# EDGAR Filing Document

**Accession Number:** 0001628908
**File Stem:** 0001628908-23-000029
**Filing Date:** 2023-2
**Character Count:** 1200616
**Document Hash:** a4c40b16cf12028f7569259f3d630331
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628908-23-000029.hdr.sgml**: 20230224

**ACCESSION NUMBER**: 0001628908-23-000029

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 151

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230224

**DATE AS OF CHANGE**: 20230224

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Evolent Health, Inc.
- **CENTRAL INDEX KEY:** 0001628908
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MANAGEMENT SERVICES [8741]
- **IRS NUMBER:** 320454912
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-37415
- **FILM NUMBER:** 23668561

**BUSINESS ADDRESS:**
- **STREET 1:** 800 NORTH GLEBE RD, SUITE 500
- **CITY:** ARLINGTON
- **STATE:** VA
- **ZIP:** 22203
- **BUSINESS PHONE:** 571-389-6000

**MAIL ADDRESS:**
- **STREET 1:** 800 NORTH GLEBE RD, SUITE 500
- **CITY:** ARLINGTON
- **STATE:** VA
- **ZIP:** 22203

?xml version="1.0" ? evh-20221231

---

| |
|:---|
| **UNITED STATES** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**SECURITIES AND EXCHANGE COMMISSION** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**WASHINGTON, D.C. 20549** |

---

**_________________________**

**FORM 10-K** 

**_________________________**

**(Mark One)**

☒&nbsp;&nbsp;&nbsp;&nbsp;**ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2022** 

**OR** 

☐ &nbsp;&nbsp;&nbsp;&nbsp;**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>** 

**Commission File Number: 001-37415** 

**_________________________**

**Evolent Health, Inc.** 

**(Exact name of registrant as specified in its charter)**

**_________________________**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Delaware** | | | | | | | **32-0454912** |
| **(State or other jurisdiction of<br>incorporation or organization)**<br>**800 N. Glebe Road** | **,** |<br>**Suite 500** | **,** |<br>**Arlington** | **,** |<br>**Virginia** | **(I.R.S. Employer<br>Identification No.)**<br>**22203** |
| **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Zip Code)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>(571) 389-6000</u>**

**Registrant's telephone number, including area code**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **_________________________**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Class A Common Stock of Evolent Health, Inc., par value $0.01 per share | EVH | New York Stock Exchange |

---

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ 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. ☐

------

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (based on the closing price of the shares on the New York Stock Exchange on such date) as of the last business day of the registrant's most recently completed second fiscal quarter was $2.5 billion.

As of February 16, 2023, there were 111,052,414 shares of the registrant's Class A common stock outstanding.

**Documents Incorporated by Reference**

Selected portions of the Proxy Statement for the Annual Meeting of Shareholders, scheduled for June 8, 2023, have been incorporated by reference into Part III of this Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2022.

————————————————————————————————————————————————————————

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**Evolent Health, Inc.**

**Table of Contents**

---

| | | |
|:---|:---|:---|
| **<u>Item</u>** | | **<u>Page</u>** |
| | **<u>[PART I](#ie5cc4f785ce54597a137387a0d3f51e9_19)</u>** | |
| 1. | <u>[Business](#ie5cc4f785ce54597a137387a0d3f51e9_220)</u> | <u>[1](#ie5cc4f785ce54597a137387a0d3f51e9_220)</u> |
| 1A. | <u>[Risk Factors](#ie5cc4f785ce54597a137387a0d3f51e9_214)</u> | <u>[17](#ie5cc4f785ce54597a137387a0d3f51e9_214)</u> |
| 1B. | <u>[Unresolved Staff Comments](#ie5cc4f785ce54597a137387a0d3f51e9_256)</u> | <u>[44](#ie5cc4f785ce54597a137387a0d3f51e9_256)</u> |
| 2. | <u>[Properties](#ie5cc4f785ce54597a137387a0d3f51e9_268)</u> | <u>[44](#ie5cc4f785ce54597a137387a0d3f51e9_268)</u> |
| 3. | <u>[Legal Proceedings](#ie5cc4f785ce54597a137387a0d3f51e9_151)</u> | <u>[45](#ie5cc4f785ce54597a137387a0d3f51e9_151)</u> |
| 4. | <u>[Mine Safety Disclosures](#ie5cc4f785ce54597a137387a0d3f51e9_163)</u> | <u>[45](#ie5cc4f785ce54597a137387a0d3f51e9_163)</u> |
|  | **<u>[PART II](#ie5cc4f785ce54597a137387a0d3f51e9_148)</u>** |  |
| 5. | <u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ie5cc4f785ce54597a137387a0d3f51e9_259)</u> | <u>[46](#ie5cc4f785ce54597a137387a0d3f51e9_259)</u> |
| 6. | <u>[Reserved](#ie5cc4f785ce54597a137387a0d3f51e9_250)</u> | <u>[47](#ie5cc4f785ce54597a137387a0d3f51e9_250)</u> |
| 7. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#ie5cc4f785ce54597a137387a0d3f51e9_118)</u> | <u>[47](#ie5cc4f785ce54597a137387a0d3f51e9_118)</u> |
| 7A. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#ie5cc4f785ce54597a137387a0d3f51e9_142)</u> | <u>[66](#ie5cc4f785ce54597a137387a0d3f51e9_142)</u> |
| 8. | <u>[Financial Statements and Supplementary Data](#ie5cc4f785ce54597a137387a0d3f51e9_22)</u> | <u>[67](#ie5cc4f785ce54597a137387a0d3f51e9_22)</u> |
| 9. | <u>[Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#ie5cc4f785ce54597a137387a0d3f51e9_199)</u> | <u>[121](#ie5cc4f785ce54597a137387a0d3f51e9_199)</u> |
| 9A. | <u>[Controls and Procedures](#ie5cc4f785ce54597a137387a0d3f51e9_145)</u> | <u>[121](#ie5cc4f785ce54597a137387a0d3f51e9_145)</u> |
| 9B. | <u>[Other Information](#ie5cc4f785ce54597a137387a0d3f51e9_166)</u> | <u>[123](#ie5cc4f785ce54597a137387a0d3f51e9_166)</u> |
| 9C. | <u>[Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ie5cc4f785ce54597a137387a0d3f51e9_223)</u> | <u>[123](#ie5cc4f785ce54597a137387a0d3f51e9_223)</u> |
|  | **<u>[PART III](#ie5cc4f785ce54597a137387a0d3f51e9_232)</u>** |  |
| 10. | <u>[Directors, Executive Officers and Corporate Governance](#ie5cc4f785ce54597a137387a0d3f51e9_235)</u> | <u>[124](#ie5cc4f785ce54597a137387a0d3f51e9_235)</u> |
| 11. | <u>[Executive Compensation](#ie5cc4f785ce54597a137387a0d3f51e9_238)</u> | <u>[124](#ie5cc4f785ce54597a137387a0d3f51e9_238)</u> |
| 12. | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ie5cc4f785ce54597a137387a0d3f51e9_241)</u> | <u>[124](#ie5cc4f785ce54597a137387a0d3f51e9_241)</u> |
| 13. | <u>[Certain Relationships and Related Transactions, and Director Independence](#ie5cc4f785ce54597a137387a0d3f51e9_244)</u> | <u>[124](#ie5cc4f785ce54597a137387a0d3f51e9_244)</u> |
| 14. | <u>[Principal Accounting Fees and Services](#ie5cc4f785ce54597a137387a0d3f51e9_247)</u> | <u>[124](#ie5cc4f785ce54597a137387a0d3f51e9_247)</u> |
|  | **<u>[PART IV](#ie5cc4f785ce54597a137387a0d3f51e9_196)</u>** |  |
| 15. | <u>[Exhibits, Financial Statement Schedules](#ie5cc4f785ce54597a137387a0d3f51e9_169)</u> | <u>[125](#ie5cc4f785ce54597a137387a0d3f51e9_169)</u> |
| 16. | <u>[Form 10-K Summary](#ie5cc4f785ce54597a137387a0d3f51e9_229)</u> | <u>[129](#ie5cc4f785ce54597a137387a0d3f51e9_229)</u> |
|  | <u>[Signatures](#ie5cc4f785ce54597a137387a0d3f51e9_202)</u> | <u>[130](#ie5cc4f785ce54597a137387a0d3f51e9_202)</u> |

---

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**Explanatory Note**

In this Annual Report on 10-K, unless the context otherwise requires, "Evolent," the "Company," "we," "our" and "us" refer to the business of Evolent Health, Inc. and its consolidated subsidiaries since their respective dates of acquisition, unless otherwise indicated. In October 2021, we acquired Vital Decisions, a leading provider of technology-enabled advance care planning services. In August 2022, we acquired IPG, a leader in providing surgical management solutions for musculoskeletal conditions. In January 2023, we acquired NIA, a specialty benefit management organization that focuses on managing cost and quality in the areas of radiology, musculoskeletal, physical medicine and genetics. Evolent Health LLC, a subsidiary of Evolent Health, Inc. through which we conduct our operations, has owned all of our operating assets and substantially all of our business since inception. Evolent Health, Inc. is a holding company.

As used in this Annual Report on Form 10-K:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "ACA" means the Patient Protection and Affordable Care Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "accountable care organizations," or "ACOs," means organizations of groups of doctors, hospitals and other health care providers which have come together voluntarily to provide coordinated care to their Medicare patients;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "capitated arrangements" means health care payment arrangements whereby providers are paid a fixed amount of money per patient during a given period of time rather than on a per-service or per-procedure basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "CMS" means the Centers for Medicare and Medicaid Services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "DGCL" means General Corporation Law of the State of Delaware;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "EMR" means electronic medical records;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Evolent Health Holdings" means Evolent Health Holdings, Inc., the predecessor to Evolent Health, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "EVH Passport" means Justify Holdings, Inc., a wholly-owned subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Evolent Care Partners" means Evolent Care Partners ("ECP"), a wholly-owned subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Exchange Act" means the Securities Exchange Act of 1934, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "founders" means the Advisory Board Company ("The Advisory Board"), and the University of Pittsburgh Medical Center ("UPMC");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "FTC" means the United States Federal Trade Commission;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "GAAP" means United States of America generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "HIPAA" means The Health Insurance Portability and Accountability Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "HITECH Act" means The Health Information Technology for Economic and Clinical Health Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "IPG" means Implantable Provider Group, Inc, a wholly-owned subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "IPO" means our initial public offering of 13.2 million shares of our Class A common stock at a public offering price of $17.00 per share in June 2015;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "New Century Health" means NCIS Holdings, Inc., a wholly-owned subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "NIA" means National Imaging Associates, Inc., a wholly-owned subsidiary of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "NYSE" means the New York Stock Exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Offering Reorganization" means the reorganization undertaken in 2015 prior to our IPO where our predecessor, Evolent Health Holdings, Inc. merged with and into Evolent Health, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "partners" means our customers, unless we indicate otherwise or the context otherwise implies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "performance-based" means risk-based contracts with our partners wherein Evolent assumes financial responsibility for the cost of care, which may range from upside and downside gain share to all, or substantially all, of the responsibility for the cost of care within a defined scope subject to Evolent management controls and contractual protections;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "pharmacy benefit management," or "PBM," means the administration of prescription drug programs, including developing and maintaining a list of medications that are approved to be prescribed, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers and processing prescription drug claim payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "population health" means an approach to health care that seeks to improve the health of an entire human population;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "SEC" means the Securities and Exchange Commission;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Securities Act" means the Securities Act of 1933, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "third-party administration," or "TPA," means the processing of insurance claims or the administration of certain aspects of employee benefit plans for a separate entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "True Health" means True Health New Mexico, Inc., a previously wholly-owned subsidiary of Evolent Health, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "TPG" means TPG Global, LLC and its affiliates including one or both of TPG Growth II BDH, LP and TPG Eagle Holdings, L.P.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "TRA" means the Income Tax Receivables Agreement. See "Part II – Item 8. Financial Statements and Supplementary Data - Note 15" for further details of the Tax Receivables Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "UHC" means University Health Care, Inc d/b/a Passport Health Plan;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "UR" means utilization review;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Valence Health" means Valence Health, Inc., excluding Cicerone Health Solutions, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "value-based care" means a health care management strategy that is focused on high-quality and cost-effective care with the goals of promoting a healthy lifestyle, enhancing the patient experience and reducing preventable hospital admissions and emergency visits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "VIE" means variable interest entities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Vital Decisions" means Vital Decisions, LLC, a wholly-owned subsidiary of the Company.

**FORWARD-LOOKING STATEMENTS - CAUTIONARY LANGUAGE**

Certain statements made in this report and in other written or oral statements made by us or on our behalf are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: "believe," "anticipate," "expect," "estimate," "aim," "predict," "potential," "continue," "plan," "project," "will," "should," "shall," "may," "might" and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to our ability to grow our impact significantly throughout this year and beyond, future actions, trends in our businesses, prospective services, new partner additions/expansions, our guidance and business outlook and future performance or financial results, and the closing of pending transactions and the outcome of contingencies, such as legal proceedings. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

These statements are only predictions based on our current expectations and projections about future events. Forward-looking statements involve risks and uncertainties that may cause actual results, level of activity, performance or achievements to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks relating to our ability to efficiently integrate NIA into our operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financial information of NIA and the pro forma financial information of NIA may not be indicative of future results or our financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the significant portion of revenue we derive from our largest partners, and the potential loss, non-renewal, termination or renegotiation of our relationship or contract with any significant partner, or multiple partners in the aggregate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• evolution of the healthcare regulatory and political framework;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• uncertainty in the health care regulatory framework, including the potential impact of policy changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to offer new and innovative products and services and our ability to keep pace with industry standards, technology and our partners' needs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to completed and future acquisitions, investments, alliances and joint ventures, including our acquisitions of IPG and NIA, which could divert management resources, result in unanticipated costs or dilute our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financial benefits we expect to receive as a result of the sale of certain assets of Passport to Molina Healthcare, Inc. may not be realized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the growth and success of our partners and certain revenues from our engagements, which are difficult to predict and are subject to factors outside of our control, including governmental funding reductions and other policy changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks relating to our ability to maintain profitability for our total cost of care and New Century Health's performance-based contracts and products, including capitation and risk-bearing contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to effectively manage our growth and maintain an efficient cost structure, and to successfully implement cost cutting measures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in general economic conditions nationally and regionally in our markets, including increasing inflationary pressures and economic and business conditions and the impact thereof on the economy resulting from public health emergencies, epidemics, pandemics or contagious diseases such as the COVID-19 pandemic;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to recover the significant upfront costs in our partner relationships and develop our partner relationships over time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract new partners and successfully capture new opportunities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the increasing number of risk-sharing arrangements we enter into with our partners could limit or negatively impact our profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to estimate the size of our target markets for our services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain and enhance our reputation and brand recognition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidation in the health care industry;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• competition which could limit our ability to maintain or expand market share within our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to audits by CMS and other governmental payers and actions, including whistleblower claims under the False Claims Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to partner with providers due to exclusivity provisions in our contracts in some of our partner and founder contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to managing our offshore operations and cost reduction goals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to contain health care costs, implement increases in premium rates on a timely basis, maintain adequate reserves for policy benefits or maintain cost effective provider agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of additional goodwill and intangible asset impairments on our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our indebtedness, our ability to service our indebtedness, and our ability to obtain additional financing on favorable terms or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to achieve profitability in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of litigation proceedings, government inquiries, reviews, audits or investigations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• material weaknesses in the future may impact our ability to conclude that our internal control over financial reporting is not effective and we may be unable to produce timely and accurate financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on the manner in which we access personal data and penalties as a result of privacy and data protection laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• liabilities and reputational risks related to our ability to safeguard the security and privacy of confidential data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• data loss or corruption due to failures or errors in our systems and service disruptions at our data centers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adequate protection of our intellectual property, including trademarks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to legal proceedings related to any alleged infringement, misappropriation or violation of third-party intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our use of "open source" software;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to protect the confidentiality of our trade secrets, know-how and other proprietary information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our reliance on third parties and licensed technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on our ability to use, disclose, de-identify or license data and to integrate third-party technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our reliance on third-party vendors to host and maintain our technology platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our obligations to make material payments to certain of our pre-IPO investors for certain tax benefits we may claim in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to utilize benefits under the tax receivables agreement described herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our obligations to make payments under the tax receivables agreement that may be accelerated or may exceed the tax benefits we realize;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the terms of agreements between us and certain of our pre-IPO investors may contain different terms than comparable agreement we may enter into with unaffiliated third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the conditional conversion features of the 2025 convertible notes, which, if triggered, could require us to settle the 2025 convertible notes in cash;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• interest rate risk under the Credit Agreement and the terms of our Series A Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our debt following the NIA acquisition and our ability to meet our obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to service our debt and pay dividends on our Series A Preferred Stock

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the potential volatility of our Class A common stock price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the potential decline of our Class A common stock price if a substantial number of shares are sold or become available for sale, including those issuable upon conversion of our Series A Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our Series A Preferred Stock has rights, preferences and privileges that are not held by and are preferential to the rights of holders of our Class A common stock, and could in the future substantially dilute the ownership interest of holders of our Class A common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provisions in our certificate of incorporation and by-laws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability of certain of our investors to compete with us without restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provisions in our certificate of incorporation which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our intention not to pay cash dividends on our Class A common stock.

The risks included here are not exhaustive. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. More information on potential factors that could affect our businesses and financial performance is included in "Forward Looking Statements - Cautionary Language," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" or similarly captioned sections of this Annual Report and the other period and current filings we make from time to time with the SEC. Moreover, we operate

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in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances that occur after the date of this report except to the extent expressly required by law.

**Market Data and Industry Forecasts and Projections**

We use market data and industry forecasts and projections throughout this Annual Report on Form 10-K, and in particular in "Part I - Item 1. - Business." We have obtained the market data from certain publicly available sources of information, including publicly available independent industry publications and other third-party sources. Unless otherwise indicated, statements in this Annual Report on Form 10-K concerning our industry and the markets in which we operate, including our general expectations and competitive position, business opportunity and market size, growth and share, are based on information from independent industry organizations and other third-party sources (including industry publications, surveys and forecasts), data from our internal research and management estimates. We believe the data that third parties have compiled is reliable, but we have not independently verified the accuracy of this information and there is no assurance that any of the forecasted amounts will be achieved. Any forecasts are based on data (including third-party data), models and experience of various professionals and are based on various assumptions, all of which are subject to change without notice. While we are not aware of any misstatements regarding the industry data presented herein, forecasts, assumptions, expectations, beliefs, estimates and projections involve risks and uncertainties and are subject to change based on various factors, including those described under the heading "Forward-Looking Statements - Cautionary Language" and in "Part I - Item 1A. Risk Factors."

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**PART I - FINANCIAL INFORMATION**

**Item 1. Business**

**Market Opportunity**

We are a market leader in the new era of value-based care, in which leading health systems and physician organizations, which we refer to as providers, as well as health plans, which we refer to as payers, are moving their business models from traditional fee-for-service ("FFS") reimbursement to an increasingly integrated clinical and financial responsibility for populations. We refer to our provider and payer customers as partners. We consider this integration of health care delivery and financial responsibility with the aim of lowering cost, enhancing quality, and improving satisfaction, to be the core of value-based care. We believe the pace of this integration is accelerating, driven by price pressure in traditional FFS health care, a market environment that is incentivizing value-based care models, growth in consumer-focused insurance programs, such as Medicare Advantage and innovation in data and technology.

The U.S. health care market was $4.3 trillion in spending during 2022, accounting for 20% of the United State Gross Domestic Product. As of December 31, 2021, it is estimated that approximately 61% of all health care payments in the United States are tied in some way to quality of care or value, with the remainder based purely on FFS reimbursement. However, the proportion of payments tied to quality and value varies significantly by health plan line of business and the majority of current value-based models remain tied to FFS frameworks. Government agencies and private organizations are focused on goals aimed at accelerating the adoption of risk-based reimbursement models to be the predominant form of health care payment by the end of the current decade. We believe this shift to value-based care is likely to continue accelerating, driven by price pressure in traditional FFS health care, a policy and market environment that is incentivizing value-based care models and innovation in data and technology. We believe that the transition to value-based care is impacting the business models of both providers and payers in all segments of the market, including Medicare, Medicaid, and Commercial lines of business.

We believe a significant opportunity exists to facilitate the continuing transition from FFS by focusing on improving the cost and quality of care through alignment of the business between payers and providers. Providers are well-positioned to lead this transition to value-based care because of their control over large portions of health care delivery costs, their primary position with consumers, and their strong local brands. Providers operating successfully in value-based arrangements can diversify their revenue streams, capture superior economics, and improve the quality of care they provide.

We also believe payers who successfully evolve their business model from that of FFS reimbursement towards value-based care can gain meaningful competitive advantages. Payers who successfully integrate care delivery and financing with providers stand to gain market advantage as medical expenses for their populations are lowered while quality of care is also improved.

The transformation of provider and payer business models from FFS to value-based care requires infrastructure that performs two functions: (i) the ability to create clinical value, which is typically defined as lowering the cost of care while maintaining or improving quality, that is superior to FFS, and (ii) an administrative platform to operate an increasingly value-based business. In addition to this infrastructure, we believe that participants in value-based arrangements also need sustainable contractual mechanisms to enable each party to capture clinical value that is created and sufficient lives in value-based arrangements to provide a return on infrastructure investments.

**Our Business**

*Our History*

Evolent was founded in 2011 by members of our management team, UPMC, an integrated delivery system in Pittsburgh, Pennsylvania, and The Advisory Board Company, to enable providers to pursue a value-based business model and evolve their competitive position and market opportunity. Since that time, we have grown both organically and through acquisitions. During 2016 and 2017 we focused on building out administrative capabilities within value-based care. In October 2018, we acquired New Century Health, a national population health leader in managing specialty care for Medicare, commercial and Medicaid members under performance-based arrangements, focused primarily on oncology and cardiovascular care, initiating Evolent's current primary strategy to pursue solutions for managing high prevalence, complex specialty care. To add to our capabilities, in October 2021, we acquired Vital Decisions, a leading provider of technology-enabled advance care planning services. In August 2022, we acquired IPG, a leader in providing surgical management solutions for musculoskeletal conditions. In January 2023, we acquired NIA, a specialty benefit management organization that focuses on managing cost and quality in the areas of radiology, musculoskeletal, physical medicine and genetics.

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The Company currently manages its operations and allocates resources across two reportable segments as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Clinical Solutions, which includes our specialty care management and physician-oriented total cost of care solutions, along with the New Century Health, Vital Decisions, IPG, NIA and Evolent Care Partners brands; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evolent Health Services ("EHS"), focused on administrative simplification solution and supporting value-based business infrastructure.

During the first quarter of 2023, as a result of the operational success and growth within its Clinical Solutions segment including the acquisition of NIA, as well as Bright Health Group ("BHG"), a health plan operating partner of EHS, which accounted for 11.3% of the Company's short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable as of December 31, 2022, announced its plans to exit its Individual and Family Plans ("IFP") line of business for 2023 and thus negatively impacting the Company's future revenues from such partner, the Company is making organizational changes and business strategy decisions which necessitate re-evaluating its reportable segments, including potentially changing the number of reportable segments. The Company anticipates its focus in the future will be primarily on maximizing the market opportunity it believes it has in the management of complex specialty conditions, which constituted approximately 70% of corporate revenue for the year ended December 31, 2022, prior to the acquisition of NIA which will increase this proportion further.

*Clinical Solutions*

Our Clinical Solutions segment has two primary solutions: (i) specialty care management services and (ii) total cost of care management. From time to time, we package our solutions under various go-to-market brand names to create product differentiation. Our partners may engage us to provide one, or multiple types of solutions, depending on specific needs.

Core elements of our total cost of care management services include: (i) population health performance, which supports the delivery of patient-centric cost-effective care and (ii) delivery network alignment, comprising the development of high-performance delivery networks. Our total cost of care solution focuses on primary care providers, who serve as the primary point of contact for populations accessing medical care. Increasingly we are referring to this capability as "Complex Care," within the framework of our focus on specialty care.

Our specialty care management services support a broad range of specialty care delivery stakeholders during their transition from FFS to value-based care, independent of their stage of maturation and specific market dynamics. We focus on the oncology, cardiology and increasingly the musculoskeletal, physical medicine and genetics markets with the objective of helping providers and payers deliver higher quality, more affordable care. In addition, we provide comprehensive quality management for oncology and cardiology patients from diagnosis through advance care planning services as well as identifying the highest quality, lowest site of care for outpatient orthopedic surgeries. We will build out these capabilities significantly within our service offerings to support additional points in the clinical care process that can positively impact quality and cost of care.

Specialty Care Management Services Solution

The foundation for our specialty care management services solution was derived through our acquisition in 2018 of New Century Health, a national population health leader in managing specialty care for Medicare, commercial and Medicaid members under performance-based and technology and services arrangements. Since then, we have continued to invest in the solution to broaden, deepen, and scale its capabilities. We have invested in internal capabilities, as well as the acquisition of assets that expand our ability to provide more value for our clients and align with the evolution of our strategic approach to Clinical Solutions. For example, on August 1, 2022, the Company completed its acquisition of IPG, a leading technology and services company providing surgical management solutions for musculoskeletal conditions, and on January 20, 2023, the Company completed its acquisition of NIA, which provides specialty solutions for complex areas of healthcare including radiology, musculoskeletal, physical medicine and genetics.

Since its founding in 2002, New Century Health traditionally focused on the oncology and cardiology markets, which are the two largest specialties in Medicare Advantage by total expenditures. Using clinical data analytics, predictive modeling and decision support tools, New Century Health has developed proprietary clinical pathways in these markets. Managed through its proprietary specialty care management platform, New Century Health combines high performance networks of specialists and enhanced clinical pathways to deliver higher quality and more affordable care, which we consider to be hallmarks of value-based care, to patients, providers and payers. Historically, New Century Health's legacy operations focused on the Medicare market and offered performance-based contracts, as well as technology and services arrangements, primarily to payers in the Medicare HMO segment of the overall Medicare market. More recently, New Century Health has entered into performance-based contracts with Medicaid health plans, the radiology, musculoskeletal, physical medicine and genetics markets through its acquisitions of NIA and IPG and advanced care planning through its acquisition of Vital Decisions.

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New Century Health, through its legacy operations and through Vital Decisions, IPG and NIA, provides a differentiated approach designed to meet market challenges based on (i) networks of high-performance providers, (ii) design of evidence-based clinical pathways and (iii) leveraging our proprietary specialty care management technology.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)<u>High-performance provider networks</u>

We develop high-performance provider networks with tools, capabilities and incentives to align and support physicians. We develop and manage comprehensive specialty networks, provide physician engagement and support and identify provider financial incentive alignment. Key features include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Direct contracts with specialists*** facilitate ease of care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Comprehensive specialty networks*** include multiple downstream subspecialists.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Incentivizes financial payment*** for quality and cost-efficient utilization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Minimizes "buy and bill" incentives*** through shared savings methodologies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Dedicated provider operations*** provide staff to support practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Clinical response team*** provides clinical education on-site to practice staff.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Dedicated central call center*** facilitates referrals and helps to resolve claims issues.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Provides established system*** of ongoing provider education and training.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Increases the frequency of utilization and value*** of advance care planning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)<u>Design evidence-based clinical pathways</u>

We design high-quality evidence-based clinical pathways to drive provider behavior towards improved quality of care at a lower cost. The transparent pathway development process for our specialty population health focal areas, oncology and cardiology, is designed to achieve the following objectives:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Reduce*** unnecessary clinical variation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Support*** physician clinical decision making of evidence-based therapies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Increase*** patient engagement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Facilitate*** total cost-of-care management.

Our clinical pathways are based on national guidelines with independent scientific advisory boards, in-house clinical expertise with original publications and presentations at national congress. We employ a collaborative review process that is not based on denials, which includes customized clinical review based on tier 1-5 drugs and proactive monitoring response to therapy. We employ quality metrics and clinical benchmarking to continually improve our pathways. We incentivize financial payment for quality by minimizing "buy and bill" incentives and through a shared savings methodology.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)<u>Leverage proprietary specialty care management technology</u>

Our legacy NCH business leverages a custom specialty care management workflow platform, CarePro<sup>TM</sup>, to provide clinical decision support and manage providers to high-quality care, while aiming to achieve significant cost savings. Our technology consists of a clinical decision support portal that provides oversight of individual treatment plans for pathway adherence. Our platform integrates clinical analytics and protocols, pharmacy management, physician engagement, network management and claims payment to drive improved outcomes for partners. Key attributes include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Decision support portal*** delivers specialty specific clinical experience based on assigned roles (e.g., cardiologist vs. oncologist).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Custom-built rules engine*** allows flexibility for multiple specialties and automated decisions based on clinical relevance, considering, for example, rigor levels based on specified payers and providers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Workflow capability*** facilitates a seamless collaboration within and across organizations, connecting payers and clearing houses for systematic data exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Nurse triage system*** leverages proprietary technology infrastructure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Overall flexibility*** enables a new business launch of existing specialty within 60 days.

In January 2023, we completed our acquisition of NIA. NIA is a healthcare management business and is focused on delivering innovative specialty solutions for fast growing, complex areas of healthcare, including radiology, musculoskeletal, physical medicine and genetics. NIA develops innovative solutions that combine advanced analytics, agile technology and clinical excellence aimed to drive better decision making and positively impact members' health outcomes. NIA's services can be applied broadly across commercial, Medicaid and Medicare populations, or on a more targeted basis for health plan customers. NIA provides its management services primarily through: (i) risk-based contractual arrangements, where NIA assumes all or a substantial portion of the

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responsibility for the cost of providing treatment services in exchange for a fixed per member per month ("PMPM") capitation payment, or (ii) ASO contractual arrangements, where NIA provides services such as utilization review, but does not assume full responsibility for the cost of the treatment services, in exchange for an administrative fee and, in some instances, shared savings.

Total Cost of Care Management Solution

Our total cost of care management solution enables providers to manage populations they may be accountable for under value-based contracts with payers or ACO contracts with CMS. This solution seeks to reduce the total cost of care for a given population by identifying and managing high-cost patients with targeted interventions managed and coordinated through primary care physicians. The economic model of our total cost of care management solution is primarily performance-based, which we believe enhances our ability to influence provider behavior by aligning our incentives with our partners. We use, and may continue to use, different go-to-market brand names for various solution packages, depending on the markets we seek to address. These go-to-market brand names include: (i) Value Based Services, wherein we support primarily health systems in their value-based operations and (ii) Evolent Care Partners, wherein we offer physicians the opportunity to join Evolent's proprietary payer contracting vehicles, scaled risk pools, and operating model.

We refer to the offerings within this solution increasingly as "Complex Care." Core elements of this solution include: (i) population health performance, which supports the delivery of patient-centric cost-effective care and (ii) delivery network alignment, comprising the development of high performance delivery networks. We integrate change management processes and ongoing physician-led transformation into all value-based services to build engagement, integration and alignment within our partners to successfully deliver value-based care and sustain performance. We have standardized the processes described below and are able to leverage our expertise across our partner base. Through the technological and clinical integration, we achieve, our solutions are delivered as engrained components of our partners' core operations rather than as add-on solutions.

*Evolent Health Services Overview*

Our Evolent Health Services segment includes our integrated value-based care platform designed to help our customers manage and administer patient health in a more cost-effective manner. We have invested in our primary platform to facilitate value-based care business models for health plans called Identifi® along with our clinical solutions to offer an integrated value-based care platform.

Our comprehensive health plan administration services help regional and national payers and providers assemble the infrastructure required to operate, manage and capitalize on a variety of financial and administrative management services, such as health plan services, risk management, analytics and reporting and leadership and management. Historically, the economic model of this solution is primarily fee-based with defined service-level agreements around key operating metrics. The services provided by Evolent Health Services include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Health plan services***: Health plan services is a comprehensive suite of services including third-party administration, enrollment and billing support, medical and utilization management, third-party payment and program integrity support and provider network contracting services. Other health plan related services include sales and marketing, product development, actuarial, and regulatory and compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Pharmacy benefit management****:* Our team of professionals support the prescription drug component of providers' plan offerings and bring national buying power and dedicated resources that are tightly integrated with the care delivery model. Differentiated from what we consider to be traditional PBMs, our solution is integrated into patient care and engages population health levers including generic utilization, provider management, and utilization management to reduce pharmacy costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Risk management****:* Our risk management services provide the capabilities needed to successfully manage risk for payers, including analysis, data and operational integration with payer processes, and ongoing performance management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Analytics and reporting***: Our analytics and reporting services provide the ongoing and ad hoc analytic teams and reports required to measure, inform and improve performance, including population health analytics, market analytics, network evaluation, staffing models, physician effectiveness, clinical delivery optimization and patient engagement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Leadership and management***: Our local and national talent assist our partners in effectively managing the performance of their value-based operations.

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Identifi® is our proprietary technology system that aggregates and analyzes data, manages care workflows and engages patients. Identifi® links our processes with those of our partners and other third parties to create a connected clinical delivery ecosystem, stratify patient populations, standardize clinical workflows and enable high-quality, cost-effective care. The configurable nature and broad capabilities of Identifi® help enhance the benefits our partners receive from our services and increase the effectiveness of our partners' existing technology architecture. In addition, Identifi® provides support and value to our Clinical Solutions segment in a limited fashion. As part of our integration of NIA and focus on specialty care, we believe there are opportunities to more tightly integrate this technology to provide additional capabilities. From this, we can scale within our Clinical Solutions segment and this will be an area of focus during the NIA integration period. Highlights of the capabilities of Identifi® include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Data and integration services:*** Data from disparate sources, such as EMRs, and lab and pharmacy data, is collected, assembled, integrated and maintained to provide health care professionals with a holistic view of the patient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Clinical and business content:*** Clinical and business content is applied to the integrated data to create actionable information to optimize clinical and financial performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***EMR integration:*** Data and clinical insights from Identifi® are fed back into partner EMRs to improve both provider and patient satisfaction, create workflow efficiencies, promote clinical documentation and coding and provide clinical support at the point-of-care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Applications:*** A suite of cloud-based applications manages the clinical, financial and operational aspects of the value-based model. Our applications scale with the clinical, financial and administrative needs of our provider partners. As additional capabilities are required by our partners, they are often deployed as applications through Identifi®.

*Sources of Revenue*

The majority of our revenue is derived from recurring multi-year platform and operations contracts. We believe the recurring, multi-year nature of our platform and operations contracts enables us to have strong visibility into future revenue. The amount of revenue in a given platform and operations contract is typically driven by: (i) the number of members that Evolent is contracted to manage, (ii) the population types being served (e.g., Medicare, Medicaid, Commercial), (iii) the depth and breadth of the services and technology applications that our partners utilize from us. In situations involving clinical solutions, we typically elect to participate alongside or co-own risk-sharing arrangements with our partners whereby we share in a portion of the upside and downside clinical performance, or by owning a portion of the underwriting results through capitation. We believe performance-based contracts align our partners' incentives with our own and enables us to capture greater value from our contracts. We believe we are in the early stages of capitalizing on these aligned operating partnerships. We believe the current value-based care arrangements of our payer and provider partners represent a relatively small portion of their overall total opportunity.

Our business model benefits from scale, as we leverage our purpose-built technology-enabled solutions and centralized resources in conjunction with the growth of our partners' membership base. While our absolute investment in our centralized resources and technologies may increase over time, we expect it will decrease as a percentage of revenue as we are able to scale this investment across a broader group of partners. We expect to grow with current partners as they increase membership in their existing operations, through expanding the number of services we provide to our existing partners, by adding new partners and by capturing value through risk-sharing arrangements.

*Significant Activities*

On August 2, 2021, the Company, through a wholly owned subsidiary, entered into a definitive agreement for the Company to acquire Vital Decisions. On October 1, 2021, we consummated the acquisition of Vital Decisions for $46.5 million in cash and the issuance of 1.8 million shares of Class A common stock. Vital Decisions reports into Evolent's specialty care management offering, New Century Health, and is consolidated into the Company's Clinical Solutions segment. Refer to "Part II - Item 8. Financial Statements - Note 4" for additional discussion regarding the Vital Decisions transaction.

On June 24, 2022, the Company, through a wholly owned subsidiary, entered into a definitive agreement for the Company to acquire IPG. On August 1, 2022, we consummated the acquisition of IPG for $256.5 million in cash and the issuance of 3.7 million shares of Class A common stock. IPG reports into Evolent's specialty care management offering, New Century Health, and is consolidated into the Company's Clinical Solutions segment. Refer to "Part II - Item 8. Financial Statements - Note 4" for additional discussion regarding the IPG transaction.

On August 1, 2022 ("IPG Closing Date"), the Company entered into a credit agreement to finance the IPG transaction and fund fees and expenses incurred in connection therewith, by and among the Company, Evolent Health LLC, as the borrower (the "Borrower"), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation ("Ares"), as administrative agent and collateral agent and revolver agent, together with the Company (the "2022 Credit Agreement"), pursuant

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to which the lenders agreed to extend credit to the Borrower in the form of (i) an initial term loan in the aggregate principal amount of $175.0 million (the "2022 Initial Term Loan Facility") and (ii) a revolving credit facility in the aggregate principal amount of up to $50.0 million, to be determined by reference to the lesser of $50.0 million and a borrowing base (the "Revolving Facility" and, together with the Initial Term Loan Facility, the "Credit Facilities"), subject to the satisfaction of specified conditions. Refer to "Part II - Item 8. Financial Statements - Note 10" for additional discussion regarding the 2022 Credit Agreement.

On August 11, 2022, the Company entered into exchange agreements with certain holders of the 2024 Notes. Pursuant to the agreements, these holders exchanged $92.8 million in aggregate principal amount of such notes for shares of the Company's Class A common stock. On August 17 and 18, 2022, the Company consummated the exchanges and issued an aggregate of 5,394,165 shares of Class A common stock to the holders. Refer to "Part II - Item 8. Financial Statements - Note 10" for additional discussion regarding the exchange of 2024 Notes.

On November 17, 2022, Evolent Health LLC, a wholly owned subsidiary of the Company, and the Company entered into a definitive agreement for the Company to acquire NIA (the "NIA acquisition"). On January 20, 2023, we consummated the NIA acquisition for $400.0 million in cash, $265.0 million in debt financing provided by Ares Capital Corporation and the issuance of 8.5 million shares of Class A common stock. NIA reports into Evolent's specialty care management offering, New Century Health, and is consolidated into the Company's Clinical Solutions segment. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the NIA acquisition.

On January 20, 2023, in connection with the consummation of the NIA acquisition, we entered into Amendment No. 1 ("Amendment No. 1") to the Credit Agreement, dated as of August 1, 2022, that provided new secured debt financing in the form of (i) additional commitments under the Company's existing asset-based revolving credit facility in an aggregate principal amount equal to $25.0 million (the "Priority ABL Incremental Facility"), and (ii) additional commitments under the Company's existing term loan facility in an aggregate principal amount equal to $240.0 million (the "Term Loan Incremental Facility" and together with the Priority ABL Incremental Facility, the "Acquisition Facilities"), and effected certain amendments to the Existing Credit Agreement. Concurrently with Amendment No. 1, EVH LLC borrowed $25.0 million under the Priority ABL Incremental Facility and $240.0 million under the Term Loan Incremental Facility to finance, together with the proceeds from the sale of the Series A Preferred Stock (as defined below), the cash consideration payable for the NIA acquisition and pay transaction fees and expenses. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the amendment to the Credit Agreement.

In connection with the consummation of the NIA acquisition, on January 20, 2023, we entered into a Securities Purchase Agreement (Series A Convertible Preferred Shares) pursuant to which the Company offered and sold an aggregate 175,000 shares of our newly created Cumulative Series A Convertible Preferred Shares, par value $0.01 per share (the "Series A Preferred Stock"), at a purchase price of $960.00 per share, resulting in total gross proceeds to us of $168.0 million. The proceeds from the offer and sale of the Series A Preferred Stock were used, together with the proceeds from the Priority ABL Incremental Facility and Term Loan Incremental Facility, to finance the cash consideration payable for the NIA acquisition and pay transaction fees and expenses. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the sale of Series A Convertible Preferred Shares.

**Competitive Strengths**

We believe we are well-positioned to benefit from the transformations occurring in health care payment and delivery described above. We believe this environment that rewards the better use of information to drive patient outcomes aligns with our business model, recent investments and other competitive strengths.

*Early Innovator*

We believe we are an innovator in the delivery of comprehensive value-based care solutions. We were founded in 2011, ahead of the implementation of the ACA and before the rapid expansion of programs, such as Medicare ACOs or Medicare Bundled Payment Initiatives. Since our inception, we have invested a significant amount in expanding our offerings.

*Differentiated Offering by Performing More Services Utilizing An Integrated Strategy*

Building off of our strength in oncology and cardiology, we believe the acquisition of NIA will accelerate our market leadership to serve the needs of large scale, national payer organizations to manage the cost and quality of care across large and complex medical specialties. NIA is a specialty benefit management company with a complementary service offering to the Company's historic specialties. Based on feedback from our clients, we believe the market for value-based specialty care is large, fragmented and lacking a market leader to provide clinically sophisticated, technology-enabled solutions across the highest cost, highly prevalent and most complex medical specialties. The acquisitions of NIA and IPG by Evolent are part of our competitive response to this apparent unmet need. We believe our payer clients will benefit from a platform offering a broader set of specialty services in order to avoid the

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inefficiencies of vendor fragmentation, and we believe they prefer fewer vendors that may provide more consistent services to their membership over time.

*Comprehensive End-to-End Solutions*

We provide end-to-end, built-for-purpose, technology-enabled solutions for our partners to succeed in value-based payment models. We believe that offering comprehensive and integrated solutions which bring together clinical and administrative management allows payers and providers to accelerate their path to adoption of value-based care.

*Depth of Market Experience*

With experience across Medicare, Medicaid and commercial markets, our depth and variety of expertise allows us to serve a variety of customer types in the broad health care marketplace including health systems, providers, physicians, health plans, ACOs, delegated arrangements and other payers.

*Proprietary Technology*

Our integrated proprietary technology, Identifi®, allows us to deliver a connected delivery ecosystem, implement replicable clinical processes, scale our value-based services and capitalize on multiple types of value-based payment relationships.

We leverage a custom specialty care management workflow platform, CarePro<sup>TM</sup>, to provide clinical decision support and manage providers to high-quality care, while aiming to achieve significant cost savings. Our technology consists of a clinical decision support portal that provides oversight of individual treatment plans for pathway adherence. Our platform integrates clinical analytics and protocols, pharmacy management, physician engagement, network management and claims payment to drive improved outcomes for partners.

We believe we are creating scaled benefits for our partners in areas such as data analytics, administrative services and care management. We expect Identifi® and CarePro<sup>TM</sup> to enable us to deliver increasing levels of efficiency to our partners.

*Provider-Heritage Brand Identity*

We believe our provider-heritage brand identity and origins differentiate us from our competitors in the value-based care services area. We believe our solutions resonate with potential partners seeking proven solutions that work with providers in a manner that attempts to minimize friction and foster a care team approach. Our analytical and clinical solutions are rooted in our experience in growing a provider-led, integrated delivery network over the 15-years prior to the founding of Evolent Health, Inc., and growing to become one of the largest provider-owned health plans in the country. Our unique position allows for the sharing of data across multiple payers and care delivery integration regardless of payer, which we believe is not possible with traditional, payer-siloed solutions.

*Partnership-Driven Business Model*

Our business model is predicated on strategic partnerships with leading providers and payers that are attempting to evolve two of their most critical business functions: how they deliver care and how they are compensated for it. The partnership model enables cultural alignment, integration into the provider care delivery and payment work-flow, contractual relationships and a cycle of clinical and cost improvement with shared financial benefit. In certain cases, we also agree to participate alongside our partners in risk-sharing or other support arrangements to increase our alignment of interests via performance-based relationships.

*Proven Leadership Team*

We have made a significant investment in building an industry-leading management team. Our senior leadership team has extensive experience in the health care industry and a track record of delivering measurable clinical, financial and operational improvement for health care providers and payers. Our Chief Executive Officer, Seth Blackley, had served as our President since August 2011. Prior to co-founding the Company, Mr. Blackley was the Executive Director of Corporate Development and Strategic Planning at The Advisory Board from June 2007 to August 2011. Our President, Dan McCarthy, served as the New Century Health's Chief Executive Officer since 2019 and held multiple leadership roles within Evolent since joining the Company in 2014. Prior to joining the Company, Mr. McCarthy was a partner at McKinsey & Company. Our Chief Financial Officer, John Johnson, served as the Chief Financial Officer for New Century Health along with various roles within the Company since 2016.

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**Growth Opportunities**

*Multiple Avenues for Growth with Our Existing, Embedded Partner Base*

We have established a multi-year partnership model with multiple drivers of embedded growth through the following avenues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• growth in lives in existing covered populations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• partners expanding into new lines of value-based care to capture growth in new profit pools;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cross-selling additional solutions to existing partners; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• capturing value created through a variety of value-based arrangements by participating alongside our partners in upside risk sharing arrangements.

*Early Stages of a Rapidly Growing Transformational Addressable Market*

We believe that our existing partners represent a small fraction of providers and payers that could benefit from our solutions. The transformation of the care delivery and payment model in the United States has been rapid, but it is still in the early stages. Approximately 20% of health care payments were paid through performance or value-based care programs in 2021 and we believe that this number will continue to grow.

We believe there is a significant market opportunity in our specialty care management services solution. As of December 31, 2022, New Century Health served approximately 3.2 million Medicaid Managed Care and Medicare HMO patients out of total population of approximately 74 million. This represents a market share of roughly 4% of this total population. We believe that the adoption of this solution in oncology and cardiology by payers serving the Medicare HMO market is very low but is likely to increase as the growth in spending in these specialties is higher than the growth in overall health care spending. Furthermore, we believe that our specialty care management solution is scalable to Medicaid and other lines of business.

*Capitalize on Growth in Select Government-Driven Programs*

The number of people managed by government-driven programs in the United States has seen significant growth since 2016. Specifically, the number of Medicare beneficiaries reached 65 million in 2022, an 10% increase from 2017. The nature of our variable fee economic model enables us to benefit from this growth in government-managed lives. A significant portion of our revenues are attributable to government-driven programs, primarily comprised of Medicaid and, to a less significant extent, Medicare.

*Ability to Capture Additional Value through Delivering Clinical Results*

We are capturing only a portion of the addressable clinical and administrative dollars in the market through our current solutions. We believe there is a significant opportunity to capture an increasing portion of the medical dollar over time, namely the remainder of the premium dollar which goes to medical expenses, and we have begun to do so in certain performance-based relationships. We believe business models that allow us to participate in the medical savings through a variety of risk-sharing arrangements that align incentives to reduce costs and improve quality outcomes will enable us to grow and differentiate ourselves from other vendors. We anticipate the manner with which we partner and share in risk with health care providers will likely continue to evolve over time given the still nascent and fragmented nature of value-based care.

*Expand Offerings to Meet Evolving Market Needs*

There are multiple business offerings that our partners may require to operate in a value-based care environment that we do not currently provide, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• physician employment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PBM expansion to include additional specialty pharmacy management capabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additional specialty lines of business beyond oncology, cardiology and musculoskeletal, including kidney and fetal-maternal medicine care;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on-site or specialty clinic services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consumer engagement and digital outreach.

*Selectively Pursue Strategic Acquisitions, Investments and Divestitures*

We believe that the nature of our competitive landscape provides meaningful acquisition and investment opportunities. Our industry is in the early stages of its life cycle and there are multiple firms attempting to capitalize on the transformation of the care delivery model and the various forms of new profit pools. We believe that our partners will require an end-to-end solution and we believe we are well

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positioned to meet this demand by expanding the breadth of our offerings through not only organic growth, but also the acquisition of niche vendors and non-core portions of larger enterprises. From time to time, we may also pursue acquisition and investment opportunities of businesses related to services we currently provide or that are complementary to our technical capabilities. For example, we completed the following recent acquisitions which are expected to deepen capabilities of both Evolent and the acquired organizations, allowing cross-sell, an enhanced value proposition to partners and an opportunity to increase the margin profile of the combined organization:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On October 1, 2021, we completed the acquisition of Vital Decisions, a leading provider of technology-enabled advance care planning services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On August 1, 2022, we completed the acquisition of IPG, a leading technology and services company providing surgical management solutions for musculoskeletal conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On January 20, 2023, we completed the acquisition of NIA (also known as Magellan Specialty Health), the specialty benefit management organization that focuses on managing cost and quality in the areas of radiology, musculoskeletal, physical medicine, and genetics.

As we grow, from time to time, we pursue and consummate opportunities to dispose of non-core businesses and assets.

**Sales and Marketing**

We market and sell our services to payers and providers throughout the United States. Our sales team works closely with our leadership team and subject matter experts to foster long-term relationships with our partners' leadership and board of directors given the nature of our partnerships. Our dedicated business development team works closely with our partners to identify additional service opportunities on a continuous basis.

**Partner Relationships**

Our business is predicated on strategic partnerships with leading payers and providers that are attempting to evolve two of their most critical business functions: how they deliver care and how they are compensated for it. The partnership model enables cultural alignment, integration into the care delivery and payment workflow, contractual relationships and a cycle of clinical and cost improvement with shared financial benefit.

We have sought to partner with leading payers and providers in sizable markets, which we believe creates a growth cycle that benefits from the secular transition to value-based care.

As of December 31, 2022, we had contractual relationships with 47 operating partners. We define an operating partner as an individual health plan or provider entity under contract with the Company based on a specific state-level geography and whether a relationship is based on fees for covered lives or capitation per life under management. Certain of our partners operate in a local and highly decentralized manner, requiring negotiation and contracting at a local level to expand into new arrangements and thus may be considered multiple entities under this definition, depending on partner business requirements.

Our contracts governing the relationships with our operating partners include key terms which may include the period of performance, revenue rates, advanced billing terms, service level agreements, termination clauses, exclusivity clauses and right of first refusal clauses. Typically, these contracts provide for a monthly payment calculated based on a specified rate multiplied by the number of members that our partners are managing. The specified rate varies depending on which market-facing solutions the partner has adopted and the number of services and technology applications they are utilizing. In some cases, we are responsible for paying for all, or substantially all, of the cost of care for a defined scope of health care services out of the revenue we receive. Some of our contracts allow for advance billing of our partners. In some of our contracts, a defined portion of the revenue is at risk and can be refunded to the partner if certain service levels are not attained. We monitor our compliance with the service levels to determine whether a refund will be provided and record an estimate of these refunds. In addition, certain of our contracts provide that if we fail to meet specified implementation targets, the contracts will terminate and we will be subject to financial penalties. The initial term of New Century Health contracts, including contracts of IPG and Vital Decisions, typically have a multi-year initial term. While they typically contain year-to-year renewal provisions, we cannot assure you any or all of these contracts will be renewed in any particular year. NIA's contracts with customers typically have stated terms of one to three years, and in certain cases contain renewal provisions (at the customer's option) for successive terms of between one and two years (unless terminated earlier). Substantially all these contracts may be immediately terminated with cause and many of NIA's contracts are terminable without cause by the customer or NIA either upon the giving of requisite notice and the passage of a specified period of time (typically between 30 and 180 days) or upon the occurrence of other specified events.

Although the revenue from our contracts is not guaranteed because certain of our contracts are terminable for convenience by our partners after a notice period has passed, certain partners would be required to pay us a termination fee in certain circumstances.

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Termination fees and the related notice period in certain of our contracts are determined based on the scope of the market-facing solutions that the partner has adopted and the duration of the contract. Most of our contracts include cure periods for certain breaches, during which time we may attempt to resolve any issues that would trigger a partner's ability to terminate the contract. However, certain of our contracts are also terminable immediately on the occurrence of certain events. For example, some of our contracts may be terminated by the partner if we fail to achieve target performance metrics over a specified period. Certain of our contracts may be terminated by the partner immediately following repeated failures by us to provide specified levels of service over periods ranging from six months to more than a year. Certain of our contracts may be terminated immediately by the partner if we lose applicable licenses, go bankrupt, lose our liability insurance, become insolvent, file for bankruptcy or receive an exclusion, suspension or debarment from state or federal government authorities. Additionally, if a partner were to lose applicable licenses, go bankrupt, lose liability insurance, become insolvent, file for bankruptcy or receive an exclusion, suspension or debarment from state or federal government authorities, our contract with such partner could in effect be terminated. The loss, termination or renegotiation of any contract could negatively impact our results. In addition, as our partners' businesses respond to market dynamics and financial pressures, and as our partners make strategic business decisions in respect of the lines of business they pursue and programs in which they participate, we expect that certain of our partners will, from time to time, seek to restructure their agreements with us.

The contracts may contain exclusivity or other restrictive provisions which are negotiated on an individual basis and vary depending on many factors, including the term and scope of the contract. The term of these exclusivity and other restrictive provisions typically corresponds to the term of the contract. These exclusivity or other restrictive provisions may apply to specific competitors of our partners or specific geographic areas, subject to certain exceptions. Accordingly, these exclusivity clauses may prevent us from entering into relationships with certain potential partners.

The contracts with our partners impose other obligations on us. For example, we typically agree that all services provided under the partner contract and all employees providing such services will comply with our partner's policies and procedures. In addition, in most instances, we have agreed to indemnify our partners against certain third-party claims, which may include claims that our services infringe the intellectual property rights of such third parties.

**Competition**

The market for our solutions is fragmented, competitive and characterized by rapidly evolving technology standards, customer needs and the frequent introduction of new products and services. Our competitors range from smaller niche companies to large, well-financed and technologically-sophisticated entities. Some of our competitors are more established, benefit from greater brand recognition, have larger client bases and have substantially greater financial, technical and marketing resources. The entrance or expansion of these larger companies in the managed healthcare industry (including our customers who have in-sourced or who may choose to in-source healthcare services) could increase the competitive pressures we face and could limit our ability to maintain or increase our rates. Other competitors have proprietary technology that differentiates their product and service offerings from ours. Our competitors are constantly developing products and services that may become more efficient or appealing to our existing partners and potential partners. Additionally, some health care information technology providers have begun to incorporate enhanced analytical tools and functionality into their core product and service offerings used by health care providers. Our partners may also choose to insource solution functions from us in part or in whole. Our services solutions compete based on several factors, including breadth, depth and quality of product and service offerings, ability to deliver clinical, financial and operational performance improvement using products and services, quality and reliability of services, ease of use and convenience, brand recognition and the ability to integrate services with existing technology. We also compete based on price and aligned performance relationships and are subject to pricing pressures as a result of, among other things, competition within the industry, consolidation of health care industry participants, practices of managed care organizations, government action and financial stress experienced by our partners.

**Government Regulation**

Our business is subject to extensive, complex and rapidly changing federal and state laws and regulations. Various federal and state agencies have discretion to issue regulations and interpret and enforce health care laws. While we believe we comply in all material respects with applicable health care and insurance laws and regulations, these regulations can vary significantly from jurisdiction to jurisdiction, and interpretation of existing laws and regulations may change periodically. Federal and state legislatures also may enact various legislative proposals that could materially impact certain aspects of our business. The following are summaries of key federal and state laws and regulations that impact our operations:

*Governmental Health Care Programs & Health Care Reform*

We are subject to regulation by both CMS and state agencies with respect to certain services we provide relating to Medicaid and Medicare programs. Medicare is a federal program that provides hospital and medical insurance benefits to persons age 65 and over, as well as certain other individuals. Medicaid programs are jointly funded by federal and state governments and are administered by states under an approved plan that provides hospital and other health care benefits to qualifying individuals. As we increase our

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exposure to Medicare and Medicaid businesses through new and existing partners, we increase our exposure to changes in government policy with respect to and regulation of the Medicaid and Medicare programs in which we and our partners participate.

Because some of our partners are participants in governmental programs, our services have in the past and may again in the future be subject to periodic surveys and audits by governmental entities or contractors for compliance with Medicare and other standards and requirements. As a result of surveys or audits, we may incur fines and penalties, and could be excluded from participating in one or more programs or institute other sanctions against us if we fail to comply with CMS regulations or Medicare and Medicaid contractual requirements.

The regulations and requirements applicable to us and other participants in Medicaid and Medicare programs are complex and subject to change. In particular, prior authorization standards and requirements of Medicaid and Medicare programs have come under increased scrutiny at the state and federal level. Medicare Advantage Organization ("MAOs") utilization management practices have been the focus of a report by the Department of Health and Human Services Office of Inspector General as well as another recent calendar year 2024 proposed rule by CMS ("CY 2024 Proposed Rule"). The CY 2024 Proposed Rule would impose several requirements on MAOs with respect to their use of prior authorization.

The U.S. Congress ("Congress") and state and local legislatures and regulators may propose and adopt legislation or policy changes or implementations effecting additional fundamental changes with respect to Medicare and Medicaid programs. Such changes in the law, or new interpretations of existing laws, may have a significant impact on our methods and costs of doing business. Additionally, expansion of enforcement activity could adversely affect our business and financial condition. Going forward, we expect CMS, Congress, and state agencies to continue to closely scrutinize each component of the Medicare and Medicaid programs, as well as modify the terms and requirements of the programs. It is not possible to predict the outcome of this congressional or regulatory activity, either of which could adversely affect us. Similarly, we cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the Medicaid and Medicare programs, nor can we predict the impact those changes will have on our business operations or financial results, but the effects could be materially adverse.

In addition, Congress, state legislatures and third-party payers may continue to review and assess alternative health care delivery and payment systems and may in the future propose and adopt legislation or policy changes or implementations effecting additional fundamental changes in the health care delivery system, including with respect to Medicare, and Medicaid, and exchange programs. We cannot assure you as to the ultimate content, timing, or effect of any changes, nor is it possible at this time to estimate the impact of any such potential legislation or changes. Health care reform has resulted in profound changes to the individual health insurance market and our business, and we expect these changes to continue.

*Fraud, Waste and Abuse Laws*

Investigating and prosecuting healthcare fraud, waste and abuse continues to be a top priority for state and federal law enforcement entities. The focus of these efforts has been directed at Medicare, Medicaid, Health Insurance Marketplace and commercial products. Compliance with these laws may require substantial resources. We are constantly looking for ways to improve our fraud, waste and abuse detection methods. The fraud, waste and abuse laws include federal and state anti-kickback laws that generally prohibit the payment or receipt of kickbacks, bribes or other remuneration in exchange for the referral of patients or other health-related business. The United States federal health care programs' Anti-Kickback Statute makes it unlawful for individuals or entities knowingly and willfully to solicit, offer, receive or pay any kickback, bribe or other remuneration, directly or indirectly, in exchange for or to induce the referral of an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program or the purchase, lease or order, or arranging for or recommending purchasing, leasing or ordering, any good, facility, service, or item for which payment may be made in whole or in part under a federal health care program. Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from federal health care programs. If an arrangement falls outside the safe harbors, it must be evaluated on its specific facts to assess whether regulatory authorities might take the position that one purpose of the arrangement is to induce referrals of federal health care program business. Our business arrangements may implicate the Anti-Kickback Statute, and we evaluate whether investment and compensation arrangements being developed by us on behalf of clients and providers fall within one of the safe harbors or Medicare Shared Savings Program waiver. If not, we consider the factors that regulatory authorities are likely to consider in attempting to identify the intent behind such arrangements. We also design business models that reduce the risk that any such arrangements might be viewed as abusive and trigger Anti-Kickback Statute claims.

The federal civil False Claims Act imposes liability on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program. The "qui tam" or "whistleblower" provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery. Our activities relating to the way we sell and market our services, including our risk adjustment solution, may be subject to scrutiny under these laws.

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The HIPAA health care fraud statute created a class of federal crimes, including health care fraud and false statements relating to health care matters, known as the "federal health care offenses." The HIPAA health care fraud statute prohibits, among other things, executing a scheme to defraud any health care benefit program, while the HIPAA false statements statute prohibits, among other things, concealing a material fact or making a materially false statement in connection with the payment for health care benefits, items or services. Entities that are found to have aided or abetted in a violation of the HIPAA federal health care offenses are deemed by statute to have committed the offense and are punishable as a principal.

In addition, we may be subject to federal and state "self-referral" laws, which generally prohibit physicians from referring patients for items covered by Medicare or Medicaid to entities with which the physician has a financial relationship, unless that relationship falls within a specified exception. The Stark Law is a strict liability statute and is violated even if the parties did not have an improper intent to induce physician referrals. The Stark Law is relevant to our business because we frequently organize arrangements of various kinds under which (a) physicians and hospitals jointly invest in and own ACOs, clinically integrated networks and other entities that engage in value-based contracting with third-party payers or (b) physicians are paid by hospitals or hospital affiliates for care management, medical or other services related to value-based contracts. We evaluate when these investment and compensation arrangements create financial relationships under the Stark Law and design structures that are intended to satisfy exceptions under the Stark Law or Medicare Shared Savings Program waiver.

*Antitrust Laws*

The antitrust laws are designed to prevent competitors from jointly fixing prices. However, competitors often work collaboratively to reduce the cost of health care and improve quality. To balance these competing goals, antitrust enforcement agencies have established a regulatory framework under which claims of per se price fixing can be avoided if a network of competitors (such as an ACO or clinically integrated network) is financially or clinically integrated. In this context, we evaluate the tests for financial and clinical integration that would be applied to the provider networks that we are helping to create and support, including the nature and extent of any financial risk that must be assumed to be deemed financially integrated and the types of programs that must be implemented to achieve clinical integration. However, even if a network is integrated, it is still subject to a "rule of reason" test to determine whether its activities are, on balance, pro-competitive. The key factors in the rule of reason analysis are market share and exclusivity. We focus on network size, composition and contracting policies to strengthen our partners' position that their networks meet the rule of reason test.

*Privacy and Data Security*

We are subject to various federal, state and local laws and rules regarding the use, security and disclosure of protected health information, personal information, and other categories of confidential or legally protected data that we handle. Such laws and rules include, without limitation, HIPAA, the Federal Trade Commission Act, the Gramm-Leach-Bliley Financial Modernization Act of 1999 (Gramm-Leach-Bliley Act), and state privacy and security laws such as the California Privacy Rights Act. Privacy and security laws and regulations often change due to new or amended legislation, regulations or administrative interpretation. A variety of state and federal regulators enforce these laws, including but not limited to the U.S. Department of Health and Human Services (HHS), the Federal Trade Commission, state attorneys general and other state regulators.

By processing data on behalf of our partners, we are subject to specific compliance obligations under privacy and data security-related laws, including HIPAA, the HITECH Act and related state laws. We are also subject to federal and state security breach notification laws, as well as state laws regulating the processing of protected personal information, including laws governing the collection, use and disclosure of social security numbers and related identifiers. The regulations that implement HIPAA and the HITECH Act establish uniform standards governing the conduct of certain electronic health care transactions and protecting the security and privacy of individually identifiable health information maintained or transmitted by health care providers, health plans and health care clearinghouses, all of which are referred to as "covered entities," and their "business associates" (which includes anyone who performs a service on behalf of a covered entity involving the use or disclosure of protected health information and is not a member of the covered entity's workforce). Our partners' health plans generally will be covered entities, and, as their business associate, they require us to contractually comply with certain aspects of these standards by entering into requisite business associate agreements.

In addition to federal regulations issued under HIPAA, several states have enacted privacy and security statutes or regulations, which we refer to as state privacy laws, that govern the use and disclosure of a person's medical information or records and, in some cases, are more stringent than those issued under HIPAA. These state privacy laws include regulation of employers; regulation of organizations that perform certain administrative functions, such as UR, or TPA; issuance of notices of privacy practices; and reporting and providing access to law enforcement authorities. In those cases, it may be necessary to modify our operations and procedures to comply with these more stringent state privacy laws. If we fail to comply with applicable state privacy laws, we could be subject to additional sanctions.

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Federal and state consumer protection laws are being applied increasingly by the FTC, Federal Communications Commission and states' attorneys general to regulate the collection, use, storage and disclosure of personal or patient information, through websites or otherwise, and to regulate the presentation of website content and to regulate direct marketing, including telemarketing and telephonic communication. Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.

*Other State Laws*

State insurance laws require licenses for certain health plan administrative activities, including TPA licenses for the processing, handling and adjudication of health insurance claims and UR agent licenses for providing medical management services. Given the nature and scope of services that we provide to certain partners, we are required to maintain TPA and UR agent licenses and ensure that such licenses are in good standing on an annual basis. In addition, laws in many states govern prompt payment obligations for health care services. These laws generally define claims payment processes and set specific time frames for submission, payment, and appeal steps. Failure to meet these requirements and time frames may result in rejection, delay of claims and possible interest and regulatory penalties. The Company has also established a captive insurance company under the laws of the State of Vermont and is subject to the captive insurance laws of that state.

**Intellectual Property**

Our continued growth and success depend, in part, on our ability to protect our intellectual property and proprietary technology, including our Identifi® software and CarePro<sup>TM</sup> platform. We primarily protect our intellectual property through a combination of copyrights, trademarks and trade secrets, intellectual property licenses and other contractual rights (including confidentiality, non-disclosure and assignment-of-invention agreements with our employees, independent contractors, consultants and companies with which we conduct business).

However, these intellectual property rights and procedures may not prevent others from creating a competitive online presence or otherwise competing with us. We may be unable to obtain, maintain and enforce the intellectual property rights on which our business depends, and assertions by third parties that we violate their intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. For additional information related to our intellectual property position see "Part I - Item 1A. Risk Factors - Risks relating to our business and industry."

**Research and Development**

Our research and development expenditures primarily consist of our strategic investment in enhancing the functionality and usability of our software, Identifi® and developing programs and processes to maximize care delivery efficiency and effectiveness. We also capitalize software development costs related to Identifi® and CarePro<sup>TM</sup>. Our research and development expenditures and capitalized software development costs also include the suite of products developed primarily by New Century Health.

**Human Capital Management**

We believe our commitment to and investment in human capital enables our continued efforts to reduce the total cost of care, improve clinical quality and simplify administration. As of February 16, 2023, we had approximately 5,100 global employees. None of our employees are represented by a labor union, and we are not a party to any collective bargaining agreements. We focus on the following key measures and objectives in managing our business in order to deploy and develop our human capital strategy:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee Compensation and Incentives

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee Training and Career Development

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee Well Being

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Diversity, Equity and Inclusion

*Employee Compensation and Incentives*

We aim to attract and retain the highest caliber of health care talent. We believe in pay for performance and structure our compensation to annually incentivize and reward high performance. We annually conduct market pay equity assessments and compensation reviews, and we continue to actively work to reduce unconscious bias in our sourcing, hiring practices, performance reviews and promotion opportunities that may contribute to pay inequities.

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*Employee Training and Career Development*

We believe that the continued edification and development of our talent is important in continuing to maintain growth as a company as well as the growth of our individual talent. Training programs are available to all employees through our company portal that is managed by our learning and development team. Our learning and development portal enables employees to find on-demand content, view and attend live learning sessions. Additionally, during 2020 we launched our internal mobility initiative. The initiative gives employees the visibility and opportunity to apply for positions within their current teams as well as company-wide. In 2021 and 2022, we enhanced our support for our internal mobility initiative by offering Talent profiles within our human capital management system which allows employees to share skills, education, job history, personal statements and career interests. We believe this initiative will continue to help with transparency of opportunities and talent across the organization, enables employees to develop in areas that align to their career goals as well as focus on increasing the diversity of our senior levels within the company over time.

*Employee Well-Being*

We believe that we have a responsibility to help maintain the health and well-being of our employees. We provide our employees with comprehensive benefits including: medical insurance, dental, vision, PTO and 401k plan. In addition, we offer 100% paid maternity leave, parental leave, fertility support, bariatric surgery, diabetes and hypertension program offerings. With the on-going COVID-19 pandemic impacting our employees, we have continued to support work from home across our employee population. We continue to offer additional mental health offerings through our insurance provider through Lyra Health, work from home office set-up support, regular employee feedback surveys, personal impact days to promote social improvement engagement, an employee crisis fund, holistic wellness initiatives during the year that include yoga, cooking sessions, meditation and wellness challenges.

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*Diversity, Equity and Inclusion*

Evolent stands firm behind its commitment to diversity, equity and inclusion and overall non-discrimination practices. Evolent is an equal opportunity employer and works to create an environment where diverse perspectives can belong, grow and lead regardless of gender, national origin, ethnicity or other protected class. In 2022, we continue to build on established diversity, equity and inclusion initiatives as we aim to continue to create a more equitable workspace. In 2021, we introduced a new development program focused on top diverse employees across the business and continued that program through 2022. This initiative included additional training for leadership in diversity, equity and inclusion throughout the organization and the hiring of a Head of Diversity, Equity and Inclusion to focus on diversity as well as an internal organization review that focused around pay, rewards, job descriptions, recruiting, career pathing and development. The table below presents certain demographic data based on our latest engagement surveys for each of the respective years below (results are based on self-identification):

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| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** |
| | **2022** | **2021** | **2020** |
| Gender (global representation) |  |  |  |
| &nbsp;&nbsp;Women | 62% | 62% | 67% |
| &nbsp;&nbsp;Men | 38% | 38% | 33% |
| Racial and ethnic minorities (U.S. representation) |  |  |  |
| &nbsp;&nbsp;Black or African American | 22.2% | 21.8% | 23.7% |
| &nbsp;&nbsp;Asian | 12.6% | 13.8% | 11.6% |
| &nbsp;&nbsp;Hispanic or Latino | 14.1% | 12.1% | 11.2% |
| &nbsp;&nbsp;Two or more races | 2.8% | 2.7% | 2.8% |
| &nbsp;&nbsp;American Indian or Alaska Native | 0.3% | 0.2% | 0.3% |
| &nbsp;&nbsp;Native Hawaiian or Other Pacific Islander | 0.4% | 0.4% | 0.2% |
| Leadership Representation (Managing Director level or above) |  |  |  |
| &nbsp;&nbsp;Women | 48% | 50% | 46% |
| &nbsp;&nbsp;Minorities | 28% | 29% | 28% |
| Employee self-identification (U.S. representation) |  |  |  |
| &nbsp;&nbsp;LGBTQ+ | 8.7% | 7.2% | 6.8% |
| &nbsp;&nbsp;Veteran | 2.0% | 2.4% | 2.6% |
| &nbsp;&nbsp;Disabled Individual | 7.8% | 4.8% | 5.1% |

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**Information about our Executive Officers**

Our executive officers as of February 24, 2023, were as follows:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Seth Blackley | 44 | Chief Executive Officer |
| Dan McCarthy | 38 | President |
| John Johnson | 39 | Chief Financial Officer |
| Steve Tutewohl | 50 | Chief Operating Officer |
| Jonathan Weinberg | 55 | General Counsel |
| Aammaad Shams | 39 | Chief Accounting Officer |

---

***Seth Blackley*** is our co-founder and has served as our Chief Executive Officer since October 2020 and served as our President from August 2011 until his promotion. Prior to co-founding the Company, Mr. Blackley was the Executive Director of Corporate Development and Strategic Planning at The Advisory Board from June 2007 to August 2011. Mr. Blackley began his career as an analyst in the Washington, D.C. office of McKinsey & Company. Mr. Blackley holds a Bachelor of Arts degree in business from The University of North Carolina at Chapel Hill, and a master of business administration from Harvard Business School.

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***Dan McCarthy*** has served as our President since September 2022. Prior to his role as President, Mr. McCarthy was the New Century Health's Chief Executive Officer since 2019, and prior to that held multiple leadership roles within Evolent since joining the Company in 2014. Mr. McCarthy came to Evolent from McKinsey & Company, where he was a leader in the firm's health care practice. Mr. McCarthy holds an M.B.A. from Harvard Business School, where he was a Goldsmith Fellow, and received a B.A. from Georgetown University.

***John Johnson*** has served as our Chief Financial Officer since July 2019. Prior to his role as Chief Financial Officer, Mr. Johnson was acting Chief Financial Officer for New Century Health from March 2019 to June 2019. Prior to his New Century Health role, Mr. Johnson was Senior Vice President, Corporate Performance at Evolent Health from January 2018 to March 2019 and Vice President, Corporate Performance at Evolent Health from April 2016 to December 2017. Prior to joining the Company, Mr. Johnson was the Managing Partner at Riverbend Analytics, LLC from December 2015 until April 2016 and the Vice President of Strategy at PSA Healthcare from February 2013 until November 2015. Mr. Johnson holds a Bachelor of Arts degree in Physics from Cornell University.

***Steve Tutewohl*** has served as our Chief Operating Officer since June 2020. Mr. Tutewohl has also served as the Chief Executive Officer of Evolent Health Services, since January 2018. Mr. Tutewohl previously served as the Chief Actuary of the Company from January 2017 until December 2017. Prior to the Company's acquisition of Valence Health, Mr. Tutewohl was the Strategic Accounts Officer of Valence Health from October 1996 - January 2017. Mr. Tutewohl received his B.S. in risk management, math and actuarial science from the University of Wisconsin.

***Jonathan Weinberg*** has served as our General Counsel since January 2014. Prior to joining Evolent, Mr. Weinberg was a Senior Vice President and Deputy General Counsel for Coventry Health Care, Inc. (Aetna Inc.) from 1999 to 2013, and oversaw the day-to-day management of the legal department as well as the company's risk management department. Prior to joining Coventry, Mr. Weinberg was an associate and then partner at Epstein Becker and Green, P.C. in the firm's health care practice, specializing in managed care issues from 1992 to 2002. Mr. Weinberg received his Bachelor of Arts in history and political science from the University of Wisconsin-Madison and his juris doctorate from the Catholic University of America.

***Aammaad Shams*** has served as our Chief Accounting Officer since August 2022. Prior to his current role, Mr. Shams was the Company's Controller from June 2020 to August 2022 and Assistant Corporate Controller from January 2020 to June 2020. Mr. Shams also served as Senior Director of Technical Accounting from April 2018 to June 2019 and Senior Director of Accounting from July 2019 until December 2019. Prior to joining the Company, Mr. Shams was a Director in KPMG, LLP's Accounting Advisory Services practice from June 2015 until March 2018. Mr. Shams is a Certified Public Accountant in the Commonwealth of Virginia.

Our executive officers are elected annually by our Board of Directors. All executive officers serve until their successors are duly chosen or elected and qualified, except in the case of earlier death, resignation or removal.

**Corporate Information**

Evolent began business operations in August 2011. Evolent Health, Inc., the registrant, was incorporated in the State of Delaware in December 2014. We completed our IPO in June 2015 and our Class A common stock is listed on the NYSE under the symbol "EVH". Evolent Health, Inc. is a holding company whose principal asset is all of the Class A common units it holds in Evolent Health LLC, and its only business is to act as sole managing member of Evolent Health LLC. Substantially all of our operations are conducted through Evolent Health LLC and its consolidated subsidiaries and the financial results of Evolent Health LLC are consolidated in the financial statements of Evolent Health, Inc.

**Website to Access Our Reports**

Our internet website address is www.evolenthealth.com. In addition to the information about us and our subsidiaries contained in this Annual Report on Form 10-K, information about us can be found on our website including information on our corporate governance principles and practices. Our Investor Relations website at ir.evolenthealth.com contains a significant amount of information about us, including financial and other information for investors. We use the investor relations page of our website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information, including news releases, investor presentations, financial information and corporate governance practices. We encourage investors to visit our website, as we frequently update and post new information about our company on our website and it is possible that this information could be deemed to be material information. Our website and information included in or linked to our website are not part of this Annual Report on Form 10-K.

We make available, free of charge, on or through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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**Item 1A. Risk Factors**

The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations. This summary is not complete and the risks summarized below are not the only risks we face. These risks are discussed more fully further below. These risks include, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to efficiently integrate NIA into our operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The historical financial information of NIA related to the NIA acquisition may not be a reliable indicator of future results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•* We derive a significant portion of our revenues from our largest partners.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The market for value-based health care in the United States is rapidly evolving.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The health care regulatory and political framework is uncertain and evolving.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to offer new and innovative products and services or our products and services fail to keep pace our results of operations may suffer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have made and entered, and may in the future make and enter acquisitions, investments and alliances and joint ventures, which may be difficult to integrate, result in unanticipated costs or dilute our stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our revenues and growth rely, in part, on our partners and revenues from our engagements, which are subject to factors outside of our control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to accurately underwrite performance-based contracts could result in a reduction in profitability for our specialty care management solution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to effectively manage our growth and costs, our business could be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Public health emergencies such as the COVID-19 pandemic have adversely affected, and could in the future, adversely affect our business and the business of our customers and suppliers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our offshore support and professional services may prove difficult to manage or may not allow us to realize our cost reduction goals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we lose key members of our management team or employees or are unable to attract and retain employees, our compensation costs will increase and our business and operating results will be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have recorded a significant amount of goodwill, and we may never realize the full value of our intangible assets, causing us to record impairments that may negatively affect our results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may need to obtain additional financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have experienced net losses in the past and we may not achieve profitability in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are and may become subject to litigation, proceedings, government inquiries, reviews, audits or investigations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We typically incur significant upfront costs in our partner relationships, and if we are unable to develop or grow these partner relationships over time, we are unlikely to recover these costs and our operating results may suffer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we do not continue to attract new partners and successfully capture new opportunities, we may not achieve our financial projections, and our results of operations would be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As we enter into an increasing number and variety of risk sharing arrangements with partners, our revenues and profitability could be limited and negatively impacted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the estimates and assumptions we use to determine the size of the target markets for our services are inaccurate, our future growth rate may be impacted and our business would be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are not able to maintain and enhance our reputation and brand recognition, our business and results of operations will be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Consolidation in the health care industry could have a material adverse effect on us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We face intense competition, which could limit our ability to maintain or expand market share within our industry, and if we do not maintain or expand our market share our business and operating results will be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our offerings could be subject to audits by CMS and other governmental payers and whistleblower claims.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Exclusivity and right of first refusal clauses in some of our partner and founder contracts may prohibit us from partnering with certain other providers in the future, and limit our growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Increasing inflationary pressures and consumer costs may have a negative effect on our margins, profitability and results of operations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to privacy and data protection laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Data loss or corruption due to failures or errors in our systems or service disruptions at our data centers may adversely affect our reputation and relationships with existing partners, which could have a negative impact on us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business is subject to online security risks, and if we are unable to safeguard the security and privacy of confidential data, we may face significant liabilities and our reputation and business will be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to obtain, maintain and enforce intellectual property protection, others may be able to develop and commercialize technology and products similar to ours, and our ability to commercialize our technology and products may be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Third parties may initiate legal proceedings alleging that we are infringing or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on us.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our use of "open source" software could adversely affect our ability to offer our services and subject us to possible litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to protect the confidentiality of our trade secrets, know-how and other proprietary information, the value of our technology and products could be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We do not control the intellectual property rights covering certain technologies and any loss of rights to these technologies or the rights licensed to us could prevent us from developing and/or commercializing our products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any restrictions on our use of, or ability to license, data, or our failure to license data and integrate third-party technologies, could have a material adverse effect on us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We rely on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our partners, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation and negatively impact our relationships with partners, adversely affecting our brand and our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We rely on third-party vendors to host and maintain our technology platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we identify material weaknesses in the future, we and our auditor may conclude that our internal control over financial reporting is not effective and we may be unable to produce timely and accurate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are required to pay certain of our pre-IPO investors for certain tax benefits we may claim in the future, and these amounts are expected to be material.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will not be reimbursed for any payments made under the TRA in the event that any tax benefits are disallowed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to realize all or a portion of the tax benefits that resulted from the exchanges of Class B common units or from the utilization of certain NOLs and from payments made under the TRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In certain cases, payments by us under the TRA may be accelerated or significantly exceed the tax benefits we realize in respect of the tax attributes subject to the TRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The agreements between us and certain of our pre-IPO investors were made in the context of an affiliated relationship and may contain different terms than comparable agreements with unaffiliated third parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The conditional conversion feature of the 2025 Notes, if triggered, may adversely affect our financial condition and operating results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The accounting method for convertible debt securities that may be settled in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are exposed to interest rate risk, which could cause the Company's debt service obligations to increase significantly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our debt following the NIA acquisition is significant and could adversely affect our business and our ability to meet our obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We expect that our stock price will be volatile and may fluctuate or decline significantly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our Class A common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The market price of our Class A common stock could decline due to the large number of shares of Class A common stock issuable upon conversion of our convertible notes or the Series A Preferred Stock, or by sales or issuances of substantial amounts of our Class A common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Some provisions of Delaware law certificate of incorporation and our by-laws and certain of our contracts may deter third parties from acquiring us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our second amended and restated certificate of incorporation, as amended, and stockholders' agreement contain provisions renouncing our interest and expectation to participate in certain corporate opportunities identified by or presented to certain of our pre-IPO investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our certificate of incorporation designates the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Our business, operations and financial position are subject to various risks. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the audited annual financial statements and notes thereto included elsewhere in this Form 10-K, when evaluating your investment in our securities. The risks and uncertainties described below are those that we currently believe may materially affect the Company. Additional risks and uncertainties of which we are unaware or that we currently deem immaterial also may become important factors that affect the Company. If any of the following risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our securities could decline, and you could lose part or all of your investment. Some statements in this Form 10-K, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Forward-Looking Statements - Cautionary Language."

**Risks relating to the NIA acquisition**

*We may be unable to efficiently integrate NIA into our operations.*

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The successful integration of the NIA business and operations into those of our own, and our ability to realize the expected synergies and benefits of the NIA acquisition are subject to a number of risks and uncertainties, many of which are outside of our control. We will also be required to devote significant management attention and resources to integrating business practices, cultures and operations of each business. The risks and uncertainties relating to integrating the two businesses, and realizing the anticipated cost synergies, include, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the challenge of integrating complex organizations, platforms, systems, operating procedures, compliance programs, technology, networks and other assets of NIA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the difficulties harmonizing differences in the business cultures of our company and NIA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to combine successfully our respective businesses in a manner that permits us to achieve the cost savings, revenue synergies and other anticipated benefits from the NIA acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to minimize the diversion of management attention from ongoing business concerns during the process of integrating NIA into our businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to resolve potential conflicts that may arise relating to customer, supplier and other important relationships of our business and NIA; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulties in retaining key management and other key employees.

We have incurred substantial expenses to consummate the NIA acquisition but may not realize the anticipated cost synergies, revenue synergies and other benefits to the extent expected, on the timeline expected, or at all. In addition, even if we are able to integrate the NIA business successfully, the anticipated benefits of the NIA acquisition may not be realized fully, or at all, or may take longer to realize than expected. Moreover, competition may also cause us not to fully realize the anticipated benefits of the NIA acquisition. Given the size and significance of the NIA acquisition, we may encounter difficulties in the integration of the operations of NIA and may fail to realize the full benefits and synergies of the NIA acquisition, which could adversely impact our business, results of operation and financial condition.

*The historical combined financial information of NIA may not be a reliable indicator of future results.*

The historical audited and unaudited financial information of NIA that was included in our Current Report on Form 8-K filed with the SEC on January 23, 2023, was prepared on a carve-out basis from Centene Corporation ("Centene"), which required certain assumptions and estimates based on accounting data extracted from accounting data books that were used when preparing the consolidated financial statements of Centene.

Accordingly, the historical combined financial information of NIA in our Current Report on Form 8-K filed with the SEC on January 23, 2023, was derived from the historical accounting records of Centene, and we anticipate that significant changes will occur in NIA's cost structure, financing and business operations as a result of our operation of it as part of our larger corporate organization. Such historical financial information may therefore not reflect what NIA's results of operations, financial position or cash flows would have been had it been a standalone company during the periods presented, or what they would have been had NIA been operated by us as part of our larger corporate organization during the periods presented, and may not be indicative of what NIA's results of operations, financial position or cash flows will be in the future. In addition, our accounting policies may differ from those reflected in the carve-out financial statements.

*The pro forma financial information related to the NIA acquisition was prepared for informational purposes only and may not be an indication of our financial condition or results of operations in the future.*

The unaudited pro forma condensed combined financial statements included in our Current Report on Form 8-K filed with the SEC on January 23, 2023, were presented for informational purposes only and are not necessarily indicative of what our actual financial condition or results of operations would have been had the NIA acquisition, Amendment No. 1 to the Credit Agreement and sale of the Series A Preferred Stock been completed on the date indicated. The assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect our financial condition or results of operations. Accordingly, our financial condition and results of operations in the future may not be consistent with, or evident from, such pro forma financial information.

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**Risks relating to our business and industry**

*We derive a significant portion of our revenues from our largest partners. The loss, termination or renegotiation of our relationship or contract with a significant partner, or multiple partners in the aggregate, could negatively impact our results.*

Historically, we have relied on a limited number of partners for a substantial portion of our total revenue. Our largest partner in terms of revenue, Cook County Health and Hospitals System, comprised 22.4% of our revenue for the year ended December 31, 2022. In addition, our partnership with Centene has grown, both as a result of the NIA acquisition and from other partnership opportunities. The loss of Cook County Health and Hospitals System, or any other significant partner, pursuant to a reprocurement process or otherwise, or the non-renewal or renegotiation of any of our significant partner contracts, could adversely affect our results.

In the ordinary course of business, we engage in active discussions and renegotiations, and at times we are required to participate in reprocurement or other request for proposal ("RFP") exercises with our partners in respect of the services we provide and the terms of our partner agreements, including our fees. Certain of our customers are subject to Medicaid health plans with state contracts that come up for renewal from time to time and can be subject to an RFP process. If a customer loses its contract or an RFP process it would cause the Company to lose that portion of the customer's business. In addition, we may not successfully win new contracts or renewals of existing contracts through competitive market standard reprocurement or RFP processes. As partners' businesses respond to market dynamics and financial pressures, and as partners make strategic business decisions in respect of the lines of business they pursue and programs in which they participate, certain of our and NIA's partners have renegotiated or terminated, or not renewed, and we expect that in the future additional partners will, from time to time, seek to renegotiate or terminate or not renew their agreements with us. For example, in October 2022, BHG, an operating partner of the EHS segment of the Company who accounted for 12.2% of the Company's accounts receivable as of September 30, 2022, announced that it plans to exit its IFP line of business in 2023. The Company had previously announced the selection of EHS by BHG as the administrative services provider for this line of business, along with BHG's intention to add approximately 700,000 members to our platform beginning January 1, 2023. BHG's announcement, other discussions and decisions, and future discussions and decisions, have resulted and could result in reductions to the fees and changes to the scope of services contemplated by our original partner contracts and consequently have and could negatively impact our revenues, financial results (including potential impairments), business and prospects. The impact of these actions have included, and in the future could include making organizational changes across our business as well as other profitability initiatives that may result in reductions in force, re-aligning of resources as well as other potential operational efficiency and cost-reduction initiatives.

Because we rely on a limited number of partners for a significant portion of our revenues, we depend on the creditworthiness of these partners. Our partners are subject to a number of risks including reductions in payment rates from governmental payers, higher than expected health care costs and lack of predictability of financial results when entering new lines of business, particularly with high-risk populations, such as plans established under the ACA and Aged, Blind and Disabled Medicaid. If the financial condition of our partners declines, our credit risk could increase. Should one or more of our significant partners declare bankruptcy, be declared insolvent or otherwise be restricted by state or federal laws or regulation from continuing in some or all of their operations, this could adversely affect our ongoing revenues, financial results (including potential impairments), the collectability of our accounts receivable and our bad debt reserves and net income (loss).

Although we have long-term contracts with many partners, these contracts may be terminated before their term expires for various reasons, such as changes in the regulatory landscape and poor performance by us, subject to certain conditions. For example, after a specified period, certain of our contracts are terminable for convenience by the partner after a notice period has passed and, in certain cases, the partner has paid a termination fee. Certain contracts are terminable immediately upon the occurrence of certain events. For example, some contracts may be terminated by the partner if we fail to achieve target performance metrics over a specified period. Certain contracts may be terminated by the partner immediately following repeated failures by us to provide specified levels of service. Certain contracts may be terminated immediately by the partner if we lose applicable licenses, go bankrupt, lose our liability insurance or receive an exclusion, suspension or debarment from state or federal government authorities. Additionally, if a partner were to lose applicable licenses, go bankrupt, lose liability insurance, become insolvent, file for bankruptcy or receive an exclusion, suspension or debarment from state or federal government authorities, the contract with such partner could in effect be terminated. In addition, certain contracts may be terminated immediately if we become insolvent or file for bankruptcy. If any contracts with partners are terminated, we may not be able to recover all fees due under the terminated contract, which may adversely affect our operating results. In addition, certain contracts provide that if we fail to meet specified implementation targets, the contracts will terminate and we will be subject to financial penalties. Separately, the contracts of New Century Health, including Vital Decisions, typically run for one-year terms. While they typically contain year-to-year renewal provisions, we cannot assure that any or all of these contracts will be renewed in any particular year. We expect that future contracts will contain similar provisions to those described in this paragraph. The market for value-based health care in the United States continues to evolve, which makes it difficult to forecast demand for our products and services.

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*The market for value-based health care in the United States is rapidly evolving. Our future financial performance will depend in part on growth in this market and on our ability to adapt to emerging demands of this market. It is difficult to predict with any precision the future growth rate and size of our target markets.*

The rapidly evolving nature of the markets in which we operate, as well as other factors that are beyond our control, reduce our ability to accurately evaluate our long-term outlook and forecast annual performance. We believe that demand for our products and services has been driven in large part by price pressure in traditional FFS health care, a regulatory environment that is incentivizing value-based care models, a rapid expansion of retail insurance, broader use of the Internet and advances in technology. Widespread acceptance of the value-based care model is critical to our future growth and success. A reduction in demand for our products and services caused by lack of acceptance, technological challenges, competing offerings or other factors would result in a lower revenue growth rate or decreased revenue, either of which could negatively impact our business and results of operations. For example, a large portion of New Century Health's and NIA's revenue is derived from customers in the managed care industry, including risk bearing providers and national and regional managed care companies. Changes in this industry's business practices could negatively impact New Century Health and NIA. For example, if New Century Health's and NIA's managed care customers seek to provide services directly to their subscribers instead of contracting with New Century Health or NIA for such services, New Century Health and NIA could be adversely affected.

*The health care regulatory and political framework is uncertain and evolving.*

Health care laws and regulations are rapidly evolving and may change significantly in the future, including as a result of the Biden administration, which could adversely affect our financial condition and results of operations. We are subject to regulation by both CMS and state agencies in respect of certain services we provide relating to Medicaid and Medicare programs. Medicare is a federal program that provides hospital and medical insurance benefits to persons age 65 and over, as well as certain other individuals. Medicaid programs are jointly funded by federal and state governments and are administered by states under an approved plan that provides hospital and other health care benefits to qualifying individuals. As we increase our exposure to Medicare and Medicaid businesses through new and existing partners, we increase our exposure to changes in government policy with respect to and regulation of the Medicaid and Medicare programs in which we and our partners participate.

Because some of our partners are participants in governmental programs, our services have in the past and may again in the future be subject to periodic surveys and audits by governmental entities or contractors for compliance with Medicare and other standards and requirements. As a result of surveys or audits, we may incur fines and penalties, and could be excluded from participating in one or more programs or institute other sanctions against us if we fail to comply with CMS regulations or Medicare and Medicaid contractual requirements.

The regulations and requirements applicable to us and other participants in Medicaid and Medicare programs are complex and subject to change. In particular, prior authorization standards and requirements of Medicaid and Medicare programs have come under increased scrutiny at the state and federal level. MAO utilization management practices have been the focus of a report by the Department of Health and Human Services Office of Inspector General as well as the recent CY 2024 Proposed Rule. The CY 2024 Proposed Rule would impose several requirements on MAOs with respect to their use of prior authorization.

Congress and state and local legislatures and regulators may propose and adopt legislation or policy changes or implementations effecting additional fundamental changes with respect to Medicare and Medicaid programs. Such changes in the law, or new interpretations of existing laws, may have a significant impact on our methods and costs of doing business. Additionally, expansion of enforcement activity could adversely affect our business and financial condition. Going forward, we expect CMS, Congress, and state agencies to continue to closely scrutinize each component of the Medicare and Medicaid programs, as well as modify the terms and requirements of the programs. It is not possible to predict the outcome of this congressional or regulatory activity, either of which could adversely affect us. Similarly, we cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the Medicaid and Medicare programs, nor can we predict the impact those changes will have on our business operations or financial results, but the effects could be materially adverse.

In addition, CMS, Congress, state legislatures and third-party payers may continue to review and assess alternative health care delivery and payment systems and may in the future propose and adopt legislation or policy changes or implementations effecting additional fundamental changes in the health care delivery system, including with respect to Medicare, Medicaid, and exchange programs. In October 2021, the CMS Center for Medicare and Medicaid Innovation (CMMI) published a white paper outlining its new strategic direction. Key themes include an increased focus on health equity, on streamlining the CMMI model portfolio, and on advancing new goals to get "all Medicare beneficiaries" and "the vast majority of Medicaid beneficiaries" into care relationships with accountability for quality and total cost of care by 2030. We cannot quantify or predict with any certainty the likely impact of this new strategic direction on the availability or functioning of CMMI models, participation in CMS programs or modifications to their rules and regulations, changes in the law, or new interpretations of existing laws, on our methods and costs of doing business.

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Additionally, expansion of enforcement activity could adversely affect our business and financial condition. Going forward, we expect CMS and Congress to continue to closely scrutinize each component of the Medicare program as well as modify the terms and requirements of the program. It is not possible to predict the outcome of this congressional or regulatory activity, either of which could adversely affect us. Similarly, we cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the health care delivery system, including Medicaid and Medicare programs, nor can we predict the impact those changes will have on our business operations or financial results, but the effects could be materially adverse.

Furthermore, in April 2020, Congress enacted the Families First Coronavirus Response Act (the "FFCRA"), which requires Medicaid programs to keep individuals continuously enrolled through the end of the month in which the COVID-19 public health emergency (the "PHE") is terminated. The PHE was most recently re-extended on October 13, 2022 through January 11, 2023. On January 30, 2023, President Biden stated that the PHE would terminate on May 11, 2023. Once the PHE extension ends on May 11, 2023, and Medicaid redeterminations resume, millions of Medicaid enrollees could lose their coverage. At such time, we believe that certain of our partners may experience a meaningful decrease of enrolled lives, which may decrease the numbers of lives on our platform and which would impact the revenues derived from such partners.

As another example of recent health care legislative changes, the Consolidated Appropriations Act (the "CAA"), enacted on December 27, 2020, contains provisions impacting group health plans, including protections for plan participants from surprise medical bills and ensuring health plan price transparency. The CAA prohibits plans from entering into services agreements that directly or indirectly restrict the plans from disclosing provider-specific costs and quality of care information. The CAA will also require certain service providers for health plans to comply with certain ERISA fee disclosure rules. In addition, effective January 1, 2022, the No Surprises Act (enacted as part of the CAA) provides protection against surprise medical bills by prohibiting plans and providers from balance billing patients for emergency care performed by out-of-network providers as well as non-emergency and ancillary services performed by out-of-network providers at in-network facilities, subject to certain notice and consent exceptions for non-emergency and ancillary services. The new law also grants additional patient protections, including requiring providers to send a good faith estimate of the expected charges for furnishing items or services to an insured patient's health plan (or directly to an uninsured patient) before such items or services are delivered (including items or services reasonably expected to be provided in conjunction with scheduled items or services or that are reasonably expected to be delivered by another provider). The No Surprises Act also provides a dispute resolution process in the event the actual charges for such items and services are substantially higher than the plan's estimate and will prohibit providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to certain exceptions. Several states have also enacted comprehensive surprise billing laws and the CAA defers to existing state requirements with respect to state-established payment amounts.

We are unable to predict how these changes and other health care reform initiatives from new legislation, regulation, judicial action and/or executive action, including the CAA and No Surprises Act and state laws, will ultimately impact the health care industry and what the potential impact may be on our business, financial condition, operating results and prospects.

In addition to these health care laws and regulations, we are subject to various other laws and regulations, including, among others, other aspects of state insurance laws, the Stark Law relating to self-referrals, the whistleblower provisions of the False Claims Act, anti-kickback laws, antitrust laws and the privacy and data protection laws.

Investigating and prosecuting healthcare fraud, waste and abuse continues to be a top priority for state and federal law enforcement entities. The focus of these efforts has been directed at Medicare, Medicaid, Health Insurance Marketplace and commercial products. Compliance with these laws may require substantial resources. We are constantly looking for ways to improve our fraud, waste and abuse detection methods. The fraud, waste and abuse laws include In the United States, there are federal and state anti-kickback laws that generally prohibit the payment or receipt of kickbacks, bribes or other remuneration in exchange for the referral of patients or other health-related business. In addition to these health care laws and regulations, we are subject to various other laws and regulations, including, among others, other aspects of state insurance laws, the Stark Law relating to self-referrals, the whistleblower provisions of the False Claims Act, anti-kickback laws, antitrust laws and the privacy and data protection laws. The federal civil False Claims Act imposes liability on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program. The "qui tam" or "whistleblower" provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery. Our activities relating to the way we sell and market our services, including our risk adjustment solution, may be subject to scrutiny under these laws. The Stark Law is relevant to our business because we frequently organize arrangements of various kinds under which (a) physicians and hospitals jointly invest in and own ACOs, clinically integrated networks and other entities that engage in value-based contracting with third-party payers or (b) physicians are paid by hospitals or hospital affiliates for care management, medical or other services related to value-based contracts. We evaluate when these investment and compensation arrangements create financial relationships under the Stark Law and design structures that are intended to satisfy exceptions under the Stark Law or Medicare Shared Savings Program waiver. We have identified instances of noncompliance in the past and cannot guarantee that we will not identify other instances in the future, or the outcome of

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any regulatory investigation into any non-compliance. If we were to become subject to litigation, liabilities or penalties under these or other laws or as part of a governmental review or audit, our business could be adversely affected.

*If we are unable to offer new and innovative products and services or our products and services fail to keep pace with advances in industry standards, technology and our partners' needs, our partners may terminate or fail to renew their relationships with us and our revenue and results of operations may suffer.*

Our success depends on providing high-quality products and services that health care providers use to improve clinical, financial and operational performance. If we cannot adapt to rapidly evolving industry standards, technology and increasingly sophisticated and varied partner needs, our existing technology could become undesirable or obsolete, which could harm our reputation. We must continue to invest significant resources in our personnel and technology in a timely and cost-effective manner in order to enhance our existing products and services and introduce new high-quality products and services that existing partners and potential new partners will want. Our operating results would also suffer if our innovations are not responsive to the needs of our existing partners or potential new partners, are not appropriately timed with market opportunity, are not effectively brought to market or significantly increase our operating costs. If our new or modified product and service innovations are not responsive to partner preferences, emerging industry standards or regulatory changes, are not appropriately timed with market opportunity or are not effectively brought to market, we may lose existing partners or be unable to obtain new partners and our results of operations may suffer. In addition, should any of our partners terminate their relationship with us after implementation has begun, we would not only lose our time, effort and resources invested in that implementation, but we would also have lost the opportunity to leverage those resources to build a relationship with other partners over that same period of time. In some cases, we price our services based on expectations of long-term relationships with our partners. When a partner terminates the relationship earlier than we had expected, we lose the resources invested in that relationship as well as the upside benefits we had anticipated.

We also engage third-party vendors to develop, maintain and enhance our technology solutions, and our ability to develop and implement new technologies is therefore dependent on our ability to engage suitable vendors. We may also need to license software or technology from third parties in order to maintain, expand or modify our technology-enabled services platform. However, there is no guarantee we will be able to enter into such agreements on acceptable terms or at all. The functionality of our services platforms depends, in part, on our ability to integrate with third-party applications and data management systems that our partners use and from which they obtain data. These third parties may terminate their relationships with us, change the features of their applications and platforms, restrict our access to their applications and platforms or alter the terms governing use of their applications, data management systems and application programming interfaces and access to those applications and platforms in an adverse manner.

*In addition to our recent acquisition of NIA we have made and entered into, and may in the future make and enter into acquisitions, investments, alliances and joint ventures, which may be difficult to integrate, divert management resources, result in unanticipated costs or dilute our stockholders.*

As our business continues to grow, we may continue to acquire or invest in companies, businesses, products or technologies that complement our current products and services, enhance our market coverage or technical capabilities or offer growth opportunities. This may include acquiring or investing in companies, businesses, products or technologies that are tangential to our current business and in which we have limited or no prior operating experience. That, and other acquisitions, investments, alliances or joint ventures, have resulted and could result in new, material risks to our results of operations, financial condition, business and prospects. These new risks could include increased variability in revenues and prospects associated with various risk sharing arrangements. In addition, the market price for our Class A common stock could also be affected, following the consummation of any other transaction, by factors that have not historically affected the market price for our Class A common stock.

We continuously evaluate potential acquisition targets and investments as well as opportunities to divest of non-core assets. However, there can be no assurance that any of these potential acquisitions, investments or divestitures will be consummated. Acquisitions, investments and alliances, including our recent acquisitions of NIA, Vital Decisions, and IPG, could result in numerous risks to our business which could negatively impact our financial condition and results of operations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulty converting platforms or integrating the purchased operations, products or technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• substantial unanticipated integration costs, delays and challenges that may arise in integration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the loss of key customers who are in turn subject to risks and financial dislocation in their businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the loss of key employees, particularly those of the acquired operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulty retaining or developing the acquired business' customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse effects on our existing business relationships with customers, suppliers, other partners, standing with regulators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges related to the integration and operation of businesses that operate in new geographic areas and new markets or lines of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated financial losses in the acquired business, including the risk of higher-than-expected health care costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure to realize the potential cost savings or other financial benefits or the strategic benefits of the acquisitions, including failure to consummate any proposed or contemplated transaction; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• liabilities, including acquired litigation, and expenses from the acquired businesses for contractual disputes with customers and other third parties, infringement of intellectual property rights, data privacy violations or other claims and failure to obtain indemnification for such liabilities or claims, and distraction of our personnel in connection with any related proceedings.

We may be unable to integrate the operations, products, technologies or personnel gained through acquisitions or investments or integrate or complete any other such transaction without a material adverse effect on our business, financial condition and results of operations. Transaction agreements may impose limitations on our ability, or the ability of the business to be acquired, to conduct business. Events outside our control, including operating changes or regulatory changes, could also adversely affect our ability to realize anticipated revenues, synergies, benefits and cost savings. In addition, revenues of acquired businesses or companies, prior to and after consummation of a transaction, may be less than expected. Counterparties in transactions may have contracts with customers and other business partners which may require consents from these parties in connection with a transaction. If these consents cannot be obtained, the Company may suffer a loss of potential future revenue and may lose rights that are material to its business and the business of any combined company. Any such disruptions could limit our ability to achieve the anticipated benefits of the transaction. Any integration may be unpredictable, or subject to delays or changed circumstances, and we and any targets may not perform in accordance with our expectations. See the risk factor captioned "We may be unable to efficiently integrate NIA into our operations." for additional information concerning integrating NIA into our operations.

We have also entered into a number of joint ventures. Conflicts or disagreements between us and any joint venture partner may negatively impact the benefits expected to be achieved by the joint venture or may ultimately threaten the ability of such joint venture to continue. We are also subject to additional risks and uncertainties because we may be dependent upon and subject to the liability, losses or reputational damage relating to joint venture partners that are not entirely under our control.

In connection with these acquisitions, investments, alliances or joint ventures, we could incur significant costs, debt, amortization expenses related to intangible assets or large and immediate write-offs or other impairments or charges (as was the case with the $47.1 million impairment charge we incurred in connection with our investment in GlobalHealth, Inc. during the year ended December 31, 2020, which represented the total value of our investment), assume liabilities or issue stock (as we have done in prior transactions) that would dilute our current stockholders' ownership.

*Our revenues and the growth of our business rely, in part, on the growth and success of our partners and certain revenues from our engagements, which are difficult to predict and are subject to factors outside of our control, including governmental funding reductions and other policy changes.*

We enter into agreements with our partners under which a significant portion of our fees are variable, including fees which are dependent upon the number of members that are covered by partners' health care plans each month, expansion of partners and the services that we provide, as well as performance-based metrics. The number of members covered by a partner's health care plan is often impacted by factors outside of our control, such as the actions of our partner or third parties. In addition, ongoing payment of fees by our partners could be negatively impacted by the general financial condition of partners. Accordingly, revenue under these agreements is unpredictable. If the number of members covered by one or more of our partners' plans were to be reduced by a material amount, or if member enrollment numbers in new plans are lower than expected, which was the case with our Florida Medicaid partners, such decrease would lead to a decrease in our expected revenue, which could harm our business, financial condition and results of operations. In addition, growth forecasts of our partners are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. Even if the markets in which partners compete meet the size estimates and growth forecasted, their health plan membership could fail to grow at similar rates, if at all. In addition, a portion of the revenue under certain of our service contracts is tied to the partners' continued participation in specified payer programs over which we have no control. If a partner ceases to participate or is disqualified from participation in any such program, this would lead to a decrease in our expected revenue under the relevant contract.

In addition, the transition to value-based care may be challenging for our partners. For example, fully-capitated or other provider risk arrangements have had a history of financial challenges for providers. Our partners may also have difficulty in value-based care if premium pricing is under pressure or if they incur selection bias in the health plans under which they assume risk and in so doing the premium, capitation amount or other risk-sharing arrangement they undertake may not adequately reflect the health status of the membership. Our partners may choose not to continue to capitalize affiliated health plans or subsidize losses to their reimbursement rates. Furthermore, revenue under our partner contracts may differ from our projections because of the termination of the contract for cause or at specified life cycle events, or because of fee reductions that are occasionally agreed to after the contract is initially signed.

Our partners derive a substantial portion of their revenue from third-party private and federal and state governmental payers, including Medicaid programs. Revenue under certain of our agreements could be negatively impacted as a result of governmental funding reductions impacting government-sponsored programs, changes in reimbursement rates, and premium pricing reductions, as well as the inability of partners to control and, if necessary, reduce health care costs, all of which are out of our control. We are unable to

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predict the impact on the Company's operations of future regulations or legislation affecting Medicaid programs, or the healthcare industry in general. For example, our partners may receive less Medicaid-based revenue once the Biden administration terminates the PHE on May 11, 2023 and state Medicaid redeterminations begin. Because certain partners' revenues are highly reliant on third-party payer reimbursement funding rates and mechanisms, overall reductions of rates from such payers could adversely impact the liquidity of our partners, resulting in their inability to make payments to us on agreed payment terms. These risks may be heightened by the COVID-19 pandemic. See "Risk factors-The health care regulatory and political framework is uncertain and evolving" for additional information.

*The financial benefits we expect to receive as a result of our sale of certain assets of Passport to Molina may not be realized.*

On July 16, 2020, EVH Passport, Evolent Health LLC and Molina entered into an Asset Purchase Agreement (the "Molina APA"), which contemplated the sale by EVH Passport to Molina of certain assets, including certain intellectual property rights of EVH Passport and EVH Passport's rights under UHC's Kentucky Medicaid contract (the "Passport Medicaid Contract"). On September 1, 2020, EVH Passport and Molina consummated the transactions contemplated by the Molina APA (the "Molina Closing") and the Passport Medicaid Contract was novated to Molina. In the event certain conditions are not fulfilled, we may not realize the full economic benefits we expect to derive from the transaction. The amount of cash we ultimately receive in connection with the transactions consummated by the Molina APA, the wind down of EVH Passport and related transactions could be adversely affected by a number of factors outside of our control. As of December 31, 2022, EVH Passport has $36.7 million recorded in cash and cash equivalents on our consolidated balance sheet and we cannot control or predict the timing of such capital return subject to regulatory approval from the Kentucky Department of Insurance.

*Failure to accurately underwrite performance-based contracts could result in a reduction in profitability for our specialty care management solution.*

Both New Century Health, the brand name we use for our specialty care management solution, and NIA derive a portion of their revenue from arrangements under which they assume responsibility for a portion of the total cost of treatments (for oncology, cardiology, radiology, musculoskeletal, physical medicine, and genetics patients) in exchange for a fixed fee. These are typically referred to as "performance-based contracts". If the Company is unable to accurately underwrite the health care cost risk for New Century Health and NIA and control associated costs, for example due to changes in the delivery system; changes in utilization patterns; changes in the number of members seeking treatment; unforeseen fluctuations in claims backlogs; unforeseen increases in the costs of the services; the occurrence of catastrophes; regulatory changes; and changes in benefit plan design, the Company's profitability could decline. Moreover, costs of providing oncology, cardiology, radiology, musculoskeletal, physical medicine, genetics and other specialties are very hard to predict, in part as a result of rapidly changing utilization of new and existing drugs and changing diagnostic and therapeutic protocols. The competitive environment for New Century Health's and NIA's performance-based products could result in pricing pressures which could cause New Century Health or NIA to reduce their respective rates. In addition, customer demands or expectations as to margin levels could cause New Century Health or NIA to reduce their respective rates. A reduction in performance-based contract rates which are not accompanied by a reduction in covered services or expected underlying care trend could result in a decrease of New Century Health's or NIA's operating margins.

*If we fail to effectively manage our growth and cost structure, our business and results of operations could be harmed.*

We have expanded our operations significantly since our inception, organically as well as through acquisitions. If we do not effectively manage our growth and maintain an efficient cost structure as we continue to expand, the quality of our products and services could suffer. Our growth to date has increased the significant demands on our management, our operational and financial systems and infrastructure and other resources. We must also continue to improve our existing systems for operational and financial management, including our reporting systems, procedures and controls. These improvements require significant capital expenditures and place increasing demands on our management. We may not be successful in managing or expanding our operations or in maintaining adequate financial and operating systems and controls. If we do not successfully manage these processes, including the timely processing of claims on behalf of our partners, our business and results of operations could be harmed.

*Public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases such as the COVID-19 pandemic have adversely affected, and could in the future, adversely affect our business and the business of our customers and suppliers.*

An epidemic, pandemic or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our results of operations, cash flows and financial condition.

To date, due to the nature of the services we provide, market dynamics in our end markets and with our significant customers, our operations have not been materially affected by the ongoing global COVID-19 pandemic and the resulting volatility and uncertainty it

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has caused in the U.S. and international markets. The extent to which COVID-19 ultimately impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Factors that may determine the severity of the impact include the scope, severity and duration of the pandemic, including the resurgence of COVID-19 cases due to more contagious variants emerging such as Omicron, employee mobility and productivity and actions to contain COVID-19 or treat its impact (including federal, state and local directives to remain at home or forced business closures and the effectiveness of vaccines), among others. A prolonged economic downturn or recession resulting from the public health emergencies, outbreak of epidemics, pandemics, or contagious diseases such as the COVID-19 pandemic could adversely affect many of our partners which could, in turn, adversely impact our business, financial condition and results of operations. The Biden administration has announced that the public health emergency that was declared in connection with the COVID-19 pandemic will expire on May 11, 2023.

While the severity of the COVID-19 pandemic recently appeared to be trending downward, particularly as vaccination rates increased, new variants of COVID-19 continue emerging, including the Omicron variants, spreading throughout the U.S. and globally and have caused and may continue to cause significant disruptions. The global economy, our markets and our business have been, and may continue to be, materially and adversely affected by COVID-19. Though availability of vaccines and reopening of state and local economies has improved the outlook for recovery from COVID-19's impacts, the impact of new, more contagious or lethal variants that may emerge, and the effectiveness of COVID-19 vaccines against new variants and the related responses by governments, including reinstated government-imposed lockdowns or other measures, cannot be predicted at this time. Both the health and economic aspects of the COVID-19 pandemic remain highly fluid and the future course of each is uncertain.

The COVID-19 pandemic has impacted and may impact our business, financial condition, cash flows, or results of operations in a number of ways, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• state Medicaid agencies may experience budget pressures as a result of the pandemic which could negatively impact payments to certain of our Medicaid health plan customers and potentially cause us to incur additional bad debt expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the pandemic on certain partners could result in delayed or reduced payments to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as our employees and our partners' employees work from home and access our system remotely, we may be subject to heightened security and privacy risks, including the risks of cyberattacks and privacy incidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• volatility in the capital markets could have a negative impact on our ability to access those markets on acceptable terms, or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any benefits to our business as a result of increased Medicaid membership or lower utilization may not be sustained in or through future periods; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decreased Medicaid membership as a result of Medicaid redeterminations in 2023 may reduce certain of our partners' revenues, which could result in reduced payments to us.

The inherent uncertainty surrounding COVID-19, due in part to rapidly changing governmental directives, public health challenges and progress, and market reactions thereto, also makes it more challenging for our management to estimate the potential impact and the future performance of our business. We cannot predict the ultimate impact of the COVID-19 pandemic, but it could materially adversely affect our business, including our financial position, results of operations and/or cash flows.

*Our offshore support and professional services may prove difficult to manage or may not allow us to realize our cost reduction goals.*

We use certain offshore resources to provide certain support and professional services, which requires technical and logistical coordination. If we are unable to maintain acceptable standards of quality in support and professional services, our attempts to reduce costs and drive growth through margin improvements in technical support and professional services may be negatively impacted, which would adversely affect our results of operations. Our offshore resources, and their ability to provide support and professional services to our domestic operations, are subject to domestic regulation at the federal, state and local levels. In certain cases, those regulations restrict or prohibit us from using our offshore resources. As a result, we may not be able to reduce costs for our domestic operations or fully realize our margin improvement goals, which could adversely affect our results of operations.

*If we lose key members of our management team or employees or are unable to attract and retain the employees we need, our compensation costs will increase and our business and operating results will be adversely affected.*

Our success depends largely upon the continued services of our key executive officers and recruitment of additional highly-skilled employees. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives, which could disrupt our business. Hiring executives with needed skills or the replacement of one or more of our executive officers or other key employees would likely involve significant time and costs and may significantly delay or prevent the achievement of our business objectives. In addition, competition for qualified talent in our industry is intense, particularly in the last several years. There has been a dramatic increase in workers leaving their positions throughout our industry that is being referred to as

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the "great resignation," and the market to build, retain and replace talent has become even more highly competitive. Many of the companies with which we compete for personnel have greater financial and other resources than we do.

We have faced and may continue to face difficulties attracting, hiring and retaining highly-skilled personnel with appropriate qualifications and may not be able to fill positions. To attract top talent, we have had to offer, and believe we will need to continue to offer, competitive compensation and benefits packages before we can validate the productivity of those employees. We have increased, and expect to continue to increase, our employee compensation levels in response to our competition, as necessary. In addition, the pressures of inflation have increased our costs of labor and may continue to do so.

In addition, we believe our corporate culture has been a key contributor to our success to date. With many of our employees working remotely, we may find it difficult to maintain important aspects of our culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success and could ultimately have a negative impact on our business and our ability to execute on our strategy. In order to successfully expand our business, we must effectively recruit, integrate and motivate new and retain existing employees, while maintaining the beneficial aspects of our corporate culture. All of our employees are "at-will" employees, and their employment can be terminated by us or them at any time, for any reason and without notice. We may not be able to hire new employees quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully integrate new employees, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and results of operations could be harmed. In addition, volatility or lack of performance in our stock price may affect our ability to attract replacements should key personnel depart.

*We have recorded a significant amount of goodwill, and we may never realize the full value of our intangible assets, causing us to record impairments that may negatively affect our results of operations.*

The Company has three reporting units. Our total assets include substantial goodwill. As of December 31, 2022, we had $722.8 million recorded as goodwill on our balance sheet. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors.

While our annual goodwill impairment test is conducted annually on October 31, we have processes in place to monitor for interim triggering events. Under GAAP, we review our goodwill for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill may not be recoverable include macroeconomic conditions, industry and market considerations, our overall financial performance including an analysis of our current and projected cash flows, revenue and earnings, a sustained decrease in our share price and other relevant entity-specific events including changes in strategy, customers or litigation. A detailed discussion of our impairment testing is included in "Part II - Item 8. Financial Statements and Supplementary Data - Note 9."

The Company recorded an impairment charge of $215.1 million during the three months ended June 30, 2020, as a result of the Kentucky Cabinet for Health and Family Services announcing that EVH Passport was not awarded a Kentucky managed Medicaid contract for the next contract period. When other indications of goodwill impairment exist, we may be required to recognize additional impairments in the future as a result of market conditions or other factors related to our performance, including changes in our forecasted results, investment strategy, interest rates or assumptions used as part of the goodwill impairment analysis. Any further impairment charges that we may record in the future could be material to our results of operations.

*We may need to obtain additional financing which may not be available or, if it is available, may result in a reduction in the ownership of our stockholders.*

We may need to raise additional funds in order to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• finance unanticipated working capital requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• develop or enhance our technological infrastructure and our existing products and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fund strategic relationships, including joint ventures and co-investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fund additional implementation engagements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquire complementary businesses, technologies, products or services.

Additional financing may not be available on terms favorable to us, or at all. If adequate funds are unavailable or are unavailable on acceptable terms, our ability to fund our expansion strategy, take advantage of unanticipated opportunities, develop or enhance technology or services or otherwise respond to competitive pressures could be significantly limited. If we raise additional funds by issuing equity or convertible debt securities, the ownership of our then-existing stockholders may be reduced, and holders of these securities may have rights, preferences or privileges senior to those of our then-existing stockholders. In addition, any indebtedness we incur and restrictive covenants contained in the agreements related thereto could:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make it difficult for us to satisfy our obligations, including interest payments on any debt obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our ability to obtain additional financing to operate our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund capital expenditures and working capital and other general operational requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our flexibility to plan for and react to changes in our business and the health care industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• place us at a competitive disadvantage relative to our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our ability to pursue acquisitions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy.

The occurrence of any one of these events could cause a significant decrease in our liquidity and impair our ability to pay amounts due on any indebtedness, and could have a material adverse effect on our business, financial condition and results of operations.

*We have experienced net losses in the past and we may not achieve profitability in the future.*

We have incurred significant net losses in the past and our operating expenses may increase in the future as we continue to invest to grow our business and build relationships with partners, develop our platforms and develop new solutions. These efforts may prove to be more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. In addition, as we continue to increase our partner base, we could incur increased losses due to mis-forecasted underwriting in performance-based contracts or because significant costs associated with entering into partner agreements are generally incurred upfront, while revenue under certain of our partner agreements is recognized each period in the month in which the services are delivered. As a result, we may need to raise additional capital through equity and debt financings in order to fund our operations. We may also fail to improve the gross margins of our business as anticipated. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.

*We are and may become subject to litigation, proceedings, government inquiries, reviews, audits or investigations which could have a material adverse effect on our business, financial condition and results of operations.*

We are and may become subject to litigation, proceedings, government inquiries, reviews, audits or investigations in the future, including potential claims against us by our partners, with or without merit. For example, on August 8, 2019, a shareholder of the Company filed a class action complaint against the Company, asserting claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934. Although we have settled this action, some of these matters and claims may result in significant defense costs and potentially significant judgments against us, some of which we are not, or cannot be, insured against. We generally intend to defend ourselves vigorously; however, we cannot be certain of the ultimate outcomes of any claims or other matters that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if the fines, judgments and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby having a material adverse effect on our business, financial condition, results of operations, cash flow and per share trading price of our Class A common stock. Certain litigation, proceedings, government inquiries, reviews, audits or investigations or the resolution of such matters may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured and adversely impact our ability to attract directors and officers.

*We typically incur significant upfront costs in our partner relationships, and if we are unable to develop or grow these partner relationships over time, we are unlikely to recover these costs and our operating results may suffer.*

We devote significant resources to establish relationships with our partners. Some of our partners undertake a significant and prolonged evaluation process, often to determine whether our products and services meet their unique health system needs, which has in the past resulted in extended periods of time to establish a partner relationship. Our efforts involve educating our partners about the use, technical capabilities and benefits of our products and services. Accordingly, our operating results will depend in substantial part on our ability to deliver a successful partner experience and persuade our partners to grow their relationship with us over time. There is no guarantee that we will be able to successfully convert a customer of our transformation services into a partner of our platform and operations services. If we are unable to sell additional products and services to existing partners, enter into and maintain favorable relationships with new partners or sufficiently grow our partners' lives on platform, it could have a material adverse effect on our business, financial condition and results of operations. As we grow, our customer acquisition costs could outpace our build-up of recurring revenue, and we may be unable to reduce our total operating costs through economies of scale such that we are unable to achieve profitability. For example, some of our partnerships require significant upfront investment including, in the case of new markets, investments in infrastructure to meet readiness and operating requirements which have outpaced our revenue growth. Under the ASC 606 revenue standard, certain set up costs we incur during the implementation phase may be deferred into the P&O phase, potentially along with associated revenues. If the economics of a partnership change such that we are unlikely to fully recover those costs, we may be required to write off a portion or all of those deferred costs and revenues and our operating results may suffer. In

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addition, we estimate the costs and timing for completing the transformation phase of relevant partner relationships. These estimates reflect our best judgment. Any increased or unexpected costs or unanticipated delays, including delays caused by factors outside our control, could cause our operating results to suffer.

*If we do not continue to attract new partners and successfully capture new opportunities, we may not achieve our financial projections, and our results of operations would be harmed.*

In order to grow our business, we must continually attract new partners and successfully capture new opportunities. Our ability to do so depends in large part on the success of our sales and marketing efforts. Potential partners may seek out other options. Therefore, we must demonstrate that our products and services provide a viable solution for potential partners. If we fail to provide high-quality solutions and convince individual partners of our value proposition, we may not be able to retain existing partners or attract new partners. In addition, there may be a limited-time opportunity to achieve and maintain a significant share of the market for our products and services due in part to the rapidly evolving nature of the health care and technology industries and the substantial resources available to our existing and potential competitors. If the market for our products and services declines or grows more slowly than we expect, if we fail to successfully convert new growth opportunities or if the number of individual partners that use our solutions declines or fails to increase as we expect, our revenue, results of operations, financial condition, business and prospects could be harmed.

*As we enter into an increasing number and variety of risk sharing arrangements with partners, our revenues and profitability could be limited and negatively impacted.*

We incorporate certain risk sharing arrangements as part of our contractual arrangements with certain partners, and we expect to enter an increasing number and variety of risk sharing arrangements in the future. As an example, as part of our strategy to support certain partners, we entered into upside and downside risk-sharing arrangements. Through our specialty care management services, we take on members from payers through performance-based arrangements where we assume risks related to pricing of contracts. We may incur losses under these arrangements if we are unable to adjust our rates if faced with increased costs related to patient care or pharmaceutical products.

As the market evolves, we expect to engage in similar and new risk sharing strategies with our partners. As of December 31, 2022, the Company had approximately $10.9 million of restricted cash and restricted investments related to risk-sharing arrangements. These arrangements have included and may include provision of letters of credit, loans, reinsurance arrangements, equity investments and other extensions of capital, where we are and may be at risk of not recovering all or a portion of any such loan or other extension of capital. These and any other potential risk sharing arrangements could limit and negatively impact our revenue, results of operations, financial condition, business and prospects.

In addition, our failure to agree on satisfactory risk sharing solutions with potential partners could negatively impact our ability to attract new partners. We may also be required to make additional capital contributions as we invest and enter into new joint ventures and strategic alliances.

*If the estimates and assumptions we use to determine the size of the target markets for our services are inaccurate, our future growth rate may be impacted and our business would be harmed.*

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. Our estimates and forecasts relating to the size and expected growth of the markets for our services may prove to be inaccurate. Even if the markets in which we compete meet our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.

Our estimates of the market opportunities for our services are based on the assumption that the strategic approaches we offer will be attractive to potential partners. Potential partners may pursue different strategic options, or none at all. In addition, our assumptions could be impacted by changes to health care laws and regulations. If our assumptions prove inaccurate, our business, financial condition and results of operations could be adversely affected.

*If we are not able to maintain and enhance our reputation and brand recognition, our business and results of operations will be harmed.*

We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with existing partners and to our ability to attract new partners. The promotion of our brands may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive. Our marketing activities may not be successful or yield increased revenue, and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur and our results of operations could be harmed. In

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addition, any factor that diminishes our reputation or that of our management, including failing to meet the expectations of our partners, or any adverse publicity or litigation involving or surrounding the Company or one of our joint venture partners, investors or strategic alliance partners could make it substantially more difficult for us to attract new partners. Similarly, because our existing partners often act as references for us with prospective new partners, any existing partner that questions the quality of our work or that of our employees could impair our ability to secure additional new partners. Therefore, financial adversity of our partners' affiliated health plans may adversely affect our reputation. In addition, negative publicity resulting from any adverse government payer audit could injure our reputation. If we do not successfully maintain and enhance our reputation and brand recognition, our business may not grow and we could lose our relationships with partners, which would harm our business, results of operations and financial condition.

*Consolidation in the health care industry could have a material adverse effect on our business, financial condition and results of operations.*

Many health care industry participants and payers are consolidating to create larger and more integrated health care delivery systems with greater market power. We expect regulatory and economic conditions to result in additional consolidation in the health care industry in the future. As consolidation accelerates, the economies of scale of our partners' organizations may grow. If a partner experiences sizable growth following consolidation, it may determine that it no longer needs to rely on us and may reduce its demand for our products and services. In addition, as health care providers consolidate to create larger and more integrated health care delivery systems with greater market power, these providers may try to use their market power to negotiate fee reductions for our products and services. Consolidation may also result in the acquisition or future development by our partners of products and services that compete with our products and services. Finally, if any of our partners were to be acquired or otherwise change ownership, we cannot assure you that the new owner would not seek to renegotiate or terminate their agreements with us. Any of these potential results of consolidation could have a material adverse effect on our business, financial condition and results of operations.

*We face intense competition, which could limit our ability to maintain or expand market share within our industry, and if we do not maintain or expand our market share our business and operating results will be harmed.*

The market for our products and services is fragmented, competitive and characterized by rapidly evolving technology standards, customer needs and the frequent introduction of new products and services. Our competitors range from smaller niche companies to large, well-financed and technologically-sophisticated entities.

We compete on the basis of several factors, including breadth, depth and quality of product and service offerings, ability to deliver clinical, financial and operational performance improvement through the use of products and services, quality and reliability of services, ease of use and convenience, brand recognition and the ability to integrate services with existing technology. Some of our competitors are more established, benefit from greater brand recognition, have larger client bases and have substantially greater financial, technical and marketing resources. The entrance or expansion of these larger companies in the managed healthcare industry (including our customers who have in-sourced or who may choose to in-source healthcare services) could increase the competitive pressures we face and could limit our ability to maintain or increase our rates. If this happens, our profitability could be adversely affected. In addition, if we do not adequately respond to these competitive pressures, it could cause us to be unable to maintain our current contracts or obtain new contracts. Other competitors have proprietary technology that differentiates their product and service offerings from ours. Our competitors are constantly developing products and services that may become more efficient or appealing to our existing partners and potential partners. Additionally, some health care information technology providers have begun to incorporate enhanced analytical tools and functionality into their core product and service offerings used by health care providers. As a result of these competitive advantages, our competitors and potential competitors may be able to respond more quickly to market forces, undertake more extensive marketing campaigns for their brands, products and services and make more attractive offers to our existing partners and potential partners.

We also compete on the basis of price. We are subject to pricing pressures as a result of, among other things, competition within the industry, consolidation of health care industry participants, practices of managed care organizations, government action and financial stress experienced by our partners. If our pricing experiences significant downward pressure, our business will be less profitable and our results of operations will be adversely affected.

We cannot be certain that we will be able to retain our current partners or expand our partner base in this competitive environment. If we do not retain current partners or expand our partner base, or if we have to renegotiate existing contracts, our business, financial condition and results of operations will be harmed. Moreover, we expect that competition will continue to increase as a result of consolidation in both the health care information technology and health care industries. If one or more of our competitors or potential competitors were to merge or partner with another of our competitors, the change in the competitive landscape could also adversely affect our ability to compete effectively and could harm our business, financial condition and results of operations.

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*Our offerings could be subject to audits by CMS and other governmental payers and whistleblower claims under the False Claims Act.*

We support provider-sponsored health plans with Medicare Advantage, Medicaid and exchange products, as well as health systems and physician groups participating in payer-delegated risk arrangements or in the CMS Next Generation ACO Model. We anticipate that CMS and other governmental payers will continue to review and audit the results of our services including risk adjustment offerings, with a focus on identifying possible false claims.

In addition, aspects of our review process and coding procedures could be subject to claims under the False Claims Act or Anti-Kickback Statute. Negative results of any such audit or claim could have a material adverse effect on our business, financial condition, results of operations or prospects and could damage our reputation.

*Exclusivity and right of first refusal clauses in some of our partner and founder contracts may prohibit us from partnering with certain other providers in the future, and as a result may limit our growth.*

Some of our partner and founder contracts include exclusivity and right of first refusal clauses. Any founder contracts with exclusivity, right of first refusal or other restrictive provisions may limit our ability to conduct business with certain potential partners, including competitors of our founders. For example, under the UPMC IP Agreement, if we were to conduct business with certain precluded providers, it would result in the loss of the license thereunder. Partner contracts with exclusivity or other restrictive provisions may limit our ability to partner with or provide services to other providers or purchase services from other vendors within certain time periods. These exclusivity or other restrictive provisions often apply to specific competitors of our health system partners or specific geographic areas within a particular state or an entire state. Accordingly, these exclusivity clauses may prevent us from entering into relationships with potential partners and could cause our business, financial condition and results of operations to be harmed.

We have also entered into a reseller, services and non-competition agreement with an affiliate of UPMC, pursuant to which we are prohibited from providing products or services to certain third parties and in certain territories. These restrictions could cause our business, financial condition and results of operations to be harmed if we found it advantageous to provide products or services to such third parties or in such territories during the restricted period.

*Increasing inflationary pressures and consumer costs may have a negative effect on our margins, profitability and results of operations.*

The broader U.S. economy has experienced higher than expected inflationary pressures throughout 2022 related to continued supply chain disruptions, labor shortages and geopolitical instability. Increasing inflationary pressures may have a negative effect on our profit margins and earnings due to associated costs increases. Additionally, we face an increasingly competitive labor market due to sustained labor shortages in part from the COVID-19 pandemic and are subject to inflationary pressures on employee wages and salaries which may increase labor costs. Failure to retain highly skilled employees due to wage inflation could have a material adverse impact on our business, results of operations or financial condition. See the risk factor captioned "If we lose key members of our management team or employees or are unable to attract and retain the employees we need, our compensation costs will increase and our business and operating results will be adversely affected." While we are unable to predict the direction of the economy or if inflation will increase or revert to normal levels, if the current inflationary trends continue for a sustained period of time, our margins, profitability and results of operations could be adversely affected.

**Risks Related to Data Protection Privacy, Cybersecurity, Intellectual Property and Technology**

*We are subject to privacy and data protection laws governing the transmission, security and privacy of health information, which may impose restrictions on the manner in which we access personal data and subject us to penalties if we are unable to fully comply with such laws.*

As described below, we are required to comply with numerous federal and state laws and regulations governing the collection, use, disclosure, storage and transmission of individually identifiable health information that we may obtain or have access to in connection with the provision of our services. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change and could have a negative impact on our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• HIPAA expanded protection of the privacy and security of personal health information and required the adoption of standards for the exchange of electronic health information. Among the standards that the Department of Health and Human Services has adopted pursuant to HIPAA are standards for electronic transactions and code sets, unique identifiers for providers, employers, health plans and individuals, security, electronic signatures, privacy and enforcement. Privacy regulations under HIPAA also provide patients with rights related to understanding and controlling how their protected health information is used and disclosed. As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a "Business Associate.". If we are

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unable to properly protect the privacy and security of protected health information entrusted to us, we could be found to have breached our contracts with our customers and be subject to investigation by the U.S. Department of Health and Human Services Office for Civil Rights ("OCR"). In the event the OCR finds that we have failed to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties that could have a material adverse effect on us. In addition, OCR performs compliance audits of Business Associates in order to proactively enforce the HIPAA privacy and security standards. OCR has become an increasingly active regulator and has signaled its intention to continue this trend. OCR has the discretion to impose penalties without being required to attempt to resolve violations through informal means; further, OCR may require companies to enter into resolution agreements and corrective action plans which impose ongoing compliance requirements. OCR enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The HITECH Act, enacted as part of the American Recovery and Reinvestment Act of 2009, also known as the "Stimulus Bill," effective February 22, 2010, set forth health information security breach notification requirements and increased penalties for violation of HIPAA. The HITECH Act requires individual notification for all breaches, media notification of breaches for over 500 individuals and at least annual reporting of all breaches to the Department of Health and Human Services. Failure to comply with the HITECH Act could result in fines and penalties that could have a material adverse effect on us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Numerous other federal and state laws may apply that restrict the use and protect the privacy and security of individually identifiable information, as well as employee personal information. These include state medical privacy laws, state social security number protection laws and federal and state consumer protection laws. These various laws in many cases are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies, creating complex compliance issues for us and our partners and potentially exposing us to additional expense, adverse publicity and liability, any of which could adversely affect our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Federal and state consumer protection laws are increasingly being applied by the FTC and states' attorneys general to regulate the collection, use, storage and disclosure of personal or individually identifiable information, through websites or otherwise, and to regulate the presentation of website content.

There is ongoing concern from privacy advocates, regulators and others regarding data protection and privacy issues, and the number of jurisdictions with data protection and privacy laws have been increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identified, anonymous or pseudonymized health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy. These discussions may lead to further restrictions on the use of such information. There can be no assurance that these initiatives or future initiatives will not adversely affect our ability to access and use data or to develop or market current or future services.

The security measures that we and our third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws may not protect our facilities and systems from security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming and human errors or other similar events. Under the HITECH Act, as a business associate we may also be liable for privacy and security breaches and failures of our subcontractors. Even though we provide for protections through our agreements with our subcontractors, we still have limited control over their actions and practices. A breach of privacy or security of individually identifiable health information by a subcontractor may result in an enforcement action, including criminal and civil liability, against us. Our failure to comply may result in criminal and civil liability because the potential for enforcement action against business associates has increased in recent years. Enforcement actions against us could be costly and could interrupt regular operations, which may adversely affect our business.

*Data loss or corruption due to failures or errors in our systems or service disruptions at our data centers may adversely affect our reputation and relationships with existing partners, which could have a negative impact on our business, financial condition and results of operations.*

Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our partners regard as significant. Complex software such as ours may contain errors or failures that are not detected until after the software is introduced or updates and new versions are released. We continually introduce new software and updates and enhancements to our existing software. Despite testing by us, we may discover defects or errors in our software. In addition, we may encounter defects or errors in connection with the integration of software and technology we acquire. Any defects or errors could expose us to risk of liability to partners and the government and could cause delays in the introduction of new products and services, result in increased costs and diversion of development resources, require design modifications, decrease market acceptance or partner satisfaction with our products and services or cause harm to our reputation.

Furthermore, our partners might use our software together with products from other companies. As a result, when problems occur, it might be difficult to identify the source of the problem. Even when our software does not cause these problems, the existence of these

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errors might cause us to incur significant costs, divert the attention of our technical personnel from our product development efforts, impact our reputation and lead to significant partner relations problems.

*Our business is subject to online security risks, and if we are unable to safeguard the security and privacy of confidential data, we may face significant liabilities and our reputation and business will be harmed.*

Our services involve the collection, storage and analysis of confidential information, including intellectual property and personal information of employees, health providers and others, as well as protected health information of our partners' patients. Because of the extreme sensitivity of this information, the security and privacy features of our computer, network, and communications systems infrastructure are very important. In certain cases, we provide such information to third parties, for example, to the service providers who provide hosting services for our technology platform, and we may be unable to control the use of such information or the security and privacy protections employed by such third parties. We may be required to expend significant capital and other resources to protect against security breaches and/or privacy incidents or to alleviate problems caused by security breaches and/or privacy incidents. Despite our implementation of security and privacy measures designed to help ensure data security and compliance with applicable laws and rules, our facilities and systems, and those of our third-party providers, are vulnerable to threats. These threats could include cyber-attacks, the use of harmful malware or ransomware, security breaches, acts of vandalism or theft (including by employees), computer viruses, misplaced or lost data, programming and/or human errors, power outages, protected health information leakage from implementing third-party technology to process and share data, hardware failures or other similar events. Furthermore, our increased use of mobile and cloud technologies, including as a result of the shift to work-from-home arrangements as a result of the COVID-19 pandemic, has heightened these cybersecurity and privacy risks, including risks from cyber-attacks such as phishing, spam emails, hacking, social engineering, and malicious software including harmful malware and ransomware. If an actual or perceived breach of our security occurs, or if we are unable to effectively resolve such breaches in a timely manner, the market perception of the effectiveness of our security and privacy measures could be harmed and we could lose sales and partners, which could have a material adverse effect on our business, operations, and financial results.

A cyber-attack that bypasses our, or our third-party providers', security systems successfully could require us to expend significant resources to remediate any damage, and prevent future occurrences, interrupt our operations, damage our reputation and our relationship with our partners, expose us or other third parties to a risk of loss or misuse of confidential information, reduce demand for our products and services or subject us to significant liability through litigation as well as regulatory action. While we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and such insurance may not be available for renewal on acceptable terms or at all, and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

Cyber-attacks continue to evolve in sophistication and volume and may remain undetected for an extended period. In addition, techniques used to obtain unauthorized access to information or to sabotage information technology systems change frequently. We have seen, and will continue to see, industry-wide vulnerabilities, such as the Log4j vulnerability reported in December 2021, which could in the future affect our or other parties' systems. We expect to continue to experience such vulnerabilities in the future. The costs of attempting to protect against cybersecurity risks and the costs of responding to cyber-attacks are significant. This could require us to expend significant resources to continue to modify or enhance our protective measures and to remediate any damage.

New data security and privacy laws and regulations are being implemented rapidly and are evolving, and we may not be able to timely comply with such requirements, and such requirements may not be compatible with our current processes. For example, regulators in the United States and globally are also inquiring more about and imposing greater monetary fines for privacy violations. In the last year, the FTC has announced that it will begin enforcing the Health Breach Notification Rule, and entered into a consent order with a $1.5 million fine. The FTC and many states (including California, Utah, Colorado, Virginia and Connecticut) have specific requirements for collecting and processing certain data including data minimization, data de-identification, opt out rights, deletion and sharing. Changing our processes could be time consuming and expensive, and failure to timely implement required changes could subject us to liability for non-compliance. Various events described above have occurred in the past and may occur in the future. Although impacts of past events have been immaterial, the impacts of such events in the future may be material.

*If we are unable to obtain, maintain and enforce intellectual property protection for our technology and products or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop and commercialize technology and products substantially similar to ours, and our ability to successfully commercialize our technology and products may be adversely affected.*

Our business depends on proprietary technology and content, including software, databases, confidential information and know-how, the protection of which is crucial to the success of our business. We rely on a combination of trademark, trade-secret and copyright laws and confidentiality procedures and contractual provisions to protect our intellectual property rights in our proprietary technology and content. We may, over time, increase our investment in protecting our intellectual property through additional trademark, patent and other intellectual property filings that could be expensive and time-consuming. Effective trademark, trade-secret and copyright protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of

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defending our rights. These measures, however, may not be sufficient to offer us meaningful protection. If we are unable to protect our intellectual property and other proprietary rights, our competitive position and our business could be harmed, as third parties may be able to commercialize and use technologies and software products that are substantially the same as ours without incurring the development and licensing costs that we have incurred. Any of our owned or licensed intellectual property rights could be challenged, invalidated, circumvented, infringed or misappropriated, our trade secrets and other confidential information could be disclosed in an unauthorized manner to third parties, or our intellectual property rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide us with competitive advantages, which could result in costly redesign efforts, discontinuance of certain offerings or other competitive harm.

Monitoring unauthorized use of our intellectual property is difficult and costly. From time to time, we seek to analyze our competitors' products and services, and may in the future seek to enforce our rights against potential infringement. However, the steps we have taken to protect our proprietary rights may not be adequate to prevent infringement or misappropriation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Any inability to meaningfully protect our intellectual property rights could result in harm to our ability to compete and reduce demand for our technology and products. Moreover, our failure to develop and properly manage new intellectual property could adversely affect our market positions and business opportunities. Also, some of our products and services rely on technologies and software developed by or licensed from third parties, and we may not be able to maintain our relationships with such third parties or enter into similar relationships in the future on reasonable terms or at all.

We may also be required to protect our proprietary technology and content in an increasing number of jurisdictions, a process that is expensive and may not be successful, or which we may not pursue in every location. In addition, effective intellectual property protection may not be available to us in every country, and the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States. Additional uncertainty may result from changes to intellectual property legislation enacted in the United States and elsewhere, and from interpretations of intellectual property laws by applicable courts and agencies. Accordingly, despite our efforts, we may be unable to obtain and maintain the intellectual property rights necessary to provide us with a competitive advantage. Our failure to obtain, maintain and enforce our intellectual property rights could therefore have a material adverse effect on our business, financial condition and results of operations.

*If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our business may be adversely affected.*

The registered or unregistered trademarks or trade names that we own or license may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with potential partners. In addition, third parties may in the future file for registration of trademarks similar or identical to our trademarks. If they succeed in registering or developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to commercialize our technologies or products in certain relevant countries. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected.

*Third parties may initiate legal proceedings alleging that we are infringing or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on our business, financial condition and results of operations.*

Our commercial success depends on our ability to develop and commercialize our services and use our proprietary technology without infringing the intellectual property or proprietary rights of third parties. Intellectual property disputes can be costly to defend and may cause our business, operating results and financial condition to suffer. As the market for health care in the United States expands and more patents are issued, the risk increases that there may be patents issued to third parties that relate to our products and technology of which we are not aware or that we must challenge to continue our operations as currently contemplated. Whether merited or not, we may face allegations that we, our partners, our licensees or parties indemnified by us have infringed or otherwise violated the patents, trademarks, copyrights or other intellectual property rights of third parties. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties. Additionally, in recent years, individuals and groups have begun purchasing intellectual property assets for the purpose of making claims of infringement and attempting to extract settlements from companies like ours. We may also face allegations that our employees have misappropriated the intellectual property or proprietary rights of their former employers or other third parties. It may be necessary for us to initiate litigation to defend ourselves in order to determine the scope, enforceability and validity of third-party intellectual property or proprietary rights, or to establish our respective rights. Regardless of whether claims that we are infringing patents or other intellectual property rights have merit, such claims can be time-consuming, divert management's attention and financial resources and can be costly to evaluate and defend. Results of any such litigation are difficult to predict and may require us to stop commercializing or using our products or technology, obtain licenses, modify our services and technology while we develop non-infringing substitutes or incur substantial damages, settlement costs or face a temporary

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or permanent injunction prohibiting us from marketing or providing the affected products and services. If we require a third-party license, it may not be available on reasonable terms or at all, and we may have to pay substantial royalties, upfront fees or grant cross-licenses to intellectual property rights for our products and services. We may also have to redesign our products or services so they do not infringe third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time, during which our technology and products may not be available for commercialization or use. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. If we cannot or do not obtain a third-party license to the infringed technology on reasonable terms or at all, or obtain similar technology from another source, our revenue and earnings could be adversely impacted.

From time to time, we have been and may be subject to legal proceedings and claims in the ordinary course of business with respect to intellectual property. We are not currently subject to any claims from third parties asserting infringement of their intellectual property rights. Some third parties may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Class A common stock. Moreover, any uncertainties resulting from the initiation and continuation of any legal proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Assertions by third parties that we violate their intellectual property rights could therefore have a material adverse effect on our business, financial condition and results of operations.

*Our use of "open source" software could adversely affect our ability to offer our services and subject us to possible litigation.*

We use open source software in connection with our products and services. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the use of open source software and/or compliance with open source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms. Some open source software licenses require users who distribute software containing open source software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code, which could include valuable proprietary code of the user, on unfavorable terms or at no cost. While we monitor the use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are often ambiguous. Any requirement to disclose our proprietary source code or pay damages for breach of contract could have a material adverse effect on our business, financial condition and results of operations and could help our competitors develop products and services that are similar to or better than ours.

*If we are unable to protect the confidentiality of our trade secrets, know-how and other proprietary information, the value of our technology and products could be adversely affected.*

We may not be able to protect our trade secrets, know-how and other proprietary information adequately. Although we use reasonable efforts to protect this proprietary information and technology, our employees, consultants and other parties may unintentionally or willfully disclose our information or technology to competitors. Enforcing a claim that a third-party illegally obtained and is using any of our proprietary information or technology is expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets, know-how and other proprietary information. We rely, in part, on non-disclosure, confidentiality and invention assignment agreements with our employees, consultants and other parties to protect our trade secrets, know-how and other intellectual property and proprietary information. These agreements may not be self-executing, or they may be breached and we may not have adequate remedies for such breach. Moreover, third parties may independently develop similar or equivalent proprietary information or otherwise gain access to our trade secrets, know-how and other proprietary information.

*We depend on certain technologies that are licensed to us. We do not control the intellectual property rights covering these technologies and any loss of our rights to these technologies or the rights licensed to us could prevent us from developing and/or commercializing our products.*

We are a party to a number of license agreements under which we are granted rights to intellectual property that is important to our business, and we expect that we may need to enter into additional license agreements in the future. We are party to an intellectual property and development services license agreement between Evolent and UPMC, or the UPMC IP Agreement, and a technology license agreement with UPMC, or the UPMC Technology Agreement. Under the UPMC IP Agreement, certain of UPMC's proprietary analytics models and know-how are licensed to Evolent on a nonexclusive basis from UPMC; pursuant to the UPMC Technology Agreement, UPMC's proprietary technology platform, associated know-how and the Identifi® trademark are licensed to Evolent on an irrevocable, non-exclusive basis from UPMC; in each case, subject to certain ongoing territorial, time and use

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restrictions. Evolent's rights to use these technologies and know-how and employ the software claimed in the licensed technologies are subject to the continuation of and our compliance with the terms of those licenses. Our existing license agreements impose, and we expect that future license agreements will impose on us, various exclusivity obligations. If we fail to comply with our obligations under these agreements, the applicable licensor may have the right to terminate our license, in which case we may not be able to develop or commercialize the products or technologies covered by the license.

Disputes may arise between us and our licensors regarding intellectual property rights subject to a license agreement, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the scope of rights granted under the license agreement and other interpretation-related issues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the license agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our obligations with respect to the use of the licensed technology in relation to our services and technologies, and which activities satisfy those obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether our activities are in compliance with the restrictions placed upon our rights to use the licensed technology by our licensors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.

If disputes over intellectual property rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to obtain equivalent replacement licensing arrangements or to successfully develop and commercialize the affected products and technologies.

The risks described elsewhere pertaining to our intellectual property rights also apply to the intellectual property rights that we license, and any failure by us or our licensors to obtain, maintain and enforce these rights could have a material adverse effect on our business. In some cases, we do not have control over the prosecution, maintenance or enforcement of the intellectual property rights that we license, and may not have sufficient ability to consult and input into the prosecution and maintenance process with respect to such intellectual property, and our licensors may fail to take the steps we feel are necessary or desirable in order to obtain, maintain and enforce the licensed intellectual property rights and, as a result, our ability to retain our competitive advantage with respect to our products and technologies may be materially affected.

*Any restrictions on our use of, or ability to license, data, or our failure to license data and integrate third-party technologies, could have a material adverse effect on our business, financial condition and results of operations.*

We depend upon licenses from third parties for some of the technology and data used in our applications, and for some of the technology platforms upon which these applications are built and operate, including under the UPMC IP Agreement and the UPMC Technology Agreement. We expect that we may need to obtain additional licenses from third parties in the future in connection with the development of our products and services. In addition, we obtain a portion of the data that we use from government entities, public records and from our partners for specific partner engagements. We believe that we have all rights necessary to use the data that is incorporated into our products and services. However, we cannot assure you that our licenses for information will allow us to use that information for all potential or contemplated applications and products. In addition, certain of our products depend on maintaining our data and analytics platform, which is populated with data disclosed to us by our partners with their consent. If these partners revoke their consent for us to maintain, use, de-identify and share this data, consistent with applicable law, our data assets could be degraded.

In the future, data providers could withdraw their data from us or restrict our usage for any reason, including if there is a competitive reason to do so, if legislation is passed restricting the use of the data or if judicial interpretations are issued restricting use of the data that we currently use in our products and services. In addition, data providers could fail to adhere to our quality control standards in the future, causing us to incur additional expense to appropriately utilize the data. If a substantial number of data providers were to withdraw or restrict their data, or if they fail to adhere to our quality control standards, and if we are unable to identify and contract with suitable alternative data suppliers and integrate these data sources into our service offerings, our ability to provide products and services to our partners would be materially adversely impacted, which could have a material adverse effect on our business, financial condition and results of operations.

We also integrate into our proprietary applications and use third-party software to maintain and enhance, among other things, content generation and delivery, and to support our technology infrastructure. Some of this software is proprietary and some is open source software. These technologies may not be available to us in the future on commercially reasonable terms or at all and could be difficult to replace once integrated into our own proprietary applications. Most of these licenses can be renewed only by mutual consent and may be terminated if we breach the terms of the license and fail to cure the breach within a specified period of time. Our inability to obtain, maintain or comply with any of these licenses could delay development until equivalent technology can be identified, licensed and integrated, which would harm our business, financial condition and results of operations.

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Most of our third-party licenses are non-exclusive and our competitors may obtain the right to use any of the technology covered by these licenses to compete directly with us. Our use of third-party technologies exposes us to increased risks, including, but not limited to, risks associated with the integration of new technology into our solutions, the diversion of our resources from development of our own proprietary technology and our inability to generate revenue from licensed technology sufficient to offset associated acquisition and maintenance costs. In addition, if our data suppliers choose to discontinue support of the licensed technology in the future, we might not be able to modify or adapt our own solutions.

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

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

Our services are designed to operate without interruption in accordance with our service level commitments. However, we have experienced limited interruptions in these systems in the past, including server failures that temporarily slow down the performance of our services, and we may experience more significant interruptions in the future. We rely on internal systems as well as third-party suppliers, including bandwidth and telecommunications equipment providers, to provide our services. We do not maintain redundant systems or facilities for some of these services. Interruptions in these systems, whether due to system failures, computer viruses, physical or electronic break-ins or other catastrophic events, could affect the security or availability of our services and prevent or inhibit the ability of our partners to access our services. These systems may be at greater risk of interruption as a result of increased use of mobile and cloud technologies, including as a result of the shift to work-from-home arrangements as a result of the COVID-19 pandemic.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• damage from fire, power loss and other natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• telecommunications failures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• software and hardware errors, failures and crashes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• security breaches, computer viruses and similar disruptive problems; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other potential interruptions.

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

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

*We rely on third-party vendors to host and maintain our technology platform.*

We rely on third-party vendors to host and maintain our technology platform, including Identifi®. Our ability to offer our services and operate our business is therefore dependent on maintaining our relationships with third-party vendors and entering into new relationships to meet the changing needs of our business. Any deterioration in our relationships with such vendors or our failure to enter into agreements with vendors in the future could harm our business, results of operations and financial condition. Despite

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precautions taken at our vendors' facilities, the occurrence of a natural disaster, a decision to close the facilities without adequate notice or other unanticipated problems, including relating to the COVID-19 pandemic, could result in lengthy interruptions in our service. These service interruption events could cause our platform to be unavailable to our partners and impair our ability to deliver services and to manage our relationships with new and existing partners, which in turn could materially affect our results of operations.

If our vendors are unable or unwilling to provide the services necessary to support our business, or if our agreements with such vendors are terminated, our operations could be significantly disrupted. Certain vendor agreements may be unilaterally terminated by the licensor for convenience, and if such agreements are terminated, we may not be able to enter into similar relationships in the future on reasonable terms or at all. We may also incur substantial costs, delays and disruptions to our business in transitioning such services to ourselves or other third-party vendors. In addition, third-party vendors may not be able to provide the services required in order to meet the changing needs of our business.

**Risks relating to internal control over financial reporting** 

*If we identify material weaknesses in the future, we and our auditor may conclude that our internal control over financial reporting is not effective and we may be unable to produce timely and accurate financial statements, any of which could adversely impact our investors' confidence and our stock price.*

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Our efforts to design and implement an effective control environment may not be sufficient to identify or prevent future material weaknesses or significant deficiencies from occurring. Any newly identified material weakness could result in a misstatement of our financial statements or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected. A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system's objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and all instances of fraud will be detected. In addition, if we identify future material weaknesses in our internal controls over financial reporting or if we are unable to comply with the demands that are placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. We also could become subject to investigations by the NYSE, the SEC or other regulatory authorities.

In addition, our continuing growth and expansion in dispersed markets, such as our acquisitions of IPG during the third quarter of 2022, NIA in the first quarter of 2023, and other businesses we may acquire in the future, may place significant additional pressure on our system of internal control over financial reporting and require us to update our internal control over financial reporting to integrate such acquisitions.

**Risks relating to our structure** 

*We are required to pay certain of our pre-IPO investors for certain tax benefits we may claim in the future, and these amounts are expected to be material.*

Under an exchange agreement we entered into at the time of our IPO, in connection with our implementation of an "Up-C" structure (which was collapsed on December 26, 2019), we granted TPG, The Advisory Board and Ptolemy Capital (together, the "Investor Stockholders") an exchange right that allowed for receipt of newly-issued shares of the Company's Class A common stock in exchange (a "Class B Exchange") for an equal number of shares of the Company's Class B common stock (which were subsequently canceled) and an equal number of Evolent Health LLC's Class B common units. Class B common units received by the Company from relevant Investor Stockholders were simultaneously exchanged for an equivalent number of Class A common units of Evolent Health LLC, and Evolent Health LLC cancelled the Class B common units it received in the Class B Exchanges, resulting in an increase in the Company's economic interest in Evolent Health LLC.

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As of December 31, 2019, all of the Class B common units held by the Investor Stockholders and certain other stockholders had been exchanged (together with an equal number of shares) for our Class A common stock. These exchanges resulted in increases in the tax basis of our share of the assets of Evolent Health LLC that otherwise would not have been available to the Company. In addition, we expect that certain net operating losses ("NOLs") will be available to us as a result of the transactions as described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 15 - "Tax Receivables Agreement." These increases in tax basis and NOLs may reduce the amount of tax that we may otherwise be required to pay in the future, although the Internal Revenue Service ("IRS") may challenge all or a part of the tax basis increases and NOLs, and a court could sustain such a challenge.

We have entered into the TRA, related to the tax basis step-up of the assets of Evolent Health LLC and certain NOLs of the former members of Evolent Health LLC, with the Investor Stockholders and certain of our other investors (the "TRA Holders"). Pursuant to the TRA, we will pay the TRA Holders 85% of the amount of the cash savings, if any, in U.S. federal, state and local and non-U.S. income tax that we realize as a result of increases in tax basis resulting from exchanges of Class B common units for shares of our Class A common stock (calculated assuming that any post-IPO transfer of Class B common units (other than the exchanges) had not occurred) as well as certain other benefits attributable to payments under the TRA itself.

The TRA also requires us to pay 85% of the amount of the cash savings, if any, in U.S. federal, state and local and non-U.S. income tax that we realize as a result of the utilization of the NOLs of Evolent Health Holdings and an affiliate of TPG attributable to periods prior to our IPO and the deduction of any imputed interest attributable to our payment obligations under the TRA.

The payments that we make under the TRA could be substantial. Assuming no material changes in relevant tax law and based on our current operating plan and other assumptions, including the tax basis of our assets as of the date of the Offering Reorganization and the tax basis step-ups resulting from each completed exchange, we estimate that the total amount that we would be required to pay under the TRA could be approximately $113.1 million. This estimated amount includes approximately $18.1 million of potential future payments under the TRA related to the future utilization of the pre-IPO NOLs described above and approximately $95.0 million of potential future payments related to the tax basis step-up of the assets of Evolent Health LLC in connection with the exchanges that occurred in connection with our completed secondary offerings and private sales. The actual amount we will be required to pay under the TRA may be materially greater than these hypothetical amounts, as potential future payments will vary as a consequence of our tax position, the relevant tax basis analysis, our ability to generate sufficient future taxable income in order to be able to benefit from the aforementioned tax attributes, the character and timing of our taxable income and the income tax rates applicable at the time we realize cash savings attributable to our recognition and utilization of the aforementioned tax attributes. Payments under the TRA are not conditioned on our existing investors' continued ownership of any of our equity.

*We will not be reimbursed for any payments made under the TRA in the event that any tax benefits are disallowed.*

If the IRS successfully challenges the tax basis increases resulting from the Class B Exchanges or the existence or amount of the pre-IPO NOLs at any point in the future after payments are made under the TRA, we will not be reimbursed for any payments we had made under the TRA (although future payments under the TRA, if any, would be netted against any unreimbursed payments to reflect the result of any such successful challenge by the IRS). As a result, in certain circumstances, we could be required to make payments under the TRA in excess of our cash tax savings.

*We may not be able to realize all or a portion of the tax benefits that resulted from the exchanges of Class B common units for our Class A common stock or from the utilization of NOLs previously held by Evolent Health Holdings and an affiliate of TPG and from payments made under the TRA.*

*In certain cases, payments by us under the TRA may be accelerated or significantly exceed the tax benefits we realize in respect of the tax attributes subject to the TRA.*

The TRA provides that upon certain changes of control, or if, at any time, we elect an early termination of the TRA or are in material breach of our obligations under the TRA, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits to certain current or former shareholders. Such payment would be based on certain valuation assumptions and deemed events set forth in the TRA, including the assumption that we have sufficient taxable income to fully utilize

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such tax benefits. The benefits would be payable even though, in certain circumstances, no tax basis step-up deductions and no NOLs are actually used at the time of the accelerated payment under the TRA. Accordingly, payments under the TRA may be made years in advance of the actual realization, if any, of the anticipated future tax benefits and may be significantly greater than the benefits we realize in respect of the tax attributes subject to the TRA. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity. We may not be able to finance our obligations under the TRA and any indebtedness we incur may limit our subsidiaries' ability to make distributions to us to pay these obligations. In addition, our obligations under the TRA could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control that could be in the best interests of holders of our Class A common stock.

*The agreements between us and certain of our pre-IPO investors were made in the context of an affiliated relationship and may contain different terms than comparable agreements with unaffiliated third parties.*

The contractual agreements that we have with certain of our pre-IPO investors were negotiated in the context of an affiliated relationship in which representatives of such pre-IPO investors and their affiliates comprised a significant portion of our board of directors. As a result, the financial provisions, and the other terms of these agreements, such as covenants, contractual obligations on our part and on the part of such pre-IPO investors and termination and default provisions, may be less favorable to us than terms that we might have obtained in negotiations with unaffiliated third parties in similar circumstances, which could have a material adverse effect on our business, financial condition and results of operations.

**Risks Relating to Indebtedness and our Series A Preferred Stock**

*The conditional conversion feature of the 2025 Notes, if triggered, may adversely affect our financial condition and operating results.*

In October 2018, the Company issued $172.5 million aggregate principal amount of its 1.50% Convertible Senior Notes due 2025 (the

"2025 Notes"). In the event the conditional conversion feature of the 2025 Notes is triggered, holders of such notes will be entitled to convert such notes at any time during specified periods at their option. If one or more holders elect to convert their 2025 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2025 Notes, as applicable, as a current rather than long-term liability, which would result in a material reduction of our net working capital.

*We are exposed to interest rate risk under the Credit Agreement and the terms of our Series A Preferred Stock, which could cause the Company's debt service obligations to increase significantly.*

We are exposed to market risk from changes in interest rates. Interest under all Credit Facilities under our Credit Agreement (including the Acquisition Facilities) and under the terms of our Series A Preferred Stock is based on the Secured Overnight Funding Rate ("SOFR"), a floating rate, subject to a minimum rate. The Federal Reserve has raised, and may in the future further raise, interest rates to combat the effects of recent high inflation. Any further increase in the SOFR will increase the Company's debt service obligations, which could have a negative impact on the Company's cash flow, financial position or operating results, including cash available for servicing the Company's indebtedness, or result in increased borrowing costs in the future.

*Our debt following the NIA acquisition is significant and could adversely affect our business and our ability to meet our obligations.*

We have $421.8 million of principal amount of indebtedness outstanding as of December 31, 2022. In connection with the NIA acquisition, we borrowed an additional $25.0 million under the Priority ABL Incremental Facility and $240.0 million under the Initial Term Loan Incremental Facility. In addition, we sold 175,000 shares of our Series A Preferred Stock for $960.00 per share, resulting in gross proceeds of $168.0 million in connection with the closing of the NIA acquisition. The proceeds from the sale of the Series A Preferred Stock were used, together with the proceeds from the Priority ABL Incremental Facility and Initial Term Loan Incremental Facility, to finance the cash consideration payable upon the closing of the NIA acquisition and pay transaction fees and expenses.

This significant amount of debt and other cash needs could have important consequences to us, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• requiring a substantial portion of our cash flow from operations to make payments on this debt, thereby limiting the cash we have available to fund future growth opportunities, such as capital expenditures and acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictive covenants in our debt arrangements and the arrangements governing our Series A Preferred Stock, which could limit our operations and borrowing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk of a future credit ratings downgrade of our debt, increasing future debt costs and limiting the future availability of debt financing;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing our vulnerability to general adverse economic and industry conditions and limiting our flexibility in planning for, or reacting to, changes in our business and industry, due to the need to use our cash to service our outstanding debt and Series A Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• placing us at a competitive disadvantage relative to our competitors that are not as highly leveraged and that may therefore be more able to invest in their business or use their available cash to pursue other opportunities, including acquisitions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise.

In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to repay all of our outstanding debt as it becomes due and satisfy obligations with respect to our Series A Preferred Stock, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt or Series A Preferred Stock.

*Servicing our debt and paying dividends on our Series A Preferred Stock requires a significant amount of cash, and we may not have sufficient cash flow from our business to service our debt and make necessary capital expenditures.*

Our ability to make scheduled payments of the principal of, to pay interest or dividends on or to refinance our indebtedness or our Series A Preferred Stock depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive to our stockholders. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our obligations and have a material adverse effect on our results of operations and financial condition.

Restrictive covenants in our Credit Agreement and in the Investors Rights Agreement we entered into in connection with the closing of the NIA acquisition, on January 20, 2023, with the Purchasers named in Schedule I thereto (the "Investors Rights Agreement") may interfere with our ability to access the revolving credit facility under the Credit Agreement, or to obtain new financing or to engage in other business activities.

Our Credit Agreement and the Investors Rights Agreement impose significant operating and financial restrictions on us. These restrictions limit our ability and/or the ability of certain of our subsidiaries to, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur or guarantee additional debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur certain liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• merge or consolidate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transfer or sell assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make certain investments;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates.

In addition, pursuant to our Credit Agreement and Investors Rights Agreement, we are required to comply with certain financial covenants consisting of a minimum liquidity test, and a total secured leverage test. As a result of these restrictions, we will be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that the Company will be able to maintain compliance with these covenants in the future and, if it fails to do so, that it will be able to obtain waivers from the lenders and/or amend the covenants. The Company's failure to comply with the restrictive covenants described above as well as the terms of any future indebtedness could result in an event of default, which, if not cured or waived, could result in it being required to repay these borrowings before their due date and the lenders would be entitled to foreclose on collateral. If the Company is forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected. In addition, we may be unable to access future borrowings under our revolving facility if we are unable to satisfy the applicable conditions precedent.

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**Risks relating to ownership of our Class A common stock**

*We expect that our stock price will be volatile and may fluctuate or decline significantly.*

The trading price of our Class A common stock has been and may continue to be volatile and subject to wide price fluctuations in response to various factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• economic and political conditions or events;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market conditions in the broader stock market in general, or in our industry in particular, including as a result of COVID-19 related impacts , inflationary pressures, and an uncertain macroeconomic environment due in part to the conflict between Russia and Ukraine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated fluctuations in our quarterly financial reports and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to satisfy our ongoing capital needs and unanticipated cash requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• indebtedness incurred in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• introduction of new products and services by us or our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• business developments of our partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuance of new or changed securities analysts' reports or recommendations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of large blocks of our stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additions or departures of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory developments; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• litigation and governmental investigations.

These and other factors may cause the market price and demand for our Class A common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of Class A common stock, including any shares of Class A common stock they receive upon conversion of our convertible notes, and may otherwise negatively affect the liquidity of our Class A common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. We are, and from time to time may become, subject to such litigation, and we could incur substantial costs defending a lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.

The trading market for our Class A common stock will also be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us downgrades our stock, or if our results of operations do not meet their expectations, our stock price could decline.

*Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our Class A common stock, which could adversely affect our liquidity and financial condition, and could in the future substantially dilute the ownership interest of holders of our Class A common stock.* 

In connection with the consummation of the NIA acquisition, we issued 175,000 shares of Series A Preferred Stock to Ares (through one or more of its funds and managed accounts).

The Series A Preferred Stock ranks senior to the Company's Class A common stock and all future series of the Company's preferred stock with respect to dividends and distributions on liquidation. Regular dividends on the Series A Preferred Stock will be paid quarterly in cash in arrears at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designation) plus 6.00%. The liquidation preference of the Series A Preferred Stock will increase on the last day of each calendar quarter by the amount of any accrued and unpaid regular dividends that have not been paid in cash on the relevant dividend payment date. The regular dividend rate will also increase by 2.00% per annum upon the occurrence and during the continuance of certain triggering events, including a breach of the protective covenants contained in the Investors Rights Agreement or the Company's failure to pay any regular dividends in cash. Holders of Series A Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Class A Common Stock on an as-converted basis.

Under various circumstances defined in the Certificate of Designation, (a) holders of shares of the Series A Preferred Stock may be entitled to convert such shares into shares of our Class A common stock, or (b) we may require all holders of such shares to convert such shares to shares of our Class A common stock. In addition, upon the occurrence of a refinancing or replacement of the entirety of the indebtedness under the Credit Agreement prior to its maturity that is provided solely by lenders who are not affiliates or approved funds of Ares Capital Management LLC, we will be required to redeem all shares of Series A Preferred Stock then outstanding for cash at a redemption price per share equal to 165.00% of the then-current liquidation preference of the Series A Preferred Stock, plus all accrued and unpaid dividends on the Series A Preferred Stock being redeemed, plus, solely in the event such refinancing or replacement is consummated prior to January 20, 2025, the aggregate amount of regular dividends per share which would have otherwise been payable on the Series A Preferred Stock from the date of redemption until January 20, 2025. If the Company undergoes a Change of Control (as defined in the Credit Agreement), the Company will be required to redeem all shares of Series A Preferred Stock then outstanding for cash at a price per share equal to the greater of (x) 150.00% of the then-current liquidation

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preference per share of the Series A Preferred Stock, if such redemption occurs prior to January 20, 2025, and 135.00% of the then-current liquidation preference per share of the Series A Preferred Stock, if such redemption occurs on or after January 20, 2025, and (y) the value of the Class A Common Stock issuable upon conversion of a share of Series A Preferred Stock, which value shall be determined based on the value attributed to the Class A Common Stock in connection with such Change of Control.

The share repurchase obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of Series A Preferred Stock could also limit our ability to obtain additional financing and increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of Series A Preferred Stock and holders of shares of our Class A common stock. Any conversion of Series A Preferred Stock into Class A common stock would dilute the ownership interest of existing holders of our Class A common stock, and any sales in the public market of the Class A common stock issuable upon such conversion could adversely affect prevailing market prices of our Class A common stock.

*The market price of our Class A common stock could decline due to the large number of shares of Class A common stock issuable upon conversion of our convertible notes or the Series A Preferred Stock, or by sales or issuances of substantial amounts of our Class A common stock.*

The market price of our Class A common stock could decline as a result of sales of a large number of the shares of our Class A common stock issuable upon the conversion of our convertible notes or the Series A Preferred Stock, or the perception that such conversions and sales could occur. These sales, or the possibility that these sales may occur, may also make it more difficult for us to raise additional capital by selling equity or equity-linked securities in the future, at a time and price that we deem appropriate. As of February 16, 2023, 111,052,414 shares of our Class A common stock were outstanding. Up to a maximum of 13.3 million shares of our Class A common stock is reserved for issuance upon the conversion of our convertible notes and 4,375,000 million shares are reserved for issuance upon the conversion of our Series A Preferred Stock. Similarly, sales or issuances of substantial amounts of our Class A common stock in the public market by us or by our stockholders into the public market could cause the market price of our Class A common stock to decrease significantly. We issued 8,474,576 shares of our Class A common stock to Centene in connection with the closing of the NIA acquisition. Such shares are subject to lock-up obligations, subject to certain exceptions, for a fifteen-month period following the closing; provided, that Magellan Health, Inc. will be permitted to sell one-third of such shares following the nine-month anniversary of the closing of the NIA acquisition and an additional one-third of such shares following the twelve-month anniversary of the closing of the NIA acquisition. In addition, we agreed to provide Magellan Health, Inc. with registration rights. See the risk factor captioned "We have made and entered, and may in the future make and enter into acquisitions, investments, alliances and joint ventures, which may be difficult to integrate, divert management resources, result in unanticipated costs or dilute our stockholders."

*Some provisions of Delaware law, our second amended and restated certificate of incorporation, as amended and our third amended and restated by-laws and certain of our contracts may deter third parties from acquiring us.*

Among other things, our second amended and restated certificate of incorporation, as amended, and our third amended and restated by-laws:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibit stockholder action by written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that special meetings of the stockholders may be called only by or at the direction of the board of directors, the chairman of our board or the chief executive officer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require advance notice to be given by stockholders for any stockholder proposals or director nominees.

In addition, Section 203 of the DGCL may affect the ability of an "interested stockholder" to engage in certain business combinations, for a period of three years following the time that the stockholder becomes an "interested stockholder." We have elected in our second amended and restated certificate of incorporation, as amended, not to be subject to Section 203 of the DGCL. Nevertheless, our second amended and restated certificate of incorporation, as amended, contains provisions that have the same effect as Section 203 of the DGCL, except that they provide that each of TPG, UPMC and The Advisory Board and their transferees will not be deemed to be "interested stockholders," and accordingly are not subject to such restrictions.

These and other provisions could have the effect of discouraging, delaying or preventing a transaction involving a change in control of our company or could make it more difficult for stockholders to elect directors of their choosing or to cause us to take other corporate actions that they desire. Provisions in certain of our contracts may also deter third parties from acquiring us. In addition, certain partners would have the right to terminate if we are acquired by certain competitors.

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*Our second amended and restated certificate of incorporation, as amended, and stockholders' agreement contain provisions renouncing our interest and expectation to participate in certain corporate opportunities identified by or presented to certain of our pre-IPO investors.*

UPMC and its affiliates may engage in activities similar to ours or lines of business or have an interest in the same areas of corporate opportunities as we do. Our second amended and restated certificate of incorporation, as amended, and stockholders' agreement provide that UPMC and its affiliates do not have any duty to refrain from (1) engaging, directly or indirectly, in the same or similar business activities or lines of business as us, including those business activities or lines of business deemed to be competing with us, or (2) doing business with any of our clients, customers or vendors. In the event that UPMC or any of its affiliates acquires knowledge of a potential business opportunity which may be a corporate opportunity for us, they have no duty to communicate or offer such corporate opportunity to us. Our second amended and restated certificate of incorporation, as amended, and stockholders' agreement also provide that, to the fullest extent permitted by law, UPMC and its affiliates will not be liable to us for breach of any fiduciary duty or otherwise, by reason of directing such corporate opportunity to another person, or otherwise not communicating information regarding such corporate opportunity to us, and we have waived and renounced any claim that such business opportunity constituted a corporate opportunity that should have been presented to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive business opportunities are allocated by UPMC to itself or its affiliates instead of to us.

*Our second amended and restated certificate of incorporation, as amended, designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.*

Our second amended and restated certificate of incorporation, as amended, provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (c) any action asserting a claim against us arising pursuant to any provision of the DGCL, our second amended and restated certificate of incorporation, as amended, or our third amended and restated by-laws, (d) any action to interpret, apply, enforce or determine the validity of our second amended and restated certificate of incorporation, as amended, or third amended and restated by-laws or (e) any other action asserting a claim against us that is governed by the internal affairs doctrine. We refer to each of these proceedings as a covered proceeding. In addition, our second amended and restated certificate of incorporation, as amended, provides that if any action the subject matter of which is a covered proceeding is filed in a court other than the specified Delaware courts without the approval of our board of directors, which we refer to as a foreign action, the claiming party will be deemed to have consented to (1) the personal jurisdiction of the specified Delaware courts in connection with any action brought in any such courts to enforce the exclusive forum provision described above and (2) having service of process made upon such claiming party in any such enforcement action by service upon such claiming party's counsel in the foreign action as agent for such claiming party. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to these provisions. These provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our second amended and restated certificate of incorporation, as amended, inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

*We do not anticipate paying any cash dividends on our Class A common stock in the foreseeable future.*

We currently intend to retain our future earnings, if any, for the foreseeable future to fund the development and growth of our business. We do not intend to pay any dividends to holders of our Class A common stock. As a result, capital appreciation in the price of our Class A common stock, if any, will be your only source of gain on an investment in our Class A common stock. See "Part II - Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividends" for a discussion of our dividend policy.

**Item 1B. Unresolved Staff Comments**

Not applicable.

**Item 2. Properties**

Our corporate headquarters and executive officers are located in Arlington, Virginia, where we occupy approximately 34,000 square feet of office space. We also lease offices throughout the United States, and in Pune, India and Manila, Philippines. We lease all of our facilities and we do not own any real property. As provided in "Part II – Item 8. Financial Statements and Supplementary Data - Note

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12 - Leases," the total rental expense on operating leases, net of sublease income, was $14.6 million for the year ended December 31, 2022.

**Item 3. Legal Proceedings**

The discussion of legal proceedings included within "Part II – Item 8. Financial Statements and Supplementary Data - Note 11 - Commitments and Contingencies - Litigation Matters" is incorporated by reference into this Item 1.

**Item 4. Mine Safety Disclosures**

Not applicable.

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**PART II**

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

**Market and Dividend Information**

*Market Information*

Our Class A common stock is traded on the New York Stock Exchange under the symbol "EVH."

*Holders*

As of February 16, 2023, there were 93 holders of record of our Class A common stock. The number of record holders does not include individuals or entities who beneficially own shares and whose shares are held of record by a broker, bank, or other nominee, but does include each such broker, bank, or other nominee as one record holder.

*Dividends*

We have not declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends on our Class A common stock for the foreseeable future. The timing and amount of future cash dividends on our Class A common stock, if any, is periodically evaluated by our board of directors and would depend on, among other factors, our current and expected earnings, financial condition, projected cash flows and anticipated financing needs.

*Performance Graph*

The following graph compares the cumulative total stockholder return on our Class A common stock for the 5 years ended December 31, 2022, to the cumulative total returns of the NASDAQ Health Care Index and the NYSE Composite Index over the same period. This graph assumes an investment of $100 at the closing price of the markets on December 31, 2017, in our Class A common stock, the NASDAQ Health Care Index and the NYSE Composite Index, and assumes the reinvestment of dividends, if any.

The comparisons shown in the following graph are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our Class A common stock.

![evh-20221231_g1.jpg](evh-20221231_g1.jpg)

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***Recent Sales of Unregistered Securities, Purchases of Equity Securities by the Issuer or Affiliated Purchases or Other Stockholder Matters***

None.

**Item 6. Reserved**

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Company's financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to consolidated financial statements presented in "Part II – Item 8. Financial Statements and Supplementary Data" as well as "Part I - Item 1A. Risk Factors."

**INTRODUCTION**

***Business Overview***

We are a market leader in the new era of value-based care, in which the delivery of health care is increasingly funded by at-risk payment models. We provide integrated solutions to both health care providers, including independent physicians and health systems, as well as payers, including health plans and other risk-bearing organizations, with a common end: to improve health care quality and outcomes while reducing cost. We consider value-based care to be the necessary convergence of health care payment and delivery. We believe the pace of this convergence is accelerating, driven by price pressure in traditional FFS health care, a market environment that is incentivizing value-based care models, growth in consumer-focused insurance programs, such as Medicare Advantage and managed Medicaid, and innovation in data and technology.

We were an early innovator in value-based care, founded in 2011 by members of our management team, UPMC, an integrated delivery system based in Pittsburgh, Pennsylvania, and The Advisory Board Company.

We currently manage our operations and allocate resources across two reportable segments: EHS and Clinical Solutions. The Company's EHS segment provides an integrated administrative and clinical platform for health plan administration and value-based business infrastructure. Our Clinical Solutions segment addresses a broad spectrum of clinical needs, with tailored solutions for specialty care management in oncology and cardiology and increasingly the musculoskeletal markets and holistic total cost of care improvement. Our economic opportunity in the Clinical Solutions segment, which we believe to be significant, is largely based on (a) the total amount of medical expenses under management, and (b) the amount of savings we are able to generate relative to a benchmark or target. These partnerships, which we refer to as performance-based arrangements, include both capitation and shared savings arrangements. We also generate Clinical Solutions revenue by providing our technology and services platform on a fee basis. We go to market for our specialty care management under the brand name New Century Health, and for our total cost of care solution under the brand name Evolent Care Partners.

During the first quarter of 2023, as a result of the operational success and growth within its Clinical Solutions segment including the acquisition of NIA, as well as BHG, a health plan operating partner of EHS, which accounted for 11.3% of the Company's short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable as of December 31, 2022, announced its plans to exit its IFP line of business for 2023 and thus negatively impacting the Company's future revenues from such partner, the Company is making organizational changes and business strategy decisions which necessitate re-evaluating its reportable segments, including potentially changing the number of reportable segments. The Company anticipates its focus in the future will be primarily on maximizing the market opportunity it believes it has in the management of complex specialty conditions, which constituted approximately 70% percent of corporate revenue for the year ended December 31, 2022, prior to the acquisition of NIA which will increase this proportion further.

All of our revenue is recognized in the United States and substantially all of our long-lived assets are located in the United States.

**Recent Events**

**Impact of Inflation**

We experience pricing pressures in the form of competitive prices in addition to rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits and facility leases. We do not believe these impacts were material to our revenues or net income during the year ended December 31, 2022. However, significant sustained inflation driven by the macroeconomic environment or other factors could negatively impact our margins, profitability and results of operations in future periods.

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**Customers**

The following table summarizes those partners who represented at least 10.0% of our consolidated revenue:

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** <sup>(1)</sup> | **2020** <sup>(1)</sup> |
| Cook County Health and Hospitals Systems | 22.4% | 28.0% | 22.3% |
| Florida Blue Medicare, Inc. <sup>(2)</sup> | 11.5% | 14.1% | N/A |
| Passport <sup>(3)</sup> | \* | \* | 19.0% |

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<sup>(1)</sup> The denominator excludes $44.8 million and 117.4 million of True Health premium revenue reclassified to discontinued operations for the years ended December 31, 2021 and 2020, respectively.

<sup>(2)</sup> Customer added during the year ended December 31, 2021. Florida Blue Medicare, Inc. utilizes our specialty care management solutions provided by New Century Health.

<sup>(3)</sup> Represents revenues from EVH Passport/UHC through the Molina Closing. Subsequent to the Molina Closing on September 1, 2020, the Company has not received any material revenue from EVH Passport. However, as part of the Molina Closing, we entered into a new contract with Molina on similar terms to our prior services contract with EVH Passport through December 31, 2020 which accounted for approximately 9.7% of our consolidated revenues for the year ended December 31, 2020.

\* &nbsp;&nbsp;&nbsp;&nbsp;Represents less than 10.0% of the respective balance

As of December 31, 2022, our average contractual relationship with our operating partners was approximately 6.4 years, with an average of 1.3 years of performance remaining per contract.

In October 2022, BHG, an operating partner of the EHS segment, announced that it plans to exit its IFP line of business for 2023. As a result of this announcement, the Company performed a quantitative assessment of the goodwill impairment test for that specific reporting unit which showed that no goodwill impairment had occurred. Revenue from BHG comprised less than 10% of our consolidated revenue for the year ended December 31, 2022.

**Transactions**

The Company has undertaken several transactions, some of which may impact year-to-year comparisons. The following is a discussion of certain of those transactions.

*Acquisition of Vital Decisions*

On August 2, 2021, Evolent Health LLC and EV Thunder Merger Sub, LLC, each wholly owned subsidiaries of the Company, and the Company entered into a definitive agreement for the Company to acquire Vital Decisions. On October 1, 2021, we consummated the acquisition of Vital Decisions for $46.5 million in cash and the issuance of 1.8 million shares of Class A common stock. Vital Decisions reports into Evolent's specialty care management offering, New Century Health, and is consolidated into the Company's Clinical Solutions segment. The transaction closed on October 1, 2021.

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*Acquisition of IPG*

On August 1, 2022, the Company completed its acquisition of IPG, including 100% of the voting equity interests. IPG is a leader in providing surgical management solutions for musculoskeletal conditions. The transaction is expected to accelerate our strategy to become a leading provider of value-based specialty care solutions as well as diversify our revenue streams with a larger customer portfolio. The transaction is expected to deepen our capabilities, allowing us to cross-sell across customers and enhance our value proposition to partners.

Total acquisition consideration, net of cash on hand and certain closing adjustments, was $461.7 million, based on the closing price of the Company's Class A common stock on the NYSE on August 1, 2022. The acquisition consideration consisted of $256.5 million of cash consideration, 3.7 million shares of Class A common stock, fair valued at $130.2 million as of August 1, 2022, and an earn-out of up to $87.0 million, fair valued at $75.0 million as of August 1, 2022, which is payable in cash and/or shares of the Company's Class A Common Stock, at the Company's option. IPG will report into Evolent's specialty care management offering, New Century Health, and will be consolidated into the Company's Clinical Solutions segment. Refer to "Part II - Item 8. Financial Statements - Note 4" for additional discussion regarding the IPG transactions.

*Ares Secured Credit Facilities*

On August 1, 2022 (the "Closing Date"), the Company entered into a Credit Agreement, by and among the Company, Evolent Health LLC ("Evolent"), Endzone Merger Sub, Inc. ("Endzone" or "Initial Borrower"), which upon consummation of the transactions contemplated by the Merger Agreement was merged with and into TPG Growth Iceman Parent, Inc., Implantable Provider Group, Inc. ("Implantable", collectively with Evolent, Endzone and TPG Growth Iceman Parent, the "Borrowers" and each a "Borrower"), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, Ares Capital Corporation, as administrative agent, and ACF Finco I LP, as collateral agent and as revolver agent (the "2022 Credit Agreement"), pursuant to which the lenders agreed to extend credit to the Borrowers in the form of the (i) 2022 Initial Term Loan Facility, with an aggregate principal amount of $175.0 million and (ii) a revolving credit facility in the aggregate principal amount of up to $50.0 million, to be determined by reference to the lesser of $50.0 million and a borrowing base (the "Revolving Facility" and, together with the 2022 Initial Term Loan Facility, the "2022 Credit Facilities"), subject to the satisfaction of specified conditions. The Borrowers borrowed the loan under the 2022 Initial Term Loan Facility on August 1, 2022 (the "Initial Term Loan"), and also borrowed $50.0 million under the Revolving Facility on the Closing Date.

The interest rate for each loan under the 2022 Credit Facilities is calculated, at the option of the Borrowers, (a) in the case of the Term Loan, at either the Adjusted Term SOFR Rate (as defined in the 2022 Credit Agreement) plus 5.50%, or the base rate plus 4.50% and (b) in the case of a Revolving Loan, at either the Adjusted Term SOFR Rate plus 3.50%, or the base rate plus 2.50%. A commitment fee of (a) 2.00% of the aggregate amount of the commitments in respect of the Term Loan Facility as of the Closing Date and (b) 2.00% of the aggregate amount of the commitments in respect of the Revolving Facility was paid as of the Closing Date. Refer to "Part II - Item 8. Financial Statements - Note 10" for additional discussion regarding the 2022 Credit Facilities.

*2024 Notes Conversion*

On August 11, 2022, the Company entered into exchange agreements with certain holders of the 2024 Notes. Pursuant to the agreements, these holders exchanged $92.8 million in aggregate principal amount of such notes for shares of the Company's Class A common stock. On August 17 and 18, 2022, the Company consummated the exchanges and issued an aggregate of 5,394,165 shares of Class A common stock to the holders. The August 2022 exchanges of the 2024 Notes resulted in a $10.2 million loss on extinguishment/repayment of debt, net, on the consolidated statements of operations and comprehensive income (loss).

*Acquisition of NIA*

On November 17, 2022, Evolent Health LLC, a wholly owned subsidiary of the Company, and the Company entered into a definitive agreement for the Company to acquire NIA. On January 20, 2023, we consummated the acquisition of NIA for $400.0 million in cash, $265.0 million in debt financing provided by Ares Capital Corporation and the issuance of 8.5 million shares of Class A common stock. NIA reports into Evolent's specialty care management offering, New Century Health, and is consolidated into the Company's Clinical Solutions segment. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the NIA acquisition.

*Credit Agreement Amendment*

On January 20, 2023, in connection with the consummation of the acquisition of NIA, we entered into Amendment No. 1 to the Credit Agreement, dated as of August 1, 2022, that provided new secured debt financing in the form of (i) additional commitments under the Priority ABL Incremental Facility in an aggregate principal amount equal to $25.0 million, and (ii) additional commitments under the Company's Term Loan Incremental Facility in an aggregate principal amount equal to $240.0 million, and effected certain

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amendments to the Existing Credit Agreement. Concurrently with Amendment No. 1, EVH LLC borrowed $25.0 million under the Priority ABL Incremental Facility and $240.0 million under the Term Loan Incremental Facility to finance, together with the proceeds from the sale of the Series A Preferred Stock (as defined below), the cash consideration payable for the acquisition of NIA and pay transaction fees and expenses. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the amendment to the Credit Agreement.

*Series A Preferred Stock*

In connection with the consummation of the acquisition of NIA, on January 20, 2023, we entered into a Securities Purchase Agreement (Series A Convertible Preferred Shares) pursuant to which the Company offered and sold an aggregate 175,000 shares of Series A Preferred Stock, at a purchase price of $960.00 per share, resulting in total gross proceeds to us of $168.0 million. The proceeds from the offer and sale of the Series A Preferred Stock were used, together with the proceeds from the Priority ABL Incremental Facility and Term Loan Incremental Facility, to finance the cash consideration payable for the acquisition of NIA and pay transaction fees and expenses. Refer to "Part II - Item 8. Financial Statements - Note 25" for additional discussion regarding the sale of Series A Preferred Stock.

**Repositioning Plan**

We continually assess opportunities to improve operational effectiveness and efficiency to better align our expenses with revenues, while continuing to make investments in our solutions, systems and people that we believe are important to our long-term goals. Across 2020, we divested or agreed to divest a majority of our health plan assets, including the assets of EVH Passport, which represented a significant revenue stream for the Company. In parallel with these divestitures, we contracted with a third-party vendor to review our operating model and organizational design in order to improve our profitability, create value through our solutions and invest in strategic opportunities in future periods.

In the fourth quarter of 2020, we committed to certain operational efficiency and profitability actions that we are taking in order to accomplish these objectives ("Repositioning Plan"). These actions included making organizational changes across our business as well as other profitability initiatives expected to result in reductions in force, re-aligning of resources as well as other potential operational efficiency and cost-reduction initiatives that will provide future benefit to the Company. The Repositioning Plan concluded in the fourth quarter of 2021.

The following table provides a summary of our total costs associated with the Repositioning Plan for the years ended December 31, 2021 and 2020, by major type of cost (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **Cumulative Amount Incurred through December 31, 2021** |
| | **2021** | **2020** | **Cumulative Amount Incurred through December 31, 2021** |
| Severance and termination benefits | $185 | $— | $185 |
| Office space consolidation | 2742 |  | 2742 |
| Professional services | 4391 | 1275 | 5666 |
| &nbsp;&nbsp;Total | $7318 | $1275 | $8593 |

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***Critical Accounting Policies and Estimates***

We have identified the accounting policies below as critical to the understanding of our results of operations and our financial condition. In applying these critical accounting policies in preparing our financial statements, management must use critical assumptions, estimates and judgments concerning future results or other developments, including the likelihood, timing or amount of one or more future events. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our assumptions, estimates and judgments based upon historical experience and various other information that we believe to be reasonable under the circumstances. For a detailed discussion of other significant accounting policies, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 2."

*Goodwill*

We recognize the excess of the purchase price plus the fair value of any non-controlling interests in the acquiree over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level. The Company has three reporting units and our annual goodwill impairment review occurs during the fourth quarter of each

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year. We perform impairment tests between annual tests if an event occurs, or circumstances change, that we believe would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of a reporting unit is below its carrying amount. Qualitative factors include macroeconomic, industry and market considerations, overall financial performance, industry, legal and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we may perform a quantitative analysis to support the qualitative factors above by applying sensitivities to assumptions and inputs used in measuring a reporting unit's fair value.

If the Company determines that it is more likely than not that the fair value of a reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit's fair value and a charge is reported in goodwill impairment on our consolidated statements of operations and comprehensive income (loss). We use discounted cash flow analyses and market multiple analyses in order to estimate reporting unit fair values. Discounted cash flow analyses rely on significant judgement and assumptions about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates and operating margins. These assumptions are based on estimates of future revenue and earnings after considering such factors as general economic and market conditions which drive key assumptions of revenue growth rates, operating margins, capital expenditures and working capital requirements. The weighted average cost of capital is based on market-based factors/inputs but also considers the specific risk characteristics of the reporting unit's cash flow forecast. A significant change to these estimates and assumptions could cause the estimated fair values of our reporting units and intangible assets to decline and increase the risk of an impairment charge to earnings. Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

On October 31, 2022, the Company performed its annual goodwill impairment test for fiscal year 2022. As a result of BHG announcing its plan to exit its IFP line of business in 2023, thus negatively impacting the Company's future revenues from such partner, the Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for that specific reporting unit. In doing so, we estimated the fair value of the reporting unit by considering a discounted cash flow valuation approach ("income approach"). In determining the estimated fair value using the income approach, we projected future cash flows based on management's estimates and long-term plans and applied a discount rate based on the Company's weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions, cash flows and discount rates. The quantitative analysis of the EHS reporting unit showed that the fair value exceeded the carrying value. Contracts with our customers may be cancelled or renegotiated and future revenue growth is dependent on winning new contracts. Further, the impairment analysis is particularly sensitive to changes in the projected revenue growth rates and expenses and the discount rate. Changes in these key assumptions such as a significant unfavorable change to our forecasted cash flows due to being unsuccessful in winning certain contracts or certain of our contracts being cancelled or renegotiated by our customers, could result in a revision of management's estimates and could result in impairment charges in the future, which could be material to our results of operations. We will continue to monitor for such changes in facts or circumstances, which may be indicators of potential impairment triggers.

For the remaining reporting units, after assessing the totality of events and circumstances including the results of our previous valuations, no events occurred or circumstances changed during the period under consideration that would, more likely than not, reduce the fair value of any reporting unit below their carrying amount. Therefore, the Company concluded that the quantitative assessment was not required. For all reporting units, it was determined that as of October 31, 2022, no impairment of goodwill had occurred.

As of December 31, 2022, the Company assessed whether there were additional events or changes in circumstances since its annual goodwill impairment test that would indicate that it was more likely than not that the fair value of the reporting units was less than the reporting unit's carrying amounts that would require an interim impairment assessment after October 31, 2022. The Company determined there had been no such indicators, therefore, we did not perform an interim goodwill impairment assessment as of December 31, 2022.

*Revenue Recognition*

<u>Contracts with Multiple Performance Obligations</u>

Our contracts with customers may contain multiple performance obligations, primarily when the customer has requested both transformation services and platform and operations services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone

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selling price using the expected cost margin approach. This approach requires estimates regarding both the level of effort it will take to satisfy the performance obligation as well as fees that will be received under the variable pricing model. We also take into consideration customer demographics, current market conditions, the scope of services and our overall pricing strategy and objectives when determining the standalone selling price.

<u>Principal vs Agent</u>

We use third parties to assist in satisfying our performance obligations. In order to determine whether we are the principal or agent in the arrangement, we review each third-party relationship on a contract-by-contract basis. We are an agent when our role is to arrange for another entity to provide the services to the customer. In these instances, we do not control the service before it is provided and recognize revenue on a net basis. We are the principal when we control the good or service prior to transferring control to the customer. We recognize revenue on a gross basis when we are the principal in the arrangement.

*Income Taxes*

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We estimate our actual current tax expense, including permanent charges and benefits, and temporary differences resulting from differing treatment of items, such as deferred revenue for tax and book accounting purposes. These temporary differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income by considering both positive and negative evidence relating to their recoverability. If we believe that it is more likely than not that these deferred tax assets will not be recovered, we establish a valuation allowance. To the extent that we increase a valuation allowance in a period, we include an expense in the consolidated statement of operations in the period in which such determination is made.

In assessing the need for a valuation allowance, we considered all available evidence, including recent operating results, projections of future taxable income, our ability to utilize loss and credit carryforwards, and the feasibility of tax planning strategies. A significant piece of objective negative evidence evaluated for jurisdictions in a net deferred tax asset position was cumulative pre-tax losses over the three years ended December 31, 2022.

We account for uncertainty in income taxes by recognizing a tax position only when it is more likely than not that the tax position, based on its technical merits, will be sustained upon ultimate settlement with the applicable tax authority. The tax benefit to be recognized is the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the applicable tax authority that has full knowledge of all relevant information.

Our gross unrecognized benefits are $1.6 million as of December 31, 2022. Our evaluation of uncertain tax positions is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. If actual settlements differ from these estimates, or we adjust these estimates in future periods, we may need to recognize additional tax benefits or charges that could materially impact our financial position and results of operations.

*Reserve for Claims and Performance-based Arrangements*

Reserves for performance-based arrangements and claims reflect actual payments under performance-based arrangements and the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily composed of accruals for incentives and other amounts payable to health care professionals and facilities. The Company uses actuarial principles and assumptions that are consistently applied in each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.

The process of estimating reserves involves a considerable degree of judgment by the Company and, as of any given date, is inherently uncertain. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and adjustments are reflected in current results of operations in the period in which they are identified as experience develops or new information becomes known.

*Business Combinations*

Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of

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acquisition through the end of the reporting period. The Company allocates the fair value of purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Critical estimates used to value certain identifiable assets include, but are not limited to, expected long-term revenues, future expected operating expenses, cost of capital, and appropriate discount rates.

The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. Goodwill is assigned to the reporting unit that benefits from the synergies arising from the business combination. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's consolidated statements of operations and comprehensive income (loss).

For contingent consideration recorded as a liability, the Company initially measures the amount at fair value as of the acquisition date and adjusts the liability, if needed, to fair value each reporting period. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recognized as a change in fair value of contingent consideration and indemnification asset on the Company's consolidated statements of operations and comprehensive income (loss). Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred.

**Adoption of New Accounting Standards**

In August 2020, the FASB issued ASU 2020-06, *Accounting for Convertible Instruments and Contracts in an Entity's Own Equity*. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity. Specifically, the ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature and no longer permits the use of the treasury stock method from calculating earnings per share. As a result, after adopting the ASU's guidance, we will not separately present in equity an embedded conversion feature of such debt. Instead, we will account for a convertible debt instrument wholly as debt unless (i) a convertible instrument contains features that require bifurcation as a derivative or (ii) a convertible debt instrument was issued at a substantial premium. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity's own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity's own equity. The Company adopted the standard using a modified retrospective method as of January 1, 2022, with adjustments which reduced additional paid-in capital by $106.2 million and increased retained earnings by $39.8 million and increased the net carrying amount of the 2024 Notes and 2025 Notes by $25.1 million and $41.3 million.

**RESULTS OF OPERATIONS**

Evolent Health, Inc. is a holding company and its principal asset is all of the Class A common units in Evolent Health LLC, which has owned all of our operating assets and substantially all of our business since inception. The financial results of Evolent Health LLC are consolidated in the financial statements of Evolent Health, Inc.

**Key Components of our Results of Operations**

*Revenue*

We derive revenue primarily from platform and operations services.

Platform and Operations Services Revenue

Platform and operations services are typically multi-year arrangements with customers to provide various clinical and administrative solutions. In our Clinical Solutions segment, our solutions are designed to lower the medical expenses of our partners and include our total cost of care and specialty care management services. In our Evolent Health Services segment, our solutions are designed to provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers receiving primarily TPA services.

Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums.

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Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time.

In our Clinical Solutions segment, we enter into capitation arrangements that may include performance-based arrangements and/or gainshare features. We recognize capitation revenue on a gross basis when we have established control over the services within our scope and recognize capitation revenue on a net basis when we do not have control over the services within our scope.

Due to the nature of our arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue from platform and operations services over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate.

Contracts with Multiple Performance Obligations

Our contracts with customers may contain multiple performance obligations, primarily when the customer has requested both transformation services and platform and operations services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price using the expected cost margin approach. This approach requires estimates regarding both the level of effort it will take to satisfy the performance obligation as well as fees that will be received under the variable pricing model. We also take into consideration customer demographics, current market conditions, the scope of services and our overall pricing strategy and objectives when determining the standalone selling price.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

*Cost of Revenue (exclusive of depreciation and amortization)*

Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments and other health care expenditures through performance-based arrangements.

*Selling, General and Administrative Expenses*

Our selling, general and administrative expenses consist of employee-related expenses (including compensation, benefits and stock-based compensation) for selling and marketing, corporate development, finance, legal, human resources, corporate information technology, professional fees and other corporate expenses associated with these functional areas. Selling, general and administrative expenses also include costs associated with our centralized infrastructure and research and development activities to support our network development capabilities, claims processing services, including PBM administration, technology infrastructure, clinical program development and data analytics.

*Depreciation and Amortization Expense*

Depreciation and amortization expenses consist of the amortization of intangible assets associated with the step up in fair value of Evolent Health LLC's assets and liabilities for the Offering Reorganization, amortization of intangible assets recorded as part of our various business combinations and asset acquisitions and depreciation of property and equipment, including the amortization of capitalized software.

*Lives on Platform and PMPM Fees*

Clinical Solutions Lives on Platform in our Performance Suite are calculated by summing members covered for oncology specialty care services and members covered for cardiology specialty care services for contracts not under ASO arrangements. New Century Health Technology and Services Suite Lives on Platform are calculated by summing members covered for oncology specialty care services, members covered for cardiology specialty care services and members covered for advance care planning services for contracts under ASO arrangements. Members covered for more than one category are counted in each category. Clinical Solutions Cases are calculated by summing the number of individuals receiving services through our IPG and Vital Decisions programs in a given period.

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Clinical Solutions Performance Suite Average PMPM fee is defined as platform and operations services revenue pertaining to our Clinical Solutions Performance Suite during the period reported divided by the average of the beginning and ending Clinical Solutions Performance Suite Lives on Platform for the period divided by the number of months in the period. New Century Health Technology and Services Suite Average PMPM fee is defined as platform and operations revenue pertaining to the New Century Health Technology and Services Suite during the period reported divided by the average of the beginning and ending New Century Health Technology and Services Suite Lives on Platform for the period divided by the number of months in the period. Clinical Solutions Revenue per Case is calculated by the revenue pertaining to IPG and Vital Decisions divided by the number of cases for a given period.

Evolent Health Services average PMPM fee is defined as platform and operations revenue pertaining to the Evolent Health Services segment during the period reported divided by the average of the beginning and ending Evolent Health Services Lives on Platform for the period divided by the number of months in the period.

Management uses lives on platform, PMPM fees, cases and revenue per case because we believe that they provide insight into the unit economics of our services. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance.

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**Evolent Health, Inc. Consolidated Results**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| (in thousands, except percentages) | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **Change Over Prior Period** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **Change Over Prior Period** |
| (in thousands, except percentages) | **2022** | **2021** | $**%** | **2021** | **2020** | $**%** |
| **Revenue** | $1352013 | $907957 | 48.9% | $907957 | $924639 | (1.8)% |
| **Expenses** |  |  |  |  |  |  |
| Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 1035429 | 657551 | 57.5% | 657551 | 696581 | (5.6)% |
| Selling, general and administrative expenses | 269269 | 219499 | 22.7% | 219499 | 210412 | 4.3% |
| Depreciation and amortization expenses | 67195 | 60037 | 11.9% | 60037 | 60835 | (1.3)% |
| Loss on disposal of assets and consolidation |  |  | —% |  | 698 | (100.0)% |
| Goodwill impairment |  |  | —% |  | 215100 | (100.0)% |
| Change in fair value of contingent consideration | (23522) | 13281 | (277.1)% | 13281 | 3860 | 244.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 1348371 | 950368 | 41.9% | 950368 | 1187486 | (20.0)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | $3642 | $(42411) | 108.6% | $(42411) | $(262847) | 83.9% |
| Cost of revenue as a % of revenue | 76.6% | 72.4% |  | 72.4% | 75.3% |  |
| Selling, general and administrative expenses as a % of revenue | 19.9% | 24.2% |  | 24.2% | 22.8% |  |

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**Comparison of the Results for Years Ended December 31, 2022 to 2021** 

*Revenue*

Total revenue increased by $444.1 million, or 48.9%, to $1,352.0 million for the year ended December 31, 2022, as compared to 2021. This increase is primarily due to $79.3 million from our acquisitions of IPG and Vital Decisions and $364.8 million from the addition of new partners and expansion with existing partners.

The following table represents Evolent's revenue disaggregated by segment and end-market (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** |
| Medicaid | $238504 | $215236 | $320858 | $205833 |
| Medicare | 27092 | 26358 | 431321 | 380973 |
| Commercial and other | 141906 | 68219 | 192332 | 11338 |
| &nbsp;&nbsp;Total | $407502 | $309813 | $944511 | $598144 |

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Revenue from our Evolent Health Services segment increased by $97.7 million for the year ended December 31, 2022, as compared to 2021 due to growth with existing customers and new customer additions; one of these new customers has entered winddown as of January 1, 2023, and we do not expect future revenues from this customer to remain at these levels. Revenue from our Clinical Solutions segment increased by $346.4 million for the year ended December 31, 2022 as compared to 2021, primarily due to $79.3 million from our acquisitions of IPG and Vital Decisions, new partner additions, transition to risk based contracts with Medicaid customers and expansion into new markets within current New Century Health Technology and Services Suite partners.

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The following table represents the Company's lives on platform and cases as of December 31, 2022 and 2021 and PMPM fees and revenue per case for the years ended December 31, 2022 and 2021 (Lives on Platform in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Revenue** | **Revenue** | **Lives on Platform/ Cases during Period** | **Lives on Platform/ Cases during Period** | **Average PMPM Fees / Revenue per Case** | **Average PMPM Fees / Revenue per Case** |
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **December 31,** | **December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Evolent Health Services<sup>(1)</sup> | $408371 | $311627 | 2159 | 1586 | $17.74 | $14.91 |
| Clinical Solutions |  |  |  |  |  |  |
| &nbsp;&nbsp;Performance suite | 808067 | 550949 | 3312 | 1502 | 27.98 | 29.05 |
| &nbsp;&nbsp;New Century Health Technology and Services Suite | 52494 | 42501 | 15158 | 14574 | 0.29 | 0.34 |
| &nbsp;&nbsp;Cases | 83950 | 4694 | 39 | 4 | 1800.55 | 1063.95 |
| Intersegment eliminations attributable to EHS | (869) | (1814) | N/A | N/A | N/A | N/A |

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<sup>(1)</sup> Evolent Health Services revenue includes $9.7 million and $11.2 million of revenue from transformation services for the years ended December 31, 2022 and 2021, respectively.

*Cost of Revenue*

The following table provides a summary of our total cost of revenue by segment for the year ended December 31, 2022, as compared to 2021 (amounts in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** | **Corporate** | **Corporate** | **Total** | **Total** |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $232337 | $198190 | $800570 | $456912 | $2522 | $2449 | $1035429 | $657551 |

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Cost of revenue increased by $377.9 million, or 57.5%, to $1,035.4 million for the year ended December 31, 2022, as compared to 2021, principally as a result of the growth in our revenue. The increase included approximately $253.8 million from higher claims cost in our Clinical Solutions and Evolent Health Services segments from acquisitions and transition from ASO to risk based contracts for certain customers, $33.6 million of higher personnel costs due to increased headcount, employee benefits and bonus accruals for employees primarily in our Clinical Solutions segment, $22.1 million in higher professional fees primarily due to costs incurred for contracts that went live during the year and third-party service fees for existing customers, $40.9 million of surgical management costs at IPG and $12.3 million of severance costs primarily in our Evolent Health Services segment. Approximately $4.4 million and $2.3 million of total personnel costs in costs of revenue was attributable to stock-based compensation expense for the year ended December 31, 2022 and 2021, respectively. Cost of revenue represented 76.6% and 72.4% of total revenue for the year ended December 31, 2022 and 2021, respectively. Our cost of revenue increased as a percentage of our total revenue due to a change in the mix of our service offerings with the rapid growth of our Performance Suite products. We expect our cost of revenue to decrease as a percentage of total revenue over the longer-term subject to the composition of our growth.

*Selling, General and Administrative Expenses*

The following table provides a summary of our total selling, general and administrative by segment for the year ended December 31, 2022, as compared to 2021 (amounts in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** | **Corporate** | **Corporate** | **Total** | **Total** |
| &nbsp;&nbsp;Total | $94581 | $86480 | $63820 | $34696 | $110868 | $98323 | $269269 | $219499 |

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Selling, general, and administrative expenses increased by $49.8 million, or 22.7%, to $269.3 million for the year ended December 31, 2022, as compared to 2021, principally as a result of acquisitions in our Clinical Solutions segment and employee costs across all business units. The increase was primarily driven by higher personnel fees due to increased headcount and expected benefit accruals to employees of $33.1 million primarily in our Clinical Solutions segment, higher stock compensation of $15.2 million due to the achievement and change in projected achievement of certain performance measurements, technology services due to higher headcount

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of $9.1 million, $1.5 million of severance costs and acquisition costs of $7.5 million, offset, in part by lower professional fees from cost savings initiatives of $9.6 million and the termination of certain leases of $3.9 million. Approximately $29.6 million and $14.4 million of total personnel costs were attributable to stock-based compensation expense for the year ended December 31, 2022 and 2021, respectively. Acquisition and severance costs accounted for approximately $24.9 million and $4.4 million of total selling, general and administrative expenses for the year ended December 31, 2022 and 2021, respectively. Selling, general and administrative expenses represented 19.9% and 24.2% of total revenue for the year ended December 31, 2022, as compared to 2021, respectively. While our selling, general and administrative expenses are expected to grow as we integrate NIA operations, we expect them to decrease as a percentage of our total revenue over the long-term due to cost saving initiatives completed in the fourth quarter of 2021 and higher operating performance.

*Depreciation and Amortization Expenses*

Depreciation and amortization expenses increased $7.2 million, or 11.9%, to $67.2 million for the year ended December 31, 2022, as compared to 2021 due primarily to amortization of intangible assets acquired through our asset acquisitions and business combinations. We expect depreciation and amortization expenses to increase in future periods as we continue to capitalize internal-use software and amortize intangible assets resulting from asset acquisitions and business combinations.

*Change in Fair Value of Contingent Consideration*

We recorded a loss (gain) on change in fair value of contingent consideration of $(23.5) million for the year ended December 31, 2022, related to the liabilities acquired as a result of the acquisitions of Vital Decisions in October 2021, and IPG in August 2022, and $13.3 million for the twelve months ended December 31, 2021, related to liabilities acquired as a result of the acquisition of Vital Decisions in 2021.

**Comparison of the Results for the Year Ended December 31, 2021 to 2020** 

*Revenue*

Total revenue decreased by $16.7 million, or 1.8%, to $908.0 million for the year ended December 31, 2021, as compared to 2020.

The following table represents Evolent's revenue disaggregated by segment and end-market for the years ended December 31, 2021 and 2020 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** | **2021** | **2020** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** |
| Medicaid | $215236 | $236634 | $205833 | $274028 |
| Medicare | 26358 | 68505 | 380973 | 257092 |
| Commercial and other | 68219 | 77221 | 11338 | 11159 |
| &nbsp;&nbsp;Total | $309813 | $382360 | $598144 | $542279 |

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Revenue from our Evolent Health Services segment decreased by $72.5 million for the year ended December 31, 2021, as compared to 2020 due to the consolidation and runout of services for EVH Passport, partially offset by new partner additions. Revenue from our Clinical Solutions segment increased by $55.9 million for the year ended December 31, 2021 as compared to 2020 due to new partner additions including Florida Blue Medicare, Inc., as well as expansion into new markets within current New Century Health Technology and Services Suite partners.

The following table represents the Company's lives on platform and cases as of December 31, 2021 and 2020 and PMPM fees and revenue per case for the years ended December 31, 2021 and 2020 (Lives on Platform in thousands):

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---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Lives on Platform/ Cases during Period** | **Lives on Platform/ Cases during Period** | **Average PMPM Fees / Revenue per Case** | **Average PMPM Fees / Revenue per Case** |
| | **December 31,** | **December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** | **2021** | **2020** |
| Evolent Health Services | 1586 | 1898 | $14.91 | $17.63 |
| Clinical Solutions |  |  |  |  |
| &nbsp;&nbsp;Performance suite | 1502 | 1602 | 29.05 | 28.55 |
| &nbsp;&nbsp;New Century Health Technology and Services suite | 14574 | 6286 | 0.34 | 0.43 |
| &nbsp;&nbsp;Cases | 4 |  | 1063.95 |  |

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*Cost of Revenue*

The following table provides a summary of our total cost of revenue by segment for the year ended December 31, 2021, as compared to 2020 (amounts in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** | **2021** | **2020** | **2021** | **2020** | **2021** | **2020** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** | **Corporate** | **Corporate** | **Total** | **Total** |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $198190 | $216004 | $456912 | $474803 | $2449 | $5774 | $657551 | $696581 |

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Cost of revenue decreased by $39.0 million, or 5.6%, to $657.6 million for the year ended December 31, 2021, as compared to 2020. Cost of revenue decreased by approximately $23.2 million due to lower personnel costs, $8.4 million due to lower claims activity in our Clinical Solutions segment, $4.0 million in lower professional fees and $4.1 million in our technology services, TPA fees, brokerage fees and other costs. The principal driver of these decreases was the wind-down of EVH Passport relative to 2020. Cost of revenue for the year ended December 31, 2021 includes approximately $(0.5) million associated with the wind-down of EVH Passport, inclusive of a reduction in Passport's claims reserve. Approximately $2.3 million and $1.8 million of total personnel costs was attributable to stock-based compensation expense for the years ended December 31, 2021 and 2020, respectively. Cost of revenue represented 72.4% and 75.3% of total services revenue for the years ended December 31, 2021 and 2020, respectively. Our cost of revenue decreased as a percentage of our total services revenue due to a change in the mix of our service offerings towards higher gross margin services with divestiture of our health plans combined with our Repositioning Plan.

*Selling, General and Administrative Expenses*

The following table provides a summary of our total selling, general and administrative by segment for the year ended December 31, 2021, as compared to 2020 (amounts in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** | **2021** | **2020** | **2021** | **2020** | **2021** | **2020** |
| | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** | **Corporate** | **Corporate** | **Total** | **Total** |
| &nbsp;&nbsp;Total | $86480 | $81778 | $34696 | $24033 | $98323 | $104601 | $219499 | $210412 |

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Selling, general, and administrative expenses increased by $9.1 million, or 4.3%, to $219.5 million for the year ended December 31, 2021, as compared to 2020. Professional fees increased by $14.8 million for the year ended December 31, 2021, as compared to 2020, respectively, primarily due to the Repositioning Plan and shareholder advisory services. During the year ended December 31, 2021, personnel costs decreased by $1.3 million period over period due to a reduction in employee headcount, other expenses decreased by $2.8 million due to the termination of leases at EVH Passport during the third quarter of 2020 and legal fees decreased $2.1 million due to the timing and volume of transactions. Approximately $14.4 million and $12.8 million of total personnel costs were attributable to stock-based compensation expense for the year ended December 31, 2021 and 2020, respectively. Acquisition and severance costs accounted for approximately $4.4 million and $9.2 million of total selling, general and administrative expenses for the year ended December 31, 2021 and 2020, respectively. Selling, general and administrative expenses represented 24.2% and 22.8% of total revenue for the year ended December 31, 2021, as compared to 2020, respectively.

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*Depreciation and Amortization Expenses*

Depreciation and amortization expenses decreased $0.8 million, or 1.3%, to $60.0 million for the year ended December 31, 2021, as compared to 2020. The decrease was due primarily to lower amortization on existing technology intangibles of $3.9 million, offset, in part by, an increase in amortization expense for internal-use software of $2.6 million and customer relationships of $0.6 million.

*Loss (Gain) on Disposal of Assets and Consolidation*

During 2019, the Company, through a non-wholly owned consolidated subsidiary, entered into an agreement with an unrelated party to provide services and support to providers, independent physician associations, and other provider groups. During the year ended December 31, 2020, the Company sold its interest in the subsidiary and recorded a $6.4 million loss in loss (gain) on disposal of assets and consolidation on the consolidated statements of operations. The Company did not have any continuing involvement with the entity after the consummation of this transaction.

On September 1, 2020, EVH Passport and Molina consummated the Molina Closing, and the Passport Medicaid Contract was novated to Molina. As a result, the Company concluded that a reconsideration event occurred whereby EVH Passport was determined to be a voting interest entity and that Evolent had a controlling financial interest in EVH Passport; accordingly, the Company consolidated EVH Passport as of September 1, 2020 and recorded a $5.7 million bargain purchase gain in gain (loss) on disposal of assets and consolidation in its consolidated financial statements.

*Goodwill Impairment*

During the year ended December 31, 2020, we recorded a non-cash impairment charge of $215.1 million on our consolidated statements of operations as we determined that the implied fair value of goodwill of one of the two reporting units in the EHS segment was less than the carrying amount. See "Part II - Item 8. Financial Statements - Note 9" for further details of the impairment charge to goodwill.

*Change in Fair Value of Contingent Consideration and Indemnification Asset*

We recorded a gain on change in fair value of contingent consideration and indemnification asset of $13.3 million and $3.9 million for the year ended December 31, 2021 and 2020, respectively. This variance is the result of changes in the fair values of contingent liabilities incurred from entering into the warrant agreements compared to the liabilities acquired as a result of the acquisition of Vital Decisions in 2021.

**Discussion of Non-Operating Results**

*Interest Expense*

Our interest expense is primarily attributable to our 2021 Notes, 2024 Notes and 2025 Notes, as well as our 2022 and 2019 Credit Agreements with Ares Capital Corporation. We recorded interest expense (including amortization of deferred financing costs) of approximately $15.6 million, $25.4 million and $28.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. The decrease in interest expense during the year ended December 31, 2022, compared to 2021 is driven primarily by the adoption of ASU 2020-06 and partial conversion of the 2024 Notes offset, in part by interest expense incurred on our 2022 Credit Agreement. The decrease in interest expense during the year ended December 31, 2021, compared to 2020, is driven primarily by the termination of the Ares Credit Agreement in January 2021, offset, in part by, the issuance of the 2024 Notes in August 2020. We expect interest expense to increase during 2023 as a result of the Acquisition Facilities entered into in January 2023. However, we are focused on deleveraging the balance sheet in the long-term thereby decreasing interest expense. See "Part II - Item 8. Financial Statements - Note 10" in this Form 10-K for more information related to interest expense.

*Impairment of Equity Method Investments*

As of June 30, 2020, the Oklahoma Insurance Division ("OID") informed GlobalHealth, Inc. that in response to the COVID-19 pandemic, the OID required GlobalHealth, Inc. to increase its regulatory capital surplus by May 15, 2020. It would otherwise be placed into receivership if additional financing could not be secured. Certain investors agreed to provide liquidity as necessary to increase statutory capital reserves to no lower than 300%. In connection with the investment, GlobalHealth, Inc. transferred 100% of the equity interests in GlobalHealth, Inc. to the new investors for no consideration. Closing of this transaction occurred on May 13, 2020. As a result of this transaction, we have recorded a non-cash impairment charge of approximately $47.1 million, representing the total value of our investment, in impairment of equity method investments on the consolidated statements of operations for the year ended December 31, 2020.

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*Gain from Equity Method Investees*

The Company allocated its proportional share of the investees' earnings and losses each reporting period. The Company's proportional share of the gain from these investments was approximately $4.6 million, $13.2 million and $10.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The change in gain from equity method investees for the year ended December 31, 2022, compared to 2021 is driven primarily by the sale of our Florida equity investee's membership during the three months ended March 31, 2021. The change in gain from equity method investees for the year ended December 31, 2021, compared to 2020, is driven primarily by the Company's investment in Passport during 2020 combined with gains on the sale of our Florida equity investee's membership during 2021.

*Gain from Transfer of Membership*

During the year ended December 31, 2021, EVH Passport earned a cash payment from Molina in the amount of $46.0 million based on the number of enrollees above a certain threshold in the D-SNP Business and Molina's Medicaid plan following the open enrollment period for plan year 2021. 50% of the payment was received during the year ended December 31, 2021, and the remaining 50% was received in the first quarter of 2022.

*Loss on Extinguishment/Repayment of Debt*

On August 11, 2022, the Company entered into exchange agreements with certain holders of the 2024 Notes. Pursuant to the agreements, these holders exchanged $92.8 million in aggregate principal amount of such notes for shares of the Company's Class A common stock. On August 17 and 18, 2022, the Company consummated the exchanges and issued an aggregate of 5,394,165 shares of Class A common stock to the holders. The August 2022 exchanges of the 2024 Notes resulted in a $10.2 million loss on extinguishment/repayment of debt, net, on the consolidated statements of operations and comprehensive income (loss).

On January 8, 2021, the Company repaid all outstanding amounts owed under, and terminated, the 2019 Credit Agreement with Ares Capital Corporation. The total amount paid to Ares Capital Corporation under the 2019 Credit Agreement in connection with the prepayment was $98.6 million, which included $9.7 million for the make-whole premium as well as $0.2 million in accrued interest. As a result of this transaction, the Company recorded a loss on the repayment of debt of $19.2 million, representing the remaining unamortized debt issuance costs of $9.5 million, the make-whole premium and legal expenses.

In August 2020, as part of the issuance of the 2024 Notes, the Company issued $84.2 million aggregate principal amount of the 2024 Notes in exchange for $84.2 million aggregate principal of its 2021 Notes. These exchanges were accounted for as an extinguishment resulting in a net loss on extinguishment of debt of $4.8 million, including an aggregate cash payment to noteholders of $2.5 million, which is included in loss on extinguishment of debt, net on the consolidated statement of operations.

*Change in Tax Receivable Agreement Liability*

Due to the reduction in the valuation allowance resulting from deferred tax liabilities established as part of the IPG acquisition, the Company has recorded a partial TRA liability of $46.0 million as of December 31, 2022, which represents 85% of the deferred tax assets related to the Company's unrealized tax benefits on historical pre-IPO losses and tax basis increases from exchanges, offset with the related valuation allowance. As a result of the NIA acquisition, we expect to record a significant reduction to our valuation allowance paired with a significant increase in our TRA liability.

*Provision for (Benefit from) Income Taxes*

An income tax provision for (benefit from) of $(43.4) million, $0.5 million and $(2.4) million was recognized for the years ended December 31, 2022, 2021 and 2020, respectively, which resulted in effective tax rates of 69.9%, (1.6)% and 0.7%, respectively. The Company and its U.S. subsidiaries continue to record a valuation allowance against its net deferred tax assets, with the exception of indefinite lived components.

**REVIEW OF CONSOLIDATED FINANCIAL CONDITION**

**Liquidity and Capital Resources**

The Company reported operating gains (losses) of $3.6 million, $(42.4) million and $(262.8) million for the years ended December 31, 2022, 2021 and 2020, respectively. Net cash and restricted cash provided by (used in) operating activities was $(11.6) million, $38.7 million and $(16.2) million for the years ended December 31, 2022, 2021 and 2020, respectively.

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As of December 31, 2022, the Company had $188.2 million of cash and cash equivalents and $27.0 million in restricted cash and restricted investments.

We believe our current cash and cash equivalents will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities and the timing and extent of our spending to support our investment efforts and expansion into other markets. We may also seek to invest in, or acquire complementary businesses, applications or technologies, which may require us to seek sources of financing.

*Cash Flows*

The following summary of cash flows (in thousands) has been derived from our financial statements included in "Part II - Item 8. Financial Statements - Consolidated Statements of Cash Flows:"

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Net cash and restricted cash provided by (used in) operating activities | $(11553) | $38747 | $(16225) |
| Net cash and restricted cash provided by (used in) investing activities | (259115) | (15786) | 261072 |
| Net cash and restricted cash provided by (used in) financing activities | 131541 | (29548) | (11862) |

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Operating Activities

Cash flows used in operating activities of $11.6 million for the year ended December 31, 2022 were primarily due to our net loss of $19.2 million, non-cash items including depreciation and amortization expenses of $67.2 million, stock-based compensation expense of $34.0 million, deferred tax benefit of $(45.6) million, amortization of contract cost assets of $23.1 million, loss on extinguishment of debt of $10.2 million, change in fair value of contingent consideration of $(23.5) million and change in our tax receivable liability of $46.0 million. Our operating cash outflows were affected by the timing of our customer and vendor payments primarily driven by increases in accounts receivables from Cook County Health and Hospitals System of approximately $99.2 million, reduction of our accrued liabilities due to a decrease in expected IPG and Vital Decisions contingent consideration payments of $25.7 million and an increase in reserves for liabilities related to payments to providers and pharmacies under performance-based arrangements related to its total cost of care and specialty care management services of $28.4 million.

Cash flows from operating activities of $38.7 million for the year ended December 31, 2021 were primarily due to our net loss of $37.6 million, a loss on the repayment and termination of our Credit Agreement and 2021 Notes of $21.3 million, a gain on the disposal of assets of $6.8 million, gain on the transfer of memberships of $45.9 million, and non-cash items including depreciation and amortization expenses of $60.0 million, stock-based compensation expense of $16.7 million and change in fair value of contingent consideration and indemnification asset of $13.3 million. Our operating cash inflows were affected by the timing of our customer and vendor payments. In addition to these non-cash items, increases in accounts receivables and contract cost assets and reductions in reserves for claims and performance-based arrangements contributed and accrued liabilities approximately $28.9 million to our cash outflows. Those cash outflows were offset, in part by higher accounts payable and accrued compensation and employee benefits of approximately $10.8 million.

Cash flows used in operating activities of $16.2 million in the year ended December 31, 2020 were due primarily to our net loss of $334.2 million, partially offset by non-cash items, including an impairment of goodwill of $215.1 million, an impairment of an equity method investment of $47.1 million, depreciation and amortization expenses of $61.5 million, stock-based compensation expense of $14.6 million and a loss on the disposal of assets and consolidation of $0.7 million. Our operating cash inflows were affected by the timing of our customer and vendor payments. In addition to these non-cash items, increases in accounts receivables and contract cost assets and decreases in claims reserves contributed approximately $94.5 million to our cash outflows. Those cash outflows were partially offset by an increase in accounts payable, accrued expenses and accrued compensation and employee benefits contributed approximately $23.5 million.

Investing Activities

Cash flows used in investing activities of $259.1 million in the year ended December 31, 2022 were primarily attributable to $248.1 million paid for the acquisition of IPG, $9.2 million paid for a purchase price adjustment related to our disposal of True Health New Mexico and $38.4 million of investments in internal-use software and purchases of property and equipment, offset in part, by $31.0 million from the transfer of membership and release of Passport escrow and $5.6 million from returns from our equity method investments.

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Cash flows used in investing activities of $15.8 million in the year ended December 31, 2021 were primarily attributable to cash flows of $46.5 million for the acquisition of Vital Decisions and $25.0 million of investments in internal-use software and purchases of property and equipment offset, in part by, $43.0 million from the transfer of membership and release of Passport escrow and returns of investment on equity method investments of $14.2 million.

Cash flows from investing activities of $261.1 million in the year ended December 31, 2020 were primarily attributable to cash flows from the impact of the initial consolidation of EVH Passport of $159.8 million, maturities and sales of investments primarily held by EVH Passport of $143.4 million, offset, in part by investments in internal-use software and purchases of property and equipment of $29.5 million, disposal of non-strategic assets of $2.3 million and purchases of investments of $11.2 million.

Financing Activities

Cash flows provided by financing activities of $131.5 million in the year ended December 31, 2022, were primarily related to $219.7 million received from our 2022 Credit Agreement, offset in part, by $59.4 million of cash outflows related to claims processing services on behalf of partners and $18.3 million from taxes withheld for restricted stock unit vesting.

Cash flows used in financing activities of $29.5 million in the year ended December 31, 2021, were primarily related to the repayment and termination of our Credit Agreement and settlement of our outstanding warrant agreements with Ares Capital Corporation of $98.4 million, offset, in part, by a $61.2 million increase in net working capital balances held on behalf of our partners for claims processing services and a $13.3 million increase from cash proceeds from stock option exercises.

Cash flows used in financing activities of $11.9 million in the year ended December 31, 2020, were primarily related to a $20.0 million redemption of the Sponsors equity in EVH Passport in accordance with the terms of EVH Passport's Stockholders' Agreement as part of the EVH Passport wind-down and repurchase of our 2021 Notes of $16.6 million, $1.9 million of taxes withheld and paid for vests of restricted stock units and a $6.0 million decrease in working capital balances held on behalf of our partners for claims processing services offset, in part by $30.1 million from proceeds of convertible debt. The change in working capital balances held on behalf of partners for claims processing are pass-through amounts and can fluctuate materially from period to period depending on the timing of when the claims are processed.

*Cash flows from Discontinued Operations*

The consolidated statements of cash flows for all periods have not been adjusted to separately disclose cash flows related to discontinued operations. Cash flows related to the True Health business were as follows:

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** |
| Cash flows provided by operating activities | $5002 | $6852 |
| Cash flows (used in) provided by investing activities | (2494) | 2636 |

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*Contractual and Other Obligations*

We believe that the amount of cash and cash equivalents on hand and cash flows from operations will be adequate for us to execute our business strategy and meet anticipated requirements for lease obligations, capital expenditures working capital and debt service for 2023. Our estimated contractual obligations (in thousands) as of December 31, 2022, were as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2023** | **2024-2025** | **2026-2027** | **2028+** | **Total** |
| Operating leases for facilities<sup>(1)</sup>  | $11455 | $20687 | $17672 | $31692 | $81506 |
| Purchase obligations related to vendor contracts | 7621 | 2266 |  |  | 9887 |
| Convertible notes interest payments | 3437 | 6025 |  |  | 9462 |
| Convertible notes principal repayment |  | 196781 |  |  | 196781 |
| Contingent consideration<sup>(2)</sup> | 78000 |  |  |  | 78000 |
| &nbsp;&nbsp;&nbsp;Total contractual obligations | $100513 | $225759 | $17672 | $31692 | $375636 |

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<sup>(1)</sup> Operating leases for facilities includes $596 thousand and $76 thousand of leases not yet commenced for the 2023 and 2024-2025 time periods, respectively.

<sup>(2)</sup> Represents the fair value of earn-out consideration related to the IPG and Vital Decisions transactions. See "Part II - Item 8. Financial Statements - Note 4" for further details of the Company's contingent consideration obligations.

As of December 31, 2022, we had $175.0 million of aggregate principal amount in a secured term loan and $50.0 million of aggregate principal amount in a secured revolving credit facility, which were subsequently increased on January 20, 2023, through additional secured term loan borrowings of $240.0 million of aggregate principal amount and secured revolving credit facility of $25.0 million of aggregate principal amount entered into as part of the NIA acquisition. All loans under the Credit Agreement (including loans under the Acquisition Facilities and loans outstanding under the Existing Credit Agreement) (collectively, the "Loans") will mature in 2029. The interest rate for all Loans will be calculated, at the option of the borrowers, (a) in the case of a term loan, at either the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 6.00%, or the base rate plus 5.00% and (b) in the case of a revolving loan, at either the Adjusted Term SOFR Rate plus 4.00%, or the base rate plus 3.00%.

In connection with the Closing, on January 20, 2023, we entered into a Securities Purchase Agreement (Series A Convertible Preferred Shares) with the Purchasers listed on Schedule I thereto pursuant to which the Company offered and sold to the Purchasers an aggregate 175,000 shares of the Company's newly created Cumulative Series A Convertible Preferred Shares. Regular dividends on the Series A Preferred Stock will be paid quarterly in cash in arrears at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designations) plus 6.00%. The regular dividend rate will also increase by 2.0% per annum upon the occurrence and during the continuance of certain triggering events.

*Accounts Receivable, net*

Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. During the year ended December 31, 2022, accounts receivable, net, increased due primarily to the timing of cash receipts from Florida Blue Medicare, Inc. and Cook County Health and Hospital Systems combined with $34.2 million of receivables acquired as part of the IPG acquisition.

*Restricted Cash and Restricted Investments*

Restricted cash and restricted investments of $27.0 million is carried at cost and includes cash held on behalf of other entities for pharmacy and claims management services of $13.8 million, collateral for letters of credit required as security deposits for facility leases of $2.3 million, amounts held with financial institutions for risk-sharing arrangements of $10.9 million as of December 31, 2022. See "Part II - Item 8. Financial Statements - Note 2" for further details of the Company's restricted cash balances.

*Prepaid Expenses and Other Current Assets*

Prepaid expenses and other current assets are carried at cost and includes prepaid expenses and non-trade accounts receivable. During the year ended December 31, 2022, non-trade accounts receivable decreased $23.0 million primarily due to proceeds from the transfer of EVH Passport membership to Molina and $8.0 million of proceeds from other EVH Passport receivables.

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*Goodwill and Intangible Assets*

We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. As part of our acquisition of IPG in August 2022, we added $195.7 million of intangible assets and $296.6 million of goodwill. See "Part II - Item 8. Financial Statements - Note 4" for further details of the Company's restricted cash balances.

*Tax Receivable Agreement*

In connection with the Offering Reorganization, we entered into the TRA with the holders of Class B common units. The agreement requires us to pay to such holders 85% of the cash savings, if any, in U.S. federal, state and local, and foreign income tax (as applicable) we realize as a result of any deductions attributable to the increase in tax basis following the Class B Exchanges or deductions attributable to imputed interest or future increases in tax basis following payments made under the TRA. Additionally, pursuant to the same agreement we will pay the former stockholders of Evolent Health Holdings 85% of the amount of the cash savings, if any, in U.S. federal, state and local, and foreign income tax that we realize as a result of the utilization of the NOLs of Evolent Health Holdings (and the affiliate of TPG) attributable to periods prior to the Offering Reorganization, approximately $79.3 million, as well as deductions attributable to imputed interest on any payments made under the agreement. Payments under the TRA are due within 100 days of filing the Company's annual U.S. Federal income tax return. The Company has recorded a partial TRA liability of $46.0 million as of December 31, 2022. See "Part II - Item 8. Financial Statements - Note 15" for further details of the Company's TRA.

*Uses of Capital*

Our principal uses of cash are in the operation and expansion of our business, payment of interest on our convertible debt and secured borrowings and payment of preferred dividends. The Company does not anticipate paying a cash dividend on our Class A common stock in the foreseeable future.

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**Item 7A. Quantitative and Qualitative Disclosures About Market Risk**

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.

*Interest Rate Risk*

As of December 31, 2022, the Company had cash and cash equivalents and restricted cash and restricted investments of $215.2 million, which consisted of bank deposits with FDIC participating banks of $214.4 million and bank deposits in international banks of $0.8 million.

Changes in interest rates affect the interest earned on our cash and cash equivalents (including restricted cash). Our investments (including restricted investments) are classified as held-to-maturity and therefore are not subject to interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

As of December 31, 2022, we had $196.8 million of aggregate principal amount of convertible notes outstanding, which are fixed rate instruments and not subject to fluctuations in interest rates. In addition, as of December 31, 2022, we had $175.0 million of aggregate principal amount in a secured term loan and $50.0 million of aggregate principal amount in a secured revolving credit facility, which were subsequently increased through additional secured term loan borrowings of $240.0 million aggregate principal amount and secured revolving credit facility of $25.0 million of aggregate principal amount entered into as part of the NIA acquisition. Regular dividends on the Series A Preferred Stock will be paid quarterly in cash in arrears at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designations) plus 6.00%. The regular dividend rate will also increase by 2.0% per annum upon the occurrence and during the continuance of certain triggering events. All of our secured term loan and secured revolving credit facility and Series A Preferred Stock borrowings are floating rate instruments based on the SOFR and subject to fluctuations in interest rates. For every 1% increase in SOFR, the Company would record additional interest expense of $4.9 million per annum and preferred dividends of $1.8 million per annum.

Refer to the discussion in "Part II - Item 8. Financial Statements - Note 10" for additional information on our long-term debt.

*Foreign Currency Exchange Risk*

We have foreign currency risks related to our operating expenses denominated in currencies other than the U.S. dollar, primarily the Indian Rupee and the Philippino Peso. In general, we are a net payor of currencies other than the U.S. dollar. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may, in the future, negatively affect our operating results as expressed in U.S. dollars. At this time, we have not entered into, but in the future, we may enter into, derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the effect hedging activities would have on our results of operations. We recognized a foreign currency translation losses of $0.8 million, $84.0 thousand and $44.0 thousand for the years ended December 31, 2022, 2021 and 2020, respectively.

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**Item 8. Financial Statements and Supplementary Data**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

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| | |
|:---|:---|
| | **Page** |
| <u>[Report of Independent Registered Public Accounting Firm (PCAOB ID No.](#ie5cc4f785ce54597a137387a0d3f51e9_217)</u>34<u>[)](#ie5cc4f785ce54597a137387a0d3f51e9_217)</u> | <u>[68](#ie5cc4f785ce54597a137387a0d3f51e9_217)</u> |
| <u>[Consolidated Balance Sheets](#ie5cc4f785ce54597a137387a0d3f51e9_25)</u> | <u>[71](#ie5cc4f785ce54597a137387a0d3f51e9_25)</u> |
| <u>[Consolidated Statements of Operations and Comprehensive Income (Loss)](#ie5cc4f785ce54597a137387a0d3f51e9_28)</u> | <u>[72](#ie5cc4f785ce54597a137387a0d3f51e9_28)</u> |
| <u>[Consolidated Statements of Changes in Shareholders' Equity](#ie5cc4f785ce54597a137387a0d3f51e9_226)</u> | <u>[73](#ie5cc4f785ce54597a137387a0d3f51e9_226)</u> |
| <u>[Consolidated Statements of Cash Flows](#ie5cc4f785ce54597a137387a0d3f51e9_34)</u> | <u>[74](#ie5cc4f785ce54597a137387a0d3f51e9_34)</u> |
| <u>[Notes to Consolidated Financial Statements](#ie5cc4f785ce54597a137387a0d3f51e9_37)</u> | <u>[76](#ie5cc4f785ce54597a137387a0d3f51e9_37)</u> |

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the shareholders and the Board of Directors of Evolent Health, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Evolent Health, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Emphasis of Matter**

As discussed in Note 5 to the financial statements, the accompanying consolidated financial statements have been retrospectively adjusted for discontinued operations.

**Critical Audit Matter**

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

***<u>Reserve for Claims — Refer to Note 22 to the financial statements</u>***

*Critical Audit Matter Description*

The Company records reserves for the ultimate cost of claims that have been incurred but not reported (IBNR), including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable. The Company uses actuarial principles and assumptions that are consistently applied in each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. The liability is primarily calculated using completion factors developed by comparing the claim incurred date to the date claims were paid. Key assumptions include current payment experience, trend factors, and completion factors. Completion factors are impacted by several key items including changes in (1) electronic (auto-adjudication) versus manual claim processing, (2) provider claims submission rates, (3) membership, and (4) the mix of products. The Company uses historical completion factors combined with an analysis of current trends and operational factors to develop current estimates of completion factors. The Company estimates the liability for claims incurred in each month by applying the current

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estimates of completion factors to the current paid claims data. This approach implicitly assumes that historical completion rates will be a useful indicator for the current period.

For more recent months, and for newer lines of business where there is insufficient paid claims history to develop completion factors, the Company expects to rely more heavily on medical cost trend and expected loss ratio analysis that reflect expected claim payment patterns and other relevant operational considerations or authorization analysis. For each reporting period, the Company compares key assumptions used to establish the reserves for claims to actual experience. When actual experience differs from these assumptions, reserves for claims are adjusted through current period net income. Additionally, the Company evaluates expected future developments and emerging trends that may impact key assumptions. The process used to determine this liability requires the Company to make critical accounting estimates that involve considerable judgment, reflecting the variability inherent in forecasting future claim payments. These estimates are highly sensitive to changes in the Company's key assumptions, specifically completion factors and medical cost trends. The reserve for claims as of December 31, 2022, was $199.7 million.

We identified the IBNR reserve as a critical audit matter because the development of the IBNR reserve involves significant estimation by management. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to the reserve for claims included the following, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested the effectiveness of controls related to the reserve for claims, including management's controls over the development and reporting of the IBNR reserve.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested the underlying data that served as the basis for the actuarial analysis, including claims lag triangles and membership data, to test that the inputs to the actuarial estimate were complete and accurate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• With the assistance of our actuarial specialists, we evaluated the reasonableness of the actuarial methods and assumptions used by management to estimate the IBNR reserve by:

– Developing an independent estimate of the IBNR reserve and comparing our estimate to management's estimates.

– Comparing management's September 30, 2022 assumptions of expected development and ultimate cost of claims to actuals incurred during the fourth quarter of 2022 to identify potential bias in the determination of the reserve for claims.

***<u>Goodwill — Refer to Note 9 to the financial statements</u>***

*Critical Audit Matter Description*

The Company's evaluation of goodwill for impairment involves the comparison of the fair value of each of its reporting units to the respective carrying value for each of those reporting units at least annually. In addition to the annual impairment evaluation, the Company evaluates goodwill for impairment if an event occurs or circumstances change during the period that indicates that the fair value of a reporting unit may be below the carrying value. The Company performed its annual goodwill impairment assessment as of October 31, 2022.

The goodwill balance was $722.8 million as of December 30, 2022. Due to a health plan operating partner within the EHS segment announcing its plans to exit its Individual and Family Plans line of business, the Company performed a quantitative impairment evaluation of the goodwill in the EHS segment's reporting unit by comparing the estimated fair value of the reporting unit to its carrying value. Estimating the fair value of a reporting unit requires the exercise of significant judgment and assumptions including judgments about expected future cash flows, weighted-average cost of capital, discount rates and expected long-term growth rates. The impairment analysis is particularly sensitive to changes in the projected revenue growth rates and expenses and the discount rate. Changes in these key assumptions such as a significant unfavorable change to the Company's forecasted cash flows due to being unsuccessful in winning certain contracts or certain of the contracts being cancelled or renegotiated by its customers, could result in a revision of management's estimates and could result in impairment charges in the future, which could be material to the Company's results of operations.

We identified goodwill for the EHS segment's reporting unit as a critical audit matter due to the significant judgments made by management to estimate the fair value, the sensitivity of the assumptions used and the difference between its fair value and carrying value. Performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to the revenue growth rates, operating margins, the discount rates, and the implied control premium required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

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*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to management's assumptions for the revenue growth rates, operating margins, the discount rates, and the implied control premium for the Company's reporting unit in the EHS segment included the following, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We tested the effectiveness of controls over management's goodwill impairment evaluations, including controls over management's impairment assessment methodology and assumptions related to revenue growth rates, operating margins, selection of the discount rate, and the implied control premium.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated management's ability to accurately forecast future revenues and operating margins by comparing actual results to management's historical forecasts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the reasonableness of management's revenue and operating margin forecasts by comparing the forecasts to:

–Historical revenues and operating margins.

–Internal communications to management and the Board of Directors.

–Forecasted information included in analyst reports as well as certain publicly available peer company information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the impact of changes in management's forecasts from the October 31, 2022 annual measurement date to December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) discount rate, and (3) implied control premium by:

–Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

–Developing a range of independent estimates and comparing those to the discount rate selected by management and the implied control premium.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 24, 2023

We have served as the Company's auditor since 2019.

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**EVOLENT HEALTH, INC.**

**CONSOLIDATED BALANCE SHEETS**

(in thousands, except share data)

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $188200 | $266280 |
| &nbsp;&nbsp;&nbsp;Restricted cash and restricted investments | 14492 | 75685 |
| &nbsp;&nbsp;Accounts receivable, net <sup>(1)</sup> | 254684 | 130604 |
| &nbsp;&nbsp;Prepaid expenses and other current assets <sup>(1)</sup> | 20678 | 51391 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 478054 | 523960 |
| Restricted cash and restricted investments | 12466 | 12977 |
| Investments in equity method investees | 4475 | 5458 |
| Property and equipment, net | 87874 | 81365 |
| Right-of-use assets - operating | 49027 | 50203 |
| Prepaid expenses and other noncurrent assets <sup>(1)</sup> | 2378 | 6790 |
| Contract cost assets | 17461 | 32624 |
| Intangible assets, net | 442784 | 279784 |
| Goodwill | 722774 | 426297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $1817293 | $1419458 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **Liabilities** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable <sup>(1)</sup> | $57174 | $96084 |
| &nbsp;&nbsp;Accrued liabilities <sup>(1)</sup> | 111198 | 107241 |
| &nbsp;&nbsp;&nbsp;Operating lease liability - current | 7122 | 7069 |
| &nbsp;&nbsp;&nbsp;Accrued compensation and employee benefits | 52460 | 51861 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 5758 | 11944 |
| &nbsp;&nbsp;Reserve for claims and performance - based arrangements <sup>(1)</sup> | 199730 | 171294 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 433442 | 445493 |
| Long-term debt, net | 412986 | 215676 |
| Other long-term liabilities | 4744 | 5531 |
| Tax receivable agreement liability | 45950 |  |
| Operating lease liabilities - noncurrent | 56010 | 57722 |
| Deferred tax liabilities, net | 4744 | 1403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 957876 | 725825 |
| **Commitments and Contingencies (See Note 11)** |  |  |
| **Shareholders' Equity** |  |  |
| Class A common stock - $0.01 par value; 750,000,000 shares authorized; 101,500,558 and 90,758,318 shares issued, respectively | 1015 | 908 |
| Additional paid-in-capital | 1486857 | 1340989 |
| Accumulated other comprehensive loss | (1178) | (362) |
| Retained earnings (accumulated deficit) | (606154) | (626779) |
| Treasury stock, at cost; 1,537,582 shares issued, respectively | (21123) | (21123) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 859417 | 693633 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $1817293 | $1419458 |

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<sup>(1)</sup> See Note 19 for amounts attributable to related parties included in these line items.

See accompanying Notes to Consolidated Financial Statements

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**EVOLENT HEALTH, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)** 

(in thousands, except per share data)

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Revenue**<sup>(1)</sup> | $1352013 | $907957 | $924639 |
| **Expenses** |  |  |  |
| Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) <sup>(1)</sup> | 1035429 | 657551 | 696581 |
| Selling, general and administrative expenses <sup>(1)</sup> | 269269 | 219499 | 210412 |
| Depreciation and amortization expenses | 67195 | 60037 | 60835 |
| Loss on disposal of assets and consolidation |  |  | 698 |
| Goodwill impairment |  |  | 215100 |
| Change in fair value of contingent consideration | (23522) | 13281 | 3860 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 1348371 | 950368 | 1187486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | 3642 | (42411) | (262847) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 1369 | 407 | 2633 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (15572) | (25425) | (28325) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of equity method investments |  |  | (47133) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain from equity method investees | 4569 | 13179 | 10039 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on transfer of membership |  | 45938 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment/repayment of debt | (10192) | (21343) | (4789) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in tax receivable agreement liability | (45950) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income (expense), net | 57 | (146) | (118) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from continuing operations before income taxes | (62077) | (29801) | (330540) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | (43376) | 483 | (2368) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from continuing operations | (18701) | (30284) | (328172) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued operations, net of tax <sup>(2)</sup> | (463) | (7317) | (6074) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common shareholders of Evolent Health, Inc. | $(19164) | $(37601) | $(334246) |
| **Loss per common share** |  |  |  |
| Basic and diluted: |  |  |  |
| &nbsp;&nbsp;Continuing operations | $(0.20) | $(0.35) | $(3.86) |
| &nbsp;&nbsp;Discontinued operations |  | (0.09) | (0.08) |
| Basic and diluted loss per share attributable to common shareholders of Evolent Health, Inc. | $(0.20) | $(0.44) | $(3.94) |
| **Weighted-average common shares outstanding** |  |  |  |
| Basic and diluted | 93699 | 86067 | 84928 |
| **Comprehensive loss** |  |  |  |
| Net loss | $(19164) | $(37601) | $(334246) |
| Other comprehensive loss, net of taxes, related to: |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (816) | (84) | (44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total comprehensive loss attributable to common shareholders of Evolent Health, Inc. | $(19980) | $(37685) | $(334290) |

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————————

<sup>(1)</sup> See Note 19 for amounts attributable to unconsolidated related parties included in these line items.

<sup>(2)</sup> Includes $0.5 million and $6.8 million of loss on disposal of discontinued operations for years ended December 31, 2022 and 2021, respectively.

See accompanying Notes to Consolidated Financial Statements.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** | **EVOLENT HEALTH, INC.** |
| **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** | **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** |
| **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| | **Class A Common Stock** | **Class A Common Stock** | **Additional Paid-In Capital** | **Accumulated Other Comprehensive Loss** | **Retained Earnings (Accumulated Deficit)** | **Treasury Stock** | **Total Shareholders' Equity<br>Attributable to Evolent Health, Inc.** | **Non-controlling Interests** | **Total Shareholders' Equity (Deficit)** |
| | **Shares** | **Amount** | **Additional Paid-In Capital** | **Accumulated Other Comprehensive Loss** | **Retained Earnings (Accumulated Deficit)** | **Treasury Stock** | **Total Shareholders' Equity<br>Attributable to Evolent Health, Inc.** | **Non-controlling Interests** | **Total Shareholders' Equity (Deficit)** |
| **Balance as of December 31, 2019** | 84589 | $846 | $1173708 | $(234) | $(251962) | $— | $922358 | $6689 | $929047 |
| Cumulative-effect adjustment from adoption of ASU 2016-03 |  |  |  |  | (2970) |  | (2970) |  | (2970) |
| Stock-based compensation expense |  |  | 14606 |  |  |  | 14606 |  | 14606 |
| Exercise of stock options | 416 | 4 | 2573 |  |  |  | 2577 |  | 2577 |
| Restricted stock units vested, net of shares withheld for taxes | 462 | 5 | (1856) |  |  |  | (1851) |  | (1851) |
| Consolidation of equity method investment |  |  |  |  |  | (21123) | (21123) |  | (21123) |
| Share retirement | (188) | (2) | (683) |  |  |  | (685) |  | (685) |
| Class A common stock issued for payment of earn-outs | 616 | 6 | 4179 |  |  |  | 4185 |  | 4185 |
| Equity component of 2024 Notes, net of issuance costs |  |  | 36793 |  |  |  | 36793 |  | 36793 |
| Disposal of assets |  |  |  |  |  |  |  | (6689) | (6689) |
| Foreign currency translation adjustment |  |  |  | (44) |  |  | (44) |  | (44) |
| Net loss |  |  |  |  | (334246) |  | (334246) |  | (334246) |
| **Balance as of December 31, 2020** | 85895 | 859 | 1229320 | (278) | (589178) | (21123) | 619600 |  | 619600 |
| Stock-based compensation expense |  |  | 16711 |  |  |  | 16711 |  | 16711 |
| Exercise of stock options | 1490 | 15 | 13274 |  |  |  | 13289 |  | 13289 |
| Restricted stock units vested, net of shares withheld for taxes | 492 | 5 | (3855) |  |  |  | (3850) |  | (3850) |
| Shares issued for acquisition | 1771 | 18 | 56608 |  |  |  | 56626 |  | 56626 |
| Conversion of 2021 Notes | 1095 | 11 | 28481 |  |  |  | 28492 |  | 28492 |
| Class A common stock issued for payment of earn-outs | 16 |  | 450 |  |  |  | 450 |  | 450 |
| Foreign currency translation adjustment |  |  |  | (84) |  |  | (84) |  | (84) |
| Net loss |  |  |  |  | (37601) |  | (37601) |  | (37601) |
| **Balance as of December 31, 2021** | 90759 | 908 | 1340989 | (362) | (626779) | (21123) | 693633 |  | 693633 |
| Cumulative-effect adjustment from adoption of ASC 2020-06 |  |  | (106172) |  | 39789 |  | (66383) |  | (66383) |
| Stock-based compensation expense |  |  | 33981 |  |  |  | 33981 |  | 33981 |
| Exercise of stock options | 651 | 6 | 4446 |  |  |  | 4452 |  | 4452 |
| Restricted stock units vested, net of shares withheld for taxes | 496 | 5 | (7091) |  |  |  | (7086) |  | (7086) |
| Leveraged stock units vested, net of shares withheld for taxes | 459 | 5 | (11237) |  |  |  | (11232) |  | (11232) |
| Exchange of 2024 Notes | 5394 | 54 | 101803 |  |  |  | 101857 |  | 101857 |
| Shares issued for acquisition | 3742 | 37 | 130138 |  |  |  | 130175 |  | 130175 |
| Foreign currency translation adjustment |  |  |  | (816) |  |  | (816) |  | (816) |
| Net loss |  |  |  |  | (19164) |  | (19164) |  | (19164) |
| **Balance as of December 31, 2022** | 101501 | $1015 | $1486857 | $(1178) | $(606154) | $(21123) | $859417 | $— | $859417 |

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See accompanying Notes to Consolidated Financial Statements

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**EVOLENT HEALTH, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

(in thousands)

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Cash Flows Provided by (Used In) Operating Activities** |  |  |  |
| Net loss | $(19164) | $(37601) | $(334246) |
| Adjustments to reconcile net loss to net cash and restricted cash used in operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of contingent consideration | (23522) | 13281 | 3860 |
| &nbsp;&nbsp;&nbsp;Loss on discontinued operations | 463 | 6786 | 698 |
| &nbsp;&nbsp;&nbsp;Gain from equity method investees | (4569) | (13179) | (10039) |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization expenses | 67195 | 60037 | 61475 |
| &nbsp;&nbsp;&nbsp;Impairment of equity method investees |  |  | 47133 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 33981 | 16711 | 14606 |
| &nbsp;&nbsp;&nbsp;Deferred tax benefit | (45608) | (526) | (1132) |
| &nbsp;&nbsp;&nbsp;Amortization of contract cost assets | 23056 | 13041 | 21195 |
| &nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 2302 | 18045 | 14780 |
| &nbsp;&nbsp;&nbsp;Gain on transfer of membership |  | (45938) |  |
| &nbsp;&nbsp;&nbsp;Goodwill impairment |  |  | 215100 |
| &nbsp;&nbsp;&nbsp;Loss on extinguishment/repayment of debt, net | 10192 | 21343 | 4789 |
| &nbsp;&nbsp;Change in tax receivable agreement liability | 45950 |  |  |
| &nbsp;&nbsp;&nbsp;Other current operating cash inflows (outflows), net | 2612 | 392 | 875 |
| &nbsp;&nbsp;&nbsp;Changes in assets and liabilities, net of acquisitions: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net and contract assets | (102980) | (5779) | (47017) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current and non-current assets | 1673 | 5599 | 7340 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract cost assets | (7693) | (18979) | (11400) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 13165 | 7250 | 3547 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | (28791) | (324) | 8801 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation and employee benefits | 447 | 3538 | 11143 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (6508) | (739) | (8943) |
| &nbsp;&nbsp;&nbsp;&nbsp;Reserve for claims and performance-based arrangements | 28436 | (3799) | (36108) |
| &nbsp;&nbsp;&nbsp;&nbsp;Right-of-use operating assets | 2500 | 8844 | 11934 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (2983) | (6522) | (2782) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | (1707) | (2734) | 8166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash and restricted cash provided by (used in) operating activities | (11553) | 38747 | (16225) |
| **Cash Flows Provided by (Used In) Investing Activities** |  |  |  |
| Cash paid for asset acquisitions and business combinations | (248111) | (49012) | (300) |
| Loan for implementation funding |  |  | 1000 |
| Proceeds from transfer of membership and release of Passport escrow | 30969 | 42996 |  |
| Disposal of non-strategic assets and divestiture of discontinued operations, net | (9164) | 3490 | (2287) |
| Return of equity method investments | 5552 | 14218 |  |
| Impact to cash and cash equivalents and restricted cash from initial consolidation |  |  | 159755 |
| Purchases of investments |  | (2995) | (11170) |
| Maturities and sales of investments |  | 500 | 143441 |
| Investments in internal-use software and purchases of property and equipment | (38361) | (24983) | (29473) |
| Other investing activities |  |  | 106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash and restricted cash provided by (used in) investing activities | (259115) | (15786) | 261072 |
| **Cash Flows Provided by (Used In) Financing Activities** |  |  |  |

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See accompanying Notes to Consolidated Financial Statements

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---

| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Changes in working capital balances related to claims processing on behalf of partners | (59449) | 61162 | (6044) |
| Repayment of Credit Agreement including settlement of warrants |  | (98420) |  |
| Proceeds from stock option exercises | 4452 | 13289 | 2577 |
| Proceeds from issuance of long-term debt, net of offering costs | 219740 |  | 30062 |
| Repayment and repurchase of 2021 Notes and financing fees |  | (429) | (16606) |
| Distributions to Sponsors | (14884) | (1300) | (20000) |
| Taxes withheld and paid for vesting of equity awards | (18318) | (3850) | (1851) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash and restricted cash provided by (used in) financing activities | 131541 | (29548) | (11862) |
| Effect of exchange rate on cash and cash equivalents and restricted cash | (657) | (52) | 65 |
| Net decrease in cash and cash equivalents and restricted cash | (139784) | (6639) | 233050 |
| Cash and cash equivalents and restricted cash as of beginning-of-period <sup>(1)</sup> | 354942 | 361581 | 128531 |
| &nbsp;&nbsp;Cash and cash equivalents and restricted cash as of end-of-period <sup>(1)</sup> | $215158 | $354942 | $361581 |

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————————

<sup>(1)</sup> As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company's operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the years ended December 31, 2021 and 2020. See Note 5.

See accompanying Notes to Consolidated Financial Statements

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**EVOLENT HEALTH, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**Note 1. Organization** 

Evolent Health, Inc. was incorporated in December 2014 in the state of Delaware and through its subsidiaries supports leading health systems and physician organizations to move their business models from traditional fee-for-service ("FFS") reimbursement to value-based care, which we consider to be an integrated clinical and financial responsibility for populations.

As of December 31, 2022, the Company had unrestricted cash and cash equivalents of $188.2 million. The Company believes it has sufficient liquidity for the next twelve months as of the date the financial statements were available to be issued.

The Company's headquarters is located in Arlington, Virginia.

*Evolent Health LLC Governance*

Our operations are conducted through Evolent Health LLC. Evolent Health, Inc. is a holding company whose only business is to act as the sole managing member of Evolent Health LLC. As such, it controls Evolent Health LLC's business and affairs and is responsible for the management of its business.

**Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles**

**Basis of Presentation**

The consolidated financial statements of the Company are prepared in accordance with U.S. GAAP. Our consolidated financial statements include the accounts of all subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

**Summary of Significant Accounting Policies**

Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below.

*Accounting Estimates and Assumptions*

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. In the accompanying consolidated financial statements, estimates are used for, but not limited to, the valuation of assets (including intangibles assets, goodwill and long-lived assets), liabilities, consideration related to business combinations and asset acquisitions, revenue recognition (including variable consideration), estimated selling prices for performance obligations in contracts with multiple performance obligations, reserves for claims and performance-based arrangements, credit losses, depreciable lives of assets, impairment of long-lived assets, stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, purchase price allocation in taxable stock transactions and useful lives of intangible assets.

*Operating Segments*

Operating segments are defined as components of a business that may recognize revenue and incur expenses for which discrete financial information is available that is evaluated, on a regular basis, by the chief operating decision maker ("CODM") to decide how to allocate resources and assess performance. The Company made organizational changes, including re-evaluating its reportable segments, as a result of the entry into the agreement to sell True Health on January 11, 2021. Effective during the first quarter of 2021, the Company bifurcated its previous Services segment into two segments. The Company's EHS segment includes our administrative simplification solution and supporting population health infrastructure. Our Clinical Solutions segment includes our specialty care

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management and physician-oriented total cost of care solutions, along with the New Century Health and Evolent Care Partners brands. Refer to Note 21 for a further discussion of our operating results by segment.

*Cash and Cash Equivalents*

We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company holds materially all of our cash in bank deposits with FDIC participating banks, at cost, which approximates fair value. Cash and cash equivalents held in money market funds are carried at fair value, which approximates cost.

*Restricted Cash and Restricted Investments*

Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations (in thousands) as follows:

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Collateral for letters of credit for facility leases <sup>(1)</sup> | $2269 | $3769 |
| Collateral with financial institutions <sup>(2)</sup> | 10912 | 11662 |
| Claims processing services <sup>(3)</sup> | 13777 | 73226 |
| Other |  | 5 |
| &nbsp;&nbsp;&nbsp;Total restricted cash and restricted investments | $26958 | $88662 |
| Current restricted cash | 14492 | 75685 |
| &nbsp;&nbsp;&nbsp;Total current restricted cash and restricted investments | $14492 | $75685 |
| Non-current restricted cash | 12466 | 12977 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-current restricted cash and restricted investments | $12466 | $12977 |

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<sup>(1)</sup> Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 12 for further discussion of our lease commitments.

<sup>(2)</sup> Represents collateral held with financial institutions for risk-sharing and other arrangements which are held in a FDIC participating bank account. See Note 18 for discussion of fair value measurement and Note 11 for discussion of our risk-sharing arrangements.

<sup>(3)</sup> Represents cash held by the Company related to claims processing services on behalf of partners. These are pass-through amounts and can fluctuate materially from period to period depending on the timing of when the claims are processed.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Cash and cash equivalents | $188200 | $266280 |
| Restricted cash and restricted investments | 26958 | 88662 |
| &nbsp;&nbsp;Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows <sup>(1)</sup> | $215158 | $354942 |

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————————

<sup>(1)</sup> As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company's operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for year ended December 31, 2021. See Note 5.

*Accounts Receivable and Allowances*

Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers. See note 7 for additional discussion regarding accounts receivable and allowances.

*Property and Equipment, Net*

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Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. The following summarizes the estimated useful lives by asset classification:

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| | |
|:---|:---|
| Computer hardware | 3 years |
| Computer software | 1 year |
| Furniture and equipment | 3 - 7 years |
| Internal-use software development costs | 5 years |
| Leasehold improvements | Shorter of useful life or remaining lease term |

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When an item is sold or retired, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in loss on disposal of assets and consolidation on our consolidated statements of operations and comprehensive income (loss).

We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset group is not recoverable and exceeds fair value. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset group exceeds its fair value. See note 8 for additional discussion regarding accounts receivable and allowances.

*Software Development Costs*

The Company capitalizes the cost of developing internal-use software, consisting primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees and third parties who devote time to their respective projects. Internal-use software costs are capitalized during the application development stage – when the research stage is complete and management has committed to a project to develop software that will be used for its intended purpose. Any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized. Capitalized software costs are included in property and equipment, net on our consolidated balance sheets. Amortization of internal-use software costs are recorded on a straight-line basis over their estimated useful life and begin once the project is substantially complete and the software is ready for its intended purpose.

*Business Combinations*

Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period. The Company allocates the fair value of purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Critical estimates used to value certain identifiable assets include, but are not limited to, expected long-term revenues, future expected operating expenses, cost of capital and appropriate discount rates.

The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. Goodwill is assigned to the reporting unit that benefits from the synergies arising from the business combination. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded on the Company's consolidated statements of operations and comprehensive income (loss).

For contingent consideration recorded as a liability, the Company initially measures the amount at fair value as of the acquisition date and adjusts the liability, if needed, to fair value at each reporting period. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recognized as operating income or expense. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. See Note 4 for additional discussion regarding business combinations.

*Equity Method Investments*

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For entities that are not consolidated, but where the Company has significant influence over the operating or financial decisions of the entity, the Company accounts for the investment under the equity method of accounting. In accordance with the equity method of accounting, the Company will recognize its share of earnings or losses of the investee in the period in which they are reported by the investee. The Company also considers whether there are any indicators of other-than-temporary impairment of its investments accounted for under the equity method. These investments are included in investments in equity method investees on the consolidated balance sheets with income or loss included in gain from equity method investees on the consolidated statements of operations and comprehensive income (loss). See Note 17 for additional discussion regarding our equity method investments.

*Impairment of Equity Method Investments*

The Company considers certain factors to determine if there is a decrease in its investment fair value for its equity method investments that is other than temporary. The equity method investments will be written down to fair value if there is evidence of a loss in value which is other-than-temporary. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analysis and recent operating results. If the fair value of the investment is below the carrying amount, management considers several factors when determining whether other-than-temporary impairment has occurred. The estimation of fair value and whether other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. Refer to Note 17 for additional discussion regarding impairments on equity method investments.

*Goodwill*

We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level. Following the sale of True Health, the Company has three reporting units and our annual goodwill impairment review occurs on October 31 of each year. We perform impairment tests between annual tests if an event occurs, or circumstances change, that we believe would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of a reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit's fair value and a charge is reported in goodwill impairment on our consolidated statements of operations and comprehensive income (loss). See Note 9 for additional discussion regarding the goodwill impairment tests conducted during 2022 and 2021.

*Intangible Assets, Net* 

Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used.

The following summarizes the estimated useful lives by asset classification:

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| | |
|:---|:---|
| Corporate trade name | 10 - 20 years |
| Customer relationships | 11 - 25 years |
| Technology | 5 years |
| Provider network contracts | 3 - 5 years |

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Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the asset's carrying value. The Company evaluates recoverability by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group exceed the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to cover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. See Note 9 for additional discussion regarding our intangible assets.

*Research and Development Costs*

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Research and development costs consist primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. Research and development costs are recorded within cost of revenue and selling, general and administrative expenses on our consolidated statements of operations and comprehensive income (loss).

*Reserves for Claims and Performance-based Arrangements*

Reserves for claims and performance-based arrangements reflect estimates of payments under performance-based arrangements and the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily composed of accruals for incentives and other amounts payable to health care professionals and facilities. The Company uses actuarial principles and assumptions that are consistently applied in each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.

The process of estimating reserves involves a considerable degree of judgment by the Company and, as of any given date, is inherently uncertain. The methods for making such estimates and for establishing the resulting liability are continually reviewed and adjustments are reflected in current results of operations in the period in which they are identified as experience develops or new information becomes known. See Note 22 for additional discussion regarding our reserves for claims and performance-based arrangements.

*Right of Offset*

Certain customer arrangements give the Company the legal right to net payment for amounts due from customers and claims payable. As of December 31, 2022 and 2021, approximately 47% and 42%, respectively, of gross accounts receivable has been netted against claims payable in lieu of cash receipt. Furthermore, as of December 31, 2022, approximately 14% of our accounts receivable, net could ultimately be settled on a net basis, once the criteria for netting have been met.

*Long-term Debt*

Convertible notes and amounts borrowed under our credit agreement are carried at cost, net of debt discounts and issuance costs, as long-term debt on the consolidated balance sheets. The debt discounts and issuance costs are amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the straight-line method over the contractual term of the note if that method is not materially different from the effective interest rate method. Cash interest payments are due either quarterly or semi-annually in arrears and we accrue interest expense monthly based on the annual coupon rate. See Note 10 for further discussion regarding our convertible notes and credit agreement.

*Leases*

The Company enters into various office space, data center and equipment lease agreements in conducting its normal business operations. At the inception of any contract, the Company evaluates the agreement to determine whether the contract contains a lease. If the contract contains a lease, the Company then evaluates the term and whether the lease is an operating or finance lease. Most leases include one or more options to renew or may have a termination option. The Company determines whether these options are reasonably certain to be exercised at the inception of the lease. The rent expense is recognized on a straight-line basis in the consolidated statements of operations and comprehensive income (loss) over the terms of the respective leases. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Further, the Company treats all lease and non-lease components as a single combined lease component for all classes of underlying assets.

The Company also enters into sublease agreements for some of its leased office space. Rental income attributable to subleases is immaterial and is offset against rent expense over the terms of the respective leases.

Refer to Note 12 for additional lease disclosures.

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*Revenue Recognition*

We derive revenue primarily from platform and operations services. Platform and operations services generally include multi-year arrangements with customers to provide various population health, health plan operations, specialty care management and claims processing services on an ongoing basis, as well as transition or run-out services to customers receiving primarily TPA services. Revenue is recognized when control of the services is transferred to our customers.

We use the following 5-step model, outlined in Accounting Standards Codification ("ASC") Topic 606, *Revenue from Contracts with Customers* ("ASC 606"), to determine revenue recognition from our contracts with customers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify the contract(s) with a customer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify the performance obligations in the contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Determine the transaction price

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Allocate the transaction price to performance obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Recognize revenue when (or as) the entity satisfies a performance obligation

See Note 6 for further discussion of our policies related to revenue recognition.

*Cost of Revenue (Exclusive of Depreciation and Amortization)*

Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments and other health care expenditures through capitated arrangements.

*Selling, general and administrative expenses*

Our selling, general and administrative expenses consist of employee-related expenses (including compensation, benefits and stock-based compensation) for selling and marketing, corporate development, finance, legal, human resources, corporate information technology, professional fees and other corporate expenses associated with these functional areas. Selling, general and administrative expenses also include costs associated with our centralized infrastructure and research and development activities to support our network development capabilities, claims processing services, including PBM administration, technology infrastructure, clinical program development and data analytics.

*Stock-based Compensation*

The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees, vendors and non-employee directors of the Company or its consolidated subsidiaries. Our stock-based awards generally vest over a three or four-year period and stock options expire 10 years from the date of grant.

We expense the fair value of stock-based awards granted under our incentive compensation plans. Fair value of stock options is determined using a Black-Scholes options valuation methodology. The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, on a straight-line basis and is recognized as an increase to additional paid-in capital. Stock-based compensation expense is reflected in cost of revenue and selling, general and administrative expenses in our consolidated statements of operations and comprehensive income (loss). Additionally, and if applicable, we capitalize personnel expenses attributable to the development of internal-use software, which include stock-based compensation costs. We recognize share-based award forfeitures as they occur.

*Income Taxes*

Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused.

We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax

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exposures as a component of income tax expense, when applicable. As of December 31, 2022 and 2021, our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S., India and the Philippines and remain subject to examination by taxing jurisdictions for the year 2011 and all subsequent periods due to the availability of NOL carryforwards.

*Loss per Common Share*

Basic loss per common share is computed by dividing net loss available to Class A common shareholders by the weighted-average number of Class A common shares outstanding.

For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings per share by dividing net income available to Class A common shareholders by the weighted average number of Class A common shares plus the weighted average number of Class A common shares assuming the conversion of our convertible notes, as well as the impact of all potential dilutive common shares, consisting primarily of common stock options and unvested restricted stock awards using the treasury stock method and our exchangeable Class B common stock. For periods of net loss, shares used in the diluted loss per share calculation represent basic shares as using potentially dilutive shares would be anti-dilutive.

*Fair Value Measurement*

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. Our consolidated balance sheets include various financial instruments (primarily cash not held in money-market funds, restricted cash, accounts receivable, accounts payable, accrued expenses and other liabilities) that are carried at cost and that approximate fair value.

See Note 18 for further discussion regarding fair value measurement.

**Note 3. Recently Issued Accounting Standards**

**Adoption of New Accounting Standards**

In August 2020, the FASB issued ASU 2020-06, *Accounting for Convertible Instruments and Contracts in an Entity's Own Equity*. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity. Specifically, the ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature and no longer permits the use of the treasury stock method from calculating earnings per share. As a result, after adopting the ASU's guidance, we do not separately present in equity an embedded conversion feature of such debt. Instead, we account for a convertible debt instrument wholly as debt unless (i) a convertible instrument contains features that require bifurcation as a derivative or (ii) a convertible debt instrument was issued at a substantial premium. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity's own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity's own equity. The Company adopted the standard using a modified retrospective method on January 1, 2022, with adjustments which increased retained earnings by $39.8 million, reduced additional paid-in capital by $106.2 million and increased the net carrying amount of the 2024 and 2025 Notes by $25.1 million and $41.3 million, respectively.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early application permitted. We are currently evaluating the impact of adopting this standard, however we do not expect it to have a material impact on our consolidated financial statements.

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**Note 4. Transactions**

**Business Combinations**

*Implantable Provider Group*

On August 1, 2022, the Company completed its acquisition of IPG, including 100% of the voting equity interests. IPG is a leader in providing surgical management solutions for musculoskeletal conditions. The transaction is expected to accelerate our strategy to become a leading provider of value-based specialty care solutions as well as diversify our revenue streams with a larger customer portfolio. The transaction is expected to deepen our capabilities, allowing us to cross-sell across customers and enhance our value proposition to partners.

Total acquisition consideration, net of cash on hand and certain closing adjustments, was $461.7 million, based on the closing price of the Company's Class A common stock on the NYSE on August 1, 2022. The acquisition consideration consisted of $256.5 million of cash consideration, 3.7 million shares of Class A common stock, fair valued at $130.2 million as of August 1, 2022, and an earn-out of up to $87.0 million, fair valued at $75.0 million as of August 1, 2022 is payable in cash and/or shares of the Company's Class A Common Stock, at the Company's option. See Note 18 for additional information regarding the fair value determination of the earn-out consideration.

The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of August 1, 2022, as follows (in thousands):

---

| | |
|:---|:---|
| **Purchase consideration:** | **Purchase consideration:** |
| Cash | $256488 |
| Fair value of Class A common stock issued | 130175 |
| Fair value of contingent consideration | 75000 |
| &nbsp;&nbsp;Total consideration | $461663 |
| **Tangible assets acquired:** |  |
| Accounts receivable | 34155 |
| Prepaid expenses and other current assets | 636 |
| Other non-current assets | 1393 |
| &nbsp;&nbsp;Total tangible assets acquired | 36184 |
| **Identifiable intangible assets acquired:** |  |
| Customer relationships | 154000 |
| Technology | 23900 |
| Corporate trade name | 17800 |
| &nbsp;&nbsp;Total identifiable intangible assets acquired | 195700 |
| **Liabilities assumed:** |  |
| Accounts payable | 7997 |
| Accrued liabilities | 8083 |
| Accrued compensation and employee benefits | 423 |
| Deferred tax liabilities, net | 48671 |
| Deferred revenue | 321 |
| Operating lease liabilities | 1323 |
| Total liabilities assumed | 66818 |

---

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---

| | |
|:---|:---|
| Goodwill | 296597 |
| Net assets acquired | $461663 |

---

Pro forma financial information has not been presented for the IPG acquisition as the impact to the Company's consolidated financial statements was not material.

The fair value of the receivables acquired, as shown in the table above, approximates the gross contractual amounts and is expected to be collectible in full. Identifiable intangible assets associated with customer relationships, technology and the corporate trade name will be amortized on a straight-line basis over their preliminary estimated useful lives of 20 years, 5 years, and 15 years, respectively. The customer relationships are primarily attributable to existing contracts with current customers. The technology consists primarily of a proprietary customer relationship management and analytics platform that supports reporting to payors with respect to medical device pricing and associated analytics. The corporate trade name reflects the value that we believe the IPG brand name carries in the market. The fair value of the intangible assets was determined using the income approach and the relief from royalty approach. The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The relief from royalty approach estimates the fair value of an asset by calculating how much an entity would have to spend to lease a similar asset. Goodwill is calculated as the difference between the acquisition date fair value of the total consideration and the fair value of the net assets acquired and represents the future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is attributable primarily to cross-selling opportunities and the acquired assembled workforce and was all allocated to the Clinical Solutions segment. The Company received carryover tax basis in the assets and liabilities acquired; accordingly, the Company recognized net deferred tax liabilities associated with the difference between the book basis and the tax basis for the assets and liabilities acquired. The goodwill is not deductible for tax purposes. Additionally, a discrete tax benefit of $46.8 million was recorded in the consolidated statements of operations and comprehensive income (loss) for the year December 31, 2022, to account for the valuation allowance release primarily related to the acquired intangible assets, which resulted in a deferred tax liability that provided a source of income supporting realization of other deferred tax assets.

The amounts above reflect management's preliminary estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed. As of December 31, 2022, we had not finalized the determination of fair values allocated to the acquired intangible assets and deferred tax liability. Any necessary adjustments will be finalized within one year from the date of acquisition.

*Vital Decisions* 

On October 1, 2021, the Company completed its acquisition of Vital Decisions, including 100% of the voting equity interests. Vital Decisions is a leading provider of technology-enabled advance care planning services, ensuring that the care of individuals with serious illness aligns with their values and changing preferences throughout their health journey and, in particular, as they approach end-of-life decisions. The transaction is expected to deepen our capabilities, allowing us to cross-sell across customers and enhance our value proposition to partners.

Total acquisition consideration, net of cash on hand and certain closing adjustments, was $117.7 million, based on the closing price of the Company's Class A common stock on the NYSE on October 1, 2021. The acquisition consideration consisted of $46.5 million of cash consideration, 1.8 million shares of Class A common stock, fair valued at $56.6 million as of October 1, 2021, and an earn-out of up to $45.0 million, fair valued at $14.6 million as of October 1, 2021 is payable in cash and/or shares of the Company's Class A Common Stock, at the Company's option. See Note 18 for additional information regarding the fair value determination of the earn-out consideration.

The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2021, as follows (in thousands):

---

| | |
|:---|:---|
| **Purchase consideration:** | **Purchase consideration:** |
| Cash | $46500 |
| Fair value of Class A common stock issued | 56626 |
| Fair value of contingent consideration | 14600 |
| &nbsp;&nbsp;Total consideration | $117726 |
| **Tangible assets acquired:** |  |
| Cash and cash equivalents | $1430 |

---

------

---

| | |
|:---|:---|
| Accounts receivable | 3301 |
| Prepaid expenses and other current assets | 78 |
| Other non-current assets | 2564 |
| &nbsp;&nbsp;Total tangible assets acquired | 7373 |
| **Identifiable intangible assets acquired:** |  |
| Customer relationships | 32500 |
| Technology | 5000 |
| Corporate trade name | 2500 |
| &nbsp;&nbsp;Total identifiable intangible assets acquired | 40000 |
| **Liabilities assumed:** |  |
| Accounts payable | 93 |
| Accrued liabilities | 661 |
| Accrued compensation and employee benefits | 970 |
| Deferred tax liabilities, net | 499 |
| Deferred revenue | 2000 |
| Operating lease liabilities | 2712 |
| Total liabilities assumed | 6935 |
| Goodwill | 77288 |
| Net assets acquired | $117726 |

---

Pro forma financial information has not been presented for the Vital Decisions acquisition as the impact to the Company's consolidated financial statements was not material.

The fair value of the receivables acquired, as shown in the table above, approximates the gross contractual amounts and is expected to be collectible in full. Identifiable intangible assets associated with customer relationships, technology and corporate trade names will be amortized on a straight-line basis over their preliminary estimated useful lives of 13 years, 5 years, and 15 years, respectively. The customer relationships are primarily attributable to existing contracts with current customers. The technology consists primarily of a proprietary advance care planning documentation portal where patients can input information, and doctor/patient conversations are populated for later reference. The corporate trade name reflects the value that we believe the Vital Decisions brand name carries in the market. The fair value of the intangible assets was determined using the income approach and the relief from royalty approach. The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The relief from royalty approach estimates the fair value of an asset by calculating how much an entity would have to spend to lease a similar asset. Goodwill is calculated as the difference between the acquisition date fair value of the total consideration and the fair value of the net assets acquired and represents the future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is attributable primarily to cross-selling opportunities and the acquired assembled workforce and was all allocated to the Clinical Solutions segment. Goodwill is considered to be an indefinite lived asset. $69.6 million of the goodwill recorded on the transaction is deductible for tax purposes.

**Note 5. Discontinued Operations**

On January 11, 2021, Evolent Health LLC, EH Holdings and True Health, each wholly owned subsidiaries of the Company, entered into a Stock Purchase Agreement (the "True Health SPA") with Bright Health Management, Inc. ("Bright HealthCare"), pursuant to which EH Holdings agreed to sell all of its equity interests in True Health to Bright HealthCare. Closing of the transactions contemplated by the True Health SPA occurred on March 31, 2021 (the "True Health Closing") and the Company has had no continuing involvement with True Health subsequent to the closing except a pre-existing services agreement for claims processing and other health plan administrative functions.

As of the first quarter of 2021, the Company determined that True Health met the discontinued operations criteria under ASC 205, and as such, True Health assets and liabilities and the results of operations for all periods presented are classified as discontinued operations and are not included in continuing operations in the consolidated financial statements.

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The following table summarizes the results of operations of the Company's True Health business, which are included in income from discontinued operations in the consolidated statements of operations and comprehensive income (loss):

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** |
| **Revenue** |  |  |
| Platform and operations | $38 | $356 |
| Premiums | 44795 | 117377 |
| &nbsp;&nbsp;&nbsp;Total revenue | 44833 | 117733 |
| **Expenses** |  |  |
| Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) <sup>(1)</sup> | 5885 | 18343 |
| Claims expenses | 33954 | 87951 |
| Selling, general and administrative expenses <sup>(2)</sup> | 5764 | 18576 |
| Depreciation and amortization expenses | 160 | 640 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 45763 | 125510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss | (930) | (7777) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 112 | 531 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (4) | (12) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other loss | (25) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss before income taxes and non-controlling interests | (847) | (7259) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes | (326) | (1185) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(521) | $(6074) |

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<sup>(1)</sup> Cost of revenue includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations in the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $2.8 million and $13.6 million for the years ended December 31, 2021 and 2020, respectively.

<sup>(2)</sup> Selling, general and administrative expenses include intercompany expenses between the Company and True Health that are recorded in income from continuing operations on the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $1.1 million and $6.4 million for the years ended December 31, 2021 and 2020, respectively.

The consolidated statements of cash flows for all periods have not been adjusted to separately disclose cash flows related to discontinued operations. Cash flows related to the True Health business were as follows:

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2021** | **2020** |
| Cash flows provided by operating activities | $5002 | $6852 |
| Cash flows (used in) provided by investing activities | (2494) | 2636 |

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**Note 6. Revenue Recognition**

We derive revenue primarily from platform and operations services.

Platform and operations services are typically multi-year arrangements with customers to provide various clinical and administrative solutions. In our Clinical Solutions segment, our solutions are designed to lower the medical expenses of our partners and include our total cost of care and specialty care management services. In our Evolent Health Services segment, our solutions are designed to provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers receiving primarily TPA services.

In our Clinical Solutions segment, we enter into performance-based arrangements that may include capitation and/or gainshare features. We recognize capitation revenue on a gross basis when we have established control over the services within our scope and recognize capitation revenue on a net basis when we do not have control over the services within our scope.

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Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums. Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time. Due to the nature of our arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue from platform and operations services over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate.

*Contracts with Multiple Performance Obligations*

Our contracts with customers may contain multiple performance obligations, primarily when the customer has requested both transformation services and platform and operations services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price using the expected cost margin approach. This approach requires estimates regarding both the level of effort it will take to satisfy the performance obligation as well as fees that will be received under the variable pricing model. We also take into consideration customer demographics, current market conditions, the scope of services and our overall pricing strategy and objectives when determining the standalone selling price.

*Principal vs. Agent*

We occasionally use third parties to assist in satisfying our performance obligations. In order to determine whether we are the principal or agent in the arrangement, we review each third-party relationship on a contract by contract basis. As we integrate goods and services provided by third parties into our overall service, we control the services provided to the customer prior to its delivery. As such, we are the principal and we will recognize revenue on a gross basis. In certain cases, we act as an agent and do not control the services from third parties before it is delivered to the customer, thereby recognizing revenue on a net basis.

**Disaggregation of Revenue**

The following table represents Evolent's revenue disaggregated by segment and end-market for the years ended December 31, 2022, 2021 and 2020 (in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** | **2022** | **2021** | **2020** |
| | **Evolent Health Services** | **Evolent Health Services** | **Evolent Health Services** | **Clinical Solutions** | **Clinical Solutions** | **Clinical Solutions** |
| Medicaid | $238504 | $215236 | $236634 | $320858 | $205833 | $274028 |
| Medicare | 27092 | 26358 | 68505 | 431321 | 380973 | 258905 |
| Commercial and other | 141906 | 68219 | 77221 | 192332 | 11338 | 9346 |
| &nbsp;&nbsp;Total | $407502 | $309813 | $382360 | $944511 | $598144 | $542279 |

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**Transaction Price Allocated to the Remaining Performance Obligations**

For contracts with a term greater than one year, we have allocated approximately $49.6 million of transaction price to performance obligations that are unsatisfied as of December 31, 2022. We do not include variable consideration that is allocated entirely to a wholly unsatisfied performance obligation accounted for under the series guidance in the calculation. As a result, the balance represents the value of the fixed consideration in our long-term contracts that we expect will be recognized as revenue in a future period and excludes the majority of our platform and operations revenue, which is primarily derived based on variable consideration as discussed in Note 2. We expect to recognize revenue on approximately 76%, 93% and 100% of these remaining performance obligations by December 31, 2023, 2024 and 2025, respectively. However, because our existing contracts may be canceled or renegotiated including for reasons outside our control, the amount of revenue that we actually receive may be more or less than this estimate and the timing of recognition may not be as expected.

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**Contract Balances**

Contract balances consist of accounts receivable, contract assets and deferred revenue. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. We classify contract assets as current or non-current based on the timing of our rights to the unconditional payments. Our contract assets are generally classified as current and recorded within prepaid expenses and other current assets on our consolidated balance sheets. Our current accounts receivables are classified within accounts receivable, net on our consolidated balance sheets and our non-current accounts receivable are classified within prepaid expenses and other non-current assets on our consolidated balance sheets.

Deferred revenue includes advance customer payments and billings in excess of revenue recognized. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. Our current deferred revenue is recorded within deferred revenue on our consolidated balance sheets and non-current deferred revenue is recorded within other long-term liabilities on our consolidated balance sheets.

The following table provides information about receivables, contract assets and deferred revenue from contracts with customers as of December 31, 2022 and 2021 (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Short-term receivables <sup>(1)</sup> | $246209 | $129012 |
| Long-term receivables <sup>(1)</sup> |  | 4877 |
| Short-term deferred revenue | 5758 | 11944 |
| Long-term deferred revenue | 2533 | 4437 |

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<sup>(1)</sup> Excludes pharmacy claims receivable and premiums receivable.

Changes in deferred revenue for the year ended December 31, 2022, are as follows (in thousands):

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| | |
|:---|:---|
| **Deferred revenue** | |
| Balance as of beginning-of-period | $16381 |
| &nbsp;&nbsp;&nbsp;Reclassification to revenue, as a result of performance obligations satisfied | (11901) |
| &nbsp;&nbsp;&nbsp;Cash received in advance of satisfaction of performance obligations | 3811 |
| Balance as of end of period | $8291 |

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The amount of revenue recognized from performance obligations satisfied (or partially satisfied) in a previous period was $36.3 million and $28.3 million for the years ended December 31, 2022 and 2021, respectively, due primarily to net gain share as well as changes in other estimates.

**Contract Cost Assets**

Certain bonuses and commissions earned by our sales team are considered incremental costs of obtaining a contract with a customer that we expect to be recoverable. The capitalized contract acquisition costs are classified as non-current assets and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within selling, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2022 and 2021, the Company had $3.4 million and $5.2 million, respectively, of contract acquisition cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortization expense of $3.0 million, $1.9 million and $1.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

In our Evolent Health Services segment, we incur certain costs related to the implementation of our platform before we begin to satisfy our performance obligation to the customer. The costs, which we expect to recover, are considered costs to fulfill a contract. Our contract fulfillment costs primarily include our employee labor costs and third-party vendor costs. The capitalized contract fulfillment costs are classified as non-current and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within cost of revenue on the accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2022 and 2021, the Company had $14.1 million and $27.4 million, respectively, of contract fulfillment cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortization expense including the acceleration of amortization of contract costs for certain customers of $20.1 million, $11.1 million and $13.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be the shorter of the contract term or five years. The period of benefit was based on our technology, the nature of our customer arrangements and other factors.

**Note 7. Credit Losses** 

We are exposed to credit losses primarily through our accounts receivable from revenue transactions, investments held at amortized cost and other notes receivable. We estimate expected credit losses based on past events, current conditions and reasonable and supportable forecasts. Expected credit losses are measured over the remaining contractual life of these assets. As part of our consideration of current and forward-looking economic conditions, we considered the impact of the COVID-19 pandemic and current inflationary pressures on our customers' and other third parties' ability to pay. We did not observe notable increases in delinquencies during the year ended December 31, 2022. Given the nature of our business, our past collection experience during recessionary and pre-recessionary periods and our forecasted impact of the COVID-19 pandemic on our business, we did not record material changes in our allowances due to the COVID-19 pandemic during the year ended December 31, 2022.

*Accounts Receivable from Revenue Transactions*

Accounts receivable represent the amounts owed to the Company for goods or services provided to customers or third parties. Current accounts receivables are classified within accounts receivable, net on the Company's consolidated balance sheets, while non-current accounts receivables are classified within prepaid expenses and other noncurrent assets on the Company's consolidated balance sheets.

We monitor our ongoing credit exposure through active review of counterparty balances against contract terms, due dates and business strategy. Our activities include timely account reconciliation, dispute resolution and payment confirmation. We may employ legal counsel to pursue recovery of defaulted receivables. In addition, the Company will establish a general reserve based on delinquency rates. Historical loss rates are determined for each delinquency bucket in 30-day past-due intervals and then applied to the composition of the reporting date balance based on delinquency. The allowance implied from application of the historical loss rates is then adjusted, as necessary, for current conditions and reasonable and supportable forecasts.

Based on an aging analysis of our trade accounts receivable, non-trade accounts receivable and contract assets as of December 31, 2022, 67% were current, 21% were past due less than 60 days, with 29% past due less than 120 days and at December 31, 2021, 90% was current, 2% was past due less than 60 days, with 3% past due less than 120 days. As of December 31, 2022 and December 31, 2021, in total we reported on the consolidated balance sheet $269.1 million and $171.5 million of accounts receivable, certain non-trade accounts receivable included in prepaid expenses and other current assets, net of allowances of $10.2 million and $3.4 million, respectively. The following table summarizes the changes in allowance for credit losses on our accounts receivables, certain non-trade accounts receivable and contract assets (in thousands):

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** |
| Balance as of beginning of period | $(3374) | $(7056) |
| IPG acquisition | (5269) |  |
| Provision for credit losses | (2740) | (2411) |
| Charge-offs<sup>(1)</sup> | 1203 | 6093 |
| Balance as of end of period | $(10180) | $(3374) |

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<sup>(1)</sup> Charge offs for the year ended December 31, 2022, are due primarily to balances written-off due to balances written-off that were previously fully reserved at IPG. Charge offs for the year ended December 31, 2021, are due to balances written-off that were previously fully reserved as part of the Passport transaction.

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**Note 8. Property and Equipment, Net**

The following summarizes our property and equipment (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Computer hardware | $30092 | $21970 |
| Furniture and equipment | 4214 | 3581 |
| Internal-use software development costs | 189119 | 159587 |
| Leasehold improvements | 14926 | 15325 |
| &nbsp;&nbsp;&nbsp;Total property and equipment | 238351 | 200463 |
| &nbsp;&nbsp;&nbsp;Accumulated depreciation and amortization expenses | (150477) | (119098) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total property and equipment, net | $87874 | $81365 |

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The Company capitalized $29.5 million, $22.5 million and $24.6 million for the years ended December 31, 2022, 2021 and 2020, respectively, of internal-use software development costs. The net book value of capitalized internal-use software development costs was $73.7 million and $71.2 million as of December 31, 2022 and December 31, 2021, respectively.

Depreciation expense related to property and equipment was $32.0 million, $30.6 million and $28.3 million for the years ended December 31, 2022, 2021 and 2020, respectively, of which amortization expense related to capitalized internal-use software development costs was $27.0 million, $26.5 million and $24.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

**Note 9. Goodwill and Intangible Assets, Net**

*Goodwill*

Goodwill has an estimated indefinite life and is not amortized; rather, it is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The Company has three reporting units, each with discrete financial information. Our assets and liabilities are employed in and relate to the operations of our reporting units. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment analysis is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies.

Our annual goodwill impairment review occurs on October 31 of each fiscal year. We evaluate qualitative factors that could cause us to believe the estimated fair value of each of our reporting units may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenues and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in management, strategy, partners, or litigation.

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*2022 Goodwill Impairment Test*

On October 31, 2022, the Company performed its annual goodwill impairment test for fiscal year 2022. As a result of BHG announcing its plan to exit its IFP line of business in 2023, thus negatively impacting the Company's future revenues from such partner, the Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for that specific reporting unit. In doing so, we estimated the fair value of the reporting unit by considering an income approach. In determining the estimated fair value using the income approach, we projected future cash flows based on management's estimates and long-term plans and applied a discount rate based on the Company's weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions, cash flows and discount rates. The quantitative analysis of the Evolent Health Services reporting unit showed that the fair value exceeded the carrying value. Contracts with our customers may be cancelled or renegotiated and future revenue growth is dependent on winning new contracts. Further, the impairment analysis is particularly sensitive to changes in the projected revenue growth rates and expenses and the discount rate. Changes in these key assumptions such as a significant unfavorable change to our forecasted cash flows due to being unsuccessful in winning certain contracts or certain of our contracts being cancelled or renegotiated by our customers, could result in a revision of management's estimates and could result in impairment charges in the future, which could be material to our results of operations. We will continue to monitor for such changes in facts or circumstances, which may be indicators of potential impairment triggers.

For the remaining reporting units, after assessing the totality of events and circumstances including the results of our previous valuations, no events occurred or circumstances changed during the period under consideration that would, more likely than not, reduce the fair value of any reporting unit below their carrying amount. Therefore, the Company concluded that the quantitative assessment was not required. For all reporting units, it was determined that as of October 31, 2022, no impairment of goodwill had occurred.

As of December 31, 2022, the Company assessed whether there were additional events or changes in circumstances since its annual goodwill impairment test that would indicate that it was more likely than not that the fair value of the reporting units was less than the reporting unit's carrying amounts that would require an interim impairment assessment after October 31, 2022. The Company determined there had been no such indicators, therefore, we did not perform an interim goodwill impairment assessment as of December 31, 2022.

*2021 Goodwill Impairment Test*

On October 31, 2021, the Company performed its annual goodwill impairment review for fiscal year 2021. Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest the fair value of any of our three reporting units was below their respective carrying values. As a result, a quantitative goodwill impairment analysis was not required.

*Change in Goodwill*

The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **EHS** | **Clinical Solutions** | **Consolidated** |
| Balance as of December 31, 2020<sup>(1)</sup> | $214354 | $134675 | $349029 |
| &nbsp;&nbsp;Goodwill acquired<sup>(2)</sup> |  | 77288 | 77288 |
| &nbsp;&nbsp;Foreign currency translation | (20) |  | (20) |
| Balance as of December 31, 2021 | 214334 | 211963 | 426297 |
| &nbsp;&nbsp;Goodwill acquired<sup>(2)</sup> |  | 296597 | 296597 |
| &nbsp;&nbsp;Foreign currency translation | (120) |  | (120) |
| Balance as of December 31, 2022 | $214214 | $508560 | $722774 |

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<sup>(1)</sup> Net of cumulative inception to date impairment of $575.5 million as of December 31, 2020.

<sup>(2)</sup> Goodwill acquired from the addition of Vital Decisions in 2021 and IPG in 2022.

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*Intangible Assets, Net*

Details of our intangible assets (in thousands, except weighted-average useful lives) are presented below:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| | **Weighted- Average Remaining Useful Life** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** | **Weighted- Average Remaining Useful Life** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** |
| Corporate trade name | 12.7 | $43600 | $11726 | $31874 | 12.4 | $25800 | $7693 | $18107 |
| Customer relationships | 15.8 | 465019 | 92760 | 372259 | 14.9 | 311019 | 72697 | 238322 |
| Technology | 2.7 | 111822 | 80255 | 31567 | 2.0 | 87922 | 73378 | 14544 |
| Below market lease, net | 0.3 | 1218 | 1151 | 67 | 1.3 | 1218 | 950 | 268 |
| Provider network contracts | 1.3 | 18851 | 11834 | 7017 | 2.2 | 16417 | 7874 | 8543 |
| &nbsp;&nbsp;&nbsp;Total intangible assets, net |  | $640510 | $197726 | $442784 |  | $442376 | $162592 | $279784 |

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Amortization expense related to intangible assets was $35.2 million, $29.4 million and $32.3 million for the years ended December 31, 2022, 2021 and 2020, respectively, excluding $0.2 million and $0.6 million of amortization expense related to discontinued operations for the years ended December 31, 2021 and 2020, respectively.

Future estimated amortization of intangible assets (in thousands) as of December 31, 2022, is as follows:

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| | |
|:---|:---|
| 2023 | $41488 |
| 2024 | 35604 |
| 2025 | 33057 |
| 2026 | 32880 |
| 2027 | 30138 |
| Thereafter | 269617 |
| &nbsp;&nbsp;&nbsp;Total future amortization of intangible assets | $442784 |

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Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets' carrying value. We did not identify any circumstances during the year ended December 31, 2022 that would require an impairment test for our intangible assets.

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**Note 10. Long-term Debt**

*2022 Credit Agreement*

On the IPG Closing Date, the Company entered into a credit agreement, by and among the Company, Evolent Health LLC, as the borrower (the "Borrower"), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent and collateral agent and revolver agent, together with the Company (the "2022 Credit Agreement"), pursuant to which the lenders agreed to extend credit to the Borrower in the form of the (i) 2022 Initial Term Facility, with an aggregate principal amount of $175.0 million and (ii) a revolving credit facility in the aggregate principal amount of up to $50.0 million, to be determined by reference to the lesser of $50.0 million and a borrowing base (the "Revolving Facility" and, together with the 2022 Initial Term Loan Facility, the "Credit Facilities"), subject to the satisfaction of specified conditions. The Borrowers borrowed the loan under the 2022 Initial Term Loan Facility on August 1, 2022 (the "Initial Term Loan"), and also borrowed $50.0 million under the Revolving Facility on the IPG Closing Date. The Credit Facilities are guaranteed by the Company and the Company's domestic subsidiaries, subject to certain exceptions. The Credit Facilities are secured by a first priority security interest in all of the capital stock of each borrower and guarantor (other than the Company) and substantially all of the assets of each borrower and guarantor, subject to certain exceptions. The Initial Term Loan and loans under the Revolving Facility will mature on the date that is the earliest of (a) August 1, 2027, (b) the date on which all amounts outstanding under the 2022 Credit Agreement have been declared or have automatically become due and payable under the terms of the Credit Agreement and (c) the date that is ninety-one (91) days prior to the maturity date of any Junior Debt (as defined in the 2022 Credit Agreement) unless certain liquidity conditions are satisfied.

The proceeds of the Initial Term Loan and Revolving Facility were used to finance the IPG transaction and fund fees and expenses incurred in connection therewith and thereafter may be used to fund acquisitions, ongoing working capital needs and other growth capital investments and to pay fees and expenses. The interest rate for each loan under the Credit Facilities is calculated, at the option of the Borrowers, (a) in the case of a Term Loan, at either the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 5.50%, or the base rate plus 4.50% and (b) in the case of a Revolving Loan, at either the Adjusted Term SOFR Rate plus 3.50%, or the base rate plus 2.50%. A commitment fee of (a) 2.00% of the aggregate amount of the commitments in respect of the Term Loan Facility as of the closing and (b) 2.00% of the aggregate amount of the commitments in respect of the Revolving Facility was paid as of the closing. The Company recorded $7.9 million in interest expense related to our 2022 Credit Agreement for the year ended December 31, 2022.

Amounts outstanding under the Credit Facility may be prepaid at the option of the Company subject to applicable premiums and a call protection premium payable on the amount prepaid in certain instances as follows: (1) 3.00% of the principal amount so prepaid after the closing but prior to the first anniversary of the IPG Closing Date; (2) 2.00% of the principal amount so prepaid after the first anniversary of the closing but prior to the second anniversary of the IPG Closing Date; (3) 1.00% of the principal amount so prepaid after the second anniversary of the closing but prior to the third anniversary of the IPG Closing Date; and (4) 0.00% of the principal amount so prepaid on or after the third anniversary of the IPG Closing Date. Amounts outstanding under the Credit Facility are subject to mandatory prepayment upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain casualty proceeds, issuances of certain debt obligations and a change of control transaction.

The Credit Facilities contain customary borrowing conditions, affirmative, negative and reporting covenants, representations and warranties, and events of default, including cross-defaults to other material indebtedness. In addition, the Company is required to comply at certain times with certain financial covenants comprised of a minimum liquidity test commencing upon closing of the Credit Facilities and a total secured leverage ratio commencing on the last day of the fiscal quarter ending September 30, 2022. If an event of default occurs, the lenders would be entitled to take enforcement action, including foreclosure on collateral and acceleration of amounts owed under the Credit Facilities. We incurred $5.3 million of debt issuance costs in connection with this Credit Agreement, which was included in long-term debt, net of discount on our consolidated balance sheets and amortized into interest expense over the life of the agreement. The Company recorded $0.4 million in interest expense related to the amortization of the debt discount and the issuance costs for the year ended December 31, 2022.

*2024 Notes*

In August 2020, the Company issued $117.1 million aggregate principal amount of its 3.50% Convertible Senior Notes due 2024 (the "2024 Notes") in privately negotiated exchange and/or subscription agreements, with certain holders of its outstanding 2021 Notes and certain new investors. The Company issued $84.2 million aggregate principal amount of 2024 Notes in exchange for $84.2 million aggregate principal amount of the 2021 Notes and an aggregate cash payment of $2.5 million, and issued $32.8 million aggregate principal amount of New Notes for cash at par. We incurred $3.0 million of debt issuance costs in connection with the 2024 Notes, which we are amortizing to non-cash interest expense using the straight-line method over the contractual term of the 2024 Notes, since this method was not materially different from the effective interest method. The closing of the private placement of the 2024 Notes occurred on August 19, 2020.

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Holders of the 2024 Notes are entitled to cash interest payments, which are payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020, at a rate equal to 3.50% per annum. The 2024 Notes will mature on December 1, 2024, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon maturity the principal amount of the notes may be settled via shares of the Company's Class A common stock. We recorded interest expense of $2.7 million, $4.1 million and $1.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The 2024 Notes are convertible into cash, shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election, based on an initial conversion rate of 54.8667 shares of Class A common stock per $1,000 principal amount of the 2024 Notes, which is equivalent to an initial conversion price of approximately $18.23 per share of the Company's Class A common stock. In the aggregate, the 2024 Notes are initially convertible into 6.4 million shares of the Company's Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole provision upon a fundamental change or a notice of redemption under the governing indenture). The conversion rate may be adjusted under certain circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash or shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election.

The option to settle the 2024 Notes in cash or shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election, resulted in a bifurcation of the carrying value of the 2024 Notes into a debt component and an equity component prior to the adoption of ASU 2020-06. The debt component was determined to be $78.9 million, before issuance costs, based on the fair value of a nonconvertible debt instrument with the same term. The equity component was determined to be $38.1 million before issuance costs and was recorded within additional paid-in capital. Issuance costs of $1.7 million and $1.3 million were allocated to the debt and equity components in proportion to the allocation of proceeds. Along with the equity component of $38.1 million, $1.7 million of issuance costs was amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the effective interest method.

On January 1, 2022, we adopted ASU 2020-06 using the retrospective transition method. As a result, prior period financial information and disclosures are not adjusted and continue to be reported under the accounting standards that were in effect prior to the adoption of ASU 2020-06. The adoption of ASU 2020-06 resulted in the combination of the debt and equity components of the 2024 Notes into a single debt instrument recorded in long term debt, net on the consolidated balance sheet. This resulted in a $38.1 million decrease in additional paid-in capital and a $1.3 million increase in additional paid-in capital from the previously bifurcated equity component from deferred financing fees, respectively, and an $11.7 million decrease to the January 1, 2022 accumulated deficit, representing the cumulative non-cash interest expense recognized related to the amortization of the debt discount associated with the bifurcated equity component of the 2024 Notes. These adjustments resulted in an increase of $25.1 million to the debt component of the 2024 Notes. Additionally, the allocation of the issuance costs to the equity component and all issuance costs related to the 2024 Notes are being amortized to interest expense using the effective interest method over the contractual term of the 2024 Notes which is included in the cumulative adjustment to the opening balance of accumulated deficit. The Company recorded interest expense related to the amortization of the issuance costs of $0.6 million, $7.9 million and $2.7 million for the years ended December 31, 2022, 2021 and 2020, respectively, including amortization of discount of $7.6 million and $2.6 million for the years ended December 31, 2021 and 2020, respectively,

Holders of the 2024 Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company may not redeem the 2024 Notes prior to March 1, 2023. The Company may redeem for cash all or any portion of the 2024 Notes, at its option, on or after March 1, 2023, if the last reported sale price of the Company's Class A common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

On August 11, 2022, the Company entered into exchange agreements with certain holders of the 2024 Notes. Pursuant to the agreements, these holders exchanged $92.8 million in aggregate principal amount of such notes for shares of the Company's Class A common stock. On August 17 and 18, 2022, the Company consummated the exchanges and issued an aggregate of 5,394,165 shares of Class A common stock to the holders.

The August 2022 exchanges of the 2024 Notes for Class A common stock resulted in a $10.2 million loss on extinguishment/repayment of debt, net, on the consolidated statements of operations and comprehensive income (loss).

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*2019 Credit Agreement*

On December 30, 2019, the Company entered into a credit agreement, by and among the Company, Evolent Health LLC, as the borrower (the "Borrower"), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent and collateral agent, together with the Company (the "2019 Credit Agreement"), pursuant to which the lenders agreed to extend credit to the Borrower in the form of the (i) 2019 Initial Term Loan Facility, with an aggregate principal amount of $75.0 million and (ii) a delayed draw secured term loan facility in the aggregate principal amount of up to $50.0 million (the "DDTL Facility" and, together with the 2019 Initial Term Loan Facility, the "Senior Credit Facilities"), subject to the satisfaction of specified conditions. The Borrower borrowed the loan under the 2019 Initial Term Loan Facility on December 30, 2019. The proceeds of the Initial Term Loan were used to finance the transactions contemplated by the Passport Asset Purchase Agreement and pay fees and expenses incurred in connection therewith.

On August 19, 2020, an amendment to the Company's 2019 Credit Agreement became effective. The amendment effected changes to, among other things, permit the Company's use of cash in the exchange transactions in connection with the issuance of the 2024 Notes, permit the issuance of the 2024 Notes and permit certain note repurchases, as well as to implement amendments to certain minimum liquidity thresholds.

On January 8, 2021, the Company repaid all outstanding amounts owed under and terminated the 2019 Credit Agreement with Ares Capital Corporation. The total amount paid to Ares Capital Corporation under the 2019 Credit Agreement in connection with the prepayment was $98.6 million, which included $9.7 million for the make-whole premium as well as $0.2 million in accrued interest. As a result of this transaction, the Company recorded a loss on the repayment of debt of $19.2 million, representing the remaining unamortized debt issuance costs of $9.5 million, the make-whole premium and $35 thousand of legal expenses.

*Warrant Agreement*

In conjunction with the Company's entry into the 2019 Credit Agreement, the Company entered into warrant agreements whereby it agreed to sell to the holders of the warrants an aggregate of 1,513,786 shares of Class A common stock at a per share purchase price equal to $8.05. The holders could exercise the warrants at any time until thirty days after the maturity of the 2019 Credit Agreement. The Company, at its sole discretion, could elect to pay the holders in cash in an amount determined based on the fair market value of the Class A common stock for the shares of Class A common stock issuable upon exercise of the warrants in lieu of delivering the shares.

On January 8, 2021, the Company settled the outstanding warrants associated with the 2019 Credit Agreement for $13.7 million.

*2025 Notes*

In October 2018, the Company issued $172.5 million aggregate principal amount of its 1.50% Convertible Senior Notes due 2025 (the "2025 Notes") in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The 2025 Notes were issued at par for net proceeds of $166.6 million. We incurred $5.9 million of debt issuance costs in connection with the 2025 Notes. The closing of the private placement of $150.0 million aggregate principal amount of the 2025 Notes occurred on October 22, 2018 and the Company completed the offering and sale of an additional $22.5 million aggregate principal amount of the 2025 Notes on October 24, 2018, pursuant to the initial purchasers' exercise in full of their option to purchase additional notes.

Holders of the 2025 Notes are entitled to cash interest payments, which are payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019, at a rate equal to 1.50% per annum. The Company recorded interest expense of $2.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. The 2025 Notes will mature on October 15, 2025, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.

Prior to the close of business on the business day immediately preceding April 15, 2025, the 2025 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions, as described in the indenture, dated as of October 22, 2018, between the Company and U.S. Bank National Association, as trustee. At any time on or after April 15, 2025, until the close of business on the business day immediately preceding the maturity date, holders may convert, at their option, all or any portion of their notes at the conversion rate.

The 2025 Notes will be convertible at an initial conversion rate of 29.9135 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $33.43 per share of the Company's Class A common stock. In the aggregate, the 2025 Notes are initially convertible into 5.2 million shares of the Company's Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole fundamental change or a notice of redemption as described in the governing indenture). The conversion rate may be adjusted under certain circumstances. Upon

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conversion, the Company will pay or deliver, as the case may be, cash or shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election.

The option to settle the 2025 Notes in cash or shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election, resulted in a bifurcation of the carrying value of the 2025 Notes into a debt component and an equity component prior to the adoption of ASU 2020-06. The debt component was determined to be $100.7 million, before issuance costs, based on the fair value of a nonconvertible debt instrument with the same term. The equity component was determined to be $71.8 million, before issuance costs, and was recorded within additional paid-in capital. The equity component is the difference between the aggregate principal amount of the debt and the debt component. Issuance costs of $3.4 million and $2.5 million are allocated to the debt and equity components in proportion to the allocation of proceeds. Along with the equity component of $71.8 million, $3.4 million of issuance costs will be amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the effective interest method over the contractual term of the 2025 Notes.

On January 1, 2022, we adopted ASU 2020-06 using the retrospective transition method. As a result, prior period financial information and disclosures are not adjusted and continue to be reported under the accounting standards that were in effect prior to the adoption of ASU 2020-06. The adoption of ASU 2020-06 resulted in the combination of the debt and equity components of the 2024 Notes into a single debt instrument recorded in long term debt, net on the consolidated balance sheet. This resulted in a $71.8 million decrease in additional paid-in capital and a $2.5 million increase in additional paid-in capital from the previously bifurcated equity component from deferred financing fees, respectively, and a $28.1 million decrease to the January 1, 2022 accumulated deficit, representing the cumulative non-cash interest expense recognized related to the amortization of the debt discount associated with the bifurcated equity component of the 2025 Notes. These adjustments resulted in an increase of $41.3 million to the debt component of the 2025 Notes. Additionally, the allocation of the issuance costs to the equity component and all issuance costs related to the 2025 Notes are being amortized to interest expense using the effective interest method over the contractual term of the 2025 Notes which is included in the cumulative adjustment to the opening balance of accumulated deficit. The Company recorded interest expense related to the amortization of the issuance costs of $1.3 million, $10.0 million and $9.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, including amortization of discount of $9.5 million and $8.8 million for the years ended December 31, 2021 and 2020, respectively,

Holders of the 2025 Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company may not redeem the 2025 Notes prior to October 20, 2022. The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after October 20, 2022, if the last reported sale price of the Company's Class A common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

*2021 Notes*

In December 2016, the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2021 (the "2021 Notes") in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act. The 2021 Notes were issued at par for net proceeds of $120.4 million. We incurred $4.6 million of debt issuance costs in connection with the 2021 Notes, which we amortized to non-cash interest expense using the straight-line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest method. The closing of the private placement of the 2021 Notes occurred on December 5, 2016.

In August 2020, as part of the issuance of the 2024 Notes, the Company issued $84.2 million aggregate principal amount of the 2024 Notes in exchange for $84.2 million aggregate principal of its 2021 Notes. There was no cash consideration in these exchanges outside of an aggregate cash payment of $2.5 million paid to exchanging noteholders. These exchanges were accounted for as an extinguishment resulting in a net loss on extinguishment of debt of $4.8 million, including an aggregate cash payment of $2.5 million paid to exchanging noteholders.

In August 2020, we also repurchased $14.0 million of the 2021 Notes with $13.9 million of cash and recorded an immaterial gain on extinguishment of debt.

Upon maturity of the 2021 Notes on December 1, 2021, outstanding 2021 Notes with a principal amount of $26.7 million were settled, at the option of the holders, by converting $26.3 million aggregate principal amount of 2021 Notes to common shares and cash repayment of $0.4 million aggregate principal amount of 2021 Notes.

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*Convertible Senior Notes Carrying Value*

The 2024 Notes and 2025 Notes are recorded on our accompanying consolidated balance sheets at their net carrying values as of December 31, 2022. However, the 2024 Notes and 2025 Notes are privately traded by qualified institutional buyers (within the meaning of Rule 144A under the Securities Act) and their fair values are Level 2 inputs. The 2024 Notes and 2025 Notes also have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments. The following table summarizes the carrying value of the long-term convertible debt as of December 31, 2022 and December 31, 2021 (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| **2024 Notes** |  |  |
| Carrying value | $23925 | $89361 |
| Unamortized debt discount and issuance costs | 356 | 27690 |
| &nbsp;&nbsp;&nbsp;Principal amount | $24281 | $117051 |
| Remaining amortization period (years) | 1.9 | 2.9 |
| Fair value<sup>(1)</sup> | $38000 | $195445 |
| **2025 Notes** |  |  |
| Carrying value | $168885 | $126315 |
| Unamortized debt discount and issuance costs | 3615 | 46185 |
| &nbsp;&nbsp;&nbsp;Principal amount | $172500 | $172500 |
| Remaining amortization period (years) | 2.8 | 3.8 |
| Fair value<sup>(1)</sup> | $185546 | $177251 |

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<sup>(1)</sup> Fair values for notes are derived from available trading prices closest to the respective balance sheet date.

**Note 11. Commitments and Contingencies** 

**Commitments**

*Letters of Credit*

As of December 31, 2022 and December 31, 2021, the Company was party to irrevocable standby letters of credit with a bank for $13.1 million and $15.4 million, respectively, for the benefit of regulatory authorities, real estate and risk-sharing agreements. As such, we held $13.1 million and $15.4 million, respectively, in restricted cash and restricted investments as collateral as of December 31, 2022 and 2021, respectively. The letters of credit have current expiration dates between January 2023 and March 2032 and will automatically extend without amendment for an additional one-year period and will continue to automatically extend after each one-year term from the expiry date unless the bank elects not to extend beyond the initial or any extended expiry date.

*Indemnifications*

The Company's customer agreements generally include a provision by which the Company agrees to defend its partners against third-party claims (a) for death, bodily injury, or damage to personal property caused by Company negligence or willful misconduct, (b) by former or current Company employees arising from such managed service agreements, (c) for intellectual property infringement under specified conditions and (d) for Company violation of applicable laws, and to indemnify them against any damages and costs awarded in connection with such claims. To date, the Company has not incurred any material costs as a result of such indemnities and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

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*Pre-IPO Investor Registration Rights Agreement*

We entered into a registration rights agreement with The Advisory Board, UPMC, TPG and another investor to register for sale under the Securities Act shares of our Class A common stock, including those delivered in exchange for Class B common stock and Class B common units. Subject to certain conditions and limitations, this agreement provides these investors with certain demand, piggyback and shelf registration rights. The registration rights granted under the registration rights agreement will terminate upon the date the holders of shares that are a party thereto no longer hold any such shares that are entitled to registration rights. Pursuant to our contractual obligations under this agreement, we filed a registration statement on Form S-3 with the SEC on July 28, 2016, which was declared effective on August 12, 2016.

We will pay all expenses relating to any demand, piggyback or shelf registration, other than underwriting discounts and commissions and any transfer taxes, subject to specified conditions and limitations. The registration rights agreement includes customary indemnification provisions, including indemnification of the participating holders of shares of Class A common stock and their directors, officers and employees by us for any losses, claims, damages or liabilities in respect thereof and expenses to which such holders may become subject under the Securities Act, state law or otherwise. We did not incur any expenses related to secondary offerings or other sales of shares by our investor stockholders during the years ended December 31, 2022, 2021 and 2020, respectively.

*Guarantees*

On July 16, 2020, EVH Passport, Evolent Health LLC and Molina Healthcare, Inc. ("Molina") entered into an Asset Purchase Agreement (the "Molina APA"), which contemplated the sale by EVH Passport to Molina of certain assets, including certain intellectual property rights of EVH Passport and EVH Passport's rights under the Passport Medicaid Contract. On September 1, 2020, EVH Passport and Molina consummated the transactions contemplated by the Molina APA (the "Molina Closing") and the Passport Medicaid Contract was novated to Molina. In connection with the Molina Closing, the Company continued to provide administrative support services relating to the Passport Medicaid Contract to Molina through the end of 2020. Following the Molina Closing, EVH Passport began working with regulatory authorities including the Kentucky Department of Insurance ("KY DOI") regarding the wind down of its operations throughout 2021 and 2022. As part of that wind down process, the Company, as the parent of EVH Passport, entered into a guarantee for the benefit of the KY DOI to satisfy any EVH Passport liability or obligation in the event EVH Passport is not able to meet its wind down liabilities or obligations. As of December 31, 2022, no amounts have been funded under this guarantee.

*Reinsurance Agreements*

On December 30, 2019, UHC, PHS I, the Company and EVH Passport consummated the transactions contemplated by the Passport APA (the "Passport Closing"). As part of the Passport Closing, EVH Passport and UHC entered into an agreement that provided for the administration and assumption of the financial risks by EVH Passport of the D-SNP Business until such time as EVH Passport became certified as a Medicare Advantage Organization and the D-SNP Business could be transferred to EVH Passport. On October 1, 2020, the D-SNP Business was transferred from UHC to EVH Passport.

At the Molina Closing, Molina and EVH Passport entered into an agreement that provided for the assumption of the financial risks by Molina of the D-SNP Business until such time as Molina's Kentucky health plan becomes certified as a Medicare Advantage Organization and the D-SNP Business is transferred to Molina. The Company and EVH Passport continued to administer the D-SNP Business until January 1, 2021, at which time Molina became responsible for its administration until the D-SNP Business was officially transferred to Molina effective September 1, 2021. As of December 31, 2022, there are no outstanding amounts under this reinsurance agreement.

*UPMC Reseller Agreement*

The Company and UPMC are parties to a reseller, services and non-competition agreement, dated August 31, 2011, which was amended and restated by the parties on June 27, 2013 (as amended through the date hereof, the "UPMC Reseller Agreement"). Under the terms of the UPMC Reseller Agreement, UPMC has appointed the Company as a non-exclusive reseller of certain services, subject to certain conditions and limitations specified in the UPMC Reseller Agreement. In consideration for the Company's obligations under the UPMC Reseller Agreement and subject to certain conditions described therein, UPMC has agreed not to sell certain products and services directly to a defined list of 20 of the Company's customers. Expense associated with the UPMC Reseller Agreement for the years ended December 31, 2022, 2021 and 2020 was $1.2 million, $2.4 million and $4.7 million, respectively, and is in wind-down.

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**Contingencies**

*Tax Receivables Agreement*

In connection with the Offering Reorganization, the Company entered into the Tax Receivables Agreement (the "TRA") with certain of its investors, which provides for the payment by the Company to these investors of 85% of the amount of the tax benefits, if any, that the Company is deemed to realize as a result of increases in our tax basis related to exchanges of Class B common units as well as tax benefits attributable to the future utilization of pre-IPO NOLs.

Due to the reduction in the Company's valuation allowance primarily resulting from deferred tax liabilities established as part of the IPG acquisition, the Company has recorded a partial TRA liability of $46.0 million as of December 31, 2022, which represents 85% of the deferred tax assets related to the Company's unrealized tax benefits on historical pre-IPO losses and tax basis increases from exchanges, offset with the related valuation allowance.

We will assess the realizability of the TRA-related deferred tax assets at each reporting period, and a change in our estimate of our liability associated with the TRA may result as additional information becomes available, including results of operations in future periods. The realizability of the deferred tax assets is evaluated based on all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.

*Litigation Matters*

We are engaged from time to time in certain legal disputes arising in the ordinary course of business, including employment claims. When the likelihood of a loss contingency becomes probable and the amount of the loss can be reasonably estimated, we accrue a liability for the loss contingency. We continue to review accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained, and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made.

On August 8, 2019, a shareholder of the Company filed a class action complaint against the Company, asserting claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, in the United States District Court, Eastern District of Virginia, Alexandria Division. An amended complaint was filed on January 10, 2020, a second amended complaint was filed on June 8, 2020, and a third amended complaint, now titled Plymouth County Retirement System v. Evolent Health, Inc., Frank Williams, Nicholas McGrane, Seth Blackley, was filed on December 2, 2021. On July 13, 2022, the parties to the class action executed a term sheet for settlement of the litigation, subject to documentation of the settlement and approval of the court after notice to class members. On August 2, 2022, the lead plaintiff in the case filed an unopposed motion seeking preliminary approval of the settlement and related exhibits, including draft notice to class members and a proposed final order. The settlement stipulation was granted final approval at hearing on November 18, 2022. The agreed-upon settlement payment of $23.5 million was funded entirely by applicable directors' and officers' liability insurance. As such, we did not incur a significant net loss or cash outflow as a result of the settlement of this matter. This matter is now resolved.

On June 8, 2021, a shareholder of the Company filed a derivative action in the Delaware Chancery Court against some current and former Board members and against the Company as a nominal defendant, alleging that the Company's Board was negligent in its oversight of the Company's relationship with Passport Health Plan. The case is Lincolnshire Police Pension Fund, derivatively on behalf of Evolent Health, Inc., v. Blackley, Williams, Scott, Holder, Farner, D'Amato, Duffy, Felt, Samet, Hobart, and Payson, and Evolent Health, Inc. ("Derivative Action"). The Company and the Director-Defendants filed a motion to dismiss the complaint on August 27, 2021, and Plaintiffs responded by filing an amended complaint on October 26, 2021. Defendants filed a motion to dismiss the amended complaint on December 17, 2021. Plaintiffs filed a motion to dismiss the case without prejudice, which was granted by the Delaware Chancery Court on January 5, 2023. This matter is now resolved.

**Credit and Concentration Risk**

The Company is subject to significant concentrations of credit risk related to cash and cash equivalents and accounts receivable. As of December 31, 2022, approximately 99.6% of our $215.2 million of cash and cash equivalents, restricted cash and restricted investments were held in bank deposits with FDIC participating banks and approximately 0.4% were held in international banks. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains these deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any realized losses on cash and cash equivalents to date.

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The Company is also subject to significant concentration of accounts receivable risk as a substantial portion of our trade accounts receivable is derived from a small number of our partners. The following table summarizes the partners who represented at least 10.0% of our consolidated short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable:

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| | | |
|:---|:---|:---|
| | **As of December 31,** | **As of December 31,** |
| | **2022** | **2021** |
| Cook County Health and Hospitals System | 42.5% | \* |
| Florida Blue Medicare, Inc. | \* | 46.4% |
| Molina Healthcare | 12.0% | 10.4% |
| Bright Health Management, Inc. | 11.3% | \* |

---

————————

\* &nbsp;&nbsp;&nbsp;&nbsp;Represents less than 10.0% of the respective balance.

In addition, the Company is subject to significant concentration of revenue risk as a substantial portion of our revenue is derived from a small number of contractual relationships with our operating partners.

The following table summarizes those partners who represented at least 10.0% of our consolidated revenue:

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** <sup>(1)</sup> | **2020** <sup>(1)</sup> |
| Cook County Health and Hospitals Systems | 22.4% | 28.0% | 22.3% |
| Florida Blue Medicare, Inc. <sup>(2)</sup> | 11.5% | 14.1% | N/A |
| Passport <sup>(3)</sup> | \* | \* | 19.0% |

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————————

<sup>(1)</sup> The denominator excludes $44.8 million and 117.4 million of True Health premium revenue reclassified to discontinued operations for the years ended December 31, 2021 and 2020, respectively.

<sup>(2)</sup> Customer added during the year ended December 31, 2021. Florida Blue Medicare, Inc. utilizes our specialty care management solutions provided by New Century Health.

<sup>(3)</sup> Represents revenues from EVH Passport/UHC through the Molina Closing. Subsequent to the Molina Closing on September 1, 2020, the Company has not received any material revenue from EVH Passport. However, as part of the Molina Closing, we entered into a new contract with Molina on similar terms to our prior services contract with EVH Passport through December 31, 2020 which accounted for approximately 9.7% of our consolidated revenues for the year ended December 31, 2020.

\* &nbsp;&nbsp;&nbsp;&nbsp;Represents less than 10.0% of the respective balance

We derive a significant portion of our revenues from our largest partners. The loss, termination or renegotiation of our relationship or contract with any significant partner or multiple partners in the aggregate could have a material adverse effect on the Company's financial condition and results of operations.

**Note 12. Leases**

The Company enters into various office space, data center, and equipment lease agreements in conducting its normal business operations. At the inception of any contract, the Company evaluates the agreement to determine whether the contract contains a lease. If the contract contains a lease, the Company then evaluates the term and whether the lease is an operating or finance lease. Most leases include one or more options to renew or may have a termination option. The Company determines whether these options are reasonably certain to be exercised or not at the inception of the lease. In addition, some leases contain escalation clauses. The rent expense is recognized on a straight-line basis in the consolidated statements of operations and comprehensive income (loss) over the term of the lease. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheets.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Further, the Company treats all lease and non-lease components as a single combined lease component for all classes of underlying assets. The Company also enters into sublease agreements for some of its leased office space. Immaterial rental income attributable to subleases is offset against rent expense over the terms of the respective leases.

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The Company leases office space and computer and other equipment under operating lease agreements expiring at various dates through 2032. Under the lease agreements, in addition to base rent, the Company is generally responsible for operating and maintenance costs and related fees. Several of these agreements include tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, we record a deferred rent asset or liability on our consolidated balance sheets equal to the difference between rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis over the terms of the leases. The Company's primary office location is in Arlington, Virginia, which has served as its corporate headquarters since 2013. The Arlington, Virginia office lease expires in January 2032. Certain leases acquired as part of the Valence Health transaction included existing sublease agreements for office locations in Chicago, Illinois.

In connection with various lease agreements, the Company is required to maintain $2.3 million and $3.8 million in letters of credit as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Company held $2.3 million and $3.8 million in restricted cash and restricted investments on the consolidated balance sheet as collateral for the letters of credit, respectively.

The following table summarizes our primary office leases as of December 31, 2022 (in thousands, other than term):

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| | | | |
|:---|:---|:---|:---|
| **Location** | **Lease Termination Term (in years)** | **Future Minimum Lease Commitments** | **Letter of Credit Amount Required** |
| Arlington, VA | 9.1 | $32409 | $1579 |
| Riverside, IL | 8.3 | 38163 | 232 |
| Edison, NJ | 3.3 | 1697 | 222 |
| Alpharetta, GA | 2.8 | 1295 |  |
| Pune, India | 0.7 | 396 |  |
| Brea, CA | 4.4 | 4229 |  |

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The following table summarizes the components of our lease expense (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Operating lease cost | $8956 | $12991 | $15848 |
| Amortization of right-of-use assets |  |  | 299 |
| Interest expense |  |  | 3 |
| Variable lease cost | 5682 | 5036 | 5097 |
| &nbsp;&nbsp;&nbsp;Total lease cost | $14638 | $18027 | $21247 |

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Maturity of lease liabilities (in thousands) as of December 31, 2022, is as follows:

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| | |
|:---|:---|
| | **Operating lease expense** |
| 2023 | $10859 |
| 2024 | 10595 |
| 2025 | 10012 |
| 2026 | 8987 |
| 2027 | 8685 |
| Thereafter | 31692 |
| Total lease payments | 80830 |
| Less: |  |
| &nbsp;&nbsp;&nbsp;Interest | 17698 |
| Present value of lease liabilities | $63132 |

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Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows:

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| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** |
| | **2022** | **2021** | **2020** |
| Weighted average discount rate | 6.36% | 6.38% | 6.44% |
| Weighted average remaining lease term | 7.8 | 8.8 | 9.4 |

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**Note 13. Loss Per Common Share**

The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Loss from continuing operations | $(18701) | $(30284) | $(328172) |
| &nbsp;&nbsp;Loss from discontinued operations, net of tax | (463) | (7317) | (6074) |
| Net loss attributable to common shareholders of Evolent Health, Inc. | $(19164) | $(37601) | $(334246) |
| Weighted-average common shares outstanding - basic and diluted | 93699 | 86067 | 84928 |
| **Loss per common share** |  |  |  |
| Basic and diluted |  |  |  |
| &nbsp;&nbsp;Continuing operations | $(0.20) | $(0.35) | $(3.86) |
| &nbsp;&nbsp;Discontinued operations |  | (0.09) | (0.08) |
| Basic and diluted loss per share attributable to common shareholders of Evolent Health, Inc. | $(0.20) | $(0.44) | $(3.94) |

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Basic net loss per common share is calculated using the weighted average number of common shares outstanding during the period. Diluted net earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), shares issuable upon debt conversion (calculated using an as-if converted method).

Anti-dilutive shares excluded from the calculation of weighted-average common shares presented above are presented below (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Restricted stock units ("RSUs"), performance-based RSUs ("PSUs") and leveraged stock units ("LSUs") | 1804 | 1807 | 797 |
| Stock options | 1769 | 2036 | 1141 |
| Convertible senior notes | 9574 | 12602 | 11206 |
| &nbsp;&nbsp;&nbsp;Total | 13147 | 16445 | 13144 |

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**Note 14. Stock-based Compensation**

***2011 and 2015 Equity Incentive Plans***

The Company issues awards, including stock options, performance-based stock options, restricted stock units, performance-based restricted stock units and leveraged stock units, under the Evolent Health Holdings, Inc. 2011 Equity Incentive Plan (the "2011 Plan") and the 2015 Evolent Health, Inc. Omnibus Incentive Compensation Plan (the "2015 Plan"). We assumed the 2011 Plan in connection with the merger of Evolent Health Holdings with and into Evolent Health, Inc. The 2011 Plan allows for the grant of an array of equity-based and cash incentive awards to our directors, employees and other service providers. The 2011 Plan was amended on September 23, 2013, to increase the number of shares authorized to 9.1 million of the Company's common stock. As of December 31, 2022 and 2021, 4.8 million stock options and 3.8 million shares of restricted stock have been awarded, net of forfeitures, under the 2011 Plan.

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On May 1, 2015, the Board of Directors approved and authorized the 2015 Plan which provides for the issuance of up to 6.0 million shares of the Company's Class A common stock to employees and non-employee directors of the Company and its consolidated subsidiaries. The 2015 Plan was amended on June 13, 2018 and April 15, 2021, to increase the number of shares authorized to 10.5 million and 15.4 million, respectively. Upon shareholder approval of the amended 2015 Plan in 2018, the 2011 Plan was automatically terminated and no further awards may be granted under the 2011 Plan. The 2011 Plan continues to govern awards previously granted under the 2011 Plan. As of December 31, 2022, 2.8 million of stock options, 5.5 million RSUs, 1.4 million LSUs and 0.8 million PSUs, have been awarded, net of forfeitures, under the 2015 Plan. As of December 31, 2021, 2.8 million stock options, 4.5 million RSUs and 1.1 million LSUs and 0.3 million PSUs, have been awarded, net of forfeitures, under the 2015 Plan.

We follow an employee model for our stock-based compensation as awards are granted in the stock of the Company to employees and non-employee directors of the Company or its consolidated subsidiaries. Following the adoption of ASU 2018-07 during 2018, we also follow the employee model for stock-based compensation for awards granted to acquire goods and services from non-employees.

*Stock-based Compensation Expense*

Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Award Type** |  |  |  |
| Stock options | $416 | $1337 | $2927 |
| Performance-based stock options |  |  | 75 |
| RSUs | 17327 | 9606 | 7763 |
| Performance-based RSUs | 14308 | 2471 |  |
| LSUs | 1930 | 3297 | 3841 |
| &nbsp;&nbsp;&nbsp;Total compensation expense by award type | $33981 | $16711 | $14606 |
| **Line Item** |  |  |  |
| Cost of revenue | $4387 | $2263 | $1811 |
| Selling, general and administrative expenses | 29594 | 14448 | 12795 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total compensation expense by financial statement line item | $33981 | $16711 | $14606 |

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No stock-based compensation was capitalized as software development costs for the years ended December 31, 2022, 2021 and 2020.

Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows:

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| | | |
|:---|:---|:---|
| | **As of December 31, 2022** | **As of December 31, 2022** |
| | **Unrecognized Compensation Expense** | **Weighted Average Period (years)** |
| Stock options | $74 | 0.29 |
| RSUs | 36555 | 1.55 |
| LSUs | 491 | 0.61 |
| PSUs | 27629 | 2.02 |
| &nbsp;&nbsp;&nbsp;Total | $64749 |  |

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*Stock Options*

Other than the performance-based stock options described below, options awarded under the incentive compensation plans are generally subject to a four-year graded service vesting period where 25% of the award vests after each year of service and have a maximum term of 10 years. Information with respect to our options is presented in the following disclosures.

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The fair value of options is determined using a Black-Scholes options valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company's awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options.

Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Options** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Term** | **Aggregate Intrinsic Value** |
| Outstanding as of December 31, 2021 | 2549 | $9.49 | 3.99 | $46342 |
| &nbsp;&nbsp;&nbsp;Exercised | (651) | 6.84 |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited | (3) | 13.29 |  |  |
| Outstanding as of December 31, 2022 | 1895 | $10.40 | 3.24 | $33503 |
| Vested and expected to vest after December 31, 2022 | 1895 | $10.40 | 3.24 | $33503 |
| Exercisable as of December 31, 2022 | 1841 | $10.36 | 3.15 | $32621 |

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The total fair value of options vested during the years ended December 31, 2022, 2021 and 2020, was $2.6 million, $4.9 million and $3.6 million, respectively. The total intrinsic value of options exercised during 2022, 2021 and 2020 was $16.3 million, $20.8 million and $2.2 million, respectively. We issue new shares to satisfy option exercises.

*Performance-based stock option awards*

In March 2016, the Company granted approximately 0.3 million performance-based options to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders' interests. Each of the grants is subject to market-based vesting, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;• one-third of the shares subject to the option award will vest in the event that the average closing price of the Company's Class A common stock on the NYSE is at least $13.35 per share for a consecutive ninety day period;

&nbsp;&nbsp;&nbsp;&nbsp;• one-third of the shares subject to the option award will vest in the event that the average closing price of the Company's Class A common stock on the NYSE is at least $16.43 per share for a consecutive ninety day period; and

&nbsp;&nbsp;&nbsp;&nbsp;• one-third of the shares subject to the option award will vest in the event that the average closing price of the Company's Class A common stock on the NYSE is at least $19.51 per share for a consecutive ninety day period.

In addition, the percentage of options per tranche that has satisfied the market-based performance hurdle is also subject to a service completion schedule. The aggregate percentage of options eligible to vest is based upon each of the service completions dates below:

&nbsp;&nbsp;&nbsp;&nbsp;• 50% of the shares subject to the option award vested on March 1, 2019, and

&nbsp;&nbsp;&nbsp;&nbsp;• 50% of the shares subject to the option award vested on March 1, 2020.

We measured the fair value of the performance-based stock options using a Monte Carlo simulation approach with the following assumptions: risk-free interest rate of 1.83%, volatility of 65%, expected term of ten years and dividend yield of 0% as we do not currently pay dividends nor expect to do so during the expected option term. These inputs resulted in a weighted-average fair value per option granted of $6.68. During 2016 all of the average stock price milestones were achieved and therefore the awards are now only subject to the service completion obligations.

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Information with respect to our performance-based stock options (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Options** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Term** | **Aggregate Intrinsic Value** |
| Outstanding as of December 31, 2021 | 268 | $10.27 | 4.16 | $5620 |
| Outstanding as of December 31, 2022 | 268 | 10.27 | 3.16 | 5730 |
| Vested and expected to vest after December 31, 2022 | 268 | $10.27 | 3.16 | $5730 |

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*Restricted Stock Units*

Other than the performance-based RSUs described below, and other than RSUs granted to our non-employee directors which have a one year vesting period, RSUs awarded under the incentive compensation plans are generally subject to a three or four-year graded service vesting period where 25% of the award vests after each year of service or a three-year graded service vesting period where 33% of the award vests after each year of service and are issued to the participants for no consideration. During 2018, we also granted certain RSUs with a one-year vesting period in conjunction with the New Century Health transaction. Information with respect to our RSUs (not including performance-based RSUs) is presented below (in thousands, except for weighted-average grant-date fair value):

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| | | |
|:---|:---|:---|
| | **Total RSUs** | **Weighted Average Grant Date Fair Value** |
| Outstanding as of December 31, 2021 | 2087 | $16.35 |
| &nbsp;&nbsp;&nbsp;Granted | 1130 | 28.23 |
| &nbsp;&nbsp;&nbsp;Forfeited | (206) | 21.10 |
| &nbsp;&nbsp;&nbsp;Vested | (743) | 15.56 |
| Outstanding as of December 31, 2022 | 2268 | $22.09 |

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During the years ended December 31, 2022, 2021 and 2020, we granted RSUs with a weighted-average grant date fair value of $28.23, $21.10 and $8.88, respectively, which represents the weighted-average closing price of our common stock on the grant date.

The total fair value of RSUs vested during the years ended December 31, 2022, 2021 and 2020 was $11.6 million, $7.3 million and $6.1 million, respectively.

*Leveraged Stock Unit Awards*

During 2020 and 2019, the Company granted 0.5 million and 0.7 million leveraged stock units, respectively, to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders' interests. Each of the grants is or was subject to share price-based vesting on the business day following the third anniversary of the grant date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;• If the stock price has increased by 33.3%, 75% of the shares will vest

&nbsp;&nbsp;&nbsp;&nbsp;• If the stock price has increased by 50%, 100% of the shares will vest

&nbsp;&nbsp;&nbsp;&nbsp;• If the stock price has increased by 100%, 150% of the shares will vest

&nbsp;&nbsp;&nbsp;&nbsp;• If the stock price has increased by 200%, 200% of the shares will vest (this is the maximum possible vest amount)

The price assumptions used for our leveraged stock unit awards were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2020** | **2020** | **2019** | **2019** |
| Weighted-average fair value per leveraged stock unit granted | $| 8.90 | $| 6.52 |
| Assumptions: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Expected term | 10 years | 10 years | 10 years | 10 years |
| &nbsp;&nbsp;&nbsp;Expected volatility | 62.1 | 62.1% | 51.7 | 51.7% |
| &nbsp;&nbsp;&nbsp;Risk-free interest rate | 0.85% | 0.85% | 2.54% | 2.54% |
| &nbsp;&nbsp;&nbsp;Dividend yield |  | —% |  | —% |

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The fair value of leveraged stock units is determined using a Black-Scholes valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the award. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company's awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the awards are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an award is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the awards.

Information with respect to our leveraged stock unit awards (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Leveraged Stock Units** | **Weighted Average Grant Date Fair Value** | **Weighted Average Remaining Contractual Term** | **Aggregate Intrinsic Value** |
| Outstanding as of December 31, 2021 | 1084 | $11.07 | 7.68 | $17993 |
| Change in achievement | 303 | 12.85 |  |  |
| Vested | (867) | 12.85 |  |  |
| Outstanding as of December 31, 2022 | 520 | $9.15 | 7.24 | $9846 |
| Vested and expected to vest after December 31, 2022 | 520 | $9.15 | 7.24 | $9846 |

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Shares awarded during fiscal 2022 include 0.3 million additional shares awarded for the final achievement of the 2019 leveraged stock unit awards which was certified in the first quarter of fiscal 2022.

*Performance-based RSUs*

During 2021, the Company granted 0.3 million performance-based RSUs to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders' interests. A two and three-year cumulative Adjusted EBITDA goal was approved and began on January 1, 2021. Shares are earned based on a sliding scale of performance above and below the performance goal. The sliding scale is anchored by a minimum performance requirement of cumulative Adjusted EBITDA. If the minimum performance goal is not achieved, then no performance shares are earned. If 100% of the performance goal is achieved, then award is paid at target and if the maximum performance is achieved, then 200% of the targeted shares are earned. If the cumulative Adjusted EBITDA falls between tiers on the sliding scale, the actual cumulative Adjusted EBITDA payout percentage shall be determined by linear interpolation between the percentages on a straight-line basis. Shares earned by the two and three-year cumulative Adjusted EBITDA performance will be adjusted based on a respective total shareholder return ("TSR"). Shares earned will be adjusted if TSR performance is in the bottom quartile and will be adjusted +10% if TSR performance is in the upper quartile. TSR represents stock price appreciation over each of the two performance periods.

The price assumptions used for our performance based stock unit awards were as follows:

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| | | |
|:---|:---|:---|
| | **1st Tranche** | **2nd Tranche** |
| Weighted-average fair value per performance based stock unit granted | $20.64 | $20.69 |
| Assumptions: |  |  |
| &nbsp;&nbsp;&nbsp;Expected term | 2 years | 3 years |
| &nbsp;&nbsp;&nbsp;Expected volatility | 89.5% | 77.7% |
| &nbsp;&nbsp;&nbsp;Risk-free interest rate | 0.12% | 0.25% |
| &nbsp;&nbsp;&nbsp;Dividend yield | —% | —% |

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The fair value of performance based stock units is determined using a Black-Scholes valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the award. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company's awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the awards are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an award is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the awards.

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During 2022, the Company granted 0.5 million performance-based RSUs to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders' interests. A three-year cliff vesting was approved and began on January 1, 2022. Shares are earned based on a sliding scale of performance above and below the performance goal. The sliding scale is anchored by a minimum performance requirement of company value. Per the agreements, company value is calculated using a formula based on revenue growth and cumulative Adjusted EBITDA, as adjusted for any acquired business during the period. If the minimum performance goal is not achieved, then no performance shares are earned. If 100% of the performance goal is achieved, then award is paid at target and if the maximum performance is achieved, then 250% of the targeted shares are earned. If the company value falls between tiers on the sliding scale, the actual company value payout percentage shall be determined by linear interpolation between the percentages on a straight-line basis.

Information with respect to our performance based restricted stock unit awards (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Performance Based Stock Units** | **Weighted Average Grant Date Fair Value** | **Weighted Average Remaining Contractual Term** | **Aggregate Intrinsic Value** |
| Outstanding as of December 31, 2021 | 319 | $20.67 | 9.16 | $2233 |
| Granted | 479 | 28.15 |  |  |
| Change in achievement | 625 | 23.85 |  |  |
| Forfeited | (27) | 25.32 |  |  |
| Outstanding as of December 31, 2022 | 1396 | $24.30 | 8.72 | $5274 |
| Vested and expected to vest after December 31, 2022 | 1396 | $24.30 | 8.72 | $5274 |

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**Note 15. Income Taxes**

An income tax expense (benefit) of $(43.4) million, $0.5 million, and $(2.4) million was recognized for the years ended December 31, 2022, 2021 and 2020, respectively.

Our loss from continuing operations before income taxes was as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Domestic | $(66055) | $(32719) | $(332373) |
| Foreign | 3978 | 2918 | 1833 |
| &nbsp;&nbsp;&nbsp;Loss from continuing operations before income taxes | $(62077) | $(29801) | $(330540) |

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Components of income tax expense (benefit) (in thousands) consist of the following:

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Current** |  |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $(875) | $(1469) | $(2305) |
| &nbsp;&nbsp;&nbsp;State and local | 1788 | 1449 | 200 |
| &nbsp;&nbsp;&nbsp;Foreign | 1318 | 1027 | 721 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current tax expense (benefit) | 2231 | 1007 | (1384) |
| **Deferred** |  |  |  |
| &nbsp;&nbsp;&nbsp;Federal | 5055 | (5866) | (38258) |
| &nbsp;&nbsp;&nbsp;State and local | (2790) | (4021) | (9565) |
| &nbsp;&nbsp;&nbsp;Foreign | 92 | (493) | (303) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax expense (benefit) | 2357 | (10380) | (48126) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in valuation allowance | (47964) | 9856 | 47142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total tax expense (benefit) | $(43376) | $483 | $(2368) |

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A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below:

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| U.S. statutory tax rate | 21.0% | 21.0% | 21.0% |
| U.S. state income taxes, net of U.S. federal tax benefit | (0.6)% | 1.9% | 2.9% |
| Foreign earnings at other than U.S. rates | (0.8)% | 0.3% | —% |
| Change in valuation allowance | 77.3% | (33.1)% | (14.3)% |
| Benefit of net operating loss carryback provision | —% | —% | 1.1% |
| Non-deductible goodwill impairment | —% | —% | (11.5)% |
| Non-deductible excess compensation | (27.8)% | (10.1)% | (0.3)% |
| Excess tax benefits (shortfalls) on stock-based compensation | 12.2% | 8.1% | (0.3)% |
| Convertible debt extinguishment | (3.4)% | (1.5)% | —% |
| Change in uncertain tax positions | (1.1)% | 0.2% | —% |
| Nondeductible transaction costs | (1.7)% | —% | —% |
| Change in state rate | 5.2% | 6.8% | 1.3% |
| Return to provision | (1.1)% | 6.6% | (0.8)% |
| Change in indefinite reinvestment assertion for domestic subsidiaries | —% | —% | 1.0% |
| Tax sharing settlement | —% | (1.1)% | —% |
| Tax receivable agreement | (9.1)% | —% | —% |
| Other, net | (0.2)% | (0.7)% | 0.6% |
| &nbsp;&nbsp;&nbsp;Effective tax rate | 69.9% | (1.6)% | 0.7% |

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Deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the tax rates expected to be in effect when the temporary differences are expected to be recovered or settled.

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Significant components of the Company's deferred tax assets and liabilities (in thousands) were as follows:

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| | | |
|:---|:---|:---|
| | **As of December 31,** | **As of December 31,** |
| | **2022** | **2021** |
| **Deferred Tax Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Start-up and organizational costs | $84 | $103 |
| &nbsp;&nbsp;&nbsp;Goodwill | 12281 | 18774 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 16362 | 15968 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 9326 | 10345 |
| &nbsp;&nbsp;&nbsp;Stock based compensation | 1263 | 8714 |
| &nbsp;&nbsp;&nbsp;Net operating loss carryforwards | 131317 | 130242 |
| &nbsp;&nbsp;&nbsp;Federal and state research tax credits | 1828 | 1828 |
| &nbsp;&nbsp;&nbsp;Fixed assets | 393 | 480 |
| &nbsp;&nbsp;&nbsp;Interest deduction limitation | 7089 | 7795 |
| &nbsp;&nbsp;&nbsp;Outside basis differences | 650 | 1972 |
| &nbsp;&nbsp;&nbsp;Other | 6677 | 9236 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 187270 | 205457 |
| &nbsp;&nbsp;&nbsp;&nbsp;Valuation allowance | (70790) | (101345) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets | 116480 | 104112 |
| **Deferred Tax Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Internally developed software costs | 11173 | 12501 |
| &nbsp;&nbsp;&nbsp;Intangible assets | 89784 | 48677 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets - Operating | 12696 | 12284 |
| &nbsp;&nbsp;&nbsp;Contract fulfillment costs | 4501 | 8317 |
| &nbsp;&nbsp;&nbsp;Convertible debt |  | 17604 |
| &nbsp;&nbsp;&nbsp;Other | 2136 | 5387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax liabilities | 120290 | 104770 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax assets (liabilities) | $(3810) | $(658) |

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Changes in our valuation allowance (in thousands) were as follows:

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** |
| Balance at beginning-of-year | $101345 | $89723 |
| Charged (credited) to costs and expenses | (47964) | 9856 |
| Charged to other accounts <sup>(1)</sup> | 17409 | 1766 |
| &nbsp;&nbsp;&nbsp;Balance at end-of-year | $70790 | $101345 |

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______________

<sup>(1)</sup> Amounts charged to other accounts includes $17.3 million charged to shareholders' equity and $0.1 million charged to discontinued operations for the year ended December 31, 2022 and $1.8 million charged to discontinued operations for the year ended December 31, 2021.

For the year ended December 31, 2022, the effective tax rate was 69.9% and the corresponding tax benefit recorded was $43.4 million. The Company and its U.S. subsidiaries continue to record a valuation allowance against its net deferred tax assets, with the exception of indefinite lived components. The income tax benefit recorded by the company in 2022 primarily relates to the $46.8 million reduction in the valuation allowance resulting from deferred tax liabilities established as part of the IPG acquisition accounting, partially offset by state and foreign taxes.

For the year ended December 31, 2021, the effective tax rate was (1.6)% and the corresponding tax expense recorded was $0.5 million. The income tax expense recorded by the Company in 2021 primarily relates to foreign taxes and the impact of the valuation allowance recorded against the Company's net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period.

For the year ended December 31, 2020, the effective tax rate was 0.7% and the corresponding tax benefit recorded was $2.4 million. The income tax benefit recorded by the Company in 2020 primarily relates to the impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). On March 27, 2020, in response to the COVID-19 pandemic, the CARES Act, was signed into law. The CARES Act allowed NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years for the recovery of previously paid federal income taxes. The Company recorded an income tax benefit related to

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carrying back New Century Health's 2018 NOL as part of a federal income tax refund claim for taxes it paid on income in 2013 and 2014. The remaining income tax provisions included in the CARES Act, did not have a significant impact on the Company.

As of December 31, 2022, the Company had $186.9 million of federal and $301.8 million of state NOL carryforwards available to offset future taxable income that begin to expire in 2032 and 2023, respectively, and $295.5 million federal and $245.0 million of state NOLs with an indefinite carryforward period, subject to a utilization limit of 80% of taxable income in any given year. However, as it is more likely than not that such tax benefit will not be realized based on our evaluation, we have established a valuation allowance against those NOLs. Furthermore, Internal Revenue Code Section 382 imposes limitations on the utilization of NOLs in the event of certain changes in ownership of the Company, which may have occurred or could occur in the future. This could result in an annual limit on the Company's ability to utilize NOLs and could cause U.S. federal and state income taxes to be due sooner than if no such limitations applied.

As of December 31, 2022, the Company had $2.1 million and $0.3 million of research and development credits for federal and state income tax purposes, respectively, which could expire unutilized beginning in 2037 and 2028, respectively. The Company has established a partial valuation allowance against those credits.

On August 16, 2022, the President signed into law the Inflation Reduction Act of 2022 which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we expect to be immaterial to our financial results, financial position and cash flows.

Changes in our unrecognized tax benefits (in thousands) were as follows:

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Balance at beginning-of-year | $609 | $678 | $753 |
| Gross increases - tax positions in prior period | 616 |  |  |
| Gross increases - tax positions in current period | 399 |  |  |
| Lapse of statute of limitations |  | (69) | (75) |
| &nbsp;&nbsp;&nbsp;Balance at end-of-year | $1624 | $609 | $678 |

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We are subject to taxation in various jurisdictions in the U.S., India and the Philippines. Tax years 2011 and all subsequent periods remain subject to examination by the U.S. federal and state taxing jurisdictions due to the availability of NOL carryforwards. Included in the balance of unrecognized tax benefits as of December 31, 2022, are $0.6 million of tax benefits that, if recognized, would not affect the overall effective tax rate, due to the offsetting impact on the Company's valuation allowance. The Company has recognized $0.3 million of interest and penalties related to uncertain tax positions as a component of income tax expense for the year ended December 31, 2022. The Company recognized no interest and penalties related to uncertain tax positions for the year ended December 31, 2021. The Company has accrued interest and penalties related to uncertain tax positions of $0.4 million and $0.0 million as of December 31, 2022 and 2021, respectively. The Company had recognized $1.6 million of uncertain tax positions as of December 31, 2022, and $0.6 million as of December 31, 2021. The Company and its subsidiaries are not currently subject to income tax audits in any U.S. state or local jurisdiction, or any foreign jurisdiction, for any tax year.

*Tax Receivables Agreement*

Pursuant to the Offering Reorganization, Class B Exchanges increased our tax basis in our share of Evolent Health LLC's tangible and intangible assets. These increases in tax basis increase our depreciation and amortization deductions and create other tax benefits and, therefore, may reduce the amount of tax that we would otherwise be required to pay in the future. In addition, certain NOLs of Evolent Health Holdings (and of an affiliate of TPG) are available to us as a result of the Offering Reorganization.

In connection with the Offering Reorganization, we entered into the TRA with the holders of Class B common units. The agreement requires us to pay to such holders 85% of the cash savings, if any, in U.S. federal, state and local, and foreign income tax (as applicable) we realize as a result of any deductions attributable to the increase in tax basis following the Class B Exchanges or deductions attributable to imputed interest or future increases in tax basis following payments made under the TRA. Additionally, pursuant to the same agreement we will pay the former stockholders of Evolent Health Holdings 85% of the amount of the cash savings, if any, in U.S. federal, state and local, and foreign income tax that we realize as a result of the utilization of the NOLs of Evolent Health Holdings (and the affiliate of TPG) attributable to periods prior to the Offering Reorganization, approximately $79.3 million, as well as deductions attributable to imputed interest on any payments made under the agreement. The Company has recorded a partial TRA liability of $46.0 million as of December 31, 2022.

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We will benefit from the remaining 15% of any realized cash savings. The TRA was effective upon the completion of the Offering Reorganization and will remain in effect until all such tax benefits have been used or expired, or until the agreement is terminated. See Note 11 for additional discussion of the implications of the TRA.

**Note 16. Employee Benefit Plans**

We sponsor a tax-qualified 401(k) retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. We make matching contributions to the plan in accordance with the plan documents and various limitations under Section 401(a) of the Internal Revenue Code of 1986, as amended. The Company made $7.4 million, $5.4 million and $6.2 million in contributions to the 401(k) plan for the years ended December 31, 2022, 2021 and 2020, respectively. Total contributions for the year ended December 31, 2020, are net of $0.2 million from discontinued operations.

**Note 17. Investments in Equity Method Investees**

The Company holds ownership interests in joint ventures and other entities which are accounted for under the equity method. The Company evaluates its interests in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) a variable interest that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. The Company has determined that its interests in these entities meet the definition of a variable interest, however, the Company is not the primary beneficiary since it does not have the power to direct activities, therefore, the Company did not consolidate the VIEs.

As of December 31, 2022 and December 31, 2021, the Company's economic interests in its equity method investments ranged between 4% and 38% and 4% and 39%, respectively, and voting interests in its equity method investments ranged between 25% and 40%, respectively. The Company determined that it has significant influence over these entities but that it does not have control over any of the entities. Accordingly, the investments are accounted for under the equity method of accounting and the Company is allocated its proportional share of the entities' earnings and losses for each reporting period. The Company's proportional share of the gain from these investments was approximately $4.6 million, $13.2 million and $10.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company signed services agreements with certain of the aforementioned entities to provide certain management, operational and support services to help manage elements of their service offerings. Revenue related to these services agreements were $16.9 million, $15.9 million and $192.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

**Note 18. Fair Value Measurement**

GAAP defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) assuming an orderly transaction in the most advantageous market at the measurement date. GAAP also establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 - inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 - inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and the fair value can be determined through the use of models or other valuation methodologies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 - inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the particular asset or liability being measured. These items are recorded in accrued liabilities on our consolidated balance sheets.

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**Recurring Fair Value Measurements**

In accordance with GAAP, certain assets and liabilities are required to be recorded at fair value on a recurring basis. The following table summarizes the Company's assets and liabilities measured at fair value on a recurring basis (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Liabilities** | | | | |
| &nbsp;&nbsp;Contingent consideration<sup>(1)</sup> | $— | $— | $78000 | $78000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total fair value of liabilities measured on a recurring basis | $— | $— | $78000 | $78000 |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Liabilities** | | | | |
| &nbsp;&nbsp;Contingent consideration<sup>(1)</sup> | $— | $— | $28700 | $28700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total fair value of liabilities measured on a recurring basis | $— | $— | $28700 | $28700 |

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<sup>(1)</sup> Represents the fair value of earn-out consideration related to the IPG and Vital transactions as described in Note 4.

The Company recognizes any transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between fair value levels during the years ended December 31, 2022 and 2021, respectively.

In the absence of observable market prices, the fair value is based on the best information available and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks.

As discussed in Note 4, the acquisitions of IPG and Vital Decisions include a provision for additional equity consideration, at the Company's option, contingent upon the Company obtaining certain performance metrics. The earnout period for the Vital Decisions contingent considering is the three months ending December 31, 2022, and the earnout periods for IPG are the four months ended December 31, 2022 and the nine months ended September 30, 2023. The fair value of the contingent equity considerations was estimated based on the real options approach, a form of the income approach, which estimated the probability of the Company achieving future revenues under the agreement. The significant unobservable inputs used in the fair value measurements of the IPG and Vital Decisions contingent considerations are the risk-neutral (probability weighted) earnout consideration and the applicable discount rate. A significant increase in the risk-neutral (probability weighted) earnout consideration or decrease in discount rate in isolation would result in a significantly higher fair value of the contingent consideration.

The changes in our liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** |
| Balance as of beginning of period | $28700 | $13730 |
| Additions | 75000 | 14600 |
| Settlements |  | (13730) |
| Unrealized (gain) loss, net | (25700) | 14100 |
| &nbsp;&nbsp;&nbsp;Balance as of end of period | $78000 | $28700 |

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The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| | | | | **Assumption or** | **Assumption or** |
| | **Fair**<br>**Value** | **Valuation**<br>**Technique** | **Significant**<br>**Unobservable Inputs** | **Input Ranges** | **Input Ranges** |
| Contingent consideration | $78000 | Real options approach | Risk-neutral expected earnout consideration | $| 77946 |
|  |  |  | Weighted average discount rate | 9.85% - 10.01% | 9.85% - 10.01% |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| | **Fair**<br>**Value** | **Valuation**<br>**Technique** | **Significant**<br>**Unobservable Inputs** | **Assumption or**<br>**Input Ranges** |
| Contingent consideration | $28700 | Real options approach | Risk-neutral expected earnout consideration | $30935 |
|  |  |  | Discount rate | 6.04% |

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**Nonrecurring Fair Value Measurements**

In addition to the assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. This includes assets and liabilities recorded in business combinations or asset acquisitions, goodwill, intangible assets, property, plant and equipment, held-to-maturity investments and equity method investments. While not carried at fair value on a recurring basis, these items are continually monitored for indicators of impairment that would indicate current carrying value is greater than fair value. In those situations, the assets are considered impaired and written down to current fair value.

**Other Fair Value Disclosures**

The carrying amounts of cash and cash equivalents (those not held in a money market fund), restricted cash, receivables, prepaid expenses, accounts payable, accrued liabilities and accrued compensation approximate their fair values because of the relatively short-term maturities of these items and financial instruments.

See Note 10 for information regarding the fair value of the 2024 Notes and 2025 Notes.

**Note 19. Related Parties** 

The entities described below are considered related parties and the balances and/or transactions with them are reported in our consolidated financial statements.

As discussed in Note 17, the Company had economic interests in several entities that are accounted for under the equity method of accounting. The Company has allocated its proportional share of the investees' earnings and losses each reporting period. In addition, Evolent has entered into services agreements with certain of the entities to provide certain management, operational and support services to help the entities manage elements of their service offerings.

The Company also works with UPMC, one of its founding investors. The Company's relationship with UPMC is a subcontractor relationship where UPMC has agreed to execute certain tasks (primarily TPA services) relating to certain customer commitments. This relationship is currently in wind-down.

The following table presents assets and liabilities attributable to our related parties (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | $8787 | $2719 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets |  | 15 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other noncurrent assets |  | 4877 |
| **Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $27 | $1967 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 192 | 1120 |
| &nbsp;&nbsp;&nbsp;Reserve for claims and performance-based arrangements |  | 734 |

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The following table presents revenues and expenses attributable to our related parties (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Revenue** | $154591 | $45082 | $231755 |
| **Expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue (exclusive of depreciation and amortization expenses) | 128308 | 3063 | 2863 |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative expenses | 1507 | 285 | 113 |

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**Note 20. Repositioning and Other Changes**

We continually assess opportunities to improve operational effectiveness and efficiency to better align our expenses with revenues, while continuing to make investments in our solutions, systems and people that we believe are important to our long-term goals. Across 2020, we divested or agreed to divest a majority of our health plan assets, including certain assets of EVH Passport, which represented a significant revenue stream for the Company. In parallel with these divestitures, we contracted with a third-party vendor to review our operating model and organizational design in order to improve our profitability, create value through our solutions and invest in strategic opportunities in future periods.

In the fourth quarter of 2020, we committed to certain operational efficiency and profitability actions that we are taking in order to accomplish these objectives ("Repositioning Plan"). These actions included making organizational changes across our business as well as other profitability initiatives expected to result in reductions in force, re-aligning of resources as well as other potential operational efficiency and cost-reduction initiatives that will provide future benefit to the Company. The Repositioning Plan concluded in the fourth quarter of 2021.

The following table provides a summary of our total costs associated with the Repositioning Plan for the years ended December 31, 2021 and 2020, by major type of cost (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **Cumulative Amount Incurred through December 31, 2021** |
| | **2021** | **2020** | **Cumulative Amount Incurred through December 31, 2021** |
| Severance and termination benefits | $185 | $— | $185 |
| Office space consolidation | 2742 |  | 2742 |
| Professional services | 4391 | 1275 | 5666 |
| &nbsp;&nbsp;Total | $7318 | $1275 | $8593 |

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**Note 21. Segment Reporting**

We define our reportable segments based on the way the CODM, the chief executive officer, manages the operations for purposes of allocating resources and assessing performance. We classify our operations into two reportable segments as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evolent Health Services, which houses our Administrative Simplification solution and certain supporting population health infrastructure; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Clinical Solutions, which includes our specialty care management and physician-oriented total cost of care solutions, along with the New Century Health and Evolent Care Partners brands.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses revenue in accordance with U.S. GAAP and Adjusted EBITDA as the relevant segment performance measures to evaluate the performance of the segments and allocate resources.

Adjusted EBITDA is a segment performance financial measure that offers a useful view of the overall operation of our businesses and may be different than similarly-titled segment performance financial measures used by other companies.

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Adjusted EBITDA is defined as net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, (provision for) benefit from income taxes, depreciation and amortization expenses, adjusted to exclude equity method investment impairment, gain on transfer of membership, loss on extinguishment/repayment of debt, net, goodwill impairment, gain from equity method investees, loss on disposal of assets, changes in fair value of contingent consideration, change in the tax receivable agreement liability, other income (expense), net, repositioning costs, stock-based compensation expense, severance costs, amortization of contract cost assets, strategy and shareholder advisory expenses, acquisition-related costs and loss from discontinued operations.

Management considers revenue and Adjusted EBITDA to be the appropriate metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items which are not indicative of each segment's core operating performance.

The following tables present our segment information (in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Evolent Health Services** | **Clinical Solutions** | **Intersegment<br>Eliminations** | **Subtotal** | **Corporate** <sup>(1)</sup> | **Consolidated Total** |
| **Revenue** | | | | | | |
| **For the Year Ended December 31, 2022** | **For the Year Ended December 31, 2022** | **For the Year Ended December 31, 2022** | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $408371 | $944511 | $(869) | $1352013 | $— | $1352013 |
| **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $311627 | $598144 | $(1814) | $907957 | $— | $907957 |
| **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $385134 | $542279 | $(2774) | $924639 | $— | $924639 |
|  | **Evolent Health Services** | **Clinical Solutions** | **Subtotal** | **Corporate** <sup>(1)</sup> | **Consolidated Total** |  |
| **For the Year Ended December 31, 2022** | **For the Year Ended December 31, 2022** | **For the Year Ended December 31, 2022** |  |  |  |  |
| Adjusted EBITDA | $57936 | $78639 | $136575 | $(30244) | $106331 |  |
| **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |  |  |  |  |
| Adjusted EBITDA | $17063 | $82920 | $99983 | $(33666) | $66317 |  |
| **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |  |  |  |  |
| Adjusted EBITDA | $57731 | $26864 | $84595 | $(36022) | $48573 |  |

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<sup>(1)</sup> Corporate includes various finance, human resources, legal, executive and other corporate infrastructure expenses.

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The following table presents our reconciliation of consolidated segments total Adjusted EBITDA to net income (loss) attributable to common shareholders of Evolent Health, Inc. (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Net loss attributable to common shareholders of Evolent Health, Inc.** | $(19164) | $(37601) | $(334246) |
| Less: |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 1369 | 407 | 2633 |
| &nbsp;&nbsp;&nbsp;Interest expense | (15572) | (25425) | (28325) |
| &nbsp;&nbsp;&nbsp;Benefit from (provision for) income taxes | 43376 | (483) | 2368 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization expenses | (67195) | (60037) | (60835) |
| &nbsp;&nbsp;&nbsp;Equity method investment impairment |  |  | (47133) |
| &nbsp;&nbsp;&nbsp;Gain on transfer of membership |  | 45938 |  |
| &nbsp;&nbsp;&nbsp;Change in tax receivable agreement liability | (45950) |  |  |
| &nbsp;&nbsp;&nbsp;Loss on extinguishment/repayment of debt, net | (10192) | (21343) | (4789) |
| &nbsp;&nbsp;&nbsp;Goodwill impairment |  |  | (215100) |
| &nbsp;&nbsp;&nbsp;Gain from equity method investees | 4569 | 13179 | 10039 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of assets |  |  | (698) |
| &nbsp;&nbsp;&nbsp;Change in fair value of contingent consideration | 23522 | (13281) | (3860) |
| &nbsp;&nbsp;&nbsp;Other income (expense), net | 57 | (146) | (118) |
| &nbsp;&nbsp;&nbsp;Repositioning costs |  | (7318) | (1275) |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | (33981) | (16711) | (14606) |
| &nbsp;&nbsp;&nbsp;Severance costs | (13265) | (198) | (8986) |
| &nbsp;&nbsp;&nbsp;Amortization of contract cost assets | (99) | (476) | (3944) |
| &nbsp;&nbsp;&nbsp;Strategy and shareholder advisory expenses |  | (6513) |  |
| &nbsp;&nbsp;&nbsp;Acquisition costs | (11671) | (4194) | (2116) |
| &nbsp;&nbsp;Loss from discontinued operations <sup>(1)</sup> | (463) | (7317) | (6074) |
| **Adjusted EBITDA** | $106331 | $66317 | $48573 |

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<sup>(1)</sup> Includes $0.5 million and $6.8 million loss on disposal of discontinued operations for the years ended December 31, 2022 and 2021, respectively.

Asset information by segment is not a key measure of performance used by the CODM. Accordingly, we have not disclosed asset information by segment.

**Note 22. Reserve for Claims and Performance-Based Arrangements**

The Company maintains reserves for its liabilities related to payments to providers and pharmacies under performance-based arrangements related to its total cost of care and specialty care management services.

Reserves for claims and performance-based arrangements for our EHS and Clinical Solutions segments reflect actual payments under performance-based arrangements and the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily composed of accruals for incentives and other amounts payable to health care professionals and facilities. Reserves for claims and performance-based arrangements also reflect estimated amounts owed under the reinsurance agreements, as discussed further in Note 11.

The Company uses actuarial principles and assumptions that are consistently applied each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.

This liability predominately consists of incurred but not reported amounts and reported claims in process including expected development on reported claims. The liability for reserves related to its total cost of care and specialty care management services is primarily calculated using "completion factors" developed by comparing the claim incurred date to the date claims were paid. Completion factors are impacted by several key items including changes in: 1) electronic (auto-adjudication) versus manual claim processing, 2) provider claims submission rates, 3) membership and 4) the mix of products.

The Company's policy for reserves related to its total cost of care and specialty care management services is to use historical completion factors combined with an analysis of current trends and operational factors to develop current estimates of completion

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factors. The Company estimates the liability for claims incurred in each month by applying the current estimates of completion factors to the current paid claims data. This approach implicitly assumes that historical completion rates will be a useful indicator for the current period.

For more recent months, and for newer lines of business where there is not sufficient paid claims history to develop completion factors, the Company expects to rely more heavily on medical cost trend and expected loss ratio analysis that reflects expected claim payment patterns and other relevant operational considerations, or authorization analysis. Medical cost trend is primarily impacted by medical service utilization and unit costs that are affected by changes in the level and mix of medical benefits offered, including inpatient, outpatient and pharmacy, the impact of copays and deductibles, changes in provider practices and changes in consumer demographics and consumption behavior. Authorization analysis projects costs based on authorizations per thousand members basis and assigning an average cost per authorization. This is also adjusted for the impact of copays, deductibles, unit cost and historic discontinuation rates for treatment are considered.

For each reporting period, the Company compares key assumptions used to establish the reserves for claims and performance-based arrangements to actual experience. When actual experience differs from these assumptions, reserves for claims and performance-based arrangements are adjusted through current period net income. Additionally, the Company evaluates expected future developments and emerging trends that may impact key assumptions. The process used to determine this liability requires the Company to make critical accounting estimates that involve considerable judgment, reflecting the variability inherent in forecasting future claim payments. These estimates are highly sensitive to changes in the Company's key assumptions, specifically completion factors and medical cost trends.

Activity in reserves for claims and performance-based arrangements was as follows (in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
| | **EHS** <sup>(1)</sup> | **Clinical Solutions** <sup>(1)</sup> | **Total** | **EHS** <sup>(1)</sup> | **Clinical Solutions** <sup>(1)</sup> | **Total** |
| Balance, beginning of period | $25618 | $145676 | $171294 | $56296 | $122532 | $178828 |
| Incurred health care costs: |  |  |  |  |  |  |
| &nbsp;&nbsp;Current year to date period |  | 605757 | 605757 | 8632 | 449172 | 457804 |
| &nbsp;&nbsp;Prior year to date period | (8176) | (3336) | (11512) | 7036 | 73 | 7109 |
| Total claims incurred | (8176) | $602421 | 594245 | 15668 | 449245 | 464913 |
| Claims paid related to: |  |  |  |  |  |  |
| &nbsp;&nbsp;Current year to date period |  | (427994) | (427994) | (20802) | (326026) | (346828) |
| &nbsp;&nbsp;Prior year to date period | (12911) | (124904) | (137815) | (25544) | (100075) | (125619) |
| Total claims paid | (12911) | (552898) | (565809) | (46346) | (426101) | (472447) |
| Balance, end of period | $4531 | $195199 | $199730 | $25618 | $145676 | $171294 |

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<sup>(1)</sup> Costs incurred to provide specialty care management and EVH Passport are recorded within cost of revenue in our statement of operations.

**Note 23. Quarterly Results of Operations (unaudited)**

The unaudited consolidated quarterly results of operations (in thousands, except per share data) were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** |
| | **December 31** | **September 30** | **June 30** | **March 31** |
| **2022** |  |  |  |  |
| &nbsp;&nbsp;Total revenue | $382432 | $352585 | $319939 | $297057 |
| &nbsp;&nbsp;Total operating expenses | 384310 | 339634 | 324572 | 299855 |
| &nbsp;&nbsp;Net income (loss) from continuing operations | (11349) | 2123 | (4125) | (5350) |
| &nbsp;&nbsp;Net loss from discontinued operations, net of tax |  |  | (463) |  |
| &nbsp;&nbsp;Net income (loss) attributable to common shareholders of Evolent Health, Inc. | (11349) | 2123 | (4588) | (5350) |
| &nbsp;&nbsp;*Income (loss) per common share* |  |  |  |  |
| &nbsp;&nbsp;Basic and diluted |  |  |  |  |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** |
| | **December 31** | **September 30** | **June 30** | **March 31** |
| &nbsp;&nbsp;&nbsp;&nbsp;Continuing operations | $(0.11) | $0.02 | $(0.05) | $(0.06) |
| &nbsp;&nbsp;&nbsp;&nbsp;Discontinued operations |  |  |  |  |
| **2021** |  |  |  |  |
| &nbsp;&nbsp;Total revenue | $248358 | $222471 | $222057 | $215071 |
| &nbsp;&nbsp;Total operating expenses | 260572 | 229052 | 229728 | 231016 |
| &nbsp;&nbsp;Net income (loss) from continuing operations | 3053 | (13040) | (9107) | (11190) |
| &nbsp;&nbsp;Net income (loss) from discontinued operations, net of tax | (8700) |  |  | 1383 |
| &nbsp;&nbsp;Net loss attributable to common shareholders of Evolent Health, Inc. | (5647) | (13040) | (9107) | (9807) |
| &nbsp;&nbsp;*Income (loss) per common share* |  |  |  |  |
| &nbsp;&nbsp;Basic and diluted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Continuing operations | $0.03 | $(0.15) | $(0.11) | $(0.13) |
| &nbsp;&nbsp;&nbsp;&nbsp;Discontinued operations | (0.09) |  |  | 0.01 |

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**Note 24. Supplemental Cash Flow Information** 

The following represents supplemental cash flow information (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Supplemental Disclosure of Non-cash Investing and Financing Activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accrued property and equipment purchases | $573 | $784 | $11 |
| &nbsp;&nbsp;&nbsp; Increase/decrease to goodwill from measurement period adjustments/business combinations |  |  | 2200 |
| &nbsp;&nbsp;&nbsp;Class A common stock issued for payment of earn-outs |  | 450 | 4185 |
| &nbsp;&nbsp;&nbsp;Accrued deferred financing costs | 450 |  |  |
| &nbsp;&nbsp;&nbsp;Gain from transfer of membership |  | (22969) |  |
| &nbsp;&nbsp;&nbsp;Class A common stock issued in connection with business combinations | 130175 | 56626 |  |
| &nbsp;&nbsp;&nbsp;Class A common stock issued in connection with debt repayment | 101999 | 28492 |  |
| &nbsp;&nbsp;&nbsp;Consideration for asset acquisition or business combinations |  | 14600 |  |
| &nbsp;&nbsp;&nbsp;Accrued net working capital adjustment with business combinations | 791 |  |  |
| **Effects of Leases** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Operating cash flows from operating leases | 14087 | 13845 | 13708 |
| &nbsp;&nbsp;&nbsp;&nbsp; Leased assets disposed of (obtained in) exchange for operating lease liabilities | 4308 | (2583) | (2170) |
| **Supplemental Disclosures** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | 6269 | 7113 | 13352 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for taxes, net | 1397 | 551 | 9679 |

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**Note 25. Subsequent Events**

***NIA Purchase and Ares Debt Agreement***

On January 20, 2023 (the "Closing Date"), Evolent Health, Inc. (the "Company") consummated the transactions (the "Closing") contemplated by the previously announced Stock and Asset Purchase Agreement (the "Magellan Purchase Agreement"), dated November 17, 2022, by and among the Company, Evolent Health LLC ("EVH LLC"), Magellan Health, Inc. ("Magellan Parent"), and Magellan Healthcare, Inc.

In connection with the Closing, on the Closing Date, we entered into Amendment No. 1 to the Credit Agreement, dated as of August 1, 2022, by and between the Lenders party thereto, EVH LLC, as the Administrative Borrower, the other borrowers party thereto, the

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Company, as the Parent, each other Guarantor party thereto, Ares, as Administrative Agent, and ACF Finco I LP, as Collateral Agent and Revolving Agent (the "Existing Credit Agreement"; the Existing Credit Agreement, as amended by Amendment No. 1, the "Credit Agreement") that provided us with new secured debt financing in the form of (i) additional commitments under our existing asset-based revolving credit facility in an aggregate principal amount equal to $25.0 million (the "Priority ABL Incremental Facility"), and (ii) additional commitments under our existing term loan facility in an aggregate principal amount equal to $240.0 million (the "Term Loan Incremental Facility" and together with the Priority ABL Incremental Facility, the "Acquisition Facilities"), and effected certain amendments to the Existing Credit Agreement. On the Closing Date, we borrowed $25.0 million under the Priority ABL Incremental Facility and $240.0 million under the Term Loan Incremental Facility to finance, together with the proceeds from the sale of the Series A Preferred Stock, the cash consideration payable at Closing and pay transaction fees and expenses.

All loans under the Credit Agreement (including loans under the Acquisition Facilities and loans outstanding under the Existing Credit Agreement) (collectively, the "Loans") will mature on the date that is the earliest of (a) the sixth anniversary of the Closing Date, (b) the date on which the commitments are voluntarily terminated pursuant to the terms of the Credit Agreement, (c) the date on which all amounts outstanding under the Credit Agreement have been declared or have automatically become due and payable under the terms of the Credit Agreement and (d) the date that is ninety-one (91) days prior to the maturity date of any Junior Debt (as defined in the Existing Credit Agreement) unless certain liquidity conditions are satisfied.

The interest rate for all Loans will be calculated, at the option of the borrowers, (a) in the case of a term loan, at either the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 6.00%, or the base rate plus 5.00% and (b) in the case of a revolving loan, at either the Adjusted Term SOFR Rate plus 4.00%, or the base rate plus 3.00%. We have paid closing fees equal to 3.00% of the aggregate commitments provided in respect of the Acquisition Facilities.

Amounts outstanding under the Credit Agreement may be prepaid at the option of the Company subject to applicable premiums and a call protection premium payable on the amount prepaid in certain instances as follows: (1) 3.00% of the principal amount so prepaid after the Closing Date but prior to the first anniversary of the Closing Date; (2) 2.00% of the principal amount so prepaid after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date; (3) 1.00% of the principal amount so prepaid after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date; and (4) 0.00% of the principal amount so prepaid on or after the third anniversary of the Closing Date.

Loans under the Acquisition Facilities are subject to the same security and guarantee arrangements and affirmative and negative covenants, mandatory prepayment provisions and events of default as loans outstanding under the Existing Credit Agreement, in each case, subject to certain modifications agreed by the parties.

Pursuant to the terms of the Magellan Purchase Agreement and at Closing, EVH LLC acquired all of the issued and outstanding shares of capital stock of National Imaging Associates, Inc. as well as certain assets held by Magellan Parent and/or certain of its subsidiaries that were used in the Magellan Specialty Health Division. At Closing, EVH LLC paid cash consideration to Magellan Parent and certain of its affiliates of approximately $386.7 million (which is subject to certain post-Closing adjustments) and issued 8,474,576 shares of the Company's Class A Common Stock ("Magellan Class A Shares") to Magellan Parent. Pursuant to Amendment No. 1 and the Securities Purchase Agreement, Ares and certain of its affiliates, who, along with certain of their affiliates, are currently lenders and agents under our Existing Credit Agreement, have provided funds used in the acquisition.

Pro forma financial information has not been presented for the NIA acquisition as the initial accounting for this business combination is incomplete as of the filing date.

**Cumulative Series A Convertible Preferred Shares**

In connection with the Closing, on January 20, 2023, the Company entered into a Securities Purchase Agreement (Series A Convertible Preferred Shares) with the Purchasers listed on Schedule I thereto (the "Securities Purchase Agreement") pursuant to which the Company offered and sold to the Purchasers an aggregate 175,000 shares of the Company's newly created Series A Preferred Stock, par value $0.01 per share, at a purchase price of $960.00 per share, resulting in total gross proceeds to the Company of $168.0 million. The proceeds from the offer and sale of the Series A Preferred Stock were used, together with the proceeds from the Priority ABL Incremental Facility and Term Loan Incremental Facility, to finance the cash consideration payable at Closing and pay transaction fees and expenses.

The Series A Preferred Stock ranks senior with respect to dividend and liquidation rights to the Company's Class A common stock, par value $0.01 per share (the "Class A Common Stock") and all future series of the Company's preferred stock. Each share of Series A Preferred Stock has an initial liquidation preference of $1,000 per share.

Regular dividends on the Series A Preferred Stock will be paid quarterly in cash in arrears at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designations (as defined below)) plus 6.00%. The liquidation preference of the Series A

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Preferred Stock will increase on the last day of each calendar quarter by the amount of any accrued and unpaid regular dividends that have not been paid in cash on the relevant dividend payment date. The regular dividend rate will also increase by 2.0% per annum upon the occurrence and during the continuance of certain triggering events, including a breach of the protective covenants contained in the Investor Rights Agreement or the Company's failure to pay any regular dividends in cash. Holders of Series A Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Class A Common Stock on an as-converted basis.

Each holder of Series A Preferred Stock has the right, at its option, to convert its shares of Series A Preferred Stock into shares of Class A Common Stock at an initial conversion price per share of $40.00 of the then-current liquidation preference per share, subject to customary anti-dilution adjustments.

Holders of Series A Preferred Stock are not entitled to vote on any matters, except as required by law and for certain consent rights set forth in the Certificate of Designations.

The Company may not redeem the Series A Preferred Stock at its option prior to January 20, 2025. At any time on or after January 20, 2025, the Company may redeem any or all of the Series A Preferred Stock then outstanding for cash at a redemption price per share equal to 165.00% of the then-current liquidation preference of the Series A Preferred Stock, plus all accrued and unpaid dividends on the Series A Preferred Stock being redeemed.

If not earlier redeemed, at any time on or after January 20, 2030, at the request of the holders of a majority of the convertible preferred stock, the Company will redeem all shares of Series A Preferred Stock then outstanding for cash at a redemption price per share equal to 150.00% of the then-current liquidation preference per share of the Series A Preferred Stock, plus all accrued and unpaid dividends on the Series A Preferred Stock being redeemed.

Upon the occurrence of a refinancing or replacement of the entirety of the indebtedness under the Credit Agreement prior to its maturity that is provided solely by lenders who are not affiliates or approved funds of Ares, the Company will be required to redeem all shares of Series A Preferred Stock then outstanding for cash at a redemption price per share equal to 165.00% of the then-current liquidation preference of the Series A Preferred Stock, plus all accrued and unpaid dividends on the Series A Preferred Stock being redeemed, plus, solely in the event such refinancing or replacement is consummated prior to January 20, 2025, the aggregate amount of dividends per share which would have otherwise been payable on the Series A Preferred Stock from the date of redemption until January 20, 2025.

If the Company undergoes a change of control (as defined in the Existing Credit Agreement), the Company will be required to redeem all shares of Series A Preferred Stock then outstanding for cash at a price per share equal to the greater of (x) 150.00% of the then-current liquidation preference per share of the Series A Preferred Stock, if such redemption occurs prior to January 20, 2025, and 135.00% of the then-current liquidation preference per share of the Series A Preferred Stock, if such redemption occurs on or after January 20, 2025, and (y) the value of the Class A Common Stock issuable upon conversion of a share of Series A Preferred Stock, which value shall be determined based on the value attributed to the Class A Common Stock in connection with such change of control.

The Investors Rights Agreement contains certain restrictions on the transfer of the Series A Preferred Stock and certain protective covenants in favor of the Purchasers. These covenants include, among other things, covenants limiting the incurrence of Funded Debt (as defined in the Existing Credit Agreement), the ability to make restricted payments and the ability to issue additional indebtedness senior to the Series A Preferred Stock. Each of these covenants is subject to certain exceptions set forth in the Investors Rights Agreement.

In connection with the Closing, on January 20, 2023, the Company entered into a Registration Rights Agreement with the Stockholders (the "Ares Registration Rights Agreement"), which granted certain registration rights to Ares in respect of the shares of the Company's Class A Common Stock issuable upon conversion of the Series A Preferred Stock.

**Payment of Contingent Consideration**

Subsequent to December 31, 2022, the Company satisfied its contingent consideration obligation for the periods ended December 31, 2022. As a result, it made cash payments of $0.3 million and issued 849,716 shares of its Class A Common Stock with a fair value of $26.5 million. See Note 4 and Note 18 for additional information regarding the IPG acquisition and the fair value determination of the IPG earn-out consideration.

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**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

None.

**Item 9A. Controls and Procedures**

*Evaluation of Disclosure Controls and Procedures* 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report on Form 10-K. The Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2022, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

*Management's Annual Report on Internal Control Over Financial Reporting*

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

As permitted by SEC rules, we excluded IPG from our assessment of internal control over financial reporting as of December 31, 2022. This exclusion considers SEC guidance on newly acquired entities which may allow companies to exclude acquired entities from their assessment of internal control over financial reporting during the first year following the acquisition. IPG was acquired during the third quarter of 2022 in a business combination. IPG is a wholly-owned subsidiary whose total assets excluded from management's assessment represent 29.6% of the Company's consolidated assets and total revenues excluded from management's assessment represent 4.3% of the Company's consolidated revenue as of and for the year ended December 31, 2022.

We assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.

*Changes in Internal Control over Financial Reporting*

There were no changes in our internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

*Inherent Limitations of Internal Controls*

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the shareholders and the Board of Directors of Evolent Health, Inc.

**Opinion on Internal Control over Financial Reporting**

We have audited the internal control over financial reporting of Evolent Health, Inc. and subsidiaries (the "Company") as of December 31, 2022, based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 24, 2023, expressed an unqualified opinion on those financial statements.

As described in *Management's Annual Report on Internal Control Over Financial Reporting*, management excluded from its assessment the internal control over financial reporting at Implantable Provider Group, which was acquired on August 1, 2022, and whose financial statements constitute 29.6% of total assets and 4.3% of revenue of the consolidated financial statement amounts as of and for the year ended December 31, 2022. Accordingly, our audit did not include the internal control over financial reporting at Implantable Provider Group.

**Basis for Opinion** 

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying *Management's Annual Report on Internal Control over Financial Reporting*. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 24, 2023

------

**Item 9B. Other Information**

None.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

None.

------

**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance**

The information called for by this Item 10 pertaining to Directors is incorporated herein by reference to Evolent Health, Inc.'s definitive proxy statement for the Annual Meeting of Shareholders to be held on June 8, 2023, to be filed by Evolent Health, Inc. with the SEC pursuant to Regulation 14A within 120 days after the year ended December 31, 2022 (the "2023 Proxy Statement").

The information called for by this Item 10 pertaining to Executive Officers appears in "Part I - Item 1. Business - Information about our Executive Officers" in this Annual Report on Form 10-K and our 2023 Proxy Statement.

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive officer and principal financial officer. The Code of Business Conduct and Ethics is posted on our investor relations website (ir.evolenthealth.com) under "Corporate Governance." We intend to satisfy the SEC's disclosure requirements regarding amendments to, or waivers of, the code of ethics by posting such information on our website.

**Item 11. Executive Compensation**

Information required by this Item 11 is incorporated herein by reference to our 2023 Proxy Statement.

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

Information required by this Item 12 is incorporated herein by reference to our 2023 Proxy Statement.

**Item 13. Certain Relationships and Related Transactions, and Director Independence**

Information required by this Item 13 is incorporated herein by reference to our 2023 Proxy Statement.

**Item 14. Principal Accounting Fees and Services**

Information required by this Item 14 is incorporated herein by reference to our 2023 Proxy Statement.

------

**PART IV**

**Item 15. Exhibits**

(a) The following documents are filed as part of this report:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The following financial statements of the registrant and report of independent registered public accounting firm are included of Item 8 hereof:

<u>[Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)](#ie5cc4f785ce54597a137387a0d3f51e9_217)</u>

<u>[Consolidated Balance Sheets](#ie5cc4f785ce54597a137387a0d3f51e9_25)</u>

<u>[Consolidated Statements of Operations and Comprehensive Income (Loss)](#ie5cc4f785ce54597a137387a0d3f51e9_28)</u>

<u>[Consolidated Statements of Changes in Shareholders' Equity (Deficit)](#ie5cc4f785ce54597a137387a0d3f51e9_226)</u>

<u>[Consolidated Statements of Cash Flows](#ie5cc4f785ce54597a137387a0d3f51e9_34)</u>

<u>[Notes to Consolidated Financial Statements](#ie5cc4f785ce54597a137387a0d3f51e9_37)</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission either have been included in the Financial Statements, are not required under the related instructions, or are not applicable and therefore have been omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Exhibits listed in the Exhibit Index below are filed with or incorporated by reference into this report

**EVOLENT HEALTH, INC.**

**Exhibit Index**

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| | |
|:---|:---|
| <u>[2.1\*](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000059/a063019exhibit24.htm)</u> | <u>[Asset Purchase Agreement, dated May 28, 2019, by and among University Health Care, Inc., d/b/a Passport Health Plan, Passport Health Solutions, LLC, Evolent Health, Inc. and Justify Holdings, Inc., filed as Exhibit 2.4 to the Company's Report on Form 10-Q filed with the SEC on August 9, 2019, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000059/a063019exhibit24.htm)</u>. |
| <u>[2.2\*](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000084/exhibit21passportfirst.htm)</u> | <u>[First Amendment to Asset Purchase Agreement, dated as of December 30, 2019, by and among University Health Care, Inc., d/b/a Passport Health Plan, Passport Health Solutions, LLC, Justify Holdings, Inc., and Evolent Health, Inc., filed as Exhibit 2.1 to the Company's Report on Form 8-K with the SEC on December 31, 2019, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000084/exhibit21passportfirst.htm)</u>. |
| <u>[2.3\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890821000109/a202108048-kexhibit21.htm)</u> | <u>[Purchase Agreement and Agreement and Plan of Merger, dated August 2, 2021, by and among Evolent Health, Inc., Evolent Health LLC, EV Thunder Merger Sub, LLC, WindRose Health Investors III, L.P., Vital Decisions Acquisition, LLC and WindRose Health Investors, LLC, as the representative, filed as Exhibit 2.1 to the Company's report on Form 8-K filed with the SEC on August 4, 2021 and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890821000109/a202108048-kexhibit21.htm)</u> |
| <u>[2.4\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex24.htm)</u> | <u>[Agreement and Plan of Merger, dated August 1, 2022, by and among Evolent Health, Inc., Evolent Health LLC, Endzone Merger Sub, Inc, TPG Growth Iceman Parent, Inc. and the Sellers' Representative, filed as Exhibit 2.4 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex24.htm)</u> |
| <u>[2.5\*](a123122exhibit25.htm)</u> | <u>[Stock and Asset Purchase Agreement by and among Evolent Health, Inc., Evolent Health LLC, Magellan Health, Inc. and Magellan Healthcare, Inc., dated as of November 17, 2022](a123122exhibit25.htm)</u>. |
| <u>[2.6\*](a123122exhibit26.htm)</u> | <u>[Amendment No. 1 to Stock and Asset Purchase Agreement dated January 20, 2023, by and among Evolent Health, Inc., Evolent Health LLC, and Magellan Health, Inc.](a123122exhibit26.htm)</u> |
| <u>[2.7\*](a123122exhibit27.htm)</u> | <u>[Amendment No. 2 to Stock and Asset Purchase Agreement dated February 17, 2023, by and among Evolent Health, Inc., Evolent Health LLC, and Magellan Health, Inc.](a123122exhibit27.htm)</u> |
| <u>[3.1](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000054/exhibit31.htm)</u> | <u>[Second Amended and Restated Certificate of Incorporation of Evolent Health, Inc., filed as Exhibit 3.1 to the Company's Report on Form 8-K filed with the SEC on June 15, 2016, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000054/exhibit31.htm)</u>. |
| <u>[3.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000066/a20210610exhibit31.htm)</u> | <u>[Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of Evolent Health, Inc., dated June 10, 2021, filed as Exhibit 3.1 to the Company's report on Form 8-K filed with the SEC on June 10, 2021 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000066/a20210610exhibit31.htm)</u> |
| <u>[3.3](https://www.sec.gov/Archives/edgar/data/0001628908/000162890820000143/a20201214form8-kex31.htm)</u> | <u>[Third Amended and Restated By-laws of Evolent Health, Inc., filed as Exhibit 3.1 to the Company's Report on Form 8-K filed with the SEC on December 14, 2020, and incorporated herein by reference](https://www.sec.gov/Archives/edgar/data/0001628908/000162890820000143/a20201214form8-kex31.htm)</u>. |
| <u>[3.4](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex31.htm)</u> | <u>[Certificate of Designation of Series A Convertible Preferred Stock of the Company, dated as of January 19, 2023, filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex31.htm)</u> |
| <u>[4.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex41.htm)</u> | <u>[Form of Class A common stock certificate, filed as Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement on Form S-1 filed with the SEC on May 18, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex41.htm)</u>. |
| <u>[4.2](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex41.htm)</u> | <u>[Registration Rights Agreement, dated as of June 4, 2015, by and among Evolent Health, Inc., TPG Growth II BDH, L.P., TPG Eagle Holdings, L.P., UPMC, The Advisory Board Company and Ptolemy Capital, LLC, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex41.htm)</u>. |

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| | |
|:---|:---|
| <u>[4.3](http://www.sec.gov/Archives/edgar/data/1628908/000095015718001058/ex4-1.htm)</u> | <u>[Indenture dated as of October 22, 2018, between Evolent Health, Inc. and U.S. Bank National Association, as trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on October 23, 2018, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000095015718001058/ex4-1.htm)</u>. |
| <u>[4.4](http://www.sec.gov/Archives/edgar/data/1628908/000095015718001058/ex4-1.htm)</u> | <u>[Form of 1.50% Convertible Senior Notes due 2025, filed as Exhibit A to the Indenture (Item 4.5 above), which was filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on October 23, 2018, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000095015718001058/ex4-1.htm)</u>. |
| <u>[4.5](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000032/a528198-kexhibit41.htm)</u> | <u>[Registration Rights Agreement, dated May 24, 2019, by and between Evolent Health, Inc. and Momentum Health Group, LLC, filed as exhibit 4.1 to the Company's Report on Form 8-K filed with the SEC on May 28, 2019, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000032/a528198-kexhibit41.htm)</u> |
| <u>[4.6](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/evh10-kexhibit46.htm)</u> | <u>[Description of Registrant's Securities, which was filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K filed with the SEC on February 23, 2022, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/evh10-kexhibit46.htm)</u> |
| <u>[4.7\*](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000121/exhibit41-indenture.htm)</u> | <u>[Indenture, dated as of August 19, 2020, by and between Evolent Health, Inc. and U.S. Bank National Association, as trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K with the SEC on August 25, 2020, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000121/exhibit41-indenture.htm)</u>. |
| <u>[4.8\*](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000121/exhibit41-indenture.htm)</u> | <u>[Form of 3.50% Convertible Senior Note due 2024 (included as Exhibit A to Exhibit 4.1), filed as Exhibit 4.2 to the Company's Current Report on Form 8-K with the SEC on August 25, 2020, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000121/exhibit41-indenture.htm)</u>. |
| <u>[4.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex41.htm)[9](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex41.htm)</u> | <u>[Registration Rights Agreement, dated August 1, 2022, by and between Evolent Health, Inc., TPG Growth V Iceman, L.P., and the individuals in Schedule I of the agreement, filed as Exhibit 4.1 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex41.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex104.htm)</u> | <u>[Income Tax Receivables Agreement, dated as of June 4, 2015, by and among Evolent Health, Inc., Evolent Health LLC and certain stockholders of Evolent Health, Inc., filed as Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex104.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex101.htm)</u> | <u>[Stockholders Agreement, dated as of June 4, 2015, by and among Evolent Health, Inc., TPG Growth II BDH, L.P., TPG Eagle Holdings, L.P., UPMC and The Advisory Board Company, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex101.htm)</u>. |
| <u>[10.3](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex108.htm)</u> | <u>[VPHealth, Inc. 2011 Equity Incentive Plan, filed as Exhibit 10.8 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex108.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex109.htm)[4](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex109.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex109.htm)</u> | <u>[Amendment No. 1 to the Evolent Health, Inc. 2011 Equity Incentive Plan, filed as Exhibit 10.9 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex109.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex109.htm)[5](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex109.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex109.htm)</u> | <u>[Evolent Health, Inc. 2015 Omnibus Equity Incentive Plan, filed as Exhibit 10.9 to Amendment No. 1 to the Company's Registration Statement on Form S-1 filed with the SEC on May 18, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515190849/d838828dex109.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000162890818000021/a2018def14a.htm)[6](http://www.sec.gov/Archives/edgar/data/1628908/000162890818000021/a2018def14a.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890818000021/a2018def14a.htm)</u> | <u>[Amendment to the Evolent Health, Inc. 2015 Omnibus Equity Incentive Plan, filed as Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2018, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890818000021/a2018def14a.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex105.htm)[7](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex105.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex105.htm)</u> | <u>[Form of Executive Officer Option Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex105.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex106.htm)[8](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex106.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex106.htm)</u> | <u>[Form of Executive Officer Restricted Stock Unit Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex106.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex107.htm)[9](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex107.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex107.htm)</u> | <u>[Form of Non-Employee Director Restricted Stock Unit Award Agreement under the Evolent Health, Inc., 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.7 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex107.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex108.htm)[0](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex108.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex108.htm)</u> | <u>[Form of Non-Qualified Stock Option Agreement under the Evolent Health, Inc. 2011 Equity Incentive Plan, filed as Exhibit 10.8 to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515219372/d939182dex108.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1012.htm)[1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1012.htm)[†](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1012.htm)</u> | <u>[Amended and Restated HealthPlaNet Technology License Agreement between UPMC and Evolent Health, Inc., dated as of June 27, 2013, filed as Exhibit 10.12 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1012.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1013.htm)[2](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1013.htm)[†](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1013.htm)</u> | <u>[Amended and Restated Intellectual Property License and Development Services Agreement between UPMC and Evolent Health, Inc., dated as of June 27, 2013, filed as Exhibit 10.13 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1013.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1015.htm)[13](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1015.htm)</u> | <u>[Amended and Restated Intellectual Property License and Data Access Agreement by and between The Advisory Board Company and Evolent Health, Inc., dated as of June 27, 2013, filed as Exhibit 10.15 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1015.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1018.htm)[4](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1018.htm)</u> | <u>[Deed of Lease by and between North Glebe Office, L.L.C. and Evolent Health, Inc., dated as of July 31, 2012, filed as Exhibit 10.18 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1018.htm)</u>. |

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| | |
|:---|:---|
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1019.htm)[5](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1019.htm)</u> | <u>[First Amendment to Deed of Lease by and between North Glebe Office, L.L.C. and Evolent Health, Inc., dated as of March 1, 2013, filed as Exhibit 10.19 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1019.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1020.htm)[6](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1020.htm)</u> | <u>[Second Amendment to Deed of Lease by and between North Glebe Office, L.L.C. and Evolent Health, Inc., dated as of April 1, 2014, filed as Exhibit 10.20 to the Company's Registration Statement on Form S-1 filed with the SEC on May 5, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515169530/d838828dex1020.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000119312515199503/d838828dex1020.htm)[7](http://www.sec.gov/Archives/edgar/data/1628908/000119312515199503/d838828dex1020.htm)</u> | <u>[Form of Director Indemnification Agreement, filed as Exhibit 10.20 to Amendment No. 2 to the Company's Registration Statement on Form S-1 filed with the SEC on May 26, 2015, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000119312515199503/d838828dex1020.htm)</u>. |
| <u>[10.1](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000051/a033116exhibit101.htm)[8](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000051/a033116exhibit101.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000051/a033116exhibit101.htm)</u> | <u>[Form of Executive Officer Performance-Based Option Award Agreement Under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890816000051/a033116exhibit101.htm)</u>. |
| <u>[10.](http://www.sec.gov/Archives/edgar/data/1628908/000162890817000044/a63017exhibit101.htm)[19](http://www.sec.gov/Archives/edgar/data/1628908/000162890817000044/a63017exhibit101.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890817000044/a63017exhibit101.htm)</u> | <u>[Form of Non-Employee Director Restricted Stock Unit Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 7, 2017, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890817000044/a63017exhibit101.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000006/a123118exhibit1026.htm)[0](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000006/a123118exhibit1026.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000006/a123118exhibit1026.htm)</u> | <u>[Form of Leveraged Stock Unit Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2019, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890819000006/a123118exhibit1026.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000108/exhibit101evh_molinaapa.htm)[1](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000108/exhibit101evh_molinaapa.htm)[\*](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000108/exhibit101evh_molinaapa.htm)</u> | <u>[Asset Purchase Agreement, dated July 16, 2020, by and among Passport Health Plan, Inc., Evolent Health LLC, and Molina Healthcare, Inc., filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q with the SEC on August 7, 2020, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1628908/000162890820000108/exhibit101evh_molinaapa.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000119312520323903/d12759dex101.htm)[2](http://www.sec.gov/Archives/edgar/data/1628908/000119312520323903/d12759dex101.htm)</u> | <u>[Cooperation Agreement, dated December 21, 2020, by and among Evolent Health, Inc., Engaged Capital Flagship Master Fund, LP, Engaged Capital Co-Invest XI, LP, Engaged Capital Special Situation Fund, LP, Engaged Capital Flagship Fund, LP, Engaged Capital Flagship Fund, Ltd., Engaged Capital LLC, Engaged Capital Holdings, LLC and Glenn W. Welling, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on December 22, 2020, and incorporated by reference herein](http://www.sec.gov/Archives/edgar/data/1628908/000119312520323903/d12759dex101.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202101298-kexhibit101.htm)[3](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202101298-kexhibit101.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202101298-kexhibit101.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. Frank Williams, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed with the SEC on January 29, 2021, and incorporated by reference herein](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202101298-kexhibit101.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit102.htm)[4](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit102.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit102.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. Seth Blackley, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K/A filed with the SEC on January 29, 2021, and incorporated by reference herein](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit102.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit103.htm)[5](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit103.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit103.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. John Johnson, filed as Exhibit 10.3 to the Company's Current Report on Form 8-K/A filed with the SEC on January 29, 2021, and incorporated by reference herein](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit103.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit104.htm)[6](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit104.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit104.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. Jonathan Weinberg, filed as Exhibit 10.4 to the Company's Current Report on Form 8-K/A filed with the SEC on January 29, 2021, and incorporated by reference herein](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000012/a202001298-kexhibit104.htm)</u>. |
| <u>[10.2](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000026/a123120exhibit1032.htm)[7](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000026/a123120exhibit1032.htm)[+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000026/a123120exhibit1032.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. Steve Tutewohl, filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2021](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000026/a123120exhibit1032.htm)</u>. |
| <u>[10.28+](a123122exhibit1028.htm)</u> | <u>[Severance and Change-in-Control Agreement, dated as of January 27, 2021, by and between Evolent Health, Inc. and Mr. Dan McCarthy.](a123122exhibit1028.htm)</u> |
| <u>[10.29+](https://www.sec.gov/Archives/edgar/data/1628908/000119312521145005/d154291ddef14a.htm)</u> | <u>[Evolent Health, Inc. Amended and Restated 2015 Omnibus Equity Incentive Plan, filed as Appendix D to the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on April 30, 2021, and incorporated herein by reference](https://www.sec.gov/Archives/edgar/data/1628908/000119312521145005/d154291ddef14a.htm)</u>. |
| <u>[10.30+](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000054/q12021exhibit102.htm)</u> | <u>[Form of Performance Stock Unit Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q with the SEC on May 6, 2021.](http://www.sec.gov/Archives/edgar/data/1628908/000162890821000054/q12021exhibit102.htm)</u> |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/a123121exhibit1031.htm)[1](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/a123121exhibit1031.htm)[+](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/a123121exhibit1031.htm)</u> | <u>[Form of Executive Officer Restricted Stock Unit Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, which was filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K filed with the SEC on February 23, 2022, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000027/a123121exhibit1031.htm)</u> |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit101.htm)[2](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit101.htm)[+](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit101.htm)</u> | <u>[Form of Corporate PSU Award Agreement under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 5, 2022.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit101.htm)</u> |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit102.htm)[3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit102.htm)[+](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit102.htm)</u> | <u>[Form of Business Unit PSU Award Agreement under the Evolent Health, Inc., 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 5, 2022.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000063/a33122exhibit102.htm)</u> |
| <u>[10.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex101.htm)[3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex101.htm)[4](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex101.htm)[\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex101.htm)</u> | <u>[Credit Agreement, by and among Evolent Health, Inc., Evolent Health LLC, certain subsidiaries of Evolent Health, Inc, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent, and ACF Finco I LP, as revolving agent and collateral agent, dated as of August 1, 2022, filed as Exhibit 10.1 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex101.htm)</u> |

---

------

---

| | | |
|:---|:---|:---|
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)[5](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)[\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)</u> |  | <u>[Security Agreement, by and among Evolent Health, Inc., Evolent Health LLC, the other guarantors and ACF Finco I LP, as collateral agent for the benefit of the secured parties, dated as of August 1, 2022, filed as Exhibit 10.2 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)</u> |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex101.htm)[6](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex101.htm)[\*](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex101.htm)</u> | 10.34\* | <u>[Amendment No. 1, dated as of January 20, 2023, to the Credit Agreement, dated as of August 1, 2022, by the Lenders party thereto, EVH LLC, as the Administrative Borrower, the other borrowers party thereto, the Company, as the Parent, each other Guarantor party thereto, Ares Capital Corporation, as Administrative Agent, and ACF Finco I LP, as Collateral Agent and Revolving Agent, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex101.htm)</u> |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)[7](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)[\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)</u> |  | <u>[Security Agreement, by and among Evolent Health, Inc., Evolent Health LLC, the other guarantors and ACF Finco I LP, as collateral agent for the benefit of the secured parties, dated as of August 1, 2022, filed as Exhibit 10.2 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex102.htm)</u> |
| <u>[10.](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex103.htm)[3](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex103.htm)[8](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex103.htm)[\*](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex103.htm)</u> |  | <u>[Guarantee Agreement, by Evolent Health, Inc. and each of the other guarantors in favor of Ares Capital Corporation, as administrative agent for the lenders, and ACF Finco I LP, as collateral agent for the lenders, dated as of August 1, 2022, filed as Exhibit 10.3 to the Company's Form 10-Q with the SEC on August 3, 2022 and incorporated herein by reference](https://www.sec.gov/Archives/edgar/data/1628908/000162890822000098/a2022q2form10qex103.htm)</u>. |
| <u>[10.39](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex102.htm)</u> |  | <u>[Securities Purchase Agreement, dated as of January 20, 2023, by and among the Purchasers listed on Schedule I thereto and the Company, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex102.htm)</u> |
| <u>[10.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex103.htm)[40](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex103.htm)</u> |  | <u>[Investors Rights Agreement, dated as of January 20, 2023, by and among the Purchasers listed on Schedule I thereto and the Company, filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex103.htm)</u> |
| <u>[10.41](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex104.htm)</u> |  | <u>[Registration Rights Agreement, dated as of January 20, 2023, by and among the Stockholders named in Schedule I thereto and the Company, filed as Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex104.htm)</u> |
| <u>[10.42](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex105.htm)</u> |  | <u>[Registration Rights Agreement, dated as of January 20, 2023, by and between Magellan Health, Inc. and the Company, filed as Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex105.htm)</u> |
| <u>[10.4](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex106.htm)[3](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex106.htm)</u> |  | <u>[Lock-Up Agreement, Dated as of January 20, 2023, by and between Magellan Health, Inc. and the Company, filed as Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on January 23, 2023, and incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1628908/000119312523012645/d331612dex106.htm)</u> |
| <u>[21.1](a2022exhibit211.htm)</u> |  | <u>[Subsidiaries of Evolent Health, Inc.](a2022exhibit211.htm)</u> |
| <u>[23.1](a123122exhibit231.htm)</u> |  | <u>[Consent of Independent Registered Public Accounting Firm](a123122exhibit231.htm)</u> |
| <u>[31.1](a123122exhibit311.htm)</u> |  | <u>[Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002](a123122exhibit311.htm)</u>. |
| <u>[31.2](a123122exhibit312.htm)</u> |  | <u>[Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002](a123122exhibit312.htm)</u>. |
| <u>[32.1](a123122exhibit321.htm)</u> |  | <u>[Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](a123122exhibit321.htm)</u>. |
| <u>[32.2](a123122exhibit322.htm)</u> |  | <u>[Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](a123122exhibit322.htm)</u>. |
| 101.INS |  | XBRL Instance Document |
| 101.SCH |  | XBRL Taxonomy Extension Schema Document |
| 101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |
| 104 |  | The cover page from this Annual Report on Form 10-K, formatted as Inline XBRL |

---

————————

+ Constitutes a management contract or other compensatory plan or arrangement

\* The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit upon the request of the SEC in accordance with Item 601(b)(2) of Regulation S-K.

------

**Item 16. Form 10-K Summary**

Not Applicable.

------

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | |
|:---|:---|
| | **Evolent Health, Inc.** |
| By: | /s/ John Johnson |
| Name: | **John Johnson** |
| Title: | **Chief Financial Officer** |

---

Dated: February 24, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Seth Blackley | Chief Executive Officer and Director | February 24, 2023 |
| **Seth Blackley** | (Principal Executive Officer) |  |
| /s/ John Johnson | Chief Financial Officer | February 24, 2023 |
| **John Johnson** | (Principal Financial Officer) |  |
| /s/ Aammaad Shams | Chief Accounting Officer and Controller | February 24, 2023 |
| **Aammaad Shams** | (Principal Accounting Officer) |  |
| /s/ Craig Barbarosh | Director | February 24, 2023 |
| **Craig Barbarosh** |  |  |
| /s/ M. Bridget Duffy | Director | February 24, 2023 |
| **M. Bridget Duffy, MD** |  |  |
| /s/ David Farner | Director | February 24, 2023 |
| **David Farner** |  |  |
| /s/ Peter Grua | Director | February 24, 2023 |
| **Peter Grua** |  |  |
| /s/ Diane Holder | Director | February 24, 2023 |
| **Diane Holder** |  |  |
| /s/ Kim Keck | Director | February 24, 2023 |
| **Kim Keck** |  |  |
| /s/ Cheryl Scott | Director | February 24, 2023 |
| **Cheryl Scott** |  |  |
| /s/ Tunde Sotunde | Director | February 24, 2023 |
| **Tunde Sotunde, MD** |  |  |
| /s/ Frank Williams | Director | February 24, 2023 |
| **Frank Williams** |  |  |

---

## Exhibit 2.5

**Exhibit 2.5**

**STOCK AND ASSET PURCHASE AGREEMENT**

**by and among**

**EVOLENT HEALTH, INC., EVOLENT HEALTH LLC, MAGELLAN HEALTH, INC., and**

**MAGELLAN HEALTHCARE, INC.**

**Dated as of November 17, 2022**

------

**TABLE OF CONTENTS**

**Page**

---

| | | |
|:---|:---|:---|
| **ARTICLE I<br>PURCHASE AND SALE** | **ARTICLE I<br>PURCHASE AND SALE** | **ARTICLE I<br>PURCHASE AND SALE** |
| Section 1.1 | Acquisition | 1 |
| Section 1.2 | Closing | 1 |
| Section 1.3 | Certain Closing Deliveries | 2 |
| Section 1.4 | Closing Payments and Issuances | 4 |
| Section 1.5 | First Post-Closing Adjustment | 5 |
| Section 1.6 | Second Post-Closing Adjustment | 7 |
| Section 1.7 | Transferred Assets | 9 |
| Section 1.8 | Excluded Assets | 10 |
| Section 1.9 | Assumed Liabilities | 12 |
| Section 1.10 | Retained Liabilities | 13 |
| **ARTICLE II<br>REPRESENTATIONS AND WARRANTIES REGARDING SELLERS** | **ARTICLE II<br>REPRESENTATIONS AND WARRANTIES REGARDING SELLERS** | **ARTICLE II<br>REPRESENTATIONS AND WARRANTIES REGARDING SELLERS** |
| Section 2.1 | Due Organization and Good Standing | 14 |
| Section 2.2 | Authority; Binding Nature of Agreement | 14 |
| Section 2.3 | Noncontravention; Consents | 14 |
| Section 2.4 | Title | 15 |
| Section 2.5 | Claims; Orders | 15 |
| Section 2.6 | Brokers | 15 |
| **Article III<br>REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ENTITIES AND THE BUSINESS** | **Article III<br>REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ENTITIES AND THE BUSINESS** | **Article III<br>REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ENTITIES AND THE BUSINESS** |
| Section 3.1 | Due Organization and Good Standing | 15 |
| Section 3.2 | Capitalization; Acquired Entities | 16 |
| Section 3.3 | Financial Statements; Undisclosed Liabilities | 16 |
| Section 3.4 | Absence of Certain Changes | 17 |
| Section 3.5 | IP Rights; Privacy; Cybersecurity | 17 |
| Section 3.6 | Real Property | 20 |
| Section 3.7 | Material Contracts | 20 |
| Section 3.8 | Compliance With Laws; Permits | 22 |
| Section 3.9 | Claims; Orders | 22 |
| Section 3.10 | Taxes | 23 |
| Section 3.11 | Employee Benefit Plans | 25 |
| Section 3.12 | Labor Matters | 27 |
| Section 3.13 | Environmental Matters | 29 |
| Section 3.14 | Health Care Matters | 29 |
| Section 3.15 | Insurance | 31 |

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| | | |
|:---|:---|:---|
| Section 3.16 | Material Customers and Suppliers | 31 |
| Section 3.17 | Directors and Officers | 32 |
| Section 3.18 | Bank Accounts | 32 |
| Section 3.19 | Anti-Corruption | 32 |
| Section 3.20 | Affiliate Contracts | 32 |
| Section 3.21 | Assets | 32 |
| Section 3.22 | Brokers | 33 |
| Section 3.23 | COVID-19 Relief | 33 |
| Section 3.24 | Investment | 33 |
| **ARTICLE IV<br>REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES** | **ARTICLE IV<br>REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES** | **ARTICLE IV<br>REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES** |
| Section 4.1 | Due Organization and Good Standing | 33 |
| Section 4.2 | Authority; Binding Nature of Agreement | 34 |
| Section 4.3 | Noncontravention; Consents | 34 |
| Section 4.4 | Capitalization | 34 |
| Section 4.5 | SEC Documents; Financial Statements; Related-Party Transactions; Undisclosed Liabilities | 35 |
| Section 4.6 | Compliance With Laws | 37 |
| Section 4.7 | Absence of Certain Changes | 37 |
| Section 4.8 | Claims; Orders | 37 |
| Section 4.9 | Anti-Corruption | 37 |
| Section 4.10 | Solvency | 37 |
| Section 4.11 | Financing | 38 |
| Section 4.12 | Investment | 40 |
| Section 4.13 | Brokers | 40 |
| Section 4.14 | R&W Insurance Policy | 40 |
| **ARTICLE V<br>COVENANTS AND AGREEMENTS** | **ARTICLE V<br>COVENANTS AND AGREEMENTS** | **ARTICLE V<br>COVENANTS AND AGREEMENTS** |
| Section 5.1 | Conduct of Business Prior to the Closing | 41 |
| Section 5.2 | Access to Information | 44 |
| Section 5.3 | Consents and Filings; Buyer Entities' Actions | 44 |
| Section 5.4 | Employee Matters | 47 |
| Section 5.5 | Names and Marks; Termination of Rights to IP Rights | 50 |
| Section 5.6 | Indemnification; Directors' and Officers' Insurance | 51 |
| Section 5.7 | Termination of Affiliate Contracts and Intercompany Accounts | 52 |
| Section 5.8 | Retention and Access to Personnel, Information and Records | 52 |
| Section 5.9 | Insurance | 53 |
| Section 5.10 | Company Employee Information | 53 |
| Section 5.11 | No Transfer | 53 |
| Section 5.12 | Financing | 54 |
| Section 5.13 | Transition | 59 |
| Section 5.14 | Exclusivity | 59 |
| Section 5.15 | Further Assurances | 59 |

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| | | |
|:---|:---|:---|
| Section 5.16 | Post-Closing Cooperation | 59 |
| Section 5.17 | Additional Financial Information | 59 |
| Section 5.18 | Certain Post-Closing Agreements | 60 |
| Section 5.19 | Earnout | 60 |
| Section 5.20 | R&W Insurance Policy | 61 |
| Section 5.21 | Confidentiality | 61 |
| Section 5.22 | Buyer Parent Shares | 62 |
| Section 5.23 | NIA Pennsylvania | 62 |
| **ARTICLE VI<br>CONDITIONS TO CLOSING** | **ARTICLE VI<br>CONDITIONS TO CLOSING** | **ARTICLE VI<br>CONDITIONS TO CLOSING** |
| Section 6.1 | Conditions to the Obligation of Each Party | 62 |
| Section 6.2 | Conditions to the Obligations of the Buyer Entities | 62 |
| Section 6.3 | Conditions to Obligation of Sellers | 63 |
| **ARTICLE VII<br>TERMINATION** | **ARTICLE VII<br>TERMINATION** | **ARTICLE VII<br>TERMINATION** |
| Section 7.1 | Termination | 64 |
| Section 7.2 | Effect of Termination | 65 |
| **ARTICLE VIII<br>TAX MATTERS** | **ARTICLE VIII<br>TAX MATTERS** | **ARTICLE VIII<br>TAX MATTERS** |
| Section 8.1 | Preparation and Filing of Tax Returns; Contests | 66 |
| Section 8.2 | Straddle Periods | 68 |
| Section 8.3 | Pre-Closing Tax Refunds | 68 |
| Section 8.4 | Allocation of Purchase Price | 69 |
| Section 8.5 | Transfer Taxes | 69 |
| Section 8.6 | Tax Sharing Agreements | 69 |
| Section 8.7 | Cooperation | 69 |
| Section 8.8 | Survival | 70 |
| Section 8.9 | Exclusivity | 70 |
| **ARTICLE IX<br>Indemnification** | **ARTICLE IX<br>Indemnification** | **ARTICLE IX<br>Indemnification** |
| Section 9.1 | Indemnification | 70 |
| Section 9.2 | Indemnification Procedures | 71 |
| Section 9.3 | Other Indemnification Procedures | 72 |
| Section 9.4 | Exclusive Remedy | 73 |
| **ARTICLE X<br>OTHER COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS** | **ARTICLE X<br>OTHER COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS** | **ARTICLE X<br>OTHER COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS** |
| Section 10.1 | No Other Representations and Warranties; Survival; As-Is Sale; <br>Nonreliance | 74 |

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| | | |
|:---|:---|:---|
| Section 10.2 | Mutual Release | 77 |
| Section 10.3 | Retention of Counsel | 79 |
| Section 10.4 | Protected Communications | 79 |
| Section 10.5 | No Waiver of Privilege, Protection From Disclosure or Use | 79 |
| **ARTICLE XI<br>MISCELLANEOUS PROVISIONS** | **ARTICLE XI<br>MISCELLANEOUS PROVISIONS** | **ARTICLE XI<br>MISCELLANEOUS PROVISIONS** |
| Section 11.1 | Amendment | 80 |
| Section 11.2 | Waiver | 80 |
| Section 11.3 | Entire Agreement; Counterparts | 80 |
| Section 11.4 | Applicable Law; Jurisdiction; WAIVER OF JURY TRIAL | 80 |
| Section 11.5 | Remedies; Specific Performance | 81 |
| Section 11.6 | Payment of Expenses | 82 |
| Section 11.7 | Assignability; Third-Party Rights | 82 |
| Section 11.8 | Notices | 82 |
| Section 11.9 | Severability | 83 |
| Section 11.10 | Financing | 83 |
| Section 11.11 | Publicity | 84 |
| Section 11.12 | Construction | 84 |
| Section 11.13 | Definitions | 86 |

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**STOCK AND ASSET PURCHASE AGREEMENT**

This STOCK AND ASSET PURCHASE AGREEMENT, dated as of November 17, 2022 (this "<u>Agreement</u>"), is by and among Evolent Health, Inc., a Delaware corporation ("<u>Buyer Parent</u>"), Evolent Health LLC, a Delaware limited liability company ("<u>Buyer</u>" and, together with the Buyer Parent, the "<u>Buyer Entities</u>"), Magellan Health, Inc., a Delaware corporation ("<u>Seller Parent</u>"), and Magellan Healthcare, Inc., a Delaware corporation ("<u>MHI</u>" and, together with Seller Parent, "<u>Sellers</u>" and, Sellers together with the Buyer Entities, the "<u>Parties</u>").

**RECITALS**

**WHEREAS**, Sellers and certain of their respective Subsidiaries own and operate the Business;

**WHEREAS**, on the terms and conditions hereof, Buyer desires to acquire, and Sellers desire to sell to Buyer, the Business, including all of the outstanding Equity Interests (the "<u>Transferred Equity Interests</u>") in National Imaging Associates, Inc., a Delaware corporation (the "<u>Company</u>"), and the Transferred Assets; and

**WHEREAS**, on the terms and conditions hereof, Buyer desires to assume, agree to pay, perform, fulfill and discharge when due all of the Assumed Liabilities.

**NOW**, **THEREFORE**, in consideration of the foregoing and the representations, warranties, covenants and agreements herein, and intending to be legally bound hereby, the Parties agree as follows:

**ARTICLE I<u><br>PURCHASE AND SALE</u>**

Section 1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Closing</u>. The Parties shall consummate the Acquisition and the Liabilities Assumption (the "<u>Closing</u>") by the exchange of required closing deliverables at 8:00 a.m. Eastern time on the third (3) Business Day after the date on which the conditions in <u>Article VI</u> are satisfied or waived (except for any such condition that by its nature is to be satisfied at the Closing, but subject to the satisfaction or waiver of any such condition at the Closing), unless Seller Parent and the Buyer Entities agree in writing on another time, date or place; <u>provided</u>, <u>however</u>, that, if, prior to the Closing, Sellers deliver the Additional Financial Information to the Buyer Entities, then either Seller Parent or the Buyer Entities may request in writing from the other Party that the Closing be delayed for up to forty-five (45) days (the "<u>Closing Delay</u> 

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<u>Notice</u>") and, if the other Party agrees in writing to such delay, the Parties shall not be required to consummate the Closing prior to the date specified in the Closing Delay Notice. As used herein, "<u>Closing Date</u>" means the date on which the Closing occurs. In the event the Measurement Time is not 12:01 a.m. on the first day of a calendar month, then the Seller Group shall use commercially reasonable efforts to prepare (or cause to be prepared) and deliver to Buyer Parent (in each case, at Buyer Parent's sole cost and expense with respect to reasonable out-of-pocket expenses paid by the Seller Group to third parties in connection therewith (and excluding any internal costs or expenses, including with respect to employees of the Seller Group or their Affiliates)) within twenty (20) days after the Closing Date a standalone closing balance sheet of "Magellan Specialty Health" and, following the delivery thereof, shall use commercially reasonable efforts to respond to any reasonable information requests by Buyer Parent or its Representatives with respect to such balance sheet. For the avoidance of doubt, as used in this <u>Section 1.2</u> with respect to the preparation and delivery of such standalone balance sheet, "commercially reasonable efforts" will (a) include identification of and providing data related to the significant and material (materiality as reasonably agreed to by the Parties) account level activity that occurred between the last month-end date prior to close and the actual Closing Date, and (b) include a roll forward and reconciliation of the material (materiality as reasonably agreed to by the Parties) balance sheet accounts.

Section 1.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Certain Closing Deliveries</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;At or prior to the Closing, Sellers shall deliver to the Buyer Entities the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;an IRS Form W-9, duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;a transition services agreement in the form of <u>Exhibit A</u> (the "<u>Transition Services Agreement</u>"), duly executed by Seller Parent and an Acquired Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;a software license agreement in the form of <u>Exhibit B</u> (the "<u>Software License Agreement</u>"), duly executed by Seller Parent and an Acquired Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;a bill of sale and assignment and assumption agreement in the form of <u>Exhibit C</u> (the "<u>Bill of Sale and Assignment Agreement</u>"), duly executed by the applicable members of the Seller Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;if any Buyer Parent Shares are issued to Seller Parent hereunder, a registration rights agreement in the form of <u>Exhibit D</u> (the "<u>Registration Rights Agreement</u>"), if applicable, duly executed by Seller Parent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;a restrictive covenant agreement in the form of <u>Exhibit E</u> (the "<u>Restrictive Covenant Agreement</u>"), duly executed by Seller Parent and MHI;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;if any Buyer Parent Shares are issued to Seller Parent hereunder, a lock-up agreement in the form of <u>Exhibit F</u> (the "<u>Lock-Up Agreement</u>"), duly executed by Seller Parent;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;a certificate of the Secretary or other authorized officer of each Seller, dated as of the Closing Date, certifying as to the resolutions or actions of such Seller's board of directors approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and certifying to the incumbency of the officers of such Seller executing this Agreement and any other documents being executed in connection with the consummation of the transactions contemplated hereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;a certificate of good standing from such Acquired Entity's jurisdiction of formation, each dated within ten (10) Business Days prior to the Closing Date; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;for any Transferred Equity Interests represented by physical certificates, such certificates, duly endorsed in blank or accompanied by transfer powers duly executed by MHI.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;At or prior to the Closing, the Buyer Entities shall deliver to Sellers the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the Bill of Sale and Assignment Agreement, duly executed by Buyer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;if any Buyer Parent Shares are issued to Seller Parent hereunder, the Registration Rights Agreement and Lock-Up Agreement, duly executed by Buyer Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;As promptly as practicable after the date hereof, Sellers or their Affiliates shall use reasonable best efforts to obtain approval of the Contract attached as <u>Exhibit G-1</u> (the "<u>Florida Company Commercial Agreement Amendment</u>") by the Office of Insurance Regulation of the State of Florida pursuant to Form D OIR-A1-2117 and Rule 69O-143.047, Florida Administrative Code (the "<u>Form D Approval</u>"). As promptly as practicable after receipt of a Form D Approval of the Florida Company Commercial Agreement Amendment, Sellers shall cause the Company and the applicable Subsidiaries of Ultimate Parent to execute and deliver the Florida Company Commercial Agreement Amendment. Receipt of the Form D Approval shall not be a condition to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Immediately after the Closing, Sellers shall deliver to the Buyer Entities the commercial agreements and commercial agreement amendments in the form of <u>Exhibit G-2</u> (the "<u>Non-Florida Commercial Agreements</u>" and, together with the Florida Company Commercial Agreement Amendment, the "<u>Commercial Agreements</u>") and the Florida Company Commercial Agreement Amendment (to the extent it has not been executed prior to the Closing), duly executed by the applicable Subsidiaries of Ultimate Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Immediately after the Closing, the Buyer Entities shall deliver to Sellers the Non-Florida Commercial Agreements and the Florida Company Commercial Agreement Amendment (to the extent it has not been executed prior to the Closing), duly executed by the Company, Buyer Parent, Buyer or the applicable Subsidiary of Buyer.

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Section 1.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Closing Payments and Issuances</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment Statement</u>. No later than two (2) Business Days prior to the Closing Date, Seller Parent shall deliver a written statement (the "<u>Payment Statement</u>") to the Buyer Entities setting forth, with reasonable supporting information, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the Estimated Business Enterprise Value, including a good-faith estimate of (1) the Closing Date Cash (the "<u>Estimated Closing Date Cash</u>"), (2) the Closing Date Indebtedness (the "<u>Estimated Closing Date Indebtedness</u>"), and (3) the Net Working Capital Adjustment Amount (the "<u>Estimated Net Working Capital Adjustment Amount</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;wiring instructions for the payment contemplated by <u>Section 1(b)</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the allocation of the Estimated Business Enterprise Value between Sellers (each Seller's percentage allocation being referred to as its "<u>Allocation Percentage</u>").

Between the delivery of the Payment Statement and the Measurement Time, Seller Parent shall (A) provide the Buyer Entities and their Representatives with reasonable access, during normal business hours, to the books and records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Business for purposes of their review of the Payment Statement, and (B) reasonably cooperate with the Buyer Entities and their Representatives in connection with such review, including using commercially reasonable efforts to provide on a timely basis all other information reasonably necessary in connection with the review of the Payment Statement, in each case, as reasonably requested by the Buyer Entities and their Representatives. Notwithstanding anything to the contrary in this Agreement, between the Measurement Time and the Closing, Sellers shall not, and Sellers shall not cause any Acquired Entity to, take any action (or omit to take any action) outside of the ordinary course of business and not contemplated by this Agreement that has the effect of modifying the Estimated Closing Date Cash, Estimated Closing Date Indebtedness, or Estimated Net Working Capital Adjustment Amount in order to increase the amounts payable to the Sellers. Following the delivery of the Payment Statement, Seller Parent shall consider in good faith any comments of the Buyer Entities to the Payment Statement and the calculations set forth therein (<u>provided</u> that any failure to accept any such comments to the Payment Statement shall not relieve the Buyer Entities of their obligations to consummate the Closing when required hereunder). Seller Parent shall use commercially reasonable efforts to deliver a draft of the Payment Statement to Buyer Parent no later than five (5) Business Days prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment and Issuance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;At the Closing, the Buyer Entities shall pay to Sellers an aggregate amount in cash equal to the Cash Consideration Amount, by wire transfer of immediately available funds in accordance with the wiring instructions and allocation in the Payment Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;At the Closing, Buyer Parent shall, if applicable, (1) issue to Seller Parent, in book-entry form, the Buyer Parent Shares and (2) deliver to Seller Parent a letter, duly executed by Buyer Parent, directing such transfer agent to enter into its book and records the

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number of Buyer Parent Shares in the name of Seller Parent. Promptly after the Closing, Buyer Parent shall deliver to Seller Parent evidence of the entry into the books and records of Buyer Parent's transfer agent of the number of Buyer Parent Shares in the name of Seller Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Transaction Expenses</u>. At the Closing, all Transaction Expenses payable to third-party Representatives of the Acquired Entities (to the extent not paid by Sellers or the Acquired Entities prior to the Closing) will be fully paid, and such payment will be funded by Buyer Parent. In order to facilitate such payment, prior to the Closing, Sellers shall use commercially reasonable efforts to obtain and deliver to Buyer Parent invoices with respect to such Transaction Expenses.

Section 1.5&nbsp;&nbsp;&nbsp;&nbsp;<u>First Post-Closing Adjustment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Within one hundred and twenty (120) days after the Closing Date, Buyer Parent shall prepare and deliver to Seller Parent a written statement (the "<u>First Adjustment Statement</u>") setting forth, in reasonable detail and with reasonable supporting information, Buyer Parent's good-faith calculation of the First Adjustment Amount. Buyer Parent shall prepare the First Adjustment Statement in a manner consistent herewith, including this <u>Section 1.5(a)</u> and the definitions herein, and in accordance with the Accounting Principles. Seller Parent shall (i) provide Buyer Parent and its Representatives with reasonable access during normal business hours to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Business to the extent necessary or useful for purposes of Buyer Parent's preparation of the First Adjustment Statement, and (ii) reasonably cooperate with Buyer Parent and its Representatives in connection with such preparation, including using commercially reasonable efforts to provide on a timely basis all other information reasonably necessary in connection with the preparation of the First Adjustment Statement as is requested by Buyer Parent or its Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Seller Parent shall have thirty (30) days from the date on which the First Adjustment Statement is delivered to Seller Parent in accordance with <u>Section 1.5(a)</u> (the "<u>First Review Period</u>") to review the First Adjustment Statement. During such First Review Period, Buyer Parent shall, and shall cause the Acquired Entities to, (i) provide Seller Parent with reasonable access during normal business hours upon reasonable prior notice to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Acquired Entities and to work papers of Buyer Parent's and the Acquired Entities' respective accountants, in each case, for purposes of their review of the First Adjustment Statement and (ii) reasonably cooperate with all requests of Seller Parent in connection with such review, including timely providing all information in connection with Seller Parent's review of the First Adjustment Statement as is requested by Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Unless Seller Parent delivers written notice to Buyer Parent prior to 5:00 p.m. on the last day of the First Review Period that it objects to any item or items shown or reflected in the First Adjustment Statement (the "<u>Dispute Notice</u>"), the First Adjustment Statement shall be deemed accepted by Seller Parent for all purposes hereof. The Dispute Notice shall specify in reasonable detail the item or items to which Seller Parent objects and the reasons therefor (such item or items, the "<u>Disputed Items</u>"). If Seller Parent delivers a Dispute Notice at or prior to 5:00 p.m. on the last day of the First Review Period, Seller Parent and Buyer Parent shall attempt in good faith to resolve each Disputed Item, and any resolution agreed by them in

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writing shall be final, binding and conclusive for all purposes of determining the payments in <u>Section 1.5(d)</u>. If, for any reason, Seller Parent and Buyer Parent are unable to resolve in writing each Disputed Item within forty-five (45) Business Days (or such longer period as Buyer Parent and Seller Parent may agree in writing) after the delivery of the Dispute Notice, all unresolved Disputed Items shall be referred to Ernst & Young LLP for resolution acting as an expert and not an arbitrator. If Ernst & Young LLP is unwilling or unable to serve as such expert, Seller Parent and Buyer Parent shall jointly select and retain a nationally recognized accounting firm that is independent and impartial to serve as such expert Ernst & Young LLP or such other accounting firm engaged in accordance with this <u>Section 1.5(c)</u>, the "<u>Independent Accountant</u>"). If, within ten (10) Business Days after the date Ernst & Young LLP informs Seller Parent and Buyer Parent that it is unable or unwilling to serve as the Independent Accountant and Seller Parent and Buyer Parent cannot mutually agree on an alternate accounting firm to serve as the Independent Accountant, either Seller Parent or Buyer Parent may request the American Arbitration Association to appoint as the Independent Accountant, within fifteen (15) days from the date of such request or as soon as practicable thereafter, a partner in a nationally recognized accounting firm that is not the auditor or independent accounting firm of any of Buyer Parent or any of its Affiliates or Seller Parent or any of its Affiliates, who is a certified public accountant and who is independent of Seller Parent and Buyer Parent and impartial to serve as the Independent Accountant. If any Disputed Item is referred to the Independent Accountant, Buyer Parent on the one hand, and Seller Parent, on the other hand, shall prepare a written report addressing each such Disputed Item and deliver such reports to the Independent Accountant and each other within fifteen (15) Business Days after the date the Independent Accountant is retained. Each of Buyer Parent, on the one hand, and Seller Parent, on the other hand, shall have fifteen (15) Business Days thereafter to deliver a rebuttal submission to the Independent Accountant. Each of Buyer Parent and Seller Parent shall use reasonable efforts to cause the Independent Accountant, as soon as reasonably practicable and in any event within thirty (30) days after receiving such rebuttal submissions, to resolve the Disputed Items; <u>provided</u>, <u>however</u>, that the dollar amount of each Disputed Item shall be determined within the range of dollar amounts proposed in the First Adjustment Statement and the Dispute Notice, respectively. Buyer Parent and Seller Parent acknowledge and agree that (i) the review by and determination of the Independent Accountant shall be limited only to the Disputed Items in the reports prepared and submitted to the Independent Accountant by Buyer Parent and Seller Parent and (ii) the determinations by the Independent Accountant shall be based solely on (1) such reports and supporting information submitted by Buyer Parent and Seller Parent and (2) the terms hereof, and not on the basis of an independent review. Neither Buyer Parent nor Seller Parent shall authorize the Independent Accountant to modify or amend any term or provision hereof or modify items previously agreed in writing between Buyer Parent and Seller Parent. If requested by the Independent Accountant, each of Buyer Parent and Seller Parent shall enter into an engagement letter with the Independent Accountant containing customary terms and conditions. There shall be no ex parte communications with the Independent Accountant, and any information or documentation provided by any Party to the Independent Accountant shall be concurrently delivered to the other Party, subject, in the case of independent accountant work papers, to such other Party entering into a customary confidentiality agreement related thereto. Neither Buyer Parent nor Seller Parent shall disclose to the Independent Accountant, and the Independent Accountant shall not consider for any purposes, any discussions, offers or negotiations made by any of the Parties

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related to the compromise of any Disputed Item. The determinations by the Independent Accountant as to the Disputed Items shall be in writing and shall, absent manifest mathematical error promptly corrected by the Independent Accountant, be an expert determination that is final, binding and conclusive for all purposes of determining the adjustments in <u>Section 1.5(d)</u>, if any, and such determination may be entered and enforced in any court of competent jurisdiction. The costs and expenses of the Independent Accountant shall be allocated between Buyer Parent and Seller Parent in inverse proportion to the amounts of Disputed Items decided in their respective favors. As an illustrative example, if Disputed Items asserting that the First Adjustment Amount should be increased by $1,000 are submitted to the Independent Accountant, and the Independent Accountant finally determines that the First Adjustment Amount should be increased by $300, then the costs and expenses of the Independent Accountant shall be allocated 70% (i.e., $700/$1000) to Seller Parent and 30% (i.e., $300/$1,000) to Buyer Parent. The process in this <u>Section 1.5</u> shall be the exclusive remedy for the Parties for any disputes arising from the calculation of the Purchase Price and the First Adjustment Amount (and any components thereof).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;If the First Adjustment Amount, as finally determined under <u>Section 1.5(c)</u> (the "<u>Final First Adjustment Amount</u>"), exceeds the Estimated First Adjustment Amount (the amount of any such excess, the "<u>Positive First Adjustment Amount</u>"), then, within five (5) Business Days after the determination of the Final First Adjustment Amount, the Buyer Entities shall pay to Sellers an aggregate amount in cash equal to the Positive First Adjustment Amount, by wire transfer of immediately available funds in accordance with the wiring instructions and allocation in the Payment Statement. If the Final First Adjustment Amount is less than the Estimated First Adjustment Amount (the amount of any such difference, the "<u>Negative First Adjustment Amount</u>"), then, within five (5) Business Days after the determination of the Final First Adjustment Amount, Sellers shall jointly and severally pay to the Buyer Entities an aggregate amount in cash equal to the Negative First Adjustment Amount, by wire transfer of immediately available funds in accordance with the wiring instructions that the Buyer Entities shall deliver to Sellers prior to the date when such payment is required to be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Any payment made under <u>Section 1.5(d)</u> shall be treated as an adjustment to the purchase price for the Acquisition for Tax purposes to the maximum extent permitted by applicable Law.

Section 1.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Second Post-Closing Adjustment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Within one hundred and twenty (120) days after the Second Adjustment Date, Buyer Parent shall prepare and deliver to Seller Parent a written statement (the "<u>Second Adjustment Statement</u>") setting forth, in reasonable detail and with reasonable supporting information, Buyer Parent's good-faith calculation of the Second Adjustment Amount. Buyer Parent shall prepare the Second Adjustment Statement in a manner consistent herewith, including this <u>Section 1.6(a)</u> and the definitions herein, and in accordance with the Accounting Principles. Seller Parent shall (A) provide Buyer Parent and its Representatives with reasonable access during normal business hours to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Business to the extent reasonably necessary for purposes of Buyer Parent's preparation of the Second Adjustment Statement, and (B) reasonably cooperate with Buyer Parent and its Representatives in connection with such preparation, including using commercially reasonable efforts to provide

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on a timely basis all other information reasonably necessary in connection with the preparation of the Second Adjustment Statement as is requested by Buyer Parent or its Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Seller Parent shall have thirty (30) days from the date on which the Second Adjustment Statement is delivered to Seller Parent in accordance with <u>Section 1.6(a)</u> (the "<u>Second Review Period</u>") to review the Second Adjustment Statement. During such Second Review Period, Buyer Parent shall, and shall cause the Acquired Entities to, (i) provide Seller Parent with reasonable access during normal business hours upon reasonable prior notice to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Acquired Entities and to work papers of Buyer Parent's and the Acquired Entities' respective accountants, in each case, for purposes of their review of the Second Adjustment Statement and (ii) reasonably cooperate with all requests of Seller Parent in connection with such review, including timely providing all information in connection with Seller Parent's review of the Second Adjustment Statement as is requested by Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Unless Seller Parent delivers written Dispute Notice to Buyer Parent prior to 5:00 p.m. on the last day of the Second Review Period that it objects to any item or items shown or reflected in the Second Adjustment Statement, the Second Adjustment Statement shall be deemed accepted by Seller Parent for all purposes hereof. The Dispute Notice shall specify in reasonable detail the Disputed Items and the reasons therefor. If Seller Parent delivers a Dispute Notice at or prior to 5:00 p.m. on the last day of the Second Review Period, Seller Parent and Buyer Parent shall attempt in good faith to resolve each Disputed Item, and any resolution agreed by them in writing shall be final, binding and conclusive for all purposes of determining the payments in <u>Section 1.6(d)</u>. If, for any reason, Seller Parent and Buyer Parent are unable to resolve in writing each Disputed Item within forty-five (45) Business Days (or such longer period as Buyer Parent and Seller Parent may agree in writing) after the delivery of the Dispute Notice, all unresolved Disputed Items shall be referred to the Independent Accountant for resolution acting as an expert and not an arbitrator and the dispute resolution provisions set forth in <u>Section 1.5(c)</u> shall apply to such dispute *mutatis mutandis*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;If the Second Adjustment Amount, as finally determined under <u>Section 1.6(c)</u> (the "<u>Final Second Adjustment Amount</u>"), is positive (the amount of any such excess, the "<u>Positive Second Adjustment Amount</u>"), then, within five (5) Business Days after the determination of the Final Second Adjustment Amount, the Buyer Entities shall pay to Sellers an aggregate amount in cash equal to the Positive Second Adjustment Amount, by wire transfer of immediately available funds in accordance with the wiring instructions and allocation in the Payment Statement. If the Final Second Adjustment Amount is negative (the amount of any such difference, the "<u>Negative Second Adjustment Amount</u>"), then, within five (5) Business Days after the determination of the Final Second Adjustment Amount, Sellers shall jointly and severally pay to the Buyer Entities an aggregate amount in cash equal to the Negative Second Adjustment Amount, by wire transfer of immediately available funds in accordance with the wiring instructions that the Buyer Entities shall deliver to Sellers prior to the date when such payment is required to be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Any payment made under <u>Section 1.6(d)</u> shall be treated as an adjustment to the purchase price for the Acquisition for Tax purposes to the maximum extent permitted by applicable Law.

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Section 1.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Transferred Assets</u>. As used herein, "<u>Transferred Asset</u>" means, except as otherwise provided herein or in the Ancillary Agreements, any of the following assets (and all title and interest thereto or therein), as existing at the Closing, to the extent owned, leased, held or licensed by any member of the Seller Group (which, for the avoidance of doubt, excludes the Acquired Entities):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the leases for Business Leased Real Property listed in <u>Section 1.7(a)</u> of the Disclosure Schedule (the "<u>Transferred Leases</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;all Contracts Related to the Business (together with the Transferred Leases, the "<u>Transferred Contracts</u>"), including the Contracts listed in <u>Section 1.7(b)</u> of the Disclosure Schedule but excluding any Consent Required Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the employment agreements listed in <u>Section 1.7(c)</u> of the Disclosure Schedule to the extent the employee a party thereto is a Transferred Employee (the "<u>Transferred Employment-Related Agreements</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;all accounts receivable and notes receivable Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;all expenses that have been prepaid and are Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;all insurance proceeds arising out of or related to damage or destruction of any Transferred Assets (or assets existing as of the date hereof that would have been Transferred Assets but for the occurrence of the event giving rise to the insurance proceeds) to the extent such damage or destruction remains unrepaired or to the extent any asset remains unreplaced at the Closing (such insurance proceeds, "<u>Post-Signing Insurance Proceeds</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;all documents, instruments, papers, books, records, books of account, files and tangible or electronic embodiments of data, telephone numbers and fax numbers, catalogs, brochures, sales literature, promotional materials, certificates and other documents to the extent Related to the Business and in the possession or control of the Seller Group, other than (i) Employee Records, (ii) any documents, instruments, papers, books, records, books of account, files and tangible, electronic embodiments of data (including customer and supplier lists and repair and performance records), telephone numbers and fax numbers, catalogs, brochures, sales literature, promotional materials, certificates and other documents not permitted to be transferred to Buyer by applicable Law and (iii) any Tax Returns or Tax records (collectively, the "<u>Books and Records</u>"); <u>provided</u> that the Seller Group shall be permitted to maintain copies of any Books and Records (1) as reasonably necessary to comply with applicable Law (including pursuant to a "litigation hold") or professional standards, (2) for bona fide corporate record keeping purposes pursuant to written policies established by a member of the Seller Group prior to the Closing or (3) that are in electronic form, including any emails and attachments thereto, to the extent saved or stored by a member of the Seller Group in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;all goodwill Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the domain names listed in <u>Section 1.7(i)</u> of the Disclosure Schedule (the "<u>Transferred Domain Names</u>");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;other than IT Assets, all tangible assets (including equipment, furniture and furnishings) Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;to the extent permitted to be transferred by applicable Law, all files and records that relate to Transferred Employees but only to the extent that such files and records relate to (1) skill and development training, (2) biographies, (3) seniority histories, (4) salary and benefits, (5) Occupational, Safety and Health Administration reports (or the equivalent), (6) active medical restriction forms, (7) drug testing and background check documentation (including criminal background history, SSN trace and OIG/SAM exclusions, if any), (8) credential verification (including Form I-9) and addresses and (9) fitness for duty, in each case, that are in the possession or under the control of any member of the Seller Group (collectively, the "<u>Employee Records</u>"); <u>provided</u> that, the Employee Records will include all employee data of the Transferred Employees (including employee offers and new hire records, performance records, bonus awards and talent acquisition records) maintained in "Workday" by the Seller Group in the ordinary course of business and all employee discipline records of the Transferred Employees for the three (3) year period preceding the Closing Date maintained in "ServiceNow" by the Seller Group in the ordinary course of business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;(i) all Personal Electronic Devices issued by a member of the Seller Group to a Transferred Employee for individual use in connection with their employment by a member of the Seller Group (collectively, the "<u>Transferred Business Employee Devices</u>") and (ii) all IT Assets and Software Related to the Business, including the Software and other IP Rights set forth in <u>Section 1.7(l)(ii)</u> of the Disclosure Schedule (together with the Transferred Domain Names and the Transferred Business Employee Devices, the "<u>Transferred IT/IP Assets</u>"); <u>provided</u> that the Transfer of such Transferred IT/IP Assets to Buyer shall not grant Buyer or any of its Affiliates, including the Acquired Entities, any right, title or interest in or to any Seller Names;

<u>provided</u>, <u>however</u>, that none of the foregoing assets or rights shall be Transferred Assets to the extent any such asset or right is an Excluded Asset. A single asset may fall within more than one (1) of <u>Sections 1.7(a)-(l)</u>, and such fact does not imply that (A) such asset shall be Transferred if any provision hereof restricts such Transfer, (B) such asset shall be Transferred more than once or (C) any duplication of such asset is required.

Section 1.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Excluded Assets</u>. Notwithstanding anything herein to the contrary, the Seller Group shall retain all of its right, title and interest in and to, and shall not, and shall not be required to, Transfer to Buyer, and the Transferred Assets shall not include, any of the following assets or rights to the extent owned, leased, held or licensed by any member of the Seller Group (which, for the avoidance of doubt, excludes the Acquired Entities) (collectively, the "<u>Excluded Assets</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;other than Post-Signing Insurance Proceeds, all cash and cash equivalents of Sellers and their respective Affiliates (other than cash and cash equivalents held in a deposit account the registered owner of which is an Acquired Entity), including all deposits with utilities, insurance companies and other Persons (other than to the extent such amounts constitute prepaid expenses subject to <u>Section 1.7(e)</u>) and all cash and cash equivalents held in any account the registered owner of which is a member of the Seller Group;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;any distribution or dividend from any Acquired Entity that has a record date or record time and paid prior to the Measurement Time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;all accounts receivable that are not Related to the Business and all accounts receivable for which the obligor is a member of the Seller Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;all notes receivable (and any similar claims or rights) that are not Related to the Business and all notes receivable that are related to or arise out of the financing of the Business or the transfer of cash to or from the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;all checkbooks, canceled checks, bank deposits, bank accounts, deposit accounts, investment accounts and collateral supporting letters of credit or any other support obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;any Equity Interests of any Person (other than an Acquired Entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;all Contracts that are not Transferred Contracts (including all Contracts related to any Excluded IP Rights or any Excluded IT Assets) and all rights and Claims thereunder, including the Contracts listed in <u>Section 1.8(g)</u> of the Disclosure Schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;other than any IP Rights included in the Transferred IT/IP Assets, all other IP Rights (the "<u>Excluded IP Rights</u>"), including (i) the IP Rights listed in <u>Section 1.8(h)</u> of the Disclosure Schedule and (ii) "Centene," "Magellan" or any confusingly similar derivative or variant thereof or any name or trademark confusingly similar to or dilutive of any of the foregoing, alone or as part of a combination (the "<u>Seller Names</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;other than any IT Assets included in the Transferred IT/IP Assets, all other IT Assets (the "<u>Excluded IT Assets</u>"), including (1) all Software installed on any Business Employee Hardware and (2) all IT Assets listed in <u>Section 1.8(i)</u> of the Disclosure Schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;any Claims against Third Parties to the extent (i) not Related to the Business or (ii) related to the Excluded Assets or the Retained Liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;any assets or rights privileged under the attorney-client privilege or the attorney work-product doctrine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;all of the Seller Group's books and records that form part of the general ledger of Seller Parent or its Subsidiaries, including any such Person's corporate or organizational books and records (including minute books), Tax Returns, financial and other accounting records (including records related to Taxes) necessary for the preparation of financial statements, Tax Returns or government-required Filings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;other than the Employee Records, all (i) personnel records and (ii) other records that (1) any member of the Seller Group is required by Law to retain in its possession, (2) cannot be transferred pursuant to applicable Law, or (3) relate to any present, former or future director, officer or employee (including any Transferred Employee) of any member of the Seller Group (including files and records containing personal identifying information or related to skill and development training, performance, biographies, seniority histories, salary and benefits,

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Occupational, Safety and Health Administration reports (or the equivalent), active medical restriction forms, fitness for duty and disciplinary actions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;all emails, instant messages, text messages, recorded voicemails and other electronic communications, of any employee (including any Transferred Employee) of any member of the Seller Group, whether on employee-owned devices or devices owned by MHI or its Subsidiaries to the extent not Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;all Seller Employee Plans and all assets and rights thereunder, together with all funding arrangements thereto (including all trusts, insurance policies and administrative service contracts);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;all Tax assets (including any refunds, rebates or credits or similar benefits) of Seller Parent or its Subsidiaries (the allocation of which among the Parties shall be governed exclusively by <u>Article VIII</u>);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;all confidential or proprietary information in any Transferred Employee's possession or control to the extent related to any business of the Seller Group (other than the Business), including (i) any such confidential or proprietary information obtained inadvertently by such Transferred Employee or contained or stored in such Transferred Employee's personal electronic devices (including mobile phones, smartphones, tablets, laptop computers and desktop computers) ("<u>Personal Electronic Devices</u>") and (ii) confidential or proprietary information, including all such information contained or archived in any Transferred Employee's emails, that is related to any business of the Seller Group (other than the Business); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;all assets and rights not Related to the Business or set forth in <u>Section 1.8(r)</u> of the Disclosure Schedule.

Section 1.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Assumed Liabilities</u>. As used herein, "<u>Assumed Liabilities</u>" means the following Liabilities of the Seller Group, whether arising prior to, on or after the Closing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;all trade and other accounts payable and notes payable Related to the Business or otherwise attributed to the Business in the Financial Statements or the notes thereto or in the calculation of the Closing Date Indebtedness or Net Working Capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities arising under or to the extent related to the Transferred Assets, including all such Liabilities related to credits, prepaid expenses, rebates, deferred charges and prepaid items of any Person (other than the Seller Group), including any deferred revenue), to the extent related to the Transferred Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities related to or arising from (i) the Transferred Employees or the employment thereof, including (1) all severance or termination payments that are payable on the cessation of employment of any Transferred Employee, and (2) the Accrued PTO (but excluding any other Liabilities under any Seller Employee Plan (except as contemplated by (ii) or (iii) of this <u>Section 1.9(c)</u> or <u>Section 5.4</u>)), (ii) all severance or termination payments that are payable by Seller or its Affiliates on the cessation of employment of any Business Employee who (1) does not receive a written offer of employment pursuant to <u>Section 5.4(a)</u> or (2) who receives a written offer of employment pursuant to <u>Section 5.4(a)</u> but such written offer does not meet the requirements of such Section, and (iii) the Transferred Employment-Related

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Agreements to the extent the Business Employee a party thereto is a Transferred Employee (the "<u>Assumed Employee Liabilities</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities arising under or related to the Closing Date Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities allocated to Buyer, any Acquired Entity or any of their respective Affiliates (other than any member of the Seller Group) herein or in the Ancillary Agreements, including all Liabilities related to or arising from any Consent Required Contract (including all third-party costs and expenses incurred by Sellers or their respective Affiliates in enforcing any Claims, rights and benefits under any Consent Required Contracts in accordance with <u>Section 5.11(b)</u>);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities to the extent arising from or related to any action or omission by a Buyer Entity or its Affiliates (including the Acquired Entities) after the Closing with respect to the Business, the Acquired Entities or the Transferred Assets or the other Assumed Liabilities, including any violation of any Law by a Buyer Entity or its Affiliates (including the Acquired Entities) after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities arising under or related to any Indebtedness or financing arrangement to be incurred or entered into by a Buyer Entity or its Affiliates (including the Acquired Entities) at or in connection with the Closing;

<u>provided</u>, <u>however</u>, that any single Liability may fall within more than one of <u>Sections 1.9(a)</u>–<u>1.9(g)</u>, and such fact does not imply that (1) such Liability shall be transferred more than once or (2) any duplication of such Liability is required.

Section 1.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Retained Liabilities</u>. Except for the Assumed Liabilities, Buyer shall not assume or become obligated with respect to any Liability of the Seller Group of any nature whatsoever (the "<u>Retained Liabilities</u>"), and the Seller Group shall retain and shall pay, discharge and perform all of the Retained Liabilities, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities not related to the Business or to the extent arising from or related to the Excluded Assets or any business of the Seller Group (other than the Business);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities to the extent related to or arising out of any Indebtedness of the Seller Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities of the Seller Group arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the agreements contemplated hereby and the transactions contemplated hereby and thereby, including fees and expenses of counsel, accountants, consultants, advisers and others;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;all Tax Liabilities of Seller or its Subsidiaries (the allocation of which among the Parties shall be governed exclusively by <u>Article VIII</u>); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;other than the Assumed Employee Liabilities, all Liabilities of the Seller Group under any Seller Employee Plan or for any present or former employees, officers, directors, retirees, independent contractors or consultants of the Seller Group, including, without

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limitation, any Liabilities associated with any claims for wages or other benefits, bonuses, accrued vacation, workers' compensation, severance, retention, termination or other payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities allocated to any Seller, any member of the Seller Group or any of their respective Affiliates (other than an Acquired Entity) herein or in the Ancillary Agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;all Liabilities related to any payroll Taxes deferred under the CARES Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;all risk-based or administrative services only (ASO) Liabilities under the Centene Customer Agreements (as defined in the Disclosure Schedule) arising prior to the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the Liabilities listed in <u>Section 1.10(i)</u> of the Disclosure Schedule (the "<u>Specified Retained Liabilities</u>");

<u>provided</u> that no Liability of an Acquired Entity shall be a Retained Liability.

**ARTICLE II<u><br>REPRESENTATIONS AND WARRANTIES REGARDING SELLERS</u>**

Except as disclosed in the Disclosure Schedule, each Seller represents and warrants to the Buyer Entities as follows:

Section 2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Due Organization and Good Standing</u>. Such Seller is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation. Except as would not be material to the Business, such Seller has all Entity power and authority to own, lease and operate its assets and to conduct its businesses in the manner in which its businesses are currently being conducted. Such Seller is not in material breach or material default of any obligation under its Organizational Documents.

Section 2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Authority; Binding Nature of Agreement</u>. Such Seller has the requisite power and authority to execute and deliver, and to perform its covenants and agreements under, this Agreement. The execution and delivery hereof by such Seller and the performance by such Seller of its covenants and agreements hereunder have been duly and validly authorized by all necessary Entity action on the part of such Seller. This Agreement has been duly and validly executed and delivered by such Seller and, assuming the due authorization, execution and delivery hereof by the other Parties, is a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to (a) Laws of general application related to bankruptcy, insolvency, reorganization, moratorium and other Laws affecting creditors' rights generally and (b) rules of law governing specific performance, injunctive relief and other equitable remedies (such Laws and rules of law, the "<u>Bankruptcy and Equity Exceptions</u>").

Section 2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Noncontravention; Consents</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Such Seller's execution and delivery hereof do not, and the performance of such Seller's, each member of the Seller Group's and each Acquired Entity's covenants and agreements hereunder (or otherwise applicable to such member of the Seller Group or Acquired

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Entity) shall not, (i) conflict with or violate any of the Organizational Documents of such Seller or any Acquired Entity, (ii) subject to making or obtaining, as applicable, the Consents and Filings referenced in <u>Section 2.3(b)</u>, conflict with or violate any Law or (iii) (1) require any Consent of, or any notice or filing (each, a "<u>Filing</u>") to or with, any Person that is not a Governmental Authority under, or (2) result in any breach of or, with or without notice or lapse of time or both, be a default under or give rise to any right of termination, cancellation, amendment or acceleration of, or result in the creation of a Lien on any asset of such Seller or an Acquired Entity under, any Material Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Such Seller's execution and delivery hereof do not, and the performance of such Seller's, each member of the Seller Group's and each Acquired Entity's covenants and agreements hereunder shall not, require such Seller or any Acquired Entity to make any Filing with or to, or to obtain any Consent from, any Governmental Authority, other than the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the HSR Act Clearance and Filings under the HSR Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the Form D Approval; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the Filings listed in <u>Section 2.3(b)</u> of the Disclosure Schedule (the "<u>Required Filings</u>").

Section 2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Title</u>. Seller owns the Transferred Equity Interests free and clear of any Lien (other than any restriction on transfer arising under the Organizational Documents of the Company). One or more members of the Seller Group own, license or hold a valid leasehold interest in or to the Transferred Assets, in each case, free and clear of any Lien (other than any Permitted Lien).

Section 2.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Claims; Orders</u>. There is no, and since the Reference Date, there has not been any, Claim pending or, to Sellers' Knowledge, being threatened against such Seller, and such Seller is not, and since the Reference Date, has not been subject to any Order, that, in each case, would result in a Seller Material Adverse Effect.

Section 2.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Brokers</u>. No broker, finder or investment banker is entitled to any brokerage, finder's or other similar fee or commission in connection with the transactions contemplated hereby based on arrangements made by or on behalf of such Seller and for which the Buyer Entities or any Acquired Entity would be liable.

**ARTICLE III<u><br>REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ENTITIES AND THE BUSINESS</u>**

Except as disclosed in the Disclosure Schedule, each Seller represents and warrants to the Buyer Entities as follows:

Section 3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Due Organization and Good Standing</u>. Each Acquired Entity is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation. Each Acquired Entity has all Entity power and authority to own, lease and operate its assets and to conduct its businesses as they are currently being conducted in all material respects.

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Each Acquired Entity is duly qualified to do business as a foreign Entity, and is in good standing, under the Laws of the jurisdictions where the nature of its businesses or the character of its assets requires such qualification, except where the failure to be so qualified or in good standing is not, and would not reasonably be expected to be, material to such Acquired Entity. None of the Acquired Entities is in material breach or material default of any material obligation under its Organizational Documents.

Section 3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Capitalization; Acquired Entities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Transferred Equity Interests are all of the outstanding Equity Interests in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.2(b)</u> of the Disclosure Schedule lists all of the Subsidiaries of the Company. No Acquired Entity owns any Equity Interests in any Person, other than Equity Interests in another Acquired Entity. All of the capital stock of, or other Equity Interests in, the Subsidiaries of the Company are owned by an Acquired Entity, free and clear of any Lien (other than any restriction on transfer arising under the Organizational Documents of such Subsidiary). All of the outstanding Equity Interests in the Acquired Entities have been duly authorized and validly issued and are free of preemptive rights. There are no voting agreements or other contracts, agreements, commitments, arrangements, instruments or rights of any kind of nature outstanding or in effect with respect to the any Equity Interests of an Acquired Entity or which restrict the transfer of any Equity Interest of an Acquired Entity.

Section 3.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial Statements; Undisclosed Liabilities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Sellers have made available to the Buyer Entities (i) combined unaudited financial statements of "Magellan Specialty Health" as of and for the years ended December 31, 2021, and December 31, 2020, and (ii) combined unaudited financial statements of "Magellan Specialty Health" for the nine-month period ended September 30, 2022 (collectively, the "<u>Financial Statements</u>"). The applicable Financial Statements present fairly, in all material respects, the consolidated financial position of "Magellan Specialty Health" as at the respective dates thereof and the consolidated results of operations for the periods then ended in accordance with GAAP (other than the absence of footnotes and normal year-end adjustments). The Acquired Entities and the members of the Seller Group with respect to the Business maintain a system of internal controls and procedures that are sufficient to provide reasonable assurance that transactions are executed only with management's authorization, and that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets of the Acquired Entities and the members of the Seller Group with respect to the Business. No Acquired Entity or member of the Seller Group with respect to the Business has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by any Acquired Entity or member of the Seller Group with respect to the Business, (ii) any fraud, whether or not material, that involves the management of the any Acquired Entity or member of the Seller Group with respect to the Business who have a role in the preparation of financial statements or the internal accounting controls utilized by any Acquired Entity or member of the Seller Group with respect to the Business or (iii) any claim or allegation regarding any of the foregoing.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity or any member of the Seller Group with respect to the Business has any material Liability, other than (i) Liabilities provided for in the Financial Statements or disclosed in the notes thereto, (ii) Liabilities that have arisen in the ordinary course of business since September 30, 2022, (iii) executory obligations under any Contract and (iv) Liabilities incurred in connection with this Agreement and the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;All accounts and notes receivable reflected on the Financial Statements have arisen in the ordinary course of business, and represent legal, valid, binding and enforceable obligations owed to the Acquired Entities or the Business, subject only to consistently recorded reserves for bad debts set forth on the Financial Statements, and are not subject to any material contests, claims, counterclaims or setoffs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.3(d)</u> of the Disclosure Schedule sets forth all Indebtedness of the Acquired Entities and all Indebtedness of the Seller Group with respect to the Transferred Assets, in each case, as of the date hereof. For each item of Indebtedness, <u>Section 3.3(d)</u> of the Disclosure Schedule sets forth the debtor, the Contract governing the Indebtedness (if any), the principal amount of the Indebtedness as of the date hereof, the creditor, the maturity date, and the collateral, if any, securing the Indebtedness (and all Contracts governing all related Liens, if any).

Section 3.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Absence of Certain Changes</u>. Since December 31, 2021, until the date hereof, (a) other than this Agreement, the negotiation, preparation or execution hereof and the process conducted by Sellers and their Affiliates in connection therewith, Sellers and the Acquired Entities have conducted the Business in all material respects in the ordinary course of business consistent with past practice, (b) no Material Adverse Effect has occurred, and (c) none of the Acquired Entities or any member of the Seller Group has taken any action described in <u>Section 5.1(b)</u> that, if taken after the date hereof and prior to the Closing without the prior written consent of Buyer Parent, would violate such provision.

Section 3.5&nbsp;&nbsp;&nbsp;&nbsp;<u>IP Rights; Privacy; Cybersecurity</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.5(a)</u> of the Disclosure Schedule lists, for the Owned Intellectual Property, all unexpired (i) issued Patents and Patent applications (published or unpublished), (ii) Trademark registrations and applications, (iii) domain names, (iv) Copyright registrations and applications, and (v) material unregistered, common law Trademarks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Acquired Entities or the applicable member of the Seller Group exclusively own and possess, all right, title and interest in and to all material Owned Intellectual Property, free and clear of all Liens (other than Permitted Liens). All registered or applied for Owned Intellectual Property is subsisting, valid and enforceable, and Seller Parent possesses all rights, privileges, licenses, and consents necessary to provide the Licensed Software (as defined in the Software License Agreement) to the Acquired Entities pursuant to the Software License Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Since December 31, 2019, (i) neither the conduct of the Business nor the Owned Intellectual Property has infringed, misappropriated or otherwise violated, or is infringing, misappropriating or otherwise violating, any material IP Rights owned by any other

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Person and (ii) to Sellers' Knowledge, no Person has infringed, misappropriated or otherwise violated, or is infringing, misappropriating or otherwise violating, any material Owned Intellectual Property. There is no material Claim pending or, to Sellers' Knowledge, being threatened by or against any Acquired Entity or a member of the Seller Group with respect to the Business, alleging either of the foregoing clauses (i) or (ii).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;As of the date hereof, no Acquired Entity or member of the Seller Group with respect to the Business, is subject to any outstanding Order that restricts, in a manner material to the Business, its use, licensing, enforceability or registrability of any Owned Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity and member of the Seller Group with respect to the Business, uses commercially reasonable efforts to protect the confidentiality of its material Trade Secrets. Since December 31, 2019, there has been no disclosure unauthorized by an Acquired Entity or applicable member of the Seller Group with respect to the Business of Trade Secrets owned by any Acquired Entity or applicable member of the Seller Group that has resulted in the loss of trade secrets material to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;The Owned Software is sufficient and operates for its intended purpose as necessary for the needs of the Business as currently conducted, in all material respects. There is no Malicious Code in any of the Owned Software or the IT Assets owned by or under the control of the Acquired Entities or any member of the Seller Group with respect to the Business. The Acquired Entities and members of the Seller Group with respect to the Business take commercially reasonable anti-virus measures, and neither Seller Parent, any member of the Seller Group nor their respective Representatives have introduced or allowed to be introduced any Malicious Code into the Licensed Software as defined in and licensed under the Software License Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Since December 31, 2019, (i) no Source Code for any Owned Software has been disclosed or delivered by or on behalf of any Acquired Entity or member of the Seller Group with respect to the Business in any material respect, and (ii) no Acquired Entity or member of the Seller Group with respect to the Business has a present or contingent duty or obligation to disclose or deliver Source Code for Owned Software, to any escrow agent or other Person, other than vendors and service providers who have a need to access the Source Code for the purpose of hosting, support, or development of the Owned Software on behalf of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.5(h)</u> of the Disclosure Schedule sets forth a list of all Copyleft Software that has been incorporated into, linked to or integrated with material Owned Software and distributed to third parties. The applicable Acquired Entity or member of the Seller Group is in material compliance with the terms and conditions of all licenses for such Copyleft Software.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Since December 31, 2019, each current and former employee and contractor of any Acquired Entity or member of the Seller Group who have developed or contributed to Owned Intellectual Property (including any Owned Software) material to the Business has entered into a valid, written agreement that protects the confidential information and Trade Secrets of the applicable Acquired Entity or member of the Seller Group and legally assigns to the applicable Acquired Entity or member of the Seller Group exclusive ownership of, including all IP Rights in and to, such Owned Intellectual Property, such that such Acquired

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Entity or member of the Seller Group has thereby obtained exclusive ownership of all IP Rights in such Owned Intellectual Property by operation of law or by valid assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;The Acquired Entities or members of the Seller Group own, lease, license or otherwise have the legal right to use or have operated on its behalf, all material IT Assets and such material IT Assets are sufficient and operate as necessary for the needs of the Business as currently conducted. Since December 31, 2019, (1) there has not been any material failure, malfunction, or other adverse event with respect to the IT Assets owned by or under the control of any Acquired Entity that has not been remedied or replaced in all material respects; and (2) each Acquired Entity and member of the Seller Group has taken commercially reasonable actions to protect the security and integrity of the IT Assets and all data stored or contained therein or transmitted thereby (including all Personal Information).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;Neither this Agreement nor the consummation of the transactions contemplated by this Agreement, including the assignment to the Buyer Entities of any Contracts, will result in, to the extent material: (i) any Acquired Entity granting to any third party any right to or with respect to Owned Intellectual Property; or (ii) any Acquired Entity or a Buyer Entity being obligated to pay any royalties or other amounts to any Person in excess of those payable by the Acquired Entity prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity and member of the Seller Group has maintained and currently maintains data security programs with standards materially consistent with Data Security Requirements with respect to the confidentiality and Processing of Personal Information. Since December 31, 2019, each Acquired Entity has conducted and conducts risk assessments of the IT Assets. Since the Reference Date and except as set forth in <u>Section 3.5(l)</u> of the Disclosure Schedule, no material Personal Information has been disclosed in breach or violation of, and each Acquired Entity and member of the Seller Group and the conduct of the Business are, and since December 31, 2019, have been, in compliance with in all material respects, Data Security Requirements. Without limiting the generality of the foregoing, each Acquired Entity and member of the Seller Group with respect to the Business has taken commercially reasonable steps to implement and maintain, at a minimum, such physical, technical, administrative, electronic and procedural safeguards designed to maintain the security, integrity, and confidentiality of Personal Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity nor any member of the Seller Group with respect to the Business distributes marketing communications to any data subject, except in accordance with the Privacy Laws or other Data Security Requirements. Each Acquired Entity has obtained all consents, authorizations, waivers of authorization or other permission pursuant to which any Acquired Entity Processed or Processes Personal Information as required under applicable Privacy Laws, except as would not be material to the Business ("<u>Privacy Consents</u>"). Each Acquired Entity or member of the Seller Group with respect to the Business has a valid and legal right (whether contractually, by law, or otherwise) in all material respects to Process all Personal Information for the purpose such Personal Information was collected, used, or disclosed in connection with the Business. Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the transactions contemplated by this Agreement, including any direct or indirect transfer of Personal Information resulting from such transactions, will violate any Privacy Policies or Privacy Consents in a material respect. No Acquired Entity or member of the Seller Group with respect to the Business has supplied or provided access to Personal

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Information Processed by it to a third party for remuneration or other consideration in violation of applicable Privacy Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;Since the Reference Date, no Acquired Entity or member of the Seller Group with respect to the Business has received any material notice, complaint, or inquiry, written or, to Sellers' Knowledge, oral, from any Governmental Authority or any other Person regarding such Acquired Entity's or member of the Seller Group's Processing of any Personal Information or its compliance with the Data Security Requirements. Since the Reference Date, (i) there have been no material security breaches with respect to any Owned Software, IT Assets, Personal Information or related data resulting in the loss of, unauthorized disclosure, access to or acquisition of such information or data, and (ii) no Acquired Entity or member of the Seller Group with respect to the Business has received any material notices or complaints from any Person concerning the foregoing.

Section 3.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Real Property</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity owns in fee any real property, and no member of the Seller Group owns in fee any real property Related to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.6(b)</u> of the Disclosure Schedule lists the address of each parcel of real property that, as of the date hereof, is leased, subleased, sub-subleased, licensed or otherwise occupied by a member of the Seller Group pursuant to a Transferred Lease (collectively, the "<u>Business Leased Real Property</u>"). The Business Leased Real Property comprises all of the material real property primarily used in the operation of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Business, a member of the Seller Group has a valid leasehold interest in each Business Leased Real Property, free and clear of any Lien (other than Permitted Liens), and (ii) there are no leases, subleases, licenses, occupancy agreements, options, rights or other agreements or arrangements to which any member of the Seller Group or any Acquired Entity is a party granting to any Person the right to use, occupy or otherwise obtain a real property interest in all or any portion of the Business Leased Real Property.

Section 3.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Material Contracts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.7(a)</u> of the Disclosure Schedule lists each Material Contract in effect on the date hereof. As used herein, "<u>Material Contract</u>" means any of the following Contracts (other than any Employee Plan (except with regard to clause (viii) below)) (x) to which any Acquired Entity is a party or by which it is bound or (y) that is a Transferred Contract:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;any Contract for specialty management services with the top twenty-five (25) largest customers of the Business (the "<u>Material Customers</u>"), measured by the amounts paid to the Business by customers during the twelve (12) month period ended September 30, 2022;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any Contract with a vendor or supplier of the Business, under which the amount paid during the twelve (12) month period ended September 30, 2022 was greater than $200,000 (such vendors or suppliers, collectively, the "<u>Material Suppliers</u>");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;any Contract that by its express terms prohibits the Business from engaging in any line of business or competing with any Person or otherwise conducting the Business in any geographic area or during any period of time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;any Contract granting most favored nation pricing, exclusive sales, distribution, marketing or other exclusive rights, rights of refusal, rights of first negotiation or similar rights and/or terms to any Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;any Contract under which the Business has incurred Indebtedness or is a guarantor with respect to Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;any Contract providing for the acquisition or disposition by the Business of any material assets (whether by merger, sale of stock, sale of assets or otherwise) and under which the Business has material continuing obligations after the date hereof (excluding indemnification obligations under which there are no pending claims);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;any Collective Bargaining Agreement or any other Contract with a labor union or organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;any Contract for the employment of any individual providing for annual compensation in excess of $100,000 or which is not terminable upon notice of thirty (30) days or less without penalty or an obligation to pay severance or similar payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;any Contract with any Governmental Authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;any Contract under which marketing, sale, advertising or promotion services are provided to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;&nbsp;&nbsp;settlement Contracts with respect to any action before or by any Governmental Authority pursuant to which the Business or any Acquired Entity is subject to any outstanding material monetary or other obligations as of the date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;&nbsp;&nbsp;&nbsp;any Contract that provides for indemnification any Person (other than Contracts entered into in the ordinary course of business);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii)&nbsp;&nbsp;&nbsp;&nbsp;Contracts with respect to any partnership, joint venture, strategic alliance or any sharing of revenues, profits, losses, costs or liabilities or similar arrangement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv)&nbsp;&nbsp;&nbsp;&nbsp;any lease for the Business Leased Real Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv)&nbsp;&nbsp;&nbsp;&nbsp;any lease or similar agreement under which (a) the Business is lessee of, or holds or uses, any material machinery, equipment, vehicle or other material tangible personal property owned by a third party or (b) the Business is a lessor or sublessor of, or makes available for use by any third party, any material tangible personal property owned or leased by the Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi)&nbsp;&nbsp;&nbsp;&nbsp;any Contract under which the Business grants, or is granted, a license or right to use material IP Rights, other than (1) any non-exclusive license for generally

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commercially available third-party technology or services that has a one-time acquisition cost of $100,000, or an annual fee of $25,000 or less (2) any nonexclusive license granted to customers, contractors, service providers or other vendors of the Business in the ordinary course of business or (3) any Contract in which grants of rights to IP are immaterial and incidental to and not the principal purpose of such Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each Material Contract is a valid and binding agreement of the Acquired Entity party thereto and each other party thereto and is in full force and effect. The Acquired Entity party to each Material Contract and each other party thereto has performed all material obligations required to be performed by it under such Material Contract, and no Acquired Entity or, to Sellers' Knowledge, any other party thereto is in breach of any Material Contract. To Sellers' Knowledge, no event has occurred that would, with or without notice or lapse of time or both, be a default or give rise to a termination right under any Material Contract. No Acquired Entity has given or received written or, to Sellers' Knowledge, oral notice of (i) any actual or alleged material breach of or material default under any Material Contract, or (ii) the intention of any party to a Material Contract to terminate such Material Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Sellers have made available to the Buyer Entities complete and accurate (i) copies of each Material Contract that is in written form and (ii) descriptions of each Material Contract that is not in written form, in each case including any and all amendments and modifications thereof.

Section 3.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance With Laws; Permits</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity and member of the Seller Group with respect to the Business is, and since the Reference Date has been, in compliance in all material respects with all applicable Laws. Since the Reference Date, no notice has been received by any Acquired Entity alleging a material violation of, material liability for, material potential responsibility under, or regarding an investigation or audit related to, any Law. No event has occurred, and no condition or circumstance exists, that (with or without notice or lapse of time) constitutes or results directly or indirectly in a violation in any material respect by any Acquired Entity or member of the Seller Group with respect to the Business of any Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.8(b)</u> of the Disclosure Schedule contains a complete and accurate listing of all material Permits held by any Acquired Entity. All Permits that are necessary to own and operate the Business are and have been held by the Acquired Entities and are in full force and effect. Each Acquired Entity is, and has been since the Reference Date, in compliance in all material respects with the terms and conditions of such Permits, and no suspension, cancellation, termination, modification, revocation, forfeiture or nonrenewal of any such Permits is pending or, to Sellers' Knowledge, threatened. No event has occurred, and no condition or circumstance exists, that (with or without notice or lapse of time) would constitute or result directly or indirectly in the suspension, cancellation, termination, modification, revocation, forfeiture or nonrenewal of any such Permits.

Section 3.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Claims; Orders</u>. There is no, and since the Reference Date, there has not been any, Claim pending or, to Sellers' Knowledge, being threatened against any Acquired Entity or member of the Seller Group with respect to the Business and, to Sellers' Knowledge,

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no facts or circumstances exist that could reasonably be expected to result in any such Claim pending or threatened against any Acquired Entity or member of the Seller Group with respect to the Business, and no Acquired Entity or member of the Seller Group with respect to the Business is, or since the Reference Date, has been subject to any Order, that, in each case, would, individually or in the aggregate, reasonably be expected to be material to the Business. There is no Claim that is an Assumed Liability.

Section 3.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Taxes</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;For all taxable periods beginning on or after January 1, 2017, for which the period of assessment or collection has not lapsed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity has prepared (or caused to be prepared) and timely filed (taking into account applicable extensions) with the appropriate Governmental Authority all Tax Returns required to be filed by such Person prior to the date hereof, and all such filed Tax Returns are true, complete and accurate in all material respects and have been prepared in compliance in all material respects with applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;All material Taxes of the Acquired Entities due and payable (whether or not shown on any Tax Return) have been timely paid in full to the appropriate Governmental Authority, and where the payment of Tax is not yet due or is being contested in good faith pursuant to appropriate procedures, an adequate accrual in accordance with GAAP has been established in each case for all Taxes reflected in the Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity has complied in all material respects with all Laws related to the withholding of Taxes and has duly and properly withheld from amounts paid or owing to any Person, and paid over to appropriate Governmental Authorities, all material amounts required to be so withheld and paid over for all periods, and each Acquired Entity has complied with the associated reporting and recordkeeping requirements (including all IRS Forms W-2 and 1099 and any corresponding forms for applicable state and local Tax purposes) in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;There is no material Tax Contest in progress, pending or, to Sellers' Knowledge, threatened with respect to any Taxes or Tax Returns of any Acquired Entity. In the past three (3) years, no written claim has been made by any Governmental Authority in a jurisdiction where an Acquired Entity does not file Tax Returns that such Acquired Entity is or may be subject to taxation by that jurisdiction. No Acquired Entity has commenced a voluntary disclosure proceeding in any state or local or non-U.S. jurisdiction that has not been fully resolved or settled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;There are no Liens for Taxes upon any Transferred Assets or the assets of any Acquired Entity other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has any Liability for a material amount of Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), or as a transferee or successor or by contract, other than any Commercial Tax Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity is and has at all times been resident for Tax purposes in its country of incorporation or formation and is not and has not at any time been a resident in any other country for any Tax purpose (including any arrangement for the avoidance of double taxation). No Acquired Entity is or has been subject to Tax in any country other than the country of its incorporation or formation by virtue of having a branch, permanent establishment, place of control or management or fixed place of business in that jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has participated in, nor are any of them currently participating in, a "listed transaction" as defined under Section 6706A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b), or any transaction requiring disclosure under a corresponding or similar provision of state, local or foreign law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has consented to or is subject to any extension of time in which any Tax may be assessed or collected by any taxing authority, which extension is in effect as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has requested or been granted an extension of the time for filing any Tax Return to a date later than the Closing Date other than automatic extensions taken in accordance with past practice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has been a member of an Affiliated Group (other than a group of which any Acquired Entity or member of the Seller Group is or was the parent).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity is a party to or bound by any Tax indemnity agreement, Tax allocation agreement or Tax sharing agreement, or similar agreement, except for any Commercial Tax Agreement or any agreement exclusively between or among the Acquired Entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has requested, been the subject of or entered into any closing agreement, private letter ruling, technical advice memoranda or similar agreements or rulings related to any Taxes, in each case that will have continuing effect after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has executed any power of attorney with respect to any Tax, other than powers of attorney that are no longer in force.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has constituted either a "distributing corporation" or a "controlled corporation" in a distribution of stock purported or intended to qualify in whole or in part for Tax-free treatment under Sections 355 or 361 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity is required to include an item of income, or exclude an item of deduction, for any period after the Closing Date as a result of (i) an installment sale transaction occurring on or before the Closing governed by Section 453 of the Code (or any similar provision of state, local or non-U.S. Law); (ii) a transaction occurring on or before the Closing reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. Law); (iii) any prepaid amounts received on or prior to the Closing Date; (iv) a change in method of accounting with respect to a Pre-Closing Tax Period (or an impermissible method used in a Pre-Closing Tax Period); (v) an agreement entered into with any Governmental Authority (including a "closing agreement" under Section 7121 of the

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Code or any "gain recognition agreements" entered into under Section 367 of the Code) on or prior to the Closing Date or deferred revenue realized on or prior to the Closing Date; or (vi) an election pursuant to Section 965(h) of the Code. No Acquired Entity currently uses the cash method of accounting for income Tax purposes. No Acquired Entity has any "long-term contracts" that are subject to a method of accounting provided for in Section 460 of the Code or has deferred any income pursuant to IRS Revenue Procedure 2004-34, Section 451(c) of the Code, or any corresponding or similar provisions of Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity owns an interest in (i) any entity, plan or arrangement that is treated for income Tax purposes as a partnership, (ii) a "controlled foreign corporation" within the meaning of Section 957 of the Code, or (iii) a "passive foreign investment corporation" within the meaning of Section 1297 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has an "excess loss account" for U.S. federal or state income Tax purposes with respect to stock owned in any Subsidiary of such Acquired Entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;No material property or obligation of any Acquired Entity is currently escheatable to any Governmental Authority under any applicable escheatment or similar Law, and the Acquired Entities have made all filings required under applicable Law in respect thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity (i) has made any election to defer any payroll Taxes under the CARES Act or Notice 2020-65 or (ii) has claimed any Tax credits under the CARES Act or the Families First Coronavirus Response Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity has collected all material Taxes required to be collected in respect of sales of goods or the provision of services, and has remitted on a timely basis such amounts to the appropriate Governmental Authority, or has furnished properly completed exemption certificates and has retained all such records and supporting documents in the manner required by applicable sales and use Tax Laws and has filed all required Tax Returns and any reports related to unclaimed property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;No Acquired Entity has any net operating loss or other Tax attribute that is currently subject to limitation under Sections 382, 383 or 384 of the Code.

Section 3.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Employee Benefit Plans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.11(a)</u> of the Disclosure Schedule lists each Business Benefit Plan and identifies each such Business Benefit Plan as either a Company Employee Plan or a Seller Employee Plan. For each material Seller Employee Plan, such Seller has provided or made available to the Buyer Entities copies of the plan document (including all amendments thereto) with respect to such Seller Employee Plan, or a summary of the material terms of such Seller Employee Plan. For each Company Employee Plan, Sellers have made available to the Buyer Entities copies of each of the following documents, as applicable: (i) all documents pursuant to which the Company Employee Plan is maintained, funded and administered (including, without limitation, the plan and trust documents, any amendments thereto, and any insurance contracts or service provider agreements and any amendments thereto); (ii) a copy of the most recent summary plan description and any current summary of material modifications; (iii) a copy of the three most recent annual reports and Forms 5500; (iv) the most recent determination letter

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received from the IRS; (v) nondiscrimination testing results for the last 3 plan years, (vi) any correspondence from the IRS, the Department of Labor or the Pension Benefit Guaranty Corporation regarding a Business Benefit Plan; and (vii) the most recent actuarial report and financial statements related thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;No Business Benefit Plan is (i) a "multiemployer plan," as such term is defined in Section 3(37) of ERISA, (ii) a plan that is subject to Title IV of ERISA, Sections 302 or 303 of ERISA or Sections 412 or 436 of the Code, (iii) a multiple employer plan as defined in Section 413(c) of the Code, or (iv) is a "multiple employer welfare arrangement" as such term is defined in Section 3(40) of ERISA, and neither any the Acquired Entities, Sellers or any trade or business, whether or not incorporated, that together with Sellers or any Acquired Entities would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA have, in the previous six years, maintained, contributed to, or been required to contribute to or otherwise have had any Liability with regards to any Business Benefit Plan or other agreement described in clauses (i), (ii), (iii) or (iv).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Except as would not reasonably be expected to result in material liability to the Acquired Entities (taken as a whole) or the Buyer Entities: (i) each Business Benefit Plan has been operated and administered in accordance with its terms and applicable Law, including ERISA and the Code; (ii) there are no Claims (other than routine claims for benefits in the ordinary course of business) that are pending, or to Sellers' Knowledge, threatened against any Company Employee Plan. Sellers have timely paid all contributions, premiums and expenses payable to or in respect of each Business Benefit Plan under the terms thereof and in accordance with applicable legal requirements; and (iii) neither Sellers nor the Acquired Entities nor, to Sellers' Knowledge, any other Person, has engaged in any transaction with respect to any Business Benefit Plan that would be reasonably likely to subject the any Acquired Entity or the Buyer Entities to any Tax or penalty (civil or otherwise) imposed by ERISA, the Code or other applicable legal requirements. Each Business Benefit Plan that is a "nonqualified deferred compensation plan" (within the meaning of Section 409A(d)(1) of the Code) has been operated in material compliance with Section 409A of the Code, Treasury Regulations issued under Section 409A of the Code, and any subsequent guidance related thereto, and no additional tax under Section 409A(a)(1)(B) of the Code has been or is reasonably expected to be incurred by a Business Employee in respect of any such Business Benefit Plan, and no employee of any Acquired Entity is entitled to any gross-up or otherwise entitled to indemnification by the Acquired Entities or the Sellers for any violation of Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;No material excise tax or penalty under the ACA including Section 4980D and 4980H of the Code, is outstanding, has accrued, has arisen or could arise with respect to any period prior to the Closing, with respect to any Acquired Entities or any Business Benefit Plan nor has the Seller or any Acquired Entity filed or been required to file with the IRS a Form 8928 in order to self-report any health plan violations with respect to Business Benefit Plans which are subject to excise taxes under applicable provisions of the Code, and, to the Sellers' Knowledge, there are no facts or circumstances that would reasonably be expected to result in the any such Form 8928 with respect to Business Benefit Plans to be filed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Each Business Benefit Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code has received a favorable determination letter or opinion

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letter from the IRS as to its qualification and, to Sellers' Knowledge, no event has occurred that would reasonably be expected to result in disqualification of such Business Benefit Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Neither the execution hereof nor the consummation of the transactions contemplated hereby (either alone or together with any other event) shall (i) entitle any current or former director, manager, officer, or employee of an Acquired Entity or any Business Employee to any compensatory payment or benefit, (ii) accelerate the time of payment or vesting of any compensation or benefits for any such director, manager, officer or employee of any Acquired Entity or any Business Employee, (iii) require the funding of any compensation or benefits (through a grantor trust or otherwise) for any such director, manager, officer or employee of any Acquired Entity or any Business Employee, or (iv) result in the payment of any amount that would, individually or in combination with any other payment, not be deductible as a result of Section 280G of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;No Business Benefit Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA provides benefits with respect to Business Employees or any current or former employee, director or officer of any Acquired Entities beyond the end of the month in which a retirement or other termination of service occurs, other than coverage mandated by applicable Law or benefits the full costs of which are borne by the Business Employee or his or her beneficiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.11(h)</u> of the Disclosure Schedule lists each Specified Business Employee as of the date hereof who holds any Ultimate Parent equity or equity-based awards (collectively, the "<u>Ultimate Parent Equity Awards</u>") that, if such Specified Business Employee becomes a Transferred Employee, such Specified Business Employee would receive equity awards of the Buyer Entities in accordance with <u>Section 5.4(c)</u> in respect thereof and, in respect of each such Ultimate Parent Equity Award held as of the date hereof, (i) the type of award and number of shares of Ultimate Parent common stock related thereto, (ii) the date of grant and service-based vesting terms, (iii) date of retirement eligibility and (iv) exercise price (as applicable) (the "<u>Equity Award Schedule</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;There are no pending or, to Sellers' Knowledge, threatened, Claims that have been asserted related to any Business Benefit Plan by any employee or beneficiary covered under any Business Benefit Plan or otherwise involving any Employee Plan (other than routine claims for benefits). No examination, voluntary correction proceeding or audit of any Business Benefit Plan by any Governmental Authority is currently in progress or, to Sellers' Knowledge, threatened. No Acquired Entity is a party to any agreement or understanding with the Pension Benefit Guaranty Corporation, the IRS or the Department of Labor.

Section 3.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Labor Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;As of the date hereof, (i) none of the Acquired Entities or any member of the Seller Group with respect to the Business is a party to or subject to, or is currently negotiating in connection with entering into, any Collective Bargaining Agreement, and to Sellers' Knowledge, in the three (3) year period prior to the date hereof, there has not been any organizational campaign, petition or other unionization activity seeking recognition of a collective bargaining unit related to any Business Employee, and (ii) (1) there is no material

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labor strike, slowdown, stoppage, picketing, interruption of work or lockout pending or, to Sellers' Knowledge, threatened in writing against any Acquired Entity or the Business and (2) there are no unfair labor practice complaints pending or, to Sellers' Knowledge, threatened in writing against any Acquired Entity before any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 3.12(b)</u> of the Disclosure Schedule lists each Business Employee, setting forth for each such Person as of the Closing Date: name or employee identification number, title, work location, employer, annual salary or hourly rate (or other compensation rate, as applicable), commission, bonus or other incentive-based compensation, vacation or paid time off accrual, hire date and designation as either exempt or non-exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act and applicable state Laws. Except as set forth in <u>Section 3.12(b)</u> of the Disclosure Schedule no current officer or key employee of the Acquired Entities or the Seller Group with respect to the Business has given written or, to Sellers' Knowledge, oral notice of his or her intent to terminate such employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;There have not been any "employment losses" within the meaning of the Worker Adjustment and Retraining Notification Act of 1988, as amended (the "<u>WARN Act</u>") within the past six (6) months impacting the Business Employees. The Acquired Entities and the members of the Seller Group with respect to the Business have not implemented any "mass layoff" or "plant closing" (as those terms are defined by the WARN Act or any similar applicable state Law) in the past three (3) years, nor is any such action currently planned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;There are no written or, to Sellers' Knowledge, oral internal complaints or reports by any current or former employee, consultant, or independent contractor alleging violations of the anti-harassment or equal employment opportunity policies of the Acquired Entities or the Business by any Business Employees that are pending or under investigation, nor have there been any such written or, to Sellers' Knowledge, oral complaints or reports, or settlements related to any such complaints or reports, in the past three (3) years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;All Business Employees are working in the United States in compliance in all material respects with all applicable Laws related to immigration and naturalization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;The Acquired Entities and the Seller Group with respect to the Business Employees and the Business are and have been at all times during the past three (3) years in compliance in all material respects with all applicable Laws respecting employment, employment practices, terms and conditions of employment, applicant and employee background checks, immigration and verification of employment eligibility (including Form I-9 and E-Verify requirements), discrimination and retaliation, employee leave, classification of workers as employees and independent contractors, classification of employees as exempt or non-exempt under applicable wage and hour Laws, privacy, employee representation, employee safety and health, overtime, wages and hours, collective negotiations, working time, social security, lending of personnel, temporary and fixed term employment, fair employment practices, reasonable accommodation, disability rights or benefits, payment of compensation, child labor, hiring, promotion and termination of employees, meal and break periods, plant closings or mass layoffs as defined by the WARN Act or any similar state statute, workers' compensation, the withholding of payroll Taxes and contract termination. There are no material Claims pending or, to the Sellers' Knowledge, threatened against the Acquired Entities or any member of the Seller

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Group with respect to the Business related to any of the matters described in the previous sentence, nor have there been any such material Claims pending or, to the Sellers' Knowledge, threatened against the Acquired Entities or any member of the Seller Group with respect to the business in the past three (3) years.

Section 3.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Environmental Matters</u>. Each Acquired Entity and member of the Seller Group with respect to the Business is, and since the Reference Date, has been, in compliance in all material respects with all applicable Environmental Laws. Each Acquired Entity and member of the Seller Group with respect to the Business holds all material Environmental Permits necessary for the lawful conduct of the Business as currently being conducted and all such Permits are valid and in full force and effect. There is no, and since the Reference Date, there has not been, any material Environmental Claim pending or, to Sellers' Knowledge, threatened against any Acquired Entity or any member of the Seller Group with respect to the Business. There has been no material Release of Hazardous Materials by any Acquired Entity or member of the Seller Group with respect to the Business at any of the properties that are currently or formerly owned, leased, operated or used by any Acquired Entity or member of the Seller Group with respect to the Business or at any properties for which any Acquired Entity or member of the Seller Group with respect to the Business has assumed liability for any Release of Hazardous Materials.

Section 3.14&nbsp;&nbsp;&nbsp;&nbsp;<u>Health Care Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Except as set forth in <u>Section 3.14(a)</u> of the Disclosure Schedule, (i) each Acquired Entity and member of the Seller Group with respect to the Business is, and has been since the Reference Date, in compliance in all material respects with all Health Care Laws, (ii) since the Reference Date, the Acquired Entities and members of the Seller Group with respect to the Business have not received any written notice or Claim issued by a Governmental Authority that alleges or asserts that an Acquired Entity or applicable member of the Seller Group has violated any Health Care Laws (iii) since the Reference Date, the Acquired Entities and members of the Seller Group with respect to the Business have not entered into any written consent decree, judgment, corporate integrity agreement, corrective action plan, deferred prosecution agreement, or other agreement or settlement with any Governmental Authority related to any actual or alleged violation of any Health Care Law and (iv) since the Reference Date, the Acquired Entities and members of the Seller Group with respect to the Business have made all Filings that they were required to file pursuant to any Health Care Law and all such Filings were correct and in compliance with Health Care Laws when filed (or were timely corrected in or supplemented by a subsequent filing). Neither the Acquired Entities or the members of the Seller Group with respect to the Business, nor to Sellers' Knowledge, any of their respective Representatives has been charged with, convicted of or entered a plea of guilty or nolo contendere to any criminal or civil offense related to the delivery of any item or service under a Governmental Health Care Program or any other violation of Health Care Laws. No Acquired Entity or member of the Seller Group with respect to the Business is a defendant or named party in any qui tam/False Claims Act litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Neither the Acquired Entities, any member of the Seller Group with respect to the Business, nor any of their respective Representatives are or have been since the Reference Date excluded, precluded, debarred, suspended from or otherwise excluded from

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contracting with any Governmental Authority or from participation in, any Governmental Health Care Program or are subject to a Claim, investigation or proceeding by any Governmental Authority that could result in such suspension, exclusion, preclusion or debarment, and no current or former Representative of the Acquired Entities or member of the Seller Group with respect to the Business has been convicted of a criminal offense related to any Health Care Law during their employ or engagement (as applicable) with the Acquired Entities or applicable member of the Seller Group or any of their respective Affiliates in connection with services performed for or on behalf of the Acquired Entities or applicable member of the Seller Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Since the Reference Date, neither the Acquired Entities, any member of the Seller Group with respect to the Business nor any of their respective Representatives acting in such capacity (i) have been assessed a civil monetary penalty under Section 1128A of the Social Security Act, (ii) have been convicted of any criminal offense related to the delivery of any item or service under any Governmental Health Care Program or (iii) have knowingly made an untrue or fraudulent statement to any Governmental Authority or agent thereof or knowingly failed to disclose a fact required to be disclosed to a Governmental Authority or agent thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Each Acquired Entity and member of the Seller Group with respect to the Business has implemented policies and procedures reasonably designed to assure that the Acquired Entity or applicable member of the Seller Group is in compliance in all material respects with all Health Care Laws. Each Acquired Entity and member of the Seller Group has established and maintains a corporate compliance program that reflects the material elements of an effective corporate compliance program as set forth in guidance issued by the U.S. Department of Health and Human Services' Office of Inspector General.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Neither the Acquired Entities, any member of the Seller Group with respect to the Business nor any of their respective Representatives have, directly or indirectly, made or offered to make, or solicited or received, any contribution, gift, bribe, rebate, payoff, influence payment, kickback or inducement to any Person, or entered into any similar financial arrangement, regardless of form, in each case, in material violation of any applicable Health Care Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;No Person with which any Acquired Entity or any member of the Seller Group with respect to the Business has a contract is, or has been since the Reference Date, the subject of an audit, investigation, or material recoupment demand or request by any Governmental Authority related to any contract between such Person and such Acquired Entity or member of the Seller Group, or related to any charges, bills or records submitted which reflect the financial or managerial relationship between such Person and Acquired Entity or member of the Seller Group, or related to the charges made by such Acquired Entity or member of the Seller Group to any such Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;The Acquired Entities and members of the Seller Group with respect to the Business do not directly or indirectly bill, have not billed or indirectly billed, and have not submitted or caused the submission of claims for payment to, any Government Health Care Program or any other health insurance program or plan, including commercial and non-governmental medical insurance plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;The Acquired Entities and members of the Seller Group with respect to the Business are and at all times since the Reference Date have been in compliance in all material

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respects with the applicable requirements of HIPAA. When acting as a Business Associate (as defined at 45 CFR § 160.103), each Acquired Entity and member of the Seller Group with respect to the Business has in effect with each entity on whose behalf such Acquired Entity or member of the Seller Group receives, creates, or transmits Protected Health Information (as defined at 45 CFR § 160.103) a Business Associate agreement ("<u>Customer BA Agreement</u>"), and the Acquired Entities and applicable members of the Seller Group with respect to the Business are, and have been since the Reference Date, in compliance in all material respects with the Customer BA Agreements. Each Acquired Entity and member of the Seller Group with respect to the Business has in effect with each entity acting as a Business Associate of such Acquired Entity and member of the Seller Group with respect to the Business an agreement that materially satisfies all of the requirements of 45 CFR §§ 164.504(e) and 164.314(a). To the extent the Acquired Entities or, with respect to the Business, any member of the Seller Group create, disclose, transfer, sell and/or assign any information derived from Protected Health Information of the Business that has been "de-identified" (in accordance with the requirements of 45 C.F.R. § 164.514(b)), each such Acquired Entity or member of the Seller Group has obtained all rights necessary for such creation, disclosure, transfer, sale and/or assignment. The Acquired Entities and members of the Seller Group with respect to the Business have not received any written complaint or notice of investigation from any Governmental Authority regarding an Acquired Entity's or member of the Seller Group's or any of their respective Business Associates' uses or disclosures of, or security practices or security incidents regarding, Protected Health Information. There have not been any Security Incidents or Breaches (as these terms are defined in HIPAA) of Protected Health Information involving the Acquired Entities or the members of the Seller Group with respect to the Business and their respective Business Associates.

Section 3.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Insurance</u>. Each insurance policy maintained by the Seller Group or any Acquired Entity and under which any of the assets or properties of the Acquired Entities or any of the Transferred Assets are covered is legal, valid, binding and enforceable and in full force and effect, and the Acquired Entities or applicable member of the Seller Group have paid or accrued (to the extent not due and payable) all premiums due, and have otherwise performed in all material respects all of their obligations under such insurance policies and are not in material breach or material default with respect to their obligations under such insurance policies. There are no material claims pending with respect to the Business which are covered under any such insurance policy and no material pending claims have been denied or are subject to an insurer's reservation of rights.

Section 3.16&nbsp;&nbsp;&nbsp;&nbsp;<u>Material Customers and Suppliers</u>. <u>Section 3.16</u> of the Disclosure Schedule sets forth a complete and accurate list of the Material Customers and Material Suppliers. Since January 1, 2021, no Material Customer or Material Supplier has had any material dispute with any Acquired Entity or member of the Seller Group with respect to the Business, made or threatened to make any indemnification claim against any Acquired Entity or member of the Seller Group with respect to the Business, cancelled, terminated or otherwise materially altered (including any material reduction in the rate or amount of sales or purchases or material increase in the prices charged or paid, as the case may be) or notified any Acquired Entity or member of the Seller Group with respect to the Business of any intention to do any of the foregoing or otherwise threatened in writing to cancel, terminate or materially alter (including any material reduction in the rate or amount of sales or purchases or material increase

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in the prices charged or paid, as the case may be) its relationship with any Acquired Entity or member of the Seller Group with respect to the Business.

Section 3.17&nbsp;&nbsp;&nbsp;&nbsp;<u>Directors and Officers</u>. <u>Section 3.17</u> of the Disclosure Schedule sets forth a complete and accurate list of the directors and officers of each Acquired Entity as of the date hereof.

Section 3.18&nbsp;&nbsp;&nbsp;&nbsp;<u>Bank Accounts</u>. <u>Section 3.18</u> of the Disclosure Schedule sets forth the name of each bank, safe deposit company or other financial institution in which any Acquired Entity has an account, lock box or safe deposit box used or held for use in connection with the Business, or in which cash or cash equivalents of any Acquired Entity are otherwise held, in each case, as of the date hereof.

Section 3.19&nbsp;&nbsp;&nbsp;&nbsp;<u>Anti-Corruption</u>. None of the Acquired Entities, any member of the Seller Group with respect to the Business, any director, officer, agent, employee or representative of the Acquired Entities or any member of the Seller Group with respect to the Business, nor, to Sellers' Knowledge, any other Person associated with or acting for or on behalf of the Business, has, since the Reference Date: (a) made, authorized, offered or promised to make any unlawful payment or transfer of anything of value, whether money, property or services, directly or indirectly through a third party, to any officer, employee or representative of a foreign government or any department, agency or instrumentality thereof, political party, political campaign or public international organization, in violation in any material respect of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the "<u>FCPA</u>"), or any applicable Law of similar effect; or (b) otherwise taken any action which would cause any Acquired Entity or member of the Seller Group with respect to the Business to be in violation in any material respect of the FCPA or any applicable Law of similar effect.

Section 3.20&nbsp;&nbsp;&nbsp;&nbsp;<u>Affiliate Contracts</u>. No Acquired Entity is a party to any Affiliate Contract. As used herein, "<u>Affiliate Contract</u>" means (i) any Contract, commitment or transaction between an Acquired Entity, on the one hand, and any member of the Seller Group, or any officer, director, stockholder or Affiliate of a member of the Seller Group, on the other hand, and (ii) any Transferred Contract that, following the transfer to Buyer Entities or any Acquired Entity, would be between the Buyer Entities or an Acquired Entity, on the one hand, and any member of the Seller Group, or any officer, director, stockholder or affiliate of a member of the Seller Group, on the other hand, other than (A) employment or service Contracts with employees, individual consultants or individual independent contractors in the ordinary course of business and (B) any Contract entered into in connection with this Agreement or the transactions contemplated hereby.

Section 3.21&nbsp;&nbsp;&nbsp;&nbsp;<u>Assets</u>. The Acquired Entities own, license or hold a valid leasehold interest in or to all of their respective material assets, in each case, free and clear of any Lien (other than any Permitted Lien). Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Business, all of the tangible assets of the Acquired Entities and Transferred Assets are in good condition and repair (ordinary wear and tear excepted). Except for the Excluded Assets and any "Excluded Services" (as defined in the Transition Services Agreement), the assets of the Acquired Entities and the Transferred Assets, together with the services under the Transition Services Agreement (without regard to any Excluded Services (as defined therein)) and the license under the Software License Agreement,

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collectively constitute all of the material assets, properties, rights, and interests used in the operation of the Business or necessary to enable the Business to conduct its business in all material respects.

Section 3.22&nbsp;&nbsp;&nbsp;&nbsp;<u>Brokers</u>. No broker, finder or investment banker is entitled to any brokerage, finder's or other similar fee or commission in connection with the transactions contemplated hereby based on arrangements made by or on behalf of any Acquired Entity and for which the Buyer Entities or any Acquired Entity would be liable.

Section 3.23&nbsp;&nbsp;&nbsp;&nbsp;<u>COVID-19 Relief</u>. No Acquired Entity or member of the Seller Group has obtained any financial aid or other assistance or relief under, any federal, state or local programs adopted in response to COVID-19, including the CARES Act, the Enhancement Act, the Federal Reserve Main Street Lending Program and any similar non-US Law or program (collectively, the "<u>COVID-19 Relief Programs</u>"). With respect to any assistance or relief obtained under any COVID-19 Relief Program, the Acquired Entities and the members of the Seller Group have complied in all material respects with the requirements of the applicable program.

Section 3.24&nbsp;&nbsp;&nbsp;&nbsp;<u>Investment</u>. Sellers have been advised and understand and acknowledge that the Buyer Parent Shares and Earnout Shares have not been registered in accordance with the Securities Act or the "blue sky" Laws of any jurisdiction and may be resold only if registered in accordance with the provisions of the Securities Act or if an exemption from registration is available, unless neither such registration nor such an exemption is required by applicable Law. Sellers have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the purchase of the Buyer Parent Shares and Earnout Shares. Sellers are able to bear the economic risk of an investment in the Buyer Parent Shares and Earnout Shares and are able to afford a complete loss of such investment. Each Seller is an "accredited investor," as defined in Rule 501 under the Securities Act.

**ARTICLE IV<u><br>REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES</u>**

Except as disclosed in Buyer Parent's (x) annual report on Form 10-K for the fiscal year ended December 31, 2021 (the "<u>2021 Buyer 10-K</u>") or (y) quarterly reports on Form 10-Q and current reports on Form 8-K filed from and after the date of the filing of the 2021 Buyer 10-K to the date prior to the date hereof (collectively, with the 2021 Buyer 10-K, the "<u>Pre-Signing Buyer Reports</u>") (excluding, in each case, any risk factor disclosure that is contained solely in any "Risk Factors" section of any such Pre-Signing Buyer Report or any disclosure in any "qualitative and quantitative disclosure about market risk" section, any "forward-looking statements" disclaimer or any other disclosure included in any such Pre-Signing Buyer Report that is predictive or forward-looking in nature), the Buyer Entities represent and warrant to Sellers as follows:

Section 4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Due Organization and Good Standing</u>. Each of the Buyer Entities is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and, except as would not result in a Buyer Material Adverse Effect, has all requisite Entity power and authority to own, lease and operate its assets and to conduct its businesses in the manner in which its businesses are currently being conducted.

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Section 4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Authority; Binding Nature of Agreement</u>. Each of the Buyer Entities has the requisite power and authority to execute and deliver, and to perform its covenants and agreements under, this Agreement. The execution and delivery hereof by the Buyer Entities and the performance by each of the Buyer Entities of their covenants and agreements hereunder have been duly and validly authorized by all necessary Entity action on the part of such Buyer Entity. This Agreement has been duly and validly executed and delivered by the Buyer Entities and, assuming the due authorization, execution and delivery hereof by the other Parties, is a legal, valid and binding obligation of the Buyer Entities, enforceable against the Buyer Entities in accordance with its terms, subject to the Bankruptcy and Equity Exceptions. No Consent of the stockholders of Buyer Parent or the holder of any Equity Interests in any member of the Buyer Group is necessary or required under Buyer's Organizational Documents, applicable Law or the rules and regulations of the New York Stock Exchange ("<u>NYSE</u>") in order for Buyer Entities to execute and deliver, and to perform its covenants and agreements under, this Agreement.

Section 4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Noncontravention; Consents</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities' execution and delivery hereof do not, and the Buyer Entities' performance of its covenants and agreements hereunder shall not, (i) materially violate the Organizational Documents of Buyer, (ii) subject to making or obtaining, as applicable, the Consents and Filings referenced in <u>Section 2.3(b)</u>, violate any Law or (iii) (1) require any Consent of, or any Filing to or with, any Person that is not a Governmental Authority under, or (2) result in any breach of or, with or without notice or lapse of time or both, be a default under or give rise to any right of termination, cancellation, amendment or acceleration of, or result in the creation of a Lien on any asset of a Buyer Entity under, any Contract to which a Buyer Entity is a party or by which a Buyer Entity or its assets are bound, except, in the case of the foregoing clauses (ii) and (iii), as would not result in a Buyer Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Buyer Entities' execution and delivery hereof do not, and Buyer Entities' performance of its covenants and agreements hereunder shall not, require Buyer Entities to make any Filing with or to, or to obtain any Consent from, any Governmental Authority, other than the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the HSR Act Clearance and Filings under the HSR Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the Form D Approval; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the Required Filings.

Section 4.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Capitalization</u>. The authorized capital stock of Buyer Parent is (a) 50,000,000 shares of preferred stock, par value $0.01 per share ("<u>Buyer Parent Preferred Stock</u>"), and (b) 850,000,000 shares of common stock, divided into 750,000,000 shares of Class A common stock, par value $0.01 per share ("<u>Buyer Parent Class A Common Stock</u>"), and 100,000,000 shares of Class B common stock, par value $0.01 per share, ("<u>Buyer Parent Class B Common Stock</u>" and, together with Class A Common Stock, "<u>Buyer Parent Common Stock</u>"). All of the issued and outstanding shares of Buyer Parent Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. As of the date hereof, there are (i) zero (0) shares of Buyer Parent Preferred Stock issued and outstanding, (ii) 101,302,600

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shares of Buyer Parent Class A Common Stock issued and outstanding, and (iii) zero (0) shares of Buyer Parent Class B Common Stock issued and outstanding (the foregoing clauses (ii) and (iii), collectively, the "<u>Outstanding Buyer Common Shares</u>"). As of the date hereof, other than the Outstanding Buyer Common Shares, there are no outstanding Equity Interests in Buyer Parent. Buyer is a wholly owned subsidiary of Buyer Parent.

Section 4.5&nbsp;&nbsp;&nbsp;&nbsp;<u>SEC Documents; Financial Statements; Related-Party Transactions; Undisclosed Liabilities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Buyer Parent has filed with or furnished to the SEC all reports, schedules, forms, statements, registration statements, prospectuses and other documents (including all exhibits and financial statements required to be filed or furnished therewith and any other document or information required to be incorporated therein) required by the Securities Act or the Exchange Act to be filed or furnished by Buyer Parent with the SEC since December 31, 2019 (collectively, together with any documents filed with or furnished to the SEC during such period by Buyer Parent on a voluntary basis, the "<u>Buyer SEC Documents</u>"). As of its respective date, or, if amended prior to the date hereof, as of the date of the last such amendment, each Buyer SEC Document complied when filed or furnished (or, if applicable, when amended) in all material respects with the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and none of the Buyer SEC Documents when filed or furnished (or, in the case of a registration statement filed under the Securities Act, at the time it was declared effective or subsequently amended) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Buyer Parent is, or has at any time since December 31, 2019, been, subject to the periodic reporting requirements of the Exchange Act or is or has been otherwise required to file any report, schedule, form, statement, registration statement, prospectus or other document with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of Buyer Parent included in the Buyer SEC Documents (including, in each case, any notes or schedules thereto) and all related compilations, reviews and other reports issued by Buyer's accountants with respect thereto (the "<u>Buyer SEC Financial Statements</u>") (i) have been prepared from the books and records of the members of the Buyer Group, which have been maintained in accordance with GAAP, (ii) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto and except, in the case of the unaudited interim financial statements, as may be permitted by Form 10-Q and Regulation S-X under the Securities Act) and (iii) present fairly, in all material respects, the Buyer Group's consolidated financial position as at the respective dates thereof and the Buyer Group's consolidated results of operations and, where included, consolidated stockholders' equity and consolidated cash flows for the respective periods indicated, in each case, in conformity with GAAP (except as may be indicated in the notes thereto and except, in the case of the unaudited interim financial statements, as may be permitted by Form 10-Q and Regulation S-X under the Securities Act). Pursuant to Regulation S-X under the Securities Act, as of the date hereof (except with regard to the transactions contemplated hereby), Buyer Parent is not required and would not be required upon the passage of any grace period or upon completion of any pending transaction to file any financial statements, audited, unaudited, pro forma or otherwise, with the SEC in order for a registration statement filed by Buyer Parent to be declared effective. Except as required by

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GAAP and disclosed in the Buyer SEC Documents, between December 31, 2019, and the date hereof, Buyer Parent has not made or adopted any material change in its accounting methods, practices or policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Buyer Parent is, and since December 31, 2019, has been, in compliance in all material respects with the applicable (i) provisions of the Sarbanes-Oxley Act and (ii) listing and corporate governance rules and regulations of NYSE. The Buyer Parent Class A Common Stock is listed on the NYSE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Buyer Parent has established and maintains a system of internal control over financial reporting (within the meaning of Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that is designed to provide reasonable assurance about the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Buyer Group, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Buyer Group are being made only in accordance with appropriate authorizations of Buyer's management and Buyer's board of directors and (iii) provide reasonable assurance about prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Buyer Group. Buyer Parent has established and maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by Buyer Parent in the Buyer SEC Documents is recorded and reported within the time periods specified in the SEC's rules and forms and that all such information is communicated to Buyer's management as appropriate to allow timely decisions about required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Buyer Parent has disclosed to Buyer's outside auditors and the audit committee of Buyer's board of directors any (1) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) which are reasonably likely to adversely affect Buyer's ability to record, process, summarize and report financial information and (2) any fraud, whether or not material, that involves Buyer's management or other employees who have a significant role in Buyer's internal control over financial reporting. As of the date hereof, there are no material outstanding or unresolved comments in comment letters received from the SEC's staff related to any Buyer SEC Documents. As of the date hereof, to Buyer's Knowledge, none of the Buyer SEC Documents is the subject of ongoing SEC review, and there are no formal internal investigations, any formal SEC inquiries or investigations or other inquiries or investigations by Governmental Authorities that are pending or threatened, in each case under this sentence, related to any accounting practices of any member of the Buyer Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;No member of the Buyer Group has any Liability, except (i) as reflected or specifically reserved against in the most recent audited balance sheet included in the Buyer SEC Financial Statements, (ii) for any liability incurred in the ordinary course of business since the date of the most recent audited balance sheet included in the Buyer SEC Financial Statements, (iii) liabilities or obligations arising out of this Agreement or the transactions contemplated hereby and (iv) for any liability that is not and would not reasonably be expected to result in, individually or in the aggregate, a Buyer Material Adverse Effect.

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Section 4.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance With Laws</u>. Each member of the Buyer Group is, and since December 31, 2019, has been, in compliance with all applicable Laws except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Absence of Certain Changes</u>. Since December 31, 2021, until the date hereof, (a) other than this Agreement, the negotiation, preparation or execution hereof, the Buyer Group has conducted their respective businesses in all material respects in the ordinary course of business and (b) no Buyer Material Adverse Effect has occurred.

Section 4.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Claims; Orders</u>. There is no Claim pending or, to Buyer's actual knowledge, being threatened against any member of the Buyer Group, and no member of the Buyer Group is subject to any Order, that, in each case, would, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Anti-Corruption</u>. None of the members of the Buyer Group, any director, officer, agent, employee or representative of any member of the Buyer Group, nor, to Buyer's actual knowledge, any other Person associated with or acting for or on behalf of the Buyer Group, has, since December 31, 2019: (a) made, authorized, offered or promised to make any unlawful payment or transfer of anything of value, whether money, property or services, directly or indirectly through a third party, to any officer, employee or representative of a foreign government or any department, agency or instrumentality thereof, political party, political campaign or public international organization, in violation in any material respect of the FCPA or any applicable Law of similar effect; or (b) otherwise taken any action which would cause any member of the Buyer Group to be in violation in any material respect of the FCPA or any applicable Law of similar effect.

Section 4.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Solvency</u>. Immediately after giving effect to the Acquisition and the Liabilities Assumption (including any financings to be undertaken in connection therewith) and assuming the accuracy of Sellers' representations and warranties set forth in this Agreement, each Acquired Entity shall be Solvent. As used herein, "<u>Solvent</u>" means, for any Person and as of any date of determination, that (a) the amount of the "present fair saleable value" of the assets of such Person shall, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise," as of such date, as such quoted terms are generally determined in accordance with applicable federal Laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person shall, as of such date, be greater than the amount that shall be required to pay the liability of such Person on its indebtedness as its indebtedness becomes absolute and matured, (c) such Person shall not have, as of such date, an unreasonably small amount of capital with which to conduct its businesses and (d) such Person shall be able to pay its indebtedness as it matures. For purposes of the foregoing definition only, "indebtedness" means a liability in connection with another Person's (i) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to any equitable remedy for breach of performance if such breach gives rise to a right of payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. No transfer of property is being made and no

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obligation is being incurred in connection with the transactions contemplated hereby with the intent to hinder, delay or defraud either present or future creditors of any Acquired Entity.

Section 4.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Financing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities have delivered to Sellers true, correct and complete copies of (i) a duly executed preferred equity commitment letter, dated as of the date hereof, among Buyer Parent and the Financing Sources party thereto (including all exhibits, schedules, term sheets, amendments, supplements, modifications and annexes thereto, attached hereto as <u>Exhibit J</u>, as may be amended, modified or replaced in accordance with the terms hereof, collectively, the "<u>Preferred Equity Commitment Letter</u>" and the preferred equity financing contemplated therein the "<u>Preferred Equity Financing</u>") and (ii) a duly executed debt commitment letter, dated as of the date hereof, among Buyer and the Financing Sources party thereto (including all exhibits, schedules, term sheets, amendments, supplements, modifications and annexes thereto, attached hereto as <u>Exhibit J</u>, as may be amended, modified or replaced in accordance with the terms hereof, collectively, the "<u>Debt Commitment Letter</u>" and, together with the Preferred Equity Commitment Letter, the "<u>Commitment Letters</u>") and any other agreements related thereto, pursuant to which the Financing Sources party thereto have committed, subject to the terms and conditions set forth therein, to lend the amounts set forth therein to the Buyer Entities (together with any Alternate Debt Financing, the "<u>Debt Financing</u>" and together with the Preferred Equity Financing, the "<u>Financing</u>") for the purpose of funding the transactions contemplated hereby. The Buyer Entities have also delivered to Sellers a true, correct and complete copy of any fee letter (which may be redacted in a customary manner solely with respect to the fee amounts (but not covenants or other terms), none of which affects conditionality, enforceability, termination or aggregate principal amount of the Financing) in connection with the Debt Commitment Letter (any such letter, a "<u>Fee Letter</u>" and together with the Commitment Letters, collectively, the "<u>Financing Letters</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;As of the date hereof, the Financing Letters have not been modified, amended, supplemented or altered in any respect and none of the respective commitments or obligations thereunder have been terminated, reduced, withdrawn, rescinded or otherwise repudiated in any respect, and, to Buyer's knowledge, no termination, reduction, withdrawal, rescission or other repudiation thereof is contemplated. As of the date hereof, no modification, amendment, supplement or alteration to any of the Financing Letters is currently contemplated. As of the date hereof, there are no other contracts, side letters or arrangements to which the Buyer Entities or any of its Affiliates is a party related to the Financing Letters or the Financing. No Fee Letter contains any "flex" provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Financing, when funded in accordance with the Financing Letters shall provide the Buyer Entities with cash proceeds on the Closing Date sufficient and available to (i) satisfy all obligations of the Buyer Entities and the Company under this Agreement and the Financing Letters due and owing on the Closing Date and (ii) pay (1) the aggregate cash consideration required to be paid by Buyer hereunder at the Closing, (2) any and all fees and expenses, including Transaction Expenses, required to be paid by Buyer on the Closing Date in connection with the transactions contemplated hereby and (3) any and all amounts in connection with the refinancing or repayment of any outstanding indebtedness of the Company or its Subsidiaries required by this Agreement or the Financing Letters (clauses (i) and (ii), the "<u>Required Amount</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Buyer Entities and, to Buyer's actual knowledge, the other parties to the Financing Letters has the requisite power and authority to execute and deliver, and to perform its covenants and agreements under, the Financing Letters. The execution and delivery hereof by the Buyer Entities and, to Buyer's knowledge, the other parties to the Financing Letters, and the performance by each of Buyer Entity and, to Buyer's knowledge, the other parties to the Financing Letters of their respective covenants and agreements thereunder have been duly and validly authorized by all necessary Entity action on the part of Buyer and such parties. The Financing Letters have been duly and validly executed and delivered by the Buyer Entities and, to Buyer's knowledge, the other parties to the Financing Letters and are legal, valid and binding obligations of the Buyer Entities and, to Buyer's knowledge, such other parties, enforceable against the Buyer Entities and such other parties in accordance with their respective terms, subject to the Bankruptcy and Equity Exceptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Other than as expressly set forth in the Financing Letters, there are no conditions precedent or other contingencies related to the funding of the full proceeds of the Financing pursuant to any agreement related to the Financing to which the Buyer Entities or any of its Affiliates is a party. The Buyer Entities are not, nor are, to Buyer's actual knowledge, any other parties to any Financing Letter, in default in the performance, observation or fulfillment of any obligation, covenant or condition contained in any Financing Letter, and, as of the date hereof and to Buyer's actual Knowledge, no event has occurred or circumstance exists which, with or without notice, lapse of time or both, could be expected to (i) constitute or result in a default under or breach on the part of the Buyer Entities or on the part of any other party under any Financing Letter, (ii) constitute or result in a failure by the Buyer Entities or any other party to any Financing Letter to satisfy, or any delay in satisfaction, of any condition or other contingency to the funding of the Financing in the Required Amount, (iii) make any assumptions or any of the statements set forth in any Financing Letter inaccurate in any material respect or (iv) otherwise result in the Required Amount of the Financing being unavailable on a timely basis, and in any event, not later than the Closing. As of the date hereof, the Buyer Entities have no reason to believe that any term or condition of closing of the Financing contained in the Financing Letters will be unable to be satisfied on a timely basis (and in any event, not later than the Closing) or that the Required Amount committed pursuant to the Financing Letters will not be available at the Closing. As of the date hereof, the Buyer Entities have not incurred any obligation, commitment, restriction or liability of any kind, and is not contemplating or aware of any obligation, commitment, restriction or liability of any kind, in either case which could be expected to delay, impair or adversely affect the parties to the Financing Letters. The Buyer Entities have paid in full any and all commitment or other fees required to be paid on or prior to the date of this Agreement pursuant to the terms of the Financing Letters, and will pay in full any such amounts due on or before the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;As of the date hereof, each of the Financing Letters is in full force and effect, and none of the Financing Letters has been withdrawn, rescinded or terminated or otherwise amended or modified in any respect, and, to the knowledge of Buyer, no such withdrawal, rescission, termination, amendment or modification is contemplated. As of the date hereof, no Financing Source has notified the Buyer Entities, the Company or any of their respective Affiliates or Representatives of its intention to terminate any of the Financing Letters or not to provide its portion of the Financing.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities hereby acknowledge and agrees that its obligations hereunder are not subject to any conditions regarding its or any other Person's ability to obtain financing for the consummation of the transactions contemplated hereby.

Section 4.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Investment</u>. Buyer is acquiring the Transferred Equity Interests for its own account and not with a view to distribution in violation of any securities Laws. Buyer has been advised and understands and acknowledges that the Transferred Equity Interests have not been registered in accordance with the Securities Act or the "blue sky" Laws of any jurisdiction and may be resold only if registered in accordance with the provisions of the Securities Act or if an exemption from registration is available, unless neither such registration nor such an exemption is required by applicable Law. Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Transferred Equity Interests. Buyer is able to bear the economic risk of an investment in the Transferred Equity Interests and is able to afford a complete loss of such investment. Buyer is an "accredited investor," as defined in Rule 501 under the Securities Act.

Section 4.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Brokers</u>. No broker, finder or investment banker is entitled to any brokerage, finder's or other similar fee or commission that could be payable by Sellers in connection with the Acquisition or the Liabilities Assumption based on arrangements made by or on behalf of the Buyer Entities.

Section 4.14&nbsp;&nbsp;&nbsp;&nbsp;<u>R&W Insurance Policy</u>. The Buyer Entities have delivered to Sellers the binder agreement, dated as of the date hereof (the "<u>Binder Agreement</u>"), between the Buyer Entities and QBE Specialty Insurance Co. (collectively, "<u>Underwriter</u>"), with respect to the buyer-side representation and warranty insurance policy attached thereto, naming the Buyer Entities and/or an Affiliate thereof as the "named insured" (the "<u>R&W Insurance Policy</u>"). The R&W Insurance Policy does not include an entitlement to subrogation rights of recovery against Sellers, except in the case of Fraud. As of the date hereof, the Binder Agreement is in full force and effect and has not been amended, restated or otherwise modified or waived, and the respective commitments in the Binder Agreement have not been withdrawn, modified or rescinded in any respect. The Binder Agreement includes all of the conditions precedent to the issuance of the final R&W Insurance Policy. The Binder Agreement has been duly and validly executed and delivered by Buyer Entities and Underwriter and is a legal, valid and binding obligation of Buyer Entities and Underwriter enforceable against Buyer Entities and Underwriter in accordance with its terms, subject to the Bankruptcy and Equity Exceptions. As of the date hereof, Buyer Entities has no reason to believe that any of the conditions precedent to the issuance of the final R&W Insurance Policy on the terms therein will not be satisfied. Each of Buyer Entities and Underwriter has the requisite power and authority to execute and deliver, and to perform its covenants, agreements and obligations under, the Binder Agreement. The execution and delivery of the Binder Agreement by Buyer Entities and Underwriter and the performance by each of Buyer Entities and Underwriter of their respective covenants and agreements thereunder have been duly and validly authorized by all necessary entity action on the part of Buyer Entities and, to the Buyer Entities' knowledge, Underwriter, respectively. As of the date hereof, no event has occurred that, with or without notice or lapse of time or both, would or would reasonably be expected to constitute a breach or default of any provision of the Binder Agreement by Buyer Entities, constitute or result in a failure to satisfy a condition precedent to or other contingency to be satisfied set forth in the Binder Agreement or otherwise cause the final R&W Insurance Policy to be unavailable.

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**ARTICLE V<u><br>COVENANTS AND AGREEMENTS</u>**

Section 5.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Conduct of Business Prior to the Closing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Closing, except (i) as required by this Agreement, (ii) as required by applicable Law, (iii) for any actions taken, or omitted, that Sellers reasonably determine are necessary in response to COVID-19 or COVID-19 Measures, (iv) as disclosed in <u>Section 5.1(a)</u> of the Disclosure Schedule or (v) with the prior written consent of Buyer Parent (which shall not be unreasonably withheld, conditioned or delayed), Sellers shall cause the Seller Group and the Acquired Entities to use commercially reasonable efforts to (1) cause the Business to preserve intact its present business organization and its relationships with material customers, material suppliers, employees and others to whom it has material contractual obligations or material business dealings or relations, and (2) conduct Business in the ordinary course of business in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Closing, except (v) as required by this Agreement, (w) as required by applicable Law or (x) any actions taken, or omitted, that Sellers reasonably determine are necessary in response to COVID-19 or COVID-19 Measures, (y) as disclosed in <u>Section 5.1(b)</u> of the Disclosure Schedule or (z) with the prior written consent of Buyer Parent (which shall not be unreasonably withheld, conditioned or delayed), Sellers shall not permit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to amend or otherwise change its Organizational Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to adjust, split, combine, amend the terms of or reclassify any shares of its capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to declare, set aside or pay any dividend or distribution (other than any dividend or distribution payable solely in cash prior to the Closing) on any of its Equity Interests or propose or authorize the issuance of any other securities for, in lieu of or in substitution for any of its Equity Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to merge or consolidate with any other Person or restructure, reorganize, recapitalize or completely or partially liquidate (or adopt a plan of liquidation);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to acquire (including by merger or consolidation or otherwise) any Equity Interest in any other Entity or any material asset from any other Person (other than another Acquired Entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group or any Acquired Entity to issue, sell, pledge or transfer any Equity Interests in any Acquired Entity to any Person (other than any Acquired Entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group or any Acquired Entity to sell, transfer, lease, sublease or license to any Person (other than any Acquired Entity) any material assets, other than (1) nonexclusive licenses or other grants of rights to IP Rights in the ordinary

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course of business or (2) in the case of any member of the Seller Group, any asset that is not Related to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to repurchase, redeem or otherwise acquire any of its Equity Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group or any Acquired Entity to, except as required by (1) the terms of any Business Benefit Plan or (2) for which any Seller and its Affiliates (other than the Acquired Entities) shall be solely obligated to pay and as would not result in a Liability to the Buyer Entities or any Acquired Entity, (A) adopt, amend or terminate any Company Employee Plan, (B) materially increase the cash compensation or fringe benefits of any director, manager officer, employee, consultant or other natural person service provider of any Acquired Entity, other than (x) base salary increases in the ordinary course of business not to exceed 3.5% in the aggregate over the base salary levels in effect as of the date hereof or (y) in connection with promotions or responses to competing offers of employment, in each case, in the ordinary course of business, or (C) other than in the ordinary course of business, hire, engage or terminate any employee or individual independent contractor of an Acquired Entity or a member of the Seller Group with respect to the Business other than non-physician employees at the level of director or above who have an annual base salary in excess of $200,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group or any Acquired Entity to enter into, terminate, or modify or amend in any material respect any Material Contract, other than expirations of Material Contracts in accordance with their terms; <u>provided</u> that this <u>Section 5.1(b)(x)</u> shall not prohibit the entry into customer and vendor agreements in the ordinary course of business with pricing and other material terms that are consistent in all material respects with past practice of the Acquired Entities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity (1) to settle, cancel or compromise any Claim (or series of related Claims) against such Acquired Entity, other than (A) customer payment reconciliations made in the ordinary course of business and (B) any other settlement, cancelation or compromise (x) involving only monetary payments where the amount paid by an Acquired Entity is less than $3,000,000, individually or in the aggregate, in excess of available insurance proceeds for such settlement, cancelation or compromise or (y) that would not result in a Liability to any Acquired Entity after the Closing, or (2) to intentionally waive or release any material rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to authorize, or make any commitment with respect to, capital expenditures that are, in the aggregate, in excess of $1,500,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to change any annual accounting period for GAAP or adopt or change any material accounting method used by it for GAAP or adopt any material accounting method, except, in each case, as required by GAAP or any Governmental Authority with jurisdiction over the business of any such Acquired Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to (1) make or change any material Tax election or method of accounting for U.S. federal income tax purposes, except in the ordinary course of business, (2) settle or compromise any audit, dispute or Claim in respect of any claim or assessment with respect to any material amount of Taxes, (3) consent to any extension or

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waiver of the limitation period applicable to any claim or assessment for any material amount of Taxes, (4) file any amended Tax Return or (5) enter into any Contract in respect of Taxes with any Governmental Authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to assume or incur any Borrowed Money Indebtedness or to assume or guarantee any liability of a member of the Seller Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to assume, incur, endorse or guarantee or otherwise become liable or responsible for any obligations of another Person (other than an Acquired Entity), whether directly, contingently or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to incur any Lien on any of its material assets (whether tangible or intangible), other than Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group to incur any Lien on any of the Transferred Assets, other than Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity to make any material loans, advances, capital contributions to or investments in any other Person (other than an Acquired Entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx)&nbsp;&nbsp;&nbsp;&nbsp;any Acquired Entity or any member of the Seller Group to enter into any Affiliate Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group (with respect to the Business) or any Acquired Entity to make any material changes in their respective policies with respect to terms, systems, policies or procedures of accounts payable and accounts receivable; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii)&nbsp;&nbsp;&nbsp;&nbsp;any member of the Seller Group or any Acquired Entity to enter into any Contract or understanding to do any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;(i) Nothing herein, including <u>Section 5.1(a)</u> and <u>Section 5.1(b)</u>, shall give the Buyer Entities or any of its Representatives, directly or indirectly, the right to control or direct the operations of any member of the Seller Group or any Acquired Entity prior to the Closing, and (ii) prior to the Closing, the Seller Group and the Acquired Entities shall exercise complete control and supervision over their respective businesses and operations. Notwithstanding anything herein to the contrary, (1) the Seller Group shall have complete control over the Excluded Assets and the Retained Liabilities, and nothing herein shall restrict, limit or prohibit the Seller Group from taking any action, or omitting to take any action, in the Seller Group's sole discretion, with respect to the Excluded Assets or the Retained Liabilities, (2) any action expressly permitted by an exception to a subsection of <u>Section 5.1(b)</u>, and the Acquired Entities' failure to take any action prohibited by <u>Section 5.1(b)</u>, shall not be a breach of <u>Section 5.1(a)</u> and (3) prior to the Closing, Sellers and their respective Affiliates shall be permitted to use all available cash and cash equivalents for dividends or distributions, to repay any Indebtedness or for any other purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything herein to the contrary, prior to or at the Closing, the Seller Group shall be permitted to assign to the Company any Contract that would be a Transferred Contract absent such assignment; <u>provided</u> that any such Contract shall be

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considered a Transferred Contract for all purposes hereof (except for purposes of <u>Section 1.1</u> and the Bill of Sale and Assignment Agreement).

Section 5.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Access to Information</u>. Upon reasonable advance notice from the Buyer Entities, Sellers shall cause the Seller Group and the Acquired Entities to provide the Buyer Entities and their Representatives reasonable access, during normal business hours throughout the period prior to the Closing, to the Seller Group's (but solely to the extent Related to the Business) and the Acquired Entities' respective properties and books and records (other than records related to skill and development training, performance, active medical restriction forms, fitness for duty and disciplinary actions), and during such period, Sellers shall furnish or make available to the Buyer Entities and their Representatives all readily available information Related to the Business as the Buyer Entities may reasonably request; <u>provided</u>, <u>however</u>, that Sellers shall not be required to permit any such access, or to disclose any information, that in the reasonable, good-faith judgment of Sellers would (a) result in the disclosure of any trade secrets of any Person (other than the Acquired Entities or the Seller Group to the extent Related to the Business) or violate any applicable Law or (b) jeopardize protections afforded any Acquired Entity under the attorney-client privilege or the attorney work product doctrine; provide that Sellers shall use commercially reasonable efforts to provide such information in a format or manner that would not disclose trade secrets or violate any applicable Law or jeopardize protections afforded any Acquired Entity under the attorney-client privilege or the attorney work product doctrine. All information obtained by the Buyer Entities and their Representatives under this <u>Section 5.2</u> shall be treated as "Confidential Information" (as defined in the Confidentiality Agreement) for purposes of the Confidentiality Agreement, and any such information may be designated Clean Team Information in accordance with the Clean Team Confidentiality Agreement. Centene Corporation, a Delaware corporation ("<u>Ultimate Parent</u>"), is an express third-party beneficiary of this <u>Section 5.2</u> to the extent related to the Buyer Entities' obligations under the Confidentiality Agreement. Notwithstanding anything in this <u>Section 5.2</u> to the contrary, neither Seller nor any of their respective Affiliates shall be required to provide Buyer Entities or their Representatives with any access to properties or books and records, or furnish the Buyer Entities or their Representatives with any information, to the extent any such properties, books, records or information are related to the Excluded Assets or the Retained Liabilities or the disclosure of which would be in violation of applicable Privacy Laws.

Section 5.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Consents and Filings; Buyer Entities' Actions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each Party shall use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to cause the conditions in <u>Article VII</u> to be satisfied as soon as reasonably practicable after the date hereof and in any event no later than the date that is two (2) Business Days prior to the Outside Date, including using reasonable best efforts to prepare and make all Filings with, and obtain all Consents of, Governmental Authorities that are necessary, proper or advisable to consummate the Closing, including the HSR Act Clearance and the Required Filings (<u>provided</u>, <u>however</u>, that, for the avoidance of doubt, the foregoing will not require any Party to waive any condition to Closing). Promptly following the date hereof, Sellers shall use commercially reasonable efforts to obtain all Consents and provide all notices under the Contracts listed in <u>Section 2.3(a)(iii)</u> of the Disclosure Schedule in connection with the transactions contemplated hereby; <u>provided</u>, <u>however</u>, that (i) none of Sellers or any of their respective Affiliates shall be required to make, or commit or agree to make, any concession or payment to, or incur any Liability to, any such Person and (ii) the inability or failure to obtain any such Consents, and any consequences to the

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extent arising out of or related to such inability or failure, including the termination of any such Contract to the extent related to the Closing or the transactions contemplated hereby shall in no event (1) be deemed a breach of, or failure to perform or comply with, a covenant or agreement hereunder or (2) grant any Buyer Entity any right to terminate this Agreement pursuant to <u>Section 7.1</u> or fail to consummate the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;In furtherance, and without limiting the generality, of Section 5.3(a), each Party shall, and shall cause its Representatives to, (i) make or cause to be made the initial Filings of such Party or its Representatives required by the HSR Act related to the transactions contemplated hereby within five (5) Business Days after the date hereof and, if available, shall request early termination of the waiting period under the HSR Act applicable to the transactions contemplated hereby, (ii) make or cause to be made all other Filings with Governmental Authorities required of such Party or its Affiliates that are necessary, proper or advisable to consummate the Closing or to obtain all Consents of Governmental Authorities that are necessary, proper or advisable to consummate the Closing, in each case, as soon as reasonably practicable after the date hereof (including the Required Filings), (iii) provide as soon as reasonably practicable all information required by applicable Law to be provided to any Governmental Authority in connection with any such Filings or Consents and comply at the earliest reasonably practicable date with any request from a Governmental Authority for additional information, documents or other materials received by such Party or its Representatives related to such Filings or the transactions contemplated hereby and (iv) act in good faith and reasonably cooperate with the other Parties in connection with any such Filings and in obtaining any Consent of a Governmental Authority that is necessary to consummate the Closing. To the extent not prohibited by applicable Law, each Party shall use reasonable best efforts to furnish to each other all information required for any Filing to be made to a Governmental Authority by applicable Law in connection with the transactions contemplated hereby. Each of the Buyer Entities and Sellers shall give the other reasonable prior notice of any communication with, and any proposed understanding, undertaking or agreement with, any Governmental Authority regarding any such Filing or Consent and shall not independently participate in any meeting, or engage in any substantive conversation, discussion or negotiation, with any Governmental Authority related to any such Filing or Consent, or related to any Claims by such Governmental Authority related to the transactions contemplated hereby, without giving the other (1) prior written notice of such meeting, conversation, discussion or negotiation and (2) unless prohibited by such Governmental Authority, the opportunity to attend or participate therein. Each of the Buyer Entities and Sellers shall consult and cooperate with the other in good faith in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of such Party in connection with any Claim by a Governmental Authority related to such Filings or the transactions contemplated hereby. Without limiting the foregoing, each Party shall not, and shall cause their respective Representatives not to, enter into any agreement with any Governmental Authority not to consummate the transactions contemplated hereby. All filing fees payable by any of the Buyer Entities, Sellers, the Acquired Entities or any of their respective Representatives in connection with any such Filings or Consents shall be borne and payable by the Buyer Entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;In furtherance, and without limiting any, of the Buyer Entities' covenants and agreements under Section 5.3(a) and Section 5.3(b), as soon as possible after the date hereof, the Buyer Entities shall, and shall cause their Representatives to, take all actions necessary,

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proper or advisable to (i) avoid or eliminate each and every impediment that may be asserted by a Governmental Authority related to any Filings or Consents contemplated by this Section 5.3, the Acquisition, the Liabilities Assumption or the other transactions contemplated hereby as soon as possible and (ii) to enable the Closing to occur as soon as possible after the date hereof, in each case, which actions shall include (1) defending through litigation on the merits, including appeals, any Claim asserted in any court or other proceeding by any Person, including any Governmental Authority, that seeks to or could prevent or prohibit or impede, interfere with or delay the consummation of the Closing, (2) proposing, negotiating, committing and effecting, by consent decree, hold separate order, settlement or otherwise, the sale, divestiture, licensing or disposition of any assets or businesses of (A) a Buyer Entity, its Affiliates or the Acquired Entities or (B) the Transferred Assets, (3) terminating existing relationships, contractual rights or obligations of a Buyer Entity, its Affiliates or the Acquired Entities or the Transferred Assets, (4) agreeing to any limitation, restriction, prohibition, undertaking, covenant, revision, obligation (contractual or otherwise) or requirement on the conduct (including contractual, business or service performance) of (A) a Buyer Entity, its Affiliates or any of their respective businesses, (B) the Acquired Entities, (C) the Transferred Assets or (D) the Business (5) taking any other action as may be required by a Governmental Authority in order to obtain any Consent thereof that is necessary, appropriate or advisable to consummate the Closing or avoiding the entry of, or having vacated, lifted, dissolved, reversed or overturned any Order, in each case, as soon as possible and in any event prior to the Outside Date (each of the actions described in the foregoing clauses (2)–(5), a "Regulatory Concession") and (6) not acquiring any asset (including any business, Equity Interests or Entity) (by way of merger, consolidation, share exchange, investment, other business combination, asset, stock or equity purchase, or otherwise), that could reasonably be expected to adversely affect obtaining or making any Consent or Filing contemplated by this Section 5.3 or the timely receipt thereof or that would or would be reasonably likely to impair, interfere with, hinder, delay or prevent the Closing. Notwithstanding anything in this Section 5.3(c) to the contrary, no member of the Buyer Group shall be required to take, propose or agree to any Regulatory Concession that, individually or in the aggregate with all Regulatory Concessions, would or would reasonably be expected to result in a material adverse effect on the business, financial condition or results of operations of (A) the Buyer Group, taken as a whole, (B) the Acquired Entities and the Business, taken as a whole, or (C) Buyer and its Subsidiaries (including the Acquired Entities and the Business), taken as a whole after giving effect to the transactions contemplated hereby (provided that, for purposes of the foregoing clauses (A) and (C), the Buyer Group, taken as a whole, and Buyer and its Subsidiaries (including the Acquired Entities and the Business), taken as a whole after giving effect to the transactions contemplated hereby, shall be deemed to be of the size, scope and scale of the Acquired Entities and the Business, taken as a whole.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything herein to the contrary, (A) the Seller Group shall not be required to make, or commit or agree to make, any Regulatory Concession or incur any Liability in connection with such Filings or Consents (other than Liabilities incidental to the making of such Filings or Consents), (B) the Acquired Entities shall not be required to make, or commit or agree to make, any Regulatory Concession or incur any Liability (I) that is not conditioned on the consummation of the transactions contemplated hereby or (II) related to any business or assets of the Seller Group (other than the Business, the Acquired Entities or the Transferred Assets) and (C) no Regulatory Concession, individually or in the aggregate, shall have any effect on, or be reflected in the calculation of, the Estimated First Adjustment Amount or the First Adjustment Amount.

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Section 5.4&nbsp;&nbsp;&nbsp;&nbsp;Employee Matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;No later than thirty (30) days prior to the Closing Date, Buyer shall, or shall cause one of its Affiliates to, offer employment in writing to each Business Employee providing for employment (assuming that the Business Employee accepts such employment) commencing at midnight local time on the Closing Date (or to the extent such Business Employee is on a leave of absence as of the Closing Date, commencing on the date on which such Business Employee returns to active service provided such return occurs within six (6) months following the Closing Date) on the terms set forth in <u>Section 5.4(b)</u>. Buyer and its Affiliates, as applicable, shall employ those Transferred Employees who are foreign nationals working in the United States under terms and conditions such that Buyer and its Affiliates, as applicable, qualify as a "successor employer" under applicable United States immigration laws effective as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Subject, and in addition, to any requirements imposed by applicable Law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;for a period of one (1) year immediately following the Closing Date (or if shorter, during the period of employment) (the "<u>Continuation Period</u>"), Buyer shall provide, or shall cause to be provided, to each Business Employee who accepts an offer of employment provided under <u>Section 5.4(a)</u> to be employed by Buyer or one of its Affiliates following the Closing (each such Business Employee, a "<u>Transferred Employee</u>") with (1) an annual base salary or wage rate, (2) target annual cash incentive opportunities (excluding equity-based incentive opportunities), and (3) employee benefits (excluding benefits under any defined benefit plan, retiree health plan, equity plan, severance payments and severance benefits) that are in the aggregate substantially similar to those provided by Sellers or any of their Affiliates (including the Acquired Entities) to such Transferred Employee immediately prior to the Closing; <u>provided</u> that notwithstanding the foregoing, each Transferred Employee shall be provided with an annual base salary or wage rate that is no less favorable than the annual base salary or wage rate provided to such Transferred Employee immediately prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Buyer shall provide, or shall cause to be provided, to each Transferred Employee severance payments and benefits that are no less favorable than the severance payments and benefits provided to similarly situated employees of Buyer and its Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;for eligibility and vesting purposes only under the employee benefit plans of Buyer and its Affiliates, if any, that are offered and provide benefits to Transferred Employees after the Closing Date (the "<u>Buyer Plans</u>"), each Transferred Employee shall be credited with his or her years of service or comparable experience with Sellers or their Affiliates (including the Acquired Entities) prior to the Closing Date to the same extent as such employee was entitled prior to the Closing Date to credit for such service under any similar Business Benefit Plan, except to the extent such credit would result in a duplication of benefits (and excluding, for the avoidance of doubt, the sabbatical program maintained by Buyer and its Affiliates); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;for purposes of each Buyer Plan, providing medical, dental, pharmaceutical or vision benefits to any Transferred Employee, to the extent such Transferred Employee satisfied participation requirements and waiting period requirements under a comparable Business Benefit Plan, Buyer shall use reasonable best efforts to obtain the consent of any applicable insurer to, or if insurer consent is not required, cause all pre-existing condition

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exclusions and actively-at-work requirements of such Buyer Plan to be waived for such Transferred Employee and his or her covered dependents, and all eligible expenses incurred by such Transferred Employee and his or her covered dependents under the comparable Business Benefit Plans during the portion of the plan year ending on the date of such Transferred Employee's participation in the corresponding Buyer Plan begins shall be considered under such Buyer Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Buyer Plan subject to all applicable terms and conditions related to such benefits or amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Effective as of the Closing Date, Buyer Parent shall, or shall cause one of its Affiliates to, grant to the individuals set forth in <u>Section 5.4(c)</u> of the Disclosure Schedule (the "<u>Specified Business Employees</u>") a cash or equity incentive award (each, a "<u>Replacement Award</u>") in respect of any Ultimate Parent Equity Awards that are outstanding on the date hereof and that are forfeited in accordance with their terms by such Specified Business Employee as of the Closing. Each Replacement Award shall equal the value of any Ultimate Parent Equity Award (using the Replacement Award VWAP) and shall have the same terms, conditions and vesting schedule as applied to such Ultimate Parent Equity Awards immediately prior to the Closing; <u>provided</u> that such Replacement Awards shall (i) be subject to solely service-based vesting conditions but shall otherwise remain subject to the same terms and conditions as applied prior to the Closing Date (except as otherwise provided herein), (ii) to the extent that such Ultimate Parent Equity Awards are stock options, (1) have a value determined in accordance with this <u>Section 5.4(c)</u> equal to the Aggregate Spread Value and (2) shall be vest and paid to the Specified Business Employee on the applicable service-based vesting schedule and (iii) vest and be paid upon the termination of employment (absent for cause termination) of the applicable Specified Business Employee by Buyer, or an Affiliate thereof, on or following the Closing Date. Prior to the Closing, Seller Parent shall use commercially reasonable efforts to deliver an updated Equity Award Schedule containing the applicable information in respect of each Specified Business Employee as of the Business Day prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Effective as of the Closing Date, the Transferred Employees shall no longer actively participate in the Magellan Health, Inc. Retirement Savings Plan (the "<u>Seller 401(k) Plan</u>"). Sellers shall, and shall cause their respective Affiliates to, take all actions required to fully vest the Transferred Employees in their accounts under the Seller 401(K) Plan. Buyer shall designate a tax-qualified defined contribution plan of Buyer (such plan, the "<u>Buyer Savings Plan</u>") that either (i) currently provides for the receipt from the Transferred Employees of "eligible rollover distributions" (as such term is defined in Section 401(a)(31) of the Internal Revenue Code, including notes representing plan loans) or (ii) shall be amended effective as of the Closing Date to provide for the receipt from the Transferred Employees of eligible rollover distributions. Sellers, the Buyer Entities and their respective Affiliates shall cooperate in good faith to work with the recordkeepers of Seller 401(k) Plan and Buyer Savings Plan to develop a process and procedure for effecting the in-kind direct rollover of promissory notes evidencing participant loans from the Seller 401(k) Plan to the Buyer Savings Plan and voluntary rollovers of account balances to the Seller 401(k) Plan. In the event that a process and procedure acceptable to the recordkeepers of Seller 401(k) Plan and Buyer Savings Plan for effecting the in-kind rollover of loan promissory notes is agreed upon, the Seller and Buyer shall take any and all commercially reasonable actions needed to permit each Transferred Employee with an

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outstanding loan balance under the Seller 401(k) Plan as of the Closing to continue to make scheduled loan payments to the Seller 401(k) Plan after the Closing, pending the distribution and in-kind rollover of the promissory notes evidencing such loans from the Seller 401(k) Plan to the Buyer Savings Plan so as to prevent, to the extent reasonably possible, a deemed distribution or loan offset with respect to such outstanding loans. Sellers shall, and shall cause their respective Affiliates to, use commercially reasonable efforts to provide Buyer year to date employee contributions and cumulative balances for the Transferred Employees under the Seller 401(k) Plan for purposes of compliance with applicable statutory limitations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Sellers shall timely advise Buyer of the amount of all accrued and unused vacation time and other paid time off as of the Closing Date held by such Transferred Employee ("<u>Accrued PTO</u>"). Buyer shall assume and credit each Transferred Employee with their Accrued PTO to the extent included in Net Working Capital as finally determined and shall cooperate in good faith with all Transferred Employees with respect to vacation and paid time off commitments purchased or reserved by such Transferred Employee prior to the Closing Date in respect of periods occurring on or subsequent to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Buyer shall not, and shall cause its Affiliates not to, cause any of the Transferred Employees to suffer an "employment loss" under the WARN Act on or in the ninety (90) days following the Closing Date which would reasonably be expected to create any Liability for Sellers or any of their Affiliates under the WARN Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;The obligation of Seller and its Affiliates (other than the Acquired Entities) to provide benefits under Seller Employee Plans shall cease effective as of the Effective Time with respect to the Transferred Employees. With respect to periods on and following the Effective Time, each Transferred Employee shall be eligible to commence participation in the Buyer Plans that provide health and welfare benefits. Seller and its Affiliates (other than the Acquired Entities) shall be responsible for all liabilities with respect to claims incurred by Transferred Employees (and their beneficiaries and covered dependents) prior to the Effective Time under those Seller Employee Plans that provide medical, dental, vision and prescription drug coverage, life, accidental death and dismemberment and business travel accident insurance and disability coverage. Buyer and its Affiliates shall be responsible for all liabilities with respect to claims incurred by Transferred Employees (and their beneficiaries and covered dependents) on and after the Effective Time under Buyer Plans that provide medical, dental, vision and prescription drug coverage, life, accidental death and dismemberment and business travel accident insurance and disability coverage. For purposes of this Section, the following claims shall be deemed to be incurred as follows: (A) with respect to short-term disability, long-term disability, life and accidental death and dismemberment benefits, upon the event giving rise to such benefits, and (B) with respect to medical, dental, vision care, prescription and health-related benefits, upon provision of medical, dental, vision, prescription and health-related services, materials or supplies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;Sellers and Buyer or their respective Affiliates shall take all actions necessary or appropriate, consistent with "Situation 2" of Revenue Ruling 2002-32, including adopting the amendments described in such Revenue Ruling to the health and dependent care flexible spending account plans of Seller (the "<u>Seller FSAs</u>") and Buyer (the "<u>Buyer FSAs</u>"), so that, effective as of the Closing Date, (i) the account balances (whether positive or negative) of

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the Transferred Employees who are participants in the Seller FSAs (the "<u>FSA Participants</u>") shall be transferred to the Buyer FSAs; (ii) the elections, contribution levels and coverage levels of the FSA Participants shall apply under Buyer FSAs in the same manner as under Seller FSAs; <u>provided</u> that Seller has provided to Buyer all data necessary to reflect such application; and (iii) the FSA Participants shall be reimbursed from the Buyer FSAs for claims (A) incurred at any time during the plan year of the Seller FSAs during which the Closing Date occurs (or during any grace period or extended grace period applicable to the Seller FSAs), and (B) submitted to Buyer FSAs from and after the Closing Date, substantially on the same basis, terms and conditions as under Seller FSAs. As soon as reasonably practicable following the Closing Date, (i) if the aggregate benefits paid by the Seller FSA to the Transferred Employees prior to the Closing Date exceed the aggregate payroll deductions for the Seller FSAs made in respect of the Transferred Employees at or prior to the Closing Date, then Buyer shall reimburse Seller for the amount of such excess or (ii) if the aggregate payroll deductions for the Seller FSAs made in respect of the Transferred Employees at or prior to the Closing Date exceed the aggregate benefits paid by the Seller FSAs to the Transferred Employees prior to the Closing, then Seller shall reimburse Buyer for the amount of such excess. The parties hereto agree to make reasonable, good faith efforts to implement the provisions of this <u>Section 5.4(h)</u>, taking into account the complexity of transferring flexible spending accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Nothing in this <u>Section 5.4</u> shall be treated as an amendment of, an undertaking to amend or terminate, or a limitation on the ability of Buyer or its Affiliates to amend or terminate any Employee Plans. Nothing herein shall require Buyer to continue to employ the services of any particular individual after the Closing Date. No provision hereof shall create any third-party beneficiary rights in any employee (including any Business Employee or Transferred Employee) or any other natural person service provider of any Acquired Entity or any beneficiary or dependents thereof for any specific compensation, terms and conditions of employment or benefits.

Section 5.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Names and Marks; Termination of Rights to IP Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;From and after the Closing (but subject to the one hundred eighty (180) day transition period referenced in the following sentence), Buyer and its Affiliates shall have no right, title or interest in or to, and Buyer shall not use, shall not permit any of its Affiliates or any third party to use, and shall cause the Acquired Entities to cease to use, the Seller Names, in whole or in part, as the name or mark of or otherwise in connection with the Acquired Entities, the Business, the Transferred Assets, the business of Buyer or any of its Affiliates or otherwise. As soon as reasonably practicable, and in any event within one hundred and eighty (180) days after the Closing Date, Buyer shall use commercially reasonable efforts to (i) remove, strike over or otherwise obliterate all Seller Names from all existing physical items, content and materials (tangible or intangible), including signage, vehicles, facilities, business cards, schedules, stationery, packaging materials, displays, promotional materials, manuals, forms, software, email, social media, online identifiers and properties, and other items, content and materials, and (ii) change the name of each Acquired Entity (and any other entity, if applicable) to remove any Seller Name, including causing its Organizational Documents to be amended to remove any references thereto. Buyer shall have no rights during such time to make any new use of any Seller Name. For the avoidance of doubt, nothing herein shall require Buyer or any Acquired Entity to amend any Contract to remove any Seller Name.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Other than such rights as may be expressly granted to an Acquired Entity pursuant to the Transition Services Agreement or the Software License Agreement, any licenses, rights and access to proprietary IP Rights, data, software or other technology that may have been granted by Sellers and their Affiliates (excluding, for clarity, the Acquired Entities) to the Acquired Entities prior to the Closing, whether expressly or impliedly, shall terminate as of immediately prior to the Closing.

Section 5.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification; Directors' and Officers' Insurance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;From and after the Closing, Buyer shall cause the Acquired Entities to fulfill and honor the obligations of each Acquired Entity under any indemnification provision, exculpation provision or advancement-of-expense provision in the Organizational Documents of any Acquired Entity as in effect as of the Closing. Buyer shall not permit any such provision to be amended, repealed or otherwise modified after the Closing in any manner that would adversely affect the rights thereunder of any Pre-Closing Indemnified Person, unless any such amendment, repeal or modification is required by applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Without limiting <u>Section 5.6(a)</u> and solely to the extent covered by the Tail Policy, from and after the Closing, Buyer shall, and shall cause the Acquired Entities (each of Buyer and the Acquired Entities, a "<u>D&O Indemnifying Party</u>") to, to the fullest extent permitted by applicable Law, (i) indemnify and hold harmless and exculpate (and release from any liability to Buyer or the Acquired Entities) the Pre-Closing Indemnified Persons against all D&O Expenses and all Losses (collectively, "<u>D&O Costs</u>") arising from or related to any threatened, pending or completed claim or investigation, whether criminal, civil, administrative or investigative or otherwise, related to acts or omissions occurring on or prior to the Closing (including for acts or omissions in connection with this Agreement and the transactions contemplated thereby) (a "<u>D&O Indemnifiable Claim</u>") and (ii) advance to such Pre-Closing Indemnified Persons all D&O Expenses incurred in connection with any D&O Indemnifiable Claim (including in circumstances where the Pre-Closing Indemnified Person has assumed the defense of such claim) promptly after receipt of reasonably detailed statements therefor. Subject to the terms of the Tail Policy, the rights of any Pre-Closing Indemnified Person related to any D&O Indemnifiable Claims shall continue until such D&O Indemnifiable Claim is finally disposed (with no liability or potential liability of, and at no cost to, such Pre-Closing Indemnified Person) or all judgments, orders, decrees or other rulings in connection with such D&O Indemnifiable Claim are fully satisfied (with no liability or potential liability of, and at no cost to, such Pre-Closing Indemnified Person). For the purposes of this <u>Section 5.6(b)</u>, "D&O Expenses" shall include attorneys' fees and all other costs, charges and expenses paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or participate in any D&O Indemnifiable Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;At the Closing, Buyer shall obtain, at its sole cost and expense, a prepaid "tail" insurance policy (the "<u>Tail Policy</u>") that provides the Pre-Closing Indemnified Persons with directors' and officers' liability insurance up to an aggregate policies limit of $10,000,000, for a period ending no earlier than the sixth (6th) anniversary of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Buyer acknowledges (on behalf of itself and its Representatives, including, after the Closing, the Acquired Entities) that the Pre-Closing Indemnified Persons may have

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certain rights to indemnification, advancement of expenses and/or insurance provided by current direct or indirect equity holders, members or other Affiliates of Sellers or their Representatives (other than the Acquired Entities) or their respective direct or indirect equity holders ("<u>Indemnitee Affiliates</u>") separate from the obligations of Buyer and the Acquired Entities hereunder or under their respective Organizational Documents. From and after the Closing, (i) the D&O Indemnifying Parties shall be the indemnitors of first resort (i.e., their obligations to the Pre-Closing Indemnified Persons are primary and any obligation of any Indemnitee Affiliate to advance expenses or to provide indemnification or insurance for the same D&O Expenses or D&O Costs incurred by the Pre-Closing Indemnified Persons is secondary), (ii) the D&O Indemnifying Parties shall advance the full amount of D&O Expenses required under <u>Section 5.6(b)</u> and shall be liable for the full amount of D&O Costs to the extent provided in <u>Section 5.6(b)</u>, without regard to any rights the Pre-Closing Indemnified Persons may have against any Indemnitee Affiliate and (iii) the D&O Indemnifying Parties (on behalf of themselves and their respective Subsidiaries) irrevocably waive, relinquish and release the Indemnitee Affiliates from all claims against the Indemnitee Affiliates for contribution, subrogation or any other recovery of any kind in respect thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;The Pre-Closing Indemnified Persons are intended third-party beneficiaries of this <u>Section 5.6</u>, with full rights of enforcement of this <u>Section 5.6</u> as if a party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;For purposes hereof, each Person who is or was an officer, manager or director of an Acquired Entity at or at any time prior to the Closing shall be deemed to be a "<u>Pre-Closing Indemnified Person</u>."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;If Buyer or any of its respective successors or assigns (i) consolidates with or merges into any other Entity and is not the continuing or surviving Entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its assets to any Person, then Buyer or its applicable successor or assign shall cause its applicable successors or assigns to assume all of the obligations thereof in this <u>Section 5.6</u>.

Section 5.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination of Affiliate Contracts and Intercompany Accounts</u>. Other than as listed in <u>Section 5.7</u> of the Disclosure Schedule, (a) all of the Acquired Entities' rights, remedies and Liabilities under the Affiliate Contracts shall be terminated as of immediately prior to the Measurement Time, (b) all rights, remedies, and Liabilities of any member of the Seller Group under the Affiliate Contracts shall be terminated as of immediately prior to the Measurement Time, and (c) all accounts (payables and receivables) between any member of the Seller Group, on the one hand, and any Acquired Entity, on the other hand, shall be terminated or settled immediately prior to the Measurement Time. Buyer acknowledges and agrees that, from and after the Closing, other than the specific services to be provided to Buyer under, and on the terms and conditions of, the Transition Services Agreement and the Software License Agreement, neither Buyer nor any Acquired Entity shall have any right, Claim or cause of action in or with respect to any Shared Service.

Section 5.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Retention and Access to Personnel, Information and Records</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;From and after the Closing Date through the date that is seven (7) years after the Closing Date (the "<u>Preservation Date</u>"), Buyer shall, and shall cause the Acquired Entities to, preserve, keep and maintain the Books and Records and all books, records, data and

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information of the Acquired Entities related to the Business, the Transferred Assets or the Assumed Liabilities, in each case, in their possession following the Closing as a result of the Acquisition with respect to periods or occurrences prior to the Closing Date. From and after the Closing Date through the Preservation Date, Buyer shall, and shall cause the Acquired Entities to, provide Sellers and their Representatives, upon Sellers' or their Representatives' reasonable request, access to or copies of such Books and Records and such other books, records, data and information and access to the personnel of Buyer and the Acquired Entities to the extent necessary for tax purposes or otherwise to comply with applicable Law or for any other legitimate business purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;From and after the Closing Date through the Preservation Date, Sellers shall, and shall cause the Seller Group to, preserve, keep and maintain all books, records, data and information of related to the Business, in each case, in their possession following the Closing and not otherwise transferred in connection with the Acquisition with respect to periods or occurrences prior to the Closing Date. From and after the Closing Date through the Preservation Date, Sellers shall, and shall cause the Seller Group to, provide Buyer and its Representatives, upon Buyer's or its Representatives' reasonable request, access to or copies of such books, records, data and information and access to the personnel of Seller and the Seller Group to the extent necessary for tax purposes or otherwise to comply with applicable Law or for any other legitimate business purpose.

Section 5.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Insurance</u>. From and after the Closing, the Acquired Entities, the Business, the Transferred Assets and the Assumed Liabilities shall cease to be insured by, have access or availability to, or be entitled to make claims on, claim benefits from or seek coverage under any insurance policy maintained by Sellers or any of their Affiliates (other than the Acquired Entities), including any insurance policy maintained by Sellers under which any Acquired Entity is a beneficiary or the Business, the Transferred Assets or the Assumed Liabilities are covered. Sellers or any of their respective Affiliates shall be permitted to amend, effective as of the Closing, any insurance policy in a manner they deem appropriate to give effect to this <u>Section 5.9</u>.

Section 5.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Company Employee Information</u>. Promptly after the Closing, Buyer shall instruct each Transferred Employee (a) to at all times maintain the confidentiality of all confidential or proprietary information in such Transferred Employee's possession or control that is related to any business of the Seller Group (other than the Business), including any such confidential or proprietary information obtained inadvertently by such Transferred Employee or contained or stored in such Transferred Employee's Personal Electronic Devices and (b) not to use, or disclose or make available to any third party, any confidential or proprietary information, including all such information contained or archived in such Transferred Employee's emails, that is related to any business of the Seller Group (other than the Business) for any purpose at any time during or after such Transferred Employee's employment by Buyer or any of its Affiliates.

Section 5.11&nbsp;&nbsp;&nbsp;&nbsp;<u>No Transfer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall not constitute an agreement to Transfer, and no member of the Seller Group shall be required to Transfer to Buyer or any Acquired Entity any Transferred Contract for which the Consent of the counterparty thereto is required pursuant to the terms thereof in connection with the transactions contemplated hereby and for which consent is not obtained prior to the Closing (any such Contract, the "<u>Consent Required Contracts</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;With respect to any Consent Required Contract, Sellers and Buyer shall enter into, as of the Closing, a mutually agreeable arrangement under which (i) Buyer would obtain, through a subcontracting, sublicensing or subleasing arrangement or otherwise, the Claims, rights and benefits of the applicable member of the Seller Group under such Consent Required Contract, (ii) Buyer would assume all Liabilities of the Seller Group under such Consent Required Contract to the same extent as an Assumed Liability and agree to perform and discharge all such Liabilities, (iii) Sellers would enforce, at Buyer's sole cost and expense and at the reasonable request of and for the benefit of Buyer, all Claims, rights and benefits of the Seller Group against any third party thereto arising from any such Consent Required Contract and (iv) Sellers would be liable for a breach of such Consent Required Contract to the extent caused by the Seller Group. Sellers shall and cause the Seller Group to, as applicable, promptly pay to Buyer, when received, all monies received by the Seller Group under any such Consent Required Contract as a result of the provisions of this <u>Section 5.11(b)</u>. If and when the legal or contractual impediments the presence of which caused the deferral of transfer of any Consent Required Contract pursuant to this <u>Section 5.11(b)</u> are obtained, the Transfer of the applicable Consent Required Contract shall be effected in accordance with the terms hereof and, upon such Transfer, such Consent Required Contract shall be a Transferred Asset and no longer considered a Consent Required Contract for purposes of this <u>Section 5.11(b)</u>. For the avoidance of doubt, in no event shall the non-existence of any Consent Required Contract be a condition to the Closing, and there shall be no adjustment to the purchase price or other consideration payable hereunder as a result of any Contract being a Consent Required Contract. Any such mutually agreeable arrangement shall terminate on the earlier of (1) the expiration of the Consent Required Contract in accordance with is terms and (2) the date that the applicable Consent Required Contract becomes a Transferred Asset pursuant to this <u>Section 5.11(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;From and after the Closing until the earlier of the expiration of the Consent Required Contract in accordance with its terms and the date that the applicable Consent Required Contract becomes a Transferred Asset, Sellers shall, at their sole cost and expense, use their commercially reasonable efforts to obtain the written Consent of each third party that is a party to any Consent Required Contract in order for Sellers to assign each such Consent Required Contract to Buyer; <u>provided</u>, <u>however</u>, that Sellers shall not be required to expend money (other than reasonable fees of, and payments to, Sellers' legal and other professional advisors and internal costs and expenses), incur any liability, commence any litigation or offer or grant any accommodation (financial or otherwise) to any such third party or any other Person. Buyer shall use its commercially reasonable efforts to assist Sellers in obtaining each such Consent. Promptly after receipt of any such Consent, Sellers and Buyer shall enter into a customary written assignment and assumption agreement assigning the applicable Consent Required Contract to Buyer.

Section 5.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Financing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Financing Obligations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall, and shall cause its Subsidiaries and each of their respective Representatives and Affiliates to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to arrange and consummate the Financing at the Closing on the terms and subject only to the conditions set forth in the Commitment Letters, including: (1) complying with and maintaining (<u>provided</u> that the Buyer Entities shall not be required to commence litigation to enforce its rights under the Commitment

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Letters) the Commitment Letters in full force and effect in accordance with the terms and subject only to the conditions thereof, (2) using reasonable best efforts to negotiate and enter into definitive agreements with respect thereto on the terms and subject only to the conditions set forth in the Commitment Letters, (3) complying with and performing the obligations applicable to it pursuant to the Commitment Letters, (4) drawing down on and consummating the Financing at or prior to the Closing, including by enforcing their respective rights under the Commitment Letter and causing the Financing Sources to fund the Financing at the Closing; <u>provided</u> that the Buyer Entities shall not be required to commence litigation to enforce such rights under the Commitment Letters, and (5) satisfying on a timely basis all conditions in such definitive agreements to the extent within the Buyer Entities' any of their Subsidiaries' or any of their respective Representatives' or Affiliates' control and assist in the satisfaction of all other conditions. If the Required Amount of the Financing expires or terminates or otherwise becomes (or could be expected to become) unavailable in the manner contemplated by the Debt Commitment Letter, the Buyer Entities shall immediately notify Sellers in writing thereof and use its reasonable best efforts to arrange for and obtain as promptly as practicable following the occurrence of any such event alternative debt financing (the "<u>Alternate Debt Financing</u>") in the Required Amount on terms and conditions that are not less favorable or more onerous (including imposition of new conditions or expansion of existing conditions), in the aggregate, than those set forth in the Debt Commitment Letter and that would not, and could not be expected to, prevent, delay or impair the ability of the Buyer Entities to obtain the Financing or consummate the transactions contemplated hereby. In the event Buyer obtains any Alternate Debt Financing, Buyer shall promptly deliver an executed debt commitment letter to Sellers with respect to such Alternate Debt Financing, including all exhibits, schedules, term sheets, amendments, supplements, modifications and annexes thereto and true, correct and complete copies of any related executed fee letters, engagement letters and other agreements, it being understood that any such fee letters may be redacted only in the same manner as the Fee Letters. Buyer shall be subject to the same obligations with respect to any Alternate Debt Financing as set forth in this Agreement with respect to the Financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall not withdraw, rescind, terminate, replace, amend or waive any Financing Letter or any provision thereof without Sellers' prior written consent if (in the case of any such replacement, amendment or waiver) such replacement, amendment or waiver would, or could be expected to, when taken together with all such amendments, modifications, and waivers: (1) delay or prevent the Closing, (2) make the funding of the Financing (or satisfaction of the conditions to obtaining the Financing) materially less likely to occur, (3) adversely impact the ability of the Buyer Entities to enforce their rights against the other parties to the Financing Letters or the definitive agreements with respect thereto, the ability of the Buyer Entities to consummate the transactions contemplated hereby at the Closing or the likelihood of the consummation of the transactions contemplated hereby to be consummated at the Closing, (4) reduce (or have the effect of reducing) the aggregate amount of the Financing below the Required Amount or (5) impose new conditions or adversely expand, amend or modify any of the existing conditions to the receipt of the Financing, or otherwise add, expand, amend or modify any other provision of the Financing Letters, in a manner that could be expected to delay or prevent the funding of the Financing (or satisfaction of the conditions to the Financing) at the Closing. The Buyer Entities shall promptly deliver a copy of any amendment, supplement, modification or replacement of any Financing Letter to Sellers. Upon any permitted amendment, supplement, modification or replacement of any Financing Letter (including with

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respect to any Alternate Debt Financing) in accordance with this <u>Section 5.12(a)</u>, the term "Financing Letters" shall mean the Financing Letters as so amended, supplemented, modified or replaced, and references to "Preferred Equity Financing," "Debt Financing" "Financing" and/or "Alternate Debt Financing" shall include the financing contemplated by the Financing Letters as so amended, supplemented, modified or replaced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall provide Sellers prompt (but in any event, within two (2) Business Days) written notice (1) upon becoming aware of any (A) actual or threatened material breach, default, repudiation, cancellation or termination (or any event or circumstance that, with or without notice, lapse of time or both, could be expected to give rise to any such breach, default, repudiation, cancellation or termination) by any party to any Financing Letter or such other agreements or documents (including any definitive agreements) related to the Financing or (B) any amendment, supplement, waiver, other modification or termination of any Financing Letter or such other agreements or documents (including any definitive agreements) related to the Financing, (2) upon receipt by the Buyer Entities or any of their Affiliates or Representatives of any written notice or other written communication of any such breach, default, repudiation, cancellation or termination, (3) of any dispute or disagreement between or among the parties to any of the Financing Letters or the definitive documents related to any of the Financing with respect to the obligation to fund the Financing or the amount thereof to be funded at the Closing and (4) if for any reason Buyer Entities believe in good faith that will not be able to obtain the Required Amount of the Financing on the terms, in the manner or from the sources contemplated by the Financing Letters or the definitive documents related to the Financing in any manner which could be expected to impair, delay or prevent the consummation of the transactions contemplated hereby. As soon as reasonably practicable, but in any event within two (2) Business Days after the date Sellers deliver to Buyer Entities a written request, Buyer Entities shall provide any information reasonably requested by Sellers related to any circumstance referred to in clause (1), (2), (3) or (4) of the immediately preceding sentence. In addition, the Buyer Entities shall keep Sellers informed on a reasonably current basis and in reasonable detail of the status of their efforts to obtain and finalize the Financing and provide to Sellers copies of all definitive documents related to the Financing, including by providing Sellers with drafts of such definitive documents related to the Financing a reasonable period of time prior to their execution or use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Financing Cooperation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Closing and subject to the limitations in this Agreement, Sellers and the Company shall, and shall cause their respective Subsidiaries to, use reasonable best efforts (at Buyer's sole cost and expense) to cause the appropriate officers and employees of the Company and its Subsidiaries to, provide such cooperation as is necessary, customary and reasonably requested by the Buyer Entities upon reasonable prior notice to assist the Buyer Entities solely in connection with causing the conditions to the Financing to be satisfied or as is otherwise reasonably requested by the Buyer Entities in connection with the Buyer Entities' efforts to obtain the Financing (<u>provided</u> that any such requests are timely made so as not to delay the Closing beyond the date on which it would otherwise occur), which cooperation may include (1) participating in a reasonable number of meetings and due diligence sessions with providers or potential providers of the Financing (which shall be limited to teleconference or virtual meeting platforms) during normal business hours and at mutually agreed locations and times (2) reasonably assisting the Buyer Entities in the preparation of materials reasonably and customarily requested to be used in connection with obtaining the

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Financing, in each case, solely with respect to information related to the Company (to the extent related to its business) and its Subsidiaries, (3) providing reasonably promptly to the Buyer Entities such financial and other pertinent information regarding the Company and its Subsidiaries that is readily available or within the Company's possession, in each case, as is required to satisfy the conditions set forth in paragraph 6 of Exhibit C to the Debt Commitment Letter (the "<u>Required Information</u>"), (4) executing and delivering customary authorization letters (<u>provided</u> that, such customary authorization letters, or the bank information memoranda in which such letters are included, shall include language that exculpates the Company, each of its Subsidiaries and its Representatives and Affiliates from any liability in connection with the unauthorized use or misuse by the recipients thereof of the information set forth in any such bank information memoranda or similar memoranda or report distributed in connection therewith) and other reasonable and customary certificates, management representation letters and other documentation required by the Financing Sources and the definitive documentation related to the Financing, in each case (other than with respect to such authorization letters), subject to the occurrence of the Closing and (5) delivering information and documentation related to the Company and its Subsidiaries required and reasonably requested in writing by the Financing Sources at least ten (10) Business Days prior to the Closing Date with respect to compliance under applicable "know your customer" and anti-money laundering rules and regulations, including the USA PATRIOT Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary in this Agreement, none of Sellers, the Company, their respective Subsidiaries or any officer, employee or Representative of any of the foregoing, shall be required to (1) provide or prepare, and the Buyer Entities shall be solely responsible for, the preparation of pro forma financial information, including pro forma costs savings, synergies, capitalization or other pro forma adjustments desired to be incorporated into any pro forma financing information, (2) pay any fee, (3) provide Regulation S-X compliant financial statements or any financial data other than the Required Information, (4) approve any document or other matter related to the Financing or incur or reimburse any costs or expenses or incur any other liability or obligation of any kind or give any indemnities in connection with the Financing (unless given by the Company or any of its continuing officers at or after the Closing), (5) enter into, approve or perform any agreement or commitment in connection with the Financing or modify any agreement or commitment or provide any certification (in each case, unless by the Company or any of its continuing officers and effective only at or after the Closing, excluding any customary authorization letters described in <u>Section 5.12(b)(i)(4)</u>), (6) provide any legal opinion or reliance letters or any certificate, comfort letter or opinion of any of its Representatives, (7) provide access to or disclose any information to the Buyer Entities or their Representatives to the extent such disclosure would violate the attorney-client privilege, attorney work product protections or similar protections or violate any applicable Law or contract, (8) take any action that could (A) unreasonably interfere with the day-to-day operations of the Company or any of its Subsidiaries, (B) cause any representation or warranty in this Agreement to be breached or cause any condition to Closing to fail to be satisfied or otherwise cause any breach of this Agreement, (C) result in any director, officer, employee or other Representative of the Company, the Sellers or any of their respective Subsidiaries incurring any personal liability, (D) conflict with the Organizational Documents of the Company or any of its Subsidiaries or any Law, (E) result in the contravention, violation or breach of, or a default under, any material contract, (9) prepare separate financial statements for the Company or any of its Subsidiaries or change any fiscal period (except with regard to the Audited Financial Statements), or (10) adopt any resolutions, execute any consents or otherwise take any corporate or similar action (in each

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case, unless by the Company or any of its continuing directors or officers and effective only at or after the Closing). Any use of the Company's and its Subsidiaries' logos in connection with the Financing shall require the Company's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities expressly acknowledge and agrees that neither the availability, the terms nor the obtaining of the Financing or any other financing is in any manner a condition to the Closing or the obligations of the Buyer Entities to consummate the transactions contemplated hereby. Sellers, the Company and each of their respective Subsidiaries will be deemed to be in compliance with this <u>Section 5.12(b)</u>, and the Buyer Entities shall not allege that any of Sellers, the Company or any of their respective Subsidiaries is or has not been in compliance with this <u>Section 5.12(b)</u>, unless the Buyer Entities provide prompt written notice of the alleged failure to comply specifying in reasonable detail specific steps to cure such alleged failure in a commercially reasonable and practical manner consistent with this <u>Section 5.12(b)</u>, which alleged failure to comply has not been cured within ten (10) Business Days from receipt of such written notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;Neither Sellers, the Company nor any of their respective Affiliates or Subsidiaries (or any of their respective Representatives) shall have any liability to the Buyer Entities in respect of any financial statements, other financial information or data or other information provided pursuant to this <u>Section 5.12(b)</u>, in each case, other than, with respect to the Financial Statements, liability for Fraud or the exercise of the Buyer Entities rights under <u>Section 6.2(a)</u> or <u>Section 7.1(c)</u>, as and if applicable. None of Sellers, the Company or any of their respective Affiliates or Subsidiaries (or any of their respective Representatives) shall have any liability or incur any losses, damages or penalties with respect to the Financing or any marketing materials, presentations or disclosure documents in connection therewith in the event the Closing does not occur. All non-public or other confidential information provided by or behalf of Sellers or the Company to the Buyer Entities or its Affiliates or any of their respective Representatives pursuant to this <u>Section 5.12(b)</u> shall be kept confidential in accordance with the terms of the Confidentiality Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall indemnify and hold harmless Sellers, Company, each of their respective Subsidiaries and their respective Representatives and Affiliates from and against all losses suffered or incurred by any of them in connection with the obligations under <u>Section 5.12(b)</u>, the Financing or any information used in connection with the Financing, except for any of the foregoing to the extent the same is the result of a material breach of this Agreement, gross negligence, willful misconduct or Fraud committed by or on behalf of Sellers or the Company in connection with this Agreement or the transactions contemplated hereby, and then limited only to the extent of such material breach, gross negligence, willful misconduct or Fraud. The Buyer Entities shall promptly (and in any event within two (2) Business Days of delivery of documentation evidencing the applicable cost or expense), upon request by Sellers or the Company, reimburse Sellers or the Company or any of their respective Subsidiaries or Affiliates, as the case may be, for all reasonable and documented out-of-pocket costs and expenses (including reasonable outside attorneys' fees and disbursements) incurred thereby in connection with the cooperation contemplated by <u>Section 5.12(b)</u>.

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Section 5.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Transition</u>. Prior to the Closing, the Buyer Entities and Sellers shall use commercially reasonable efforts to develop, and, if and when developed, begin implementing, a mutually acceptable transition plan for the migration and integration of the Business out of the businesses of the Seller Group and into the business of Buyer, in each case, in compliance with applicable Law and subject to the other terms and conditions hereof.

Section 5.14&nbsp;&nbsp;&nbsp;&nbsp;<u>Exclusivity</u>. From the execution of this Agreement until the Closing or earlier termination of this Agreement in accordance with its terms, Sellers will not, and will cause each of their respective Affiliates and Representatives, not to, directly or indirectly, (a) solicit, initiate or knowingly encourage any inquiry, proposal, offer or contact from any Person (other than the Buyer Entities and their Representatives) related to any transaction involving (i) the sale of the outstanding equity or consolidated assets (other than in the ordinary course of business) of any Acquired Entity, the Transferred Assets or the Business, (ii) any acquisition, divestiture, merger, equity exchange, consolidation, redemption or business combination transaction involving any Acquired Entity, the Transferred Assets or the Business or (iii) any similar transaction or business combination involving any Acquired Entity, the Transferred Assets or the Business (in each case, an "<u>Acquisition Proposal</u>"), or (b) participate in any discussion or negotiation regarding, or furnish any information with respect to, or assist or facilitate in any manner, any Acquisition Proposal or any attempt to make an Acquisition Proposal. The Seller Group shall immediately cease, and cause to be terminated, any and all contacts, discussions and negotiations with third parties regarding any of the foregoing.

Section 5.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Further Assurances</u>. From and after the Closing, each of Sellers and the Buyer Entities shall use commercially reasonable efforts from time to time to execute and deliver, or cause to be executed and delivered by its respective Affiliates, at the reasonable request of the other Party such additional documents and instruments, including any assignment or assumption agreements, bills of sale, instruments of assignment, consents and other similar instruments in addition to those required by this Agreement, as may be reasonably required to give effect to this Agreement and the transactions contemplated hereby and to provide any documents or other evidence of ownership as may be reasonably requested by the Buyer Entities to confirm Buyer's ownership of the Transferred Equity Interests and the Transferred Assets and the assumption of the Assumed Liabilities.

Section 5.16&nbsp;&nbsp;&nbsp;&nbsp;<u>Post-Closing Cooperation</u>. Other than with respect to any Consent Required Contract, which is subject to <u>Section 5.11</u>, from and after the Closing, if Sellers or any of their Affiliates receives or collects any funds in respect of any accounts receivable or notes receivable or any credits, prepaid expenses, rebates, deferred charges or prepaid items of any Person that are Transferred Assets in accordance hereof or otherwise belong to an Acquired Entity, Sellers or their applicable Affiliates shall remit such funds to Buyer promptly after receipt thereof. From and after the Closing, if Buyer or any of its Affiliate receives or collects any funds related to any Excluded Asset, Buyer or its Affiliate shall remit any such funds to Sellers promptly after its receipt thereof.

Section 5.17&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Financial Information</u>. Prior to the Closing, Seller Parent shall use commercially reasonable efforts to cause to be prepared, at Buyer Parent's cost and expense (not to exceed $500,000 or, in the event the 2022 Audited Financial Statements are included in

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the definition of Additional Financial Information, $900,000), (i) the audited combined balance sheets of the Business as of December 31, 2021, and December 31, 2020, and the respective related audited combined statements of income, parent investment, and cash flows of the Business for the fiscal years ended December 31, 2021, and December 31, 2020, and (ii) the unaudited combined balance sheets of the Business as of September 30, 2022, and September 30, 2021, and the respective related unaudited combined statements of income, parent investment and cash flows for the Business for the nine months ended September 30, 2022 and September 30, 2021, including the notes thereunder (collectively, the "<u>Additional Financial Information</u>"). If any of the Additional Financial Information has not been completed as of the Closing, Seller Parent and Buyer shall cooperate in good faith for Buyer to be assigned the engagement with the auditor conducting the audits thereof with respect to such Additional Financial Information, and Buyer Parent shall use reasonable best efforts to cause the Additional Financial Information to be completed as promptly as practicable after the Closing. The failure of any Additional Financial Information to be completed, or any differences between the Additional Financial Information and the Financial Statements, shall in no event (a) be a breach of, or failure to comply with, any provision hereof or (b) grant the Buyer Entities any right to terminate this Agreement or fail to consummate the Closing. Buyer shall, promptly upon request by Seller Parent, reimburse Seller Parent for all documented out-of-pocket costs incurred by Seller Parent or its Representatives in connection with the Additional Financial Information. Buyer shall be responsible, at its sole cost and expense, for procuring any comfort letter from the auditor of the Additional Financial Information, and Sellers shall not be required to provide any legal opinion or reliance letters or any certificate, comfort letter or opinion of any of its Representatives with respect to the Additional Financial Information. Notwithstanding anything to the contrary herein, if the Closing has not occurred prior to January 15, 2023, the definition of "Additional Financial Information" shall also include the audited combined balance sheets of the Business as of December 31, 2022, and the respective related audited combined statements of income, parent investment, and cash flows of the Business for the fiscal years ended December 31, 2022 (collectively, the "<u>2022 Audited Financial Statements</u>").

Section 5.18&nbsp;&nbsp;&nbsp;&nbsp;<u>Certain Post-Closing Agreements</u>. Following the Closing, the Buyer Entities, as applicable, shall take the actions listed in <u>Section 5.18</u> of the Disclosure Schedule.

Section 5.19&nbsp;&nbsp;&nbsp;&nbsp;<u>Earnout</u>. Buyer Parent shall pay to Seller Parent the cash amounts, and, if applicable, Buyer Parent shall issue to Seller Parent the shares of Buyer Class A Common Stock, in each case, as provided in, and on and subject to the terms, conditions, procedures and definitions set forth in, <u>Exhibit K</u> (such shares, the "<u>Earnout Shares</u>" and such cash payment together with the Earnout Shares, the "<u>Earnout Amount</u>"), and the Parties hereby agree to such terms, conditions, procedures and definitions. As set forth in more detail on <u>Exhibit K</u>, the Earnout Amount, will be payable, if at all, based on the achievement of certain metrics, or the occurrence of certain events, in calendar year 2023 and will in no event exceed $150,000,000. As set forth in more detail on <u>Exhibit K</u>, the Earnout Amount will be payable 50% in cash and 50% in Earnout Shares (based upon the volume weighted average of the sale prices per share of Buyer Parent Class A Common Stock on NYSE for the twenty (20) full consecutive trading days ending on the trading day that is two (2) Business Days prior to the date on which such shares of Buyer Parent Class A Common Stock are required to be issued); <u>provided</u> that, Buyer Parent may increase the cash amount (and correspondingly decrease the number of Earnout Shares) upon two Business Days' prior written notice to Seller Parent prior to the payment of the Earnout Amount. In the event of any conflict between <u>Exhibit K</u> and this <u>Section 5.19</u>, <u>Exhibit K</u> shall control.

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Section 5.20&nbsp;&nbsp;&nbsp;&nbsp;<u>R&W Insurance Policy</u>. The Buyer Entities shall not permit the Binder Agreement or the R&W Insurance Policy to be amended in any manner adverse to Sellers. The Buyer Entities shall take all actions necessary to cause the final R&W Insurance Policy to be issued in accordance with the Binder Agreement as promptly as practicable on or after the Closing Date. Prior to the Closing, Sellers shall provide the Buyer Entities with access and information (including participating in diligence calls as reasonably requested by the Buyer Entities) pursuant to, and subject to the terms and conditions of, <u>Section 5.2</u> to the extent reasonably requested by the Buyer Entities for the Buyer Entities to seek to limit or eliminate any exclusions from coverage under the R&W Insurance Policy.

Section 5.21&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidentiality</u>. During the period commencing on the date hereof and ending on the third (3<sup>rd</sup>) anniversary of the Closing Date, Sellers agree to hold all Buyer Confidential Information confidential and shall not, and shall cause their respective Representatives not to, directly or indirectly, (a) use any Buyer Confidential Information or (b) disclose any Buyer Confidential Information to any third Person (other than Buyer and its Affiliates), in each case, other than to perform its obligations, or exercise or enforce its rights, under the Purchase Agreement, any Ancillary Agreement, any Affiliate Contract that survives the Closing or any Contract between Buyer or its Affiliates, on the one hand, and any Seller or its Affiliates, on the other hand. Notwithstanding anything herein to the contrary, (i) Buyer Confidential Information may be disclosed to any of Sellers' respective Representatives if such Representative has a need to know such Buyer Confidential Information or is otherwise already in possession of the Buyer Confidential Information on the date hereof; <u>provided</u> that Sellers shall be liable for any breach of this <u>Section 5.21</u> by any of their respective Representatives, (ii) Sellers and their respective Representatives may disclose Buyer Confidential Information to the extent such disclosure is, on the advice of Sellers' legal counsel, required by applicable Law or the rules of any applicable stock exchange or the terms of a subpoena, Order or similar legal process pursuant to applicable Law; <u>provided</u> that such Seller or such Representative give Buyer prompt notice of any and all such requests for disclosure, to the extent reasonably practicable and permissible, and uses commercially reasonable efforts to cooperate with Buyer, at Buyer's sole expense, so that Buyer has may take all legally available actions to avoid disclosure; <u>provided</u>, <u>further</u>, that, if despite such notice and cooperation and Buyer's attempt to avoid disclosure any Seller or such Representative is nonetheless obligated to disclose the Buyer Confidential Information, such Seller or such Representative shall disclose only that portion of the Buyer Confidential Information which, on the advice of its legal counsel, such Seller or Representative is required to disclose, and (iii) Sellers and their respective Representatives may disclose Buyer Confidential Information to any Governmental Authority or securities exchange to which any Seller or any such Representative is subject in the course of any routine, non-targeted audit, examination, investigation or review by such Governmental Authority without providing notice thereof to Buyer or any other Person or otherwise complying with the foregoing clause (B). For purposes hereof, "<u>Buyer Confidential Information</u>" means all confidential, proprietary or trade secret information of the Buyer Group provided by the Buyer Group to any member of the Seller Group prior to the Closing; <u>provided</u>, <u>however</u>, that Buyer Confidential Information shall not include any information that (1) is or becomes generally available to the public prior to, on or after the Closing Date (other than as a result of a disclosure by Sellers, any of their Affiliates or any of their respective Representatives), or (2) becomes available to Sellers, their Affiliates, or their respective Representatives on a non-confidential basis after the Closing Date from a source

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other than Buyer or any of its Affiliates; <u>provided</u> that such source was not known by Sellers, Sellers' Affiliates, or their respective Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, Buyer or any of its Affiliates.

Section 5.22&nbsp;&nbsp;&nbsp;&nbsp;<u>Buyer Parent Shares</u>. If applicable, Buyer Parent shall use reasonable best efforts to cause the Buyer Parent Shares to be issued to Seller Parent hereunder to be listed on the NYSE, subject to official notice of issuance, prior to the Closing.

Section 5.23&nbsp;&nbsp;&nbsp;&nbsp;<u>NIA Pennsylvania</u>. In the event that National Imaging Associates of Pennsylvania, LLC, a Pennsylvania limited liability company and Subsidiary of the Company ("<u>NIA Pennsylvania</u>"), is not dissolved prior to the Closing, Sellers shall cause ownership of NIA Pennsylvania to be transferred to a member of the Seller Group prior to the Closing.

**ARTICLE VI<u><br>CONDITIONS TO CLOSING</u>**

Section 6.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions to the Obligation of Each Party</u>. The respective obligations of the Buyer Entities and Sellers to consummate the Acquisition and the Liabilities Assumption shall be subject to the satisfaction (or waiver by the Buyer Entities, on the one hand, and Sellers, on the other hand) at or prior to the Closing of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The waiting period (and any extension of such period) under the HSR Act applicable to the transactions contemplated hereby shall have expired or otherwise been terminated (the "<u>HSR Act Clearance</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;No Order issued after the date hereof, whether preliminary, temporary or permanent, shall be in effect that prohibits the consummation of the Acquisition (any such Law, a "<u>Legal Restraint</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;All Required Filings shall have been made.

Section 6.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions to the Obligations of the Buyer Entities</u>. The obligation of Buyer Entities to consummate the Acquisition and the Liabilities Assumption is further subject to the satisfaction (or waiver by the Buyer Entities) prior to the Closing of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Sell-Side Fundamental Representation shall be accurate (read, for purposes of this <u>Section 6.2(a)(i)</u> only, without giving effect to any qualifier as to materiality, "in all material respects," "material," Seller Material Adverse Effect or Material Adverse Effect) in all material respects as of the Closing Date as if made as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall have been accurate in all material respects as of such date), (ii) each representation and warranty in <u>Article II</u> (other than any Sell-Side Fundamental Representations) shall be accurate (read, for purposes of this <u>Section 6.2(a)(ii)</u> only, without giving effect to any qualifier as to materiality, "in all material respects," "material," Seller Material Adverse Effect or Material Adverse Effect) as of the Closing Date as if made as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall have been accurate as of such

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date), other than any failure of any such representation or warranty to be accurate as of the Closing Date as if made on the Closing Date (or express earlier date) that would not result in a Seller Material Adverse Effect, and (iii) each representation and warranty in <u>Article III</u> (other than any Sell-Side Fundamental Representation) shall be accurate (read, for purposes of this <u>Section 6.2(a)(iii)</u> only, without giving effect to any qualifier as to materiality, "in all material respects," "material" or Material Adverse Effect) as of the Closing Date as if made as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall have been accurate as of such date), other than any failure of any such representation or warranty to be accurate as of the Closing Date as if made on the Closing Date (or express earlier date) that would not result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;None of Sellers shall have materially breached any covenant or agreement hereunder (other than <u>Section 5.17</u>) that is required to be performed or complied with prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall have received a certificate, dated as of the Closing Date and duly executed on behalf of Sellers, confirming the satisfaction of the conditions in <u>Section 6.2(a)</u> and <u>Section 6.2(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Since the date of this Agreement, there shall not have occurred any Material Adverse Effect or Seller Material Adverse Effect.

Section 6.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions to Obligation of Sellers</u>. The obligation of Sellers to consummate the Acquisition and the Liabilities Assumption is further subject to the satisfaction (or waiver by the Buyer Entities) prior to the Closing of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each representation and warranty in <u>Article IV</u> shall be accurate (read, for purposes of this <u>Section 6.3(a)</u> only, without giving effect to any qualifier as to materiality, "in all material respects," "material" or Buyer Material Adverse Effect) as of the Closing Date as if made as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall have been accurate as of such date), other than any failure of any such representation or warranty to be accurate as of the Closing Date as if made on the Closing Date (or express earlier date) that would not result in a Buyer Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Entities shall not have materially breached any covenant or agreement hereunder that is required to be performed or complied with prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Sellers shall have received a certificate, dated as of the Closing Date and duly executed on behalf of the Buyer Entities, confirming the satisfaction of the conditions in <u>Section 6.3(a)</u> and <u>Section 6.3(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;(i) Since the date of this Agreement, there shall not have occurred any Buyer Material Adverse Effect, and (ii) if Buyer Parent Shares are to be issued hereunder, such Buyer Parent Shares shall have been approved for listing on the NYSE, subject to official notice of issuance.

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**ARTICLE VII<u><br>TERMINATION</u>**

Section 7.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination by Mutual Agreement</u>. Seller Parent (on behalf of Sellers) and Buyer Parent (on behalf of the Buyer Entities) shall have the right to terminate this Agreement at any time prior to the Closing by mutual written agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination by Either Seller Parent or the Buyer Entities</u>. Each of Seller Parent (on behalf of Sellers) and Buyer Parent (on behalf of the Buyer Entities) shall have the right to terminate this Agreement at any time prior to the Closing if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the Closing does not occur prior to 5:00 p.m. on August 17, 2023 (the "<u>Outside Date</u>"); <u>provided</u>, <u>however</u>, that, if the condition in <u>Section 6.1(a)</u> shall not have been satisfied as of 5:00 p.m. on the day immediately preceding the Outside Date, then the Outside Date shall be extended automatically to November 17, 2023 (and, in the case of such extension, any reference to the Outside Date in any other provision hereof shall be a reference to the Outside Date, as extended); <u>provided</u>, <u>however</u>, that the right to terminate this Agreement under this <u>Section 7.1(b)(i)</u> shall not be available to a Party if the failure of the Closing to have occurred prior to 5:00 p.m. on the Outside Date was caused by such Party's breach of any of its covenants or agreements hereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;a Legal Restraint is in effect that has become final and nonappealable; <u>provided</u>, <u>however</u>, that the right to terminate this Agreement under this <u>Section 7.1(b)(ii)</u> shall not be available to a Party if the existence of such Legal Restraint was caused by such Party's breach of any of its covenants or agreements hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination by Buyer Parent</u>. Buyer Parent, on behalf of the Buyer Entities, shall have the right to terminate this Agreement if a Seller breaches any of its covenants or agreements hereunder, or any of such Seller's representations or warranties in <u>Article II</u> or <u>Article III</u> is inaccurate, which breach or inaccuracy (1) would give rise to the failure of a condition in <u>Section 6.2(a)</u> or <u>Section 6.2(b)</u>, as applicable, to be satisfied and (2) cannot be cured by such Seller by the Outside Date or, if capable of being so cured, is not cured by such Seller within thirty (30) days after Buyer Parent delivers written notice of such breach or inaccuracy to Seller Parent; <u>provided</u>, <u>however</u>, that Buyer Parent shall not have the right to terminate this Agreement under this <u>Section 7.1(c)</u> if a Buyer Entity has breached any of its respective covenants or agreements hereunder, or any of the Buyer Entities' representations or warranties in <u>Article IV</u> is inaccurate, which breach or inaccuracy would give rise to the failure of a condition in <u>Section 6.3(a)</u> or <u>Section 6.3(b)</u>, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination by Seller Parent</u>. Seller Parent, on behalf of Sellers, shall have the right to terminate this Agreement at any time prior to the Closing if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;a Buyer Entity breaches any of its covenants or agreements hereunder, or any of the Buyer Entities' representations or warranties in <u>Article IV</u> is inaccurate, which breach or inaccuracy (A) would give rise to the failure of a condition in <u>Section 6.3(a)</u> or <u>Section 6.3(b)</u>, as applicable, to be satisfied and (B) cannot be cured by such Buyer Entity by the

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Outside Date or, if so capable of being cured, is not cured by such Buyer Entity within thirty (30) days after Seller Parent delivers written notice of such breach or inaccuracy to Buyer Parent; <u>provided</u>, <u>however</u>, that Seller Parent shall not have the right to terminate this Agreement under this <u>Section 7.1(d)(i)</u> if a Seller breaches any of its covenants or agreements hereunder, or any of Sellers' representations or warranties in <u>Article II</u> or <u>Article III</u> is inaccurate, which breach or inaccuracy would give rise to the failure of a condition in <u>Section 6.2(a)</u> or <u>Section 6.2(b)</u>, as applicable; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;(1) all of the conditions in <u>Section 6.1</u> and <u>Section 6.2</u> have been satisfied (other than any such condition that by its nature is to be satisfied at the Closing, any such condition that has been waived by Buyer Parent and any such condition the failure of which to be satisfied has been caused by or results from a breach by a Buyer Entity of any of its covenants or agreements hereunder), (2) Seller Parent has irrevocably confirmed in writing at least three (3) Business Days prior to such termination that Sellers stand ready, willing and able to consummate the Closing, and (3) the Buyer Entities have failed (for any reason) to consummate the Closing on or prior to the date on which the Buyer Entities were required to consummate the Closing under <u>Section 1.2</u> and within three (3) Business Days after receipt by Buyer Parent of the written confirmation referred to in clause (2) of this sentence (the occurrence of the foregoing, a "<u>Buyer Closing Failure</u>").

Section 7.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Effect of Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be terminated only under <u>Section 7.1</u>. In order to terminate this Agreement under <u>Section 7.1</u> (other than under <u>Section 7.1(a)</u>), the Party desiring to terminate this Agreement shall give written notice of such termination to the other Parties, specifying the subsection of <u>Section 7.1</u> under which such Party is terminating this Agreement. If this Agreement is terminated under <u>Section 7.1</u>, this Agreement shall immediately become void and of no effect, and no Party shall have any further Liability, whether arising before, at or after such termination, that may be based on this Agreement, arising out of this Agreement or related hereto or the negotiation, execution, performance or subject matter hereof, except that (a) <u>Section 5.12(c)</u>, this Section 7.2, the last sentence of <u>Section 5.17</u>, and <u>Article XI</u>, and the Parties' Liabilities thereunder, shall survive such termination and remain in full force and effect in accordance with their terms, (b) Buyer Parent's Liability under the Confidentiality Agreement as provided in <u>Section 5.2</u> shall survive such termination and remain in full force and effect and (c) subject to <u>Section 7.2(c)</u>, no such termination shall relieve any Party from liability for (i) any material breach of a covenant or agreement hereunder occurring prior to such termination (<u>provided</u> that a Buyer Closing Failure shall be a covenant or agreement hereof occurring prior to the termination hereof) or (ii) any Fraud.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;In the event that this Agreement is validly terminated by Seller Parent pursuant to <u>Section 7.1(d)</u> (other than a termination under <u>Section 7.1(d)(i)</u> as a result of a breach of a representation or warranty giving rise to the failure of the condition to Closing in <u>Section 6.3(a)</u> under clause (ii) of the definition of Buyer Material Adverse Effect (if applicable)), then Buyer Parent shall pay to Seller Parent an amount in cash by wire transfer of immediately available funds equal to $52,000,000 (the "<u>Termination Fee</u>") within two (2) Business Days after the date of such termination. In no event shall Buyer Parent be required to pay the Termination Fee on more than one (1) occasion or at different times. If Buyer Parent fails

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to pay the Termination Fee when required to be made pursuant to this <u>Section 7.2(b)</u>, Buyer Parent shall also pay to Seller Parent interest on the Termination Fee from the date such payment was required to be made pursuant to this <u>Section 7.2(b)</u> until the date of payment at the prime lending rate as published in The Wall Street Journal in effect on the date such payment was required to be made, <u>plus</u> five hundred (500) basis points (such interest, the "<u>Termination Fee Interest</u>"). In addition, if Buyer Parent fails to pay the Termination Fee when required to be made pursuant to this <u>Section 7.2</u> and Seller Parent commences a Claim that results in a final, non-appealable Order against Buyer Parent for payment of the Termination Fee (or any portion thereof), Buyer Parent shall also pay to Seller Parent an amount equal to Seller Parent's and its Affiliates' reasonable and documented out-of-pocket costs and expenses (including reasonable and documented attorneys' fees) in connection with such Claim (such costs and expenses, the "<u>Termination Fee Expenses</u>" and, together with the Termination Fee and Termination Fee Interest, the "<u>Termination Payments</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary herein, if this Agreement is terminated pursuant to <u>Section 7.1(d)</u> (other than a termination under <u>Section 7.1(d)(i)</u> as a result of a breach of a representation or warranty giving rise to the failure of the condition to Closing in <u>Section 6.3(a)</u> under clause (ii) of the definition of Buyer Material Adverse Effect (if applicable)), the exclusive remedy of Sellers and their respective Affiliates (the "<u>Company Related Persons</u>") against the Buyer Entities and any of their Representatives (collectively, the "<u>Buyer Related Persons</u>") for any Claim (whether in contract or in tort or otherwise, or whether at law (including at common law or by statute) or in equity) that may be based on, arise out of or relate to this Agreement or the Ancillary Agreements (including the negotiation, execution, performance or subject matter hereof or thereof) or the transactions contemplated hereby or thereby shall be payment of the Termination Payments pursuant to <u>Section 7.2(b)</u>, and, upon Buyer Parent's payment of the Termination Payments pursuant to <u>Section 7.2(b)</u>, none of the Buyer Related Persons shall have any further liability or obligation relating to or arising his Agreement or the Ancillary Agreements (including the negotiation, execution, performance or subject matter hereof or thereof) or the transactions contemplated hereby or thereby.

**ARTICLE VIII<u><br>TAX MATTERS</u>**

Section 8.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Preparation and Filing of Tax Returns; Contests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Seller Parent shall prepare and timely file (or cause to be prepared and timely filed) (i) all Tax Returns in respect of Seller Consolidated Taxes, (ii) all other Income Tax Returns required to be filed with respect to any Acquired Entity for any Pre-Closing Tax Period (excluding any Straddle Period), and (iii) all other Tax Returns of the Acquired Entities and with respect to the Transferred Assets that are filed prior to the Closing (those Tax Returns described in clauses (i) to (iii), "<u>Seller Tax Returns</u>"). In each case, Seller Parent shall timely remit (or cause to be timely remitted) to the applicable Governmental Authority (or, in the case of any Seller Tax Return described in clause (ii) above that is required to be filed after Closing, to Buyer for remittance to the applicable Governmental Authority) any Taxes shown as due on such Seller Tax Returns. To the extent any such Seller Tax Return relates to the Acquired Entities or to the Transferred Assets, (x) Seller Parent shall prepare such Seller Tax Returns in accordance with past practices of the Acquired Entities (or the applicable owner of the Transferred Asset

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prior to Closing), and (y) completed drafts of any such Seller Tax Returns filed after the Closing Date shall be submitted to Buyer not later than thirty (30) days prior to the due date (taking into account applicable extensions) for filing such Seller Tax Return (or, if such due date is within forty-five (45) days following the Closing Date, as promptly as practicable following the Closing Date) for Buyer's review and comment, the resolution of which shall be determined pursuant to <u>Section 8.1(d)</u>; <u>provided</u> that with respect to any Tax Return regarding Seller Consolidated Taxes, Seller Parent shall provide only pro forma statements (including the relevant data used to create such pro forma statements, excluding data that may disclose information about the operations of any member of the Seller Group other than an Acquired Entity) reporting the operations of the Acquired Entities on a separate return basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Buyer shall prepare and timely file (or cause to be prepared and timely filed) all Tax Returns of the Acquired Entities and with respect to the Transferred Assets that are due (after taking into account applicable extensions validly obtained) after the Closing Date, other than Seller Tax Returns (the "<u>Buyer Tax Returns</u>"). Buyer shall prepare any Buyer Tax Return for a Pre-Closing Tax Period (including any Straddle Period) in accordance with existing procedures and practices and accounting methods of the applicable Acquired Entity (or, if applicable, the applicable owner of the Transferred Asset prior to Closing). Seller Parent shall remit Seller Parent's share of any Taxes shown as due on any Buyer Tax Return with respect to any Straddle Period to Buyer within three Business Days following demand from Buyer therefor and, without limiting the obligations of Seller Parent under <u>Section 9.1(a)</u>, Buyer shall timely remit, or cause to be timely remitted, all Taxes shown as due in respect of such Buyer Tax Returns; <u>provided</u> that for the avoidance of doubt, Buyer's obligation to pay such Taxes shall not affect the calculation of the Closing Date Cash for purposes of the Final First Adjustment Amount. Buyer shall provide Seller Parent with a copy of each Buyer Tax Return that includes any Accrued Taxes or any Taxes for which Buyer may claim indemnification from Sellers at least twenty (20) days prior to the due date (taking into account applicable extensions) of such Tax Return for Seller Parent's review and comment. Subject to <u>Section 8.1(d)</u> with respect to any disputed comments provided by Seller Parent to Buyer at least ten (10) days prior to the due date (taking into account applicable extensions validly obtained) for filing such Buyer Tax Return, Buyer shall timely file each Buyer Tax Return with the appropriate Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;To the extent permitted by Law, each of the Acquired Entities shall elect to close each of its respective taxable periods as of or prior to the Closing Date. Any Tax Return of any Acquired Entity or of any member of the Seller Group with respect to the Transferred Assets for a Straddle Period shall, to the extent permitted by Law, be filed on the basis that the relevant taxable period ended as of the close of business on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Buyer and Seller Parent shall use good faith efforts to resolve any dispute regarding the preparation of Seller Tax Returns and Buyer Tax Returns. In the event of any such dispute that cannot be resolved, such dispute shall be resolved by the Independent Accountant and any determination by the Independent Accountant with respect to such dispute shall be final. The fees and expenses of the Independent Accountant shall be borne equally by Buyer and Seller Parent. If the Independent Accountant does not resolve any differences between Buyer and Seller Parent with respect to such Tax Return at least five (5) days prior to the due date therefor, such Tax Return shall be filed as prepared by the Party responsible for preparing such Tax Return and amended to reflect the Independent Accountant's resolution.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;None of Buyer or any of its Affiliates (including the Acquired Entities) shall (or shall cause or permit any other Person to) (i) except as otherwise provided in this <u>Article VIII</u>, amend, re-file, or otherwise modify any Tax Return or Tax election related in whole or in part to the Acquired Entities or the Transferred Assets with respect to any Pre-Closing Tax Period or any Pre-Closing Straddle Period, (ii) agree to any waiver or extension of the statute of limitations related in whole or in part to Taxes or Tax Returns of the Acquired Entities or the Transferred Assets for any Pre-Closing Tax Period, (iii) file any ruling or request with any Taxing Authority related in whole or in part to any Taxes or Tax Returns of the Acquired Entities or the Transferred Assets for a Pre-Closing Tax Period or any Pre-Closing Straddle Period, or (iv) enter into or initiate any voluntary disclosure agreement with any Taxing Authority related in whole or in part to any Taxes or Tax Returns of the Acquired Entities or the Transferred Assets for any Pre-Closing Tax Period, in each case, without the prior written consent of Sellers (which consent shall not be unreasonably withheld, conditioned, or delayed). Sellers and Buyer, as applicable, shall not make or permit to be made any election under Section 336(e) or Section 338 of the Code with respect to the disposition of shares of the Acquired Entities hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Sellers shall have the right to initiate any Claim for Pre-Closing Tax Refunds and amend any Pre-Closing Tax Return.

Section 8.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Straddle Periods</u>. Where it is necessary for purposes hereof to apportion Taxes between the Seller Group and Buyer with respect to the Acquired Entities or the Transferred Assets for a Straddle Period, such Taxes shall be apportioned between the period deemed to end on the Closing Date and the period deemed to begin at the beginning of the day following the Closing Date on the basis of an interim closing of the books, except that (a) exemptions, allowances, and deductions that are calculated on an annual basis and (b) Taxes (such as real or personal property Taxes) that are imposed on a periodic basis, shall, in each case, be allocated ratably across the entire Straddle Period on a per diem basis.

Section 8.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Pre-Closing Tax Refunds</u>. Any refund of Taxes of the Acquired Entities or with respect to the Transferred Assets for any Pre-Closing Tax Period or any Pre-Closing Straddle Period (including any interest in respect thereof) paid by the Acquired Entities on or before the Closing Date that is specifically identified on <u>Section 8.3</u> of the Disclosure Schedule and that is received by Buyer or its Affiliates (including the Acquired Entities) after the Closing Date (any such refund, a "<u>Pre-Closing Tax Refund</u>"), shall be for the account of the Seller Group to the extent such Pre-Closing Tax Refund was not taken into account in determining Net Working Capital or Accrued Taxes. Buyer shall pay over to Sellers any such Pre-Closing Tax Refund within three (3) days after receipt thereof, net of (i) any Taxes that the Acquired Entities, Buyer or any of their respective Affiliates incur with respect to the receipt of such refund, and (ii) any reasonable expenses that the Acquired Entities, Buyer, or any of their respective Affiliates incur in obtaining such Pre-Closing Tax Refund. Buyer shall reasonably cooperate with Sellers in obtaining such Pre-Closing Tax Refund and Buyer shall and shall cause the Acquired Entities to request refunds (rather than credits against future Taxes) with respect to such Pre-Closing Tax Refunds. Any refunds or credits of Taxes of the Acquired Entities or with respect to the Transferred Assets for any Straddle Period shall be apportioned between Buyer and Sellers in accordance with the principles set forth in <u>Section 8.2</u>. If, as a result of a final determination (within the meaning of Code Section 1313(a)), the amount of any such refund or

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credit for which the Seller Group received a payment pursuant to this <u>Section 8.3</u>, Seller shall repay to Buyer an amount equal to any such reduction, <u>plus</u> any penalties or interest required to be repaid to the applicable Governmental Body in connection with such determination.

Section 8.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Allocation of Purchase Price</u>. Within thirty (30) days following the determination of the Final First Adjustment Amount pursuant to <u>Section 1.5</u>, Buyer shall prepare and deliver to Seller Parent a draft allocation of the Purchase Price (and any other amounts treated as consideration for U.S. federal income Tax purposes) among the Transferred Equity Interests and the Transferred Assets (the "<u>Purchase Price Allocation</u>") in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder. If, within ten (10) Business Days of receiving the Purchase Price Allocation, Seller Parent has not objected to such allocation in writing, the Purchase Price Allocation shall become final and binding on the Parties. If, within ten (10) Business Days of receiving the Purchase Price Allocation, Seller Parent notifies Buyer in writing of its objection to the Purchase Price Allocation, Buyer and Seller Parent shall cooperate in good faith to resolve any disputed items. If Buyer and Seller Parent cannot resolve any disputed items with respect to the Purchase Price Allocation within thirty (30) Business Days of Seller Parent's delivery of its written objection (or such longer period as Buyer and Seller Parent may agree in writing), neither Party shall have any further obligation pursuant to this <u>Section 8.4</u>. In the event Buyer and Seller Parent agree on the Purchase Price Allocation, Seller Parent, Buyer and their respective Affiliates shall not take any position inconsistent with such Purchase Price Allocation on any Tax Return or in any Tax Proceeding or otherwise, in each case, except to the extent otherwise required pursuant to a "determination" within the meaning of Section 1313(a) of the Code (or any similar provision of applicable state, local or non-U.S. Law).

Section 8.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Transfer Taxes</u>. All transfer, documentary, sales, use, value added, goods and services, stamp, registration and similar Taxes, and all conveyance fees and recording charges (including any penalties and interest), arising in connection with or as a result of the transactions contemplated hereby (collectively, "<u>Transfer Taxes</u>") shall be borne and paid equally by Buyer, on the one hand, and Seller Parent, on the other hand. The Party required to do so under applicable Law shall prepare and timely file (or cause to be prepared and timely filed) all Tax Returns with respect to such Transfer Taxes.

Section 8.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Sharing Agreements</u>. Sellers shall cause all Tax sharing agreements involving any of the Acquired Entities, on the one hand, and any member of the Seller Group, on the other hand, to terminate as of the Closing Date, and shall ensure that such agreements are of no further force and effect as to the Acquired Entities on and after the Closing Date and that there shall be no present or future liabilities or obligations imposed on the Acquired Entities under any such agreements.

Section 8.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Cooperation</u>. Each of Buyer and the members of the Seller Group shall cooperate, as reasonably requested by another of them, with respect to (a) preparing and filing any Tax Return, amended Tax Return, or claim for refund, (b) determining a liability for Taxes under this <u>Article VIII</u>, or a right to refund of Taxes and (c) any audit, examination, assessment, litigation, or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon another such party's request) the provision of records and information that are reasonably relevant to any such audit, litigation, or other proceeding, and making employees

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available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer shall cause the Company to retain all books and records with respect to Tax matters pertinent to the Acquired Entities related to any taxable period beginning before the Closing Date until the expiration of the applicable statute of limitations (and, to the extent notified by Sellers, any extensions thereof), and to abide by all record retention agreements entered into with any Taxing Authority. Buyer shall cause the Company to furnish any Tax information reasonably requested by Seller Parent for any taxable period of the Acquired Entities, the Transferred Assets or the Assumed Liabilities that includes the Closing Date. Notwithstanding anything herein to the contrary, (i) Sellers shall not be required to provide Buyer with any Tax Returns or other information with respect to Seller Consolidated Taxes (other than pro forma Tax Returns of any Acquired Entity), and (ii) Buyer shall not be required to provide Seller Parent with any Tax Returns or other information with respect to Buyer Consolidated Taxes (other than pro forma Tax Returns of any Acquired Entity).

Section 8.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Survival</u>. Notwithstanding anything to the contrary in this Agreement, the covenants and agreements of the Parties in this <u>Article VIII</u> shall survive the Closing Date until thirty (30) days after the expiration of the applicable statutory periods of limitation (including any extensions or waivers thereof).

Section 8.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Exclusivity</u>. Notwithstanding anything to the contrary in this Agreement, in the event of a conflict or inconsistency between the provisions of this <u>Article VIII</u> and any other provisions hereof, the provisions of this <u>Article VIII</u> shall govern.

**ARTICLE IX<u><br>INDEMNIFICATION</u>**

Section 9.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this <u>Article IX</u>, from and after the Closing, Sellers shall jointly and severally indemnify the Buyer Entities for, and defend and hold harmless the Buyer Entities and their Representatives (the "<u>Buyer Indemnified Persons</u>") from and against, any Losses incurred or suffered by the Buyer Indemnified Persons (including arising from a Third-Party Claim or otherwise) arising from or related to any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;any breach by Sellers of any covenant or agreement herein that is required to be performed or complied with at or after the Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any Excluded Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;any Retained Liability (other than Tax Liabilities and Specified Retained Liabilities);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;any D&O Costs not covered by the Tail Policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;any Closing Date Indebtedness to the extent not taken into account in the calculation of the First Adjustment Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;any Pre-Closing Taxes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;the matters listed in <u>Section 9.1(a)(vii)</u> of the Disclosure Schedule.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this <u>Article IX</u>, from and after the Closing, the Buyer Entities shall jointly and severally indemnify Sellers for, and defend and hold harmless Sellers and their respective Representatives (the "<u>Seller Indemnified Persons</u>") from and against, any Losses incurred or suffered by the Seller Indemnified Persons (including arising from a Third-Party Claim or otherwise) arising from or related to any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;any breach by the Buyer Entities after the Closing of any covenant or agreement herein that is required to be performed or complied with at or after the Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any Transferred Asset; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;any Assumed Liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this <u>Section 9.1</u>, no amounts payable under an Affiliate Contract that survives the Closing or any Contract entered into at or after the Closing between Buyer or its Affiliates (including the Acquired Entities), on the one hand, and Seller or its Affiliates, on the other hand, shall be considered Losses.

Section 9.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification Procedures</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;As a condition to making an indemnification Claim under <u>Section 9.1</u>, any Party seeking indemnification under <u>Section 9.1</u> (each, an "<u>Indemnified Party</u>") shall assert any Claim for indemnification, including any Third-Party Claim, by delivering written notice thereof (a "<u>Claim Notice</u>") in accordance with <u>Section 11.8</u> to the Party from which indemnification is sought pursuant to <u>Section 9.1</u> (the "<u>Indemnifying Party</u>") promptly upon becoming aware of any fact or circumstance that may give rise to an indemnification Claim under <u>Section 9.1</u>; <u>provided</u>, <u>however</u>, that the failure to give such prompt written notice shall not relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is materially prejudiced by such failure. Each Claim Notice shall describe in reasonable detail the nature of the Claim and reference the Sections under which the Claim is asserted and attach copies of all material written evidence thereof that the Indemnified Party has received from any Person that is not a Party or an Affiliate of a Party (a "<u>Third Party</u>"). The date of the delivery of such Claim Notice is referred to herein as the "<u>Claim Date</u>." If the Indemnifying Party objects to any Claim within such Claim Notice, such objection must be made in writing delivered to the Indemnified Party within thirty (30) days after the Claim Date (the "<u>Objection Notice</u>"). Prior to the institution of any Claim under <u>Section 11.4</u>, the Indemnified Party and the Indemnifying Party shall attempt to resolve any dispute for a period of thirty (30) days from the date of the delivery of the Objection Notice to the Indemnified Party and thereafter. If a Claim Notice was delivered to the Indemnifying Party and the Indemnifying Party does not deliver an Objection Notice to the Indemnified Party within thirty (30) days after the Claim Date, the Indemnifying Party shall be deemed to have irrevocably agreed to pay the Losses at issue in the Claim Notice, subject to the terms and conditions of this <u>Article IX</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Following receipt by an Indemnifying Party of a Claim Notice in respect of a Claim brought by a Third Party (a "<u>Third-Party Claim</u>"), the Indemnifying Party shall be entitled to assume and have sole control over the defense and investigation of, and negotiate and enter into a settlement or compromise of, or consent to the entry of an Order with respect to, such Third-Party Claim at its sole cost and expense and with counsel of its own choosing if it gives

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notice of its intention to do so to the Indemnified Party within thirty (30) days after the Claim Date. 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; <u>provided</u> that, if in the reasonable opinion of counsel to the Indemnified Party, (i) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party or (ii) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, 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. Notwithstanding the foregoing, the Indemnifying Party shall not consent to any settlement, compromise or consent of such Third-Party Claim without the prior written consent of such Indemnified Party (whether or not such Indemnified Party is an actual or potential party to such Third-Party Claim), which consent shall not be unreasonably withheld, conditioned or delayed, unless such settlement, compromise or consent includes a full release by the applicable Third Party of the Indemnified Party or its applicable Representatives for all Losses with respect to such Third-Party Claim. In connection with any Third-Party Claim, the Indemnified Party and the Indemnifying Party and their applicable Representatives shall reasonably cooperate with one another and use their commercially reasonable efforts to make available to the other all relevant information in their possession or under their control and shall take such other steps as are reasonably necessary to enable the Indemnifying Party and/or Indemnified Party to conduct such defense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything in <u>Section 9.3(e)</u> to the contrary, the Indemnifying Party shall not be entitled to assume and control the defense or investigation of any Third-Party Claim that (i) seeks an injunction or other equitable relief against an Indemnified Party (other than an injunction or other equitable relief that is immaterial and is incidental to monetary remedies) or (ii) involves an allegation that an Indemnified Party committed a criminal violation of Law. If, within thirty (30) days after the Claim Date with respect to a Third-Party Claim, the Indemnifying Party (1) notifies such Indemnified Party in writing that the Indemnifying Party does not elect to defend and investigate such Third-Party Claim or (2) fails to deliver to the Indemnified Party a written election to assume the defense and investigation of such Third-Party Claim or (3) is not entitled to assume the defense or investigation of such Third-Party Claim, then (A) such Indemnified Party may, at its option, defend, investigate, settle or compromise, or consent to an entry of an Order with respect to, such Third-Party Claim; <u>provided</u> that any such settlement, compromise or consent shall be permitted only with the written consent of the Indemnifying Party (whether or not the Indemnifying Party is an actual or potential party to such Third-Party Claim), which consent shall not be unreasonably withheld, conditioned or delayed and (B) the Indemnifying Party may participate in (but not control) any such defense and investigation at its sole cost and expense.

Section 9.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Indemnification Procedures</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything herein to the contrary, Sellers' aggregate liability under <u>Section 9.1(a)</u> shall not exceed an amount equal to the sum of (i) the Business Enterprise Value, <u>plus</u> (ii) the First Adjustment Amount, <u>plus</u> (iii) the Second Adjustment Amount; <u>provided</u>, <u>however</u>, that (1) Sellers' aggregate liability under <u>Section 9.1(a)(vi)</u> shall not exceed the RWI Retention Amount and (2) Sellers' aggregate liability under <u>Section 9.1(a)(vii)</u> 

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(except as otherwise set forth on <u>Section 9.1(a)(vii)</u> of the Disclosure Schedule) shall not exceed $65,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary contained herein, the Buyer Entities hereby acknowledge and agree that the R&W Insurance Policy shall be the initial source for satisfaction for all claims by the Buyer Indemnified Persons that might otherwise be brought under this Agreement and the Buyer Indemnified Persons shall seek recovery first pursuant to the R&W Insurance Policy in accordance with the terms thereof, unless such claim is excluded under the terms of the R&W Insurance Policy or such claim is for less than the remaining retention under the R&W Insurance Policy. If such claim is rejected by the policy provider or such claim is not covered, or only partially covered, by the R&W Insurance Policy (including on account of the exclusions and policy limits of the R&W Insurance Policy), then the Buyer Entities may seek recovery from Sellers to the extent of such lack of coverage and to the extent available hereunder, and subject to the limitations and conditions in this <u>Article IX</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The amount of indemnifiable Losses that an Indemnifying Party is required to pay to any Indemnified Party pursuant to this <u>Article IX</u> shall be reduced (retroactively, if necessary) by any insurance proceeds (net of reasonable and documented out-of-pocket recovery costs), that are actually received by or on behalf of such Indemnified Party or its Affiliates in respect of such indemnifiable Losses. If an Indemnified Party shall have received the payment required hereby from the Indemnifying Party in respect of indemnifiable Losses and shall subsequently receive (or any of its Affiliates shall subsequently receive) any insurance proceeds in respect of such indemnifiable Losses, then such Indemnified Party shall promptly repay, or cause to be repaid, to the Indemnifying Party a sum equal to the amount of such insurance proceeds actually received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Without limiting <u>Section 9.3(a)</u>, each Indemnified Party and its Representatives, to the extent required by applicable Law, shall, in connection with any Claim for indemnification under this <u>Article IX</u>, use commercially reasonable efforts to mitigate indemnifiable Losses upon and after becoming aware of any fact or circumstance that may give rise to such indemnifiable Losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;All indemnifiable Losses under this <u>Article IX</u> shall be determined without duplication of recovery under other provisions hereof (including that no Liability to the extent reflected in the First Adjustment Amount shall be an indemnifiable Loss under this <u>Article IX</u>) or of any Ancillary Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Neither Party shall have any right to off-set or set-off any payment due pursuant to this <u>Article IX</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;The Parties agree to treat, and to cause their respective Affiliates to treat, for all Tax purposes, any payment made under this <u>Article IX</u>, to the maximum extent permitted by applicable Law, as an adjustment to the purchase price.

Section 9.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Exclusive Remedy</u>. From and after the Closing, <u>Section 1.5</u>, <u>Section 5.6(b)</u>, <u>Section 5.12(c)</u>, the last sentence of <u>Section 5.17</u>, this <u>Article IX</u>, <u>Section 11.5</u> and the provisions of the Transition Services Agreement, the Software License Agreement and

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the Commercial Agreements (and, subject to the terms and conditions of the Transition Services Agreement, Software License Agreement and Commercial Agreements, remedies for any breach thereof) or any other Ancillary Agreement shall be the sole and exclusive remedy for any Claim by any Party or any other Person (whether in contract or in tort or otherwise, or whether at law (including at common law or by statute) or in equity) that may be based on, arise out of or relate to this Agreement or the Ancillary Agreements (including the negotiation, execution, performance or subject matter hereof or thereof) or the transactions contemplated hereby or thereby or any Losses alleged to be suffered by any Party as a result of the actions or failure to act by any Buyer Indemnified Person or Seller Indemnified Person in connection herewith or the transactions contemplated hereby and thereby, including for any breach of any covenant, agreement or obligation set forth herein or therein. This <u>Article IX</u> and <u>Section 10.1</u>, including the limits imposed on each Party's rights and remedies with respect to the foregoing Claims, were specifically bargained for between sophisticated Persons and were specifically taken into account in the determination of the amounts to be paid to Sellers hereunder. No Person may avoid the limitations on liability set forth in this <u>Article IX</u> or <u>Section 10.1</u> by seeking Losses for breach of contract, tort or pursuant to any other theory of liability. Notwithstanding the foregoing, this <u>Section 9.4</u> shall not limit any Party's liability for Fraud.

**ARTICLE X<u><br>OTHER COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS</u>**

Section 10.1&nbsp;&nbsp;&nbsp;&nbsp;<u>No Other Representations and Warranties; Survival; As-Is Sale; Nonreliance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;None of the representations or warranties of any Party herein shall survive, and all such representations and warranties, including any Claim arising from or related thereto, shall terminate automatically upon, the Closing. None of the covenants and agreements of the Parties herein shall survive, and all such covenants and agreements, including any Claim arising from or related thereto, shall terminate automatically upon, the Closing, except that any covenant or agreement that, by its terms, is required to be performed or complied with, in whole or in part, at or after the Closing shall survive the Closing in accordance with its terms solely to the extent such covenant or agreement, by its terms, requires performance or compliance, in whole or in part, at or after the Closing. The Parties shall have no rights, Claims or causes of action (whether in contract or in tort or otherwise, or whether at law (including at common law or by statute) or in equity), based on or related to any inaccuracy in, or breach of, any representation or warranty in <u>Article II</u>, <u>Article III</u> and <u>Article IV</u>, or any covenant or agreement hereunder that does not survive the Closing, except prior to the Closing, as provided in <u>Section 7.1(c)</u> or <u>Section 7.1(d)(i)</u>, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Other than the representations and warranties expressly in <u>Article IV</u> or made by the Buyer Entities in the Ancillary Agreements, each Seller acknowledges and agrees that none of the Buyer Entities or any of their Representatives or direct or indirect equity holders make, or have made, any other express or implied representation or warranty whatsoever (whether at law (including at common law or by statute) or in equity) in connection with or related to the transactions contemplated hereby or by the Ancillary Agreements.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Other than the representations and warranties expressly in <u>Article II</u> or <u>Article III</u> or made by Sellers or any Affiliate of Sellers in the Ancillary Agreements (collectively, the "<u>Sell-Side Representations</u>"), Sellers (on behalf of themselves and their respective Affiliates) disclaim (i) any other express or implied representation or warranty whatsoever (whether at law (including at common law or by statute) or in equity) in connection with or related to the transactions contemplated hereby or by any Ancillary Agreement, including related to (1) the Seller Group, the Acquired Entities or any of their respective businesses (including the Business), assets (including the Transferred Assets), employees, Permits, Liabilities (including the Assumed Liabilities), operations, prospects or condition (financial or otherwise), including the condition, value, quality, risks, incidents or prospects of the Transferred Assets or (2) any opinion, projection, forecast, statement (including any forward-looking statement), budget, estimate, advice or other similar information (including information related to the future revenues, earnings, results or operations (or any component thereof)), cash flows, financial condition (or any component thereof) or the future business and operations, as well as any other business plan and cost-related plan information of or related to the foregoing (collectively, "<u>Projections</u>"), in each case, (A) with respect to the Seller Group, the Acquired Entities or any of their respective businesses (including the Business), assets (including the Transferred Assets), employees, Permits, liabilities (including the Assumed Liabilities), operations, prospects or condition (financial or otherwise), (B) whether made, communicated or furnished (orally or in writing), or to be made, communicated or furnished (orally or in writing), to the Buyer Entities or any of their Representatives and (C) whether made by Sellers, any Acquired Entity or any of their respective Representatives or direct or indirect equity holders or any other Person and (ii) all liability for any such other representation or warranty or any Projection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Other than the Sell-Side Representations, the Buyer Entities (i) (1) acknowledge and agree that none of Sellers, any Acquired Entity or any of their respective Representatives or direct or indirect equity holders or any other Person make, or have made, any other express or implied representation or warranty whatsoever (whether at law (including at common law or by statute) or in equity) in connection with or related to the transactions contemplated hereby or by the Ancillary Agreements, including related to the Seller Group, the Acquired Entities or their respective businesses (including the Business), assets (including the Transferred Assets), employees, Permits, Liabilities (including the Assumed Liabilities), operations, prospects, condition (financial or otherwise) or any Projection, and (2) irrevocably and unconditionally waives and relinquishes all rights, Claims or causes of action (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law or in equity, or based on contract, tort or otherwise) based on or related to any such other representation or warranty or any Projection, (ii) acknowledges and agrees to Sellers' disclaimer of any such other representation or warranty or any Projection and of all liability and responsibility for any such other representation or warranty or any Projection, (iii) irrevocably and unconditionally waives and relinquishes all rights, Claims and causes of action (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law or in equity, or based on contract, tort or otherwise) against (1) Sellers or any Acquired Entity in connection with the accuracy, completeness or materiality of any Projection and (2) any Representative or direct or indirect

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equity holder of Sellers or any Acquired Entity for any such other representation or warranty and (iv) acknowledges and agrees that none of Sellers, any Acquired Entity or any of their respective Representatives or direct or indirect equity holders shall have any liability for any alleged nondisclosure or misrepresentation made by any such Person or in connection with the accuracy, completeness or materiality of any Projection. The Buyer Entities acknowledge and agree that (A) it has conducted to its satisfaction its own independent investigation of the transactions contemplated hereby (including, as applicable, related to the Seller Group, the Acquired Entities and their respective businesses (including the Business), assets, employees, Permits, liabilities, operations, prospects, condition (financial or otherwise) and any Projection), including reviewing all information and documents accessible by it or its Representatives in the Data Room, and, in making its determination to enter into this Agreement and proceed with the transactions contemplated hereby and the transactions contemplated by the Ancillary Agreements, has relied solely on the results of such independent investigation and the Sell-Side Representations and (B) except the Sell-Side Representations, it has not relied on, or been induced by, any representation, warranty or other statement of or by Sellers, any Acquired Entity, any of their respective Representatives or direct or indirect equity holders or any other Person, including any Projection, in making its determination to enter into this Agreement and proceed with the transactions contemplated hereby and the transactions contemplated by the Ancillary Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Other than the representations and warranties expressly in <u>ARTICLE IV</u> or made by the Buyer Entities or any Affiliate of the Buyer Entities in the Ancillary Agreements (collectively, the "<u>Buy-Side Representations</u>"), each Buyer Entity (on behalf of itself and its Affiliates) disclaims (i) any other express or implied representation or warranty whatsoever (whether at law (including at common law or by statute) or in equity) in connection with or related to the transactions contemplated hereby or by any Ancillary Agreement, including related to (1) the Buyer Group or any of their respective businesses, assets, employees, Permits, Liabilities, operations, prospects or condition (financial or otherwise), or (2) any Projections, in each case, (A) with respect to the Buyer Group or any of their respective businesses, assets, employees, Permits, liabilities, operations, prospects or condition (financial or otherwise), (B) whether made, communicated or furnished (orally or in writing), or to be made, communicated or furnished (orally or in writing), to Sellers or any of their Representatives and (C) whether made by the Buyer Group or any of their respective Representatives or direct or indirect equity holders or any other Person and (ii) all liability for any such other representation or warranty or any Projection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Other than the Buy-Side Representations, Sellers (i) (1) acknowledge and agree that none of the Buyer Group or any of their respective Representatives or direct or indirect equity holders or any other Person make, or have made, any other express or implied representation or warranty whatsoever (whether at law (including at common law or by statute) or in equity) in connection with or related to the transactions contemplated hereby or by the Ancillary Agreements, including related to the Buyer Group or their respective businesses, assets, employees, Permits, Liabilities, operations, prospects, condition (financial or otherwise) or any Projection, and (2) irrevocably and unconditionally waives and relinquishes all rights, Claims or causes of action (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law or in equity, or based on contract, tort or otherwise) based on or related to any such other representation or warranty or

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any Projection, (ii) acknowledges and agree to the Buyer Entities' disclaimer of any such other representation or warranty or any Projection and of all liability and responsibility for any such other representation or warranty or any Projection, (iii) irrevocably and unconditionally waives and relinquishes all rights, Claims and causes of action (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law or in equity, or based on contract, tort or otherwise) against (1) the Buyer Entities in connection with the accuracy, completeness or materiality of any Projection and (2) any Representative or direct or indirect equity holder of the Buyer Entities for any such other representation or warranty and (iv) acknowledges and agrees that none of the Buyer Group or any of their respective Representatives or direct or indirect equity holders shall have any liability for any alleged nondisclosure or misrepresentation made by any such Person or in connection with the accuracy, completeness or materiality of any Projection. Each Seller acknowledges and agrees that (A) it has conducted to its satisfaction its own independent investigation of the transactions contemplated hereby (including, as applicable, related to the Buyer Group and their respective businesses, assets, employees, Permits, liabilities, operations, prospects, condition (financial or otherwise) and any Projection), and, in making its determination to enter into this Agreement and proceed with the transactions contemplated hereby and the transactions contemplated by the Ancillary Agreements, has relied solely on the results of such independent investigation and the Buy-Side Representations and (B) except the Buy-Side Representations, it has not relied on, or been induced by, any representation, warranty or other statement of or by the Buyer Group, any of their respective Representatives or direct or indirect equity holders or any other Person, including any Projection, in making its determination to enter into this Agreement and proceed with the transactions contemplated hereby and the transactions contemplated by the Ancillary Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, this <u>Section 10.1</u> shall not limit any Party's liability for Fraud.

Section 10.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Mutual Release</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Effective as of the Closing, other than (i) any Claims of Fraud, or (ii) any rights or remedies arising under the Ancillary Agreements or under the covenants and agreements hereunder that survive the Closing under <u>Section 10.1(a)</u> (including <u>Article IX</u>), each Buyer Entity, on behalf of itself and its Subsidiaries (including the Acquired Entities) and its and their respective past, present and future officers, directors, employees, agents, general or limited partners, managers, management companies, members, advisors, direct or indirect equity holders, controlling Persons, other representatives or Affiliates and any heir, executor, administrator, successor or assign of any of the foregoing (collectively, the "<u>Buyer Releasing Parties</u>"), hereby irrevocably and unconditionally releases and forever discharges Sellers and their respective Affiliates (excluding the Acquired Entities), and Sellers' and such Affiliates' respective past, present and future officers, directors, employees, agents, general or limited partners, managers, management companies, members, advisors, direct or indirect equity holders, controlling Persons, other representatives or Affiliates, and any heir, executor, administrator, successor or assign of any of the foregoing (collectively, the "<u>Buyer Released Parties</u>") of and from, and irrevocably and unconditionally waives and relinquishes any rights, claims or remedies arising from or related to, all Claims, causes of action, Orders, assessments, damages, deficiencies, losses, fines, interest, liabilities (including any indebtedness), obligations, penalties, executions and covenants whatsoever (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law

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or in equity, or based on contract, tort or otherwise) that any Buyer Releasing Party may have against any of the Buyer Released Parties, now or in the future, in each case related to (a) the Transferred Equity Interests, (b) the Business, the Transferred Assets, the Assumed Liabilities or the ownership or operation thereof, (c) this Agreement, or (d) any other cause, matter or thing related to the Acquired Entities or the transactions contemplated hereby, including any claim for breach of contract, breach of representation or warranty or negligent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Effective as of the Closing, other than (i) any Claims of Fraud, or (ii) any rights or remedies arising under the Ancillary Agreements or under the covenants and agreements hereunder that survive the Closing under <u>Section 10.1(a)</u> (including <u>Article IX</u>), Sellers, on behalf of themselves and their respective Subsidiaries (excluding the Acquired Entities) and their and their respective past, present and future officers, directors, employees, agents, general or limited partners, managers, management companies, members, advisors, direct or indirect equity holders, controlling Persons, other representatives or Affiliates and any heir, executor, administrator, successor or assign of any of the foregoing (collectively, the "<u>Seller Releasing Parties</u>"), hereby irrevocably and unconditionally release and forever discharge the Buyer Entities and their Affiliates (including the Acquired Entities), and the Buyer Entities' and such Affiliates' respective past, present and future officers, directors, employees, agents, general or limited partners, managers, management companies, members, advisors, direct or indirect equity holders, controlling Persons, other representatives or Affiliates, and any heir, executor, administrator, successor or assign of any of the foregoing (collectively, the "<u>Seller Released Parties</u>") of and from, and irrevocably and unconditionally waives and relinquishes any rights, claims or remedies arising from or related to, all Claims, causes of action, Orders, assessments, damages, deficiencies, losses, fines, interest, liabilities (including any indebtedness), obligations, penalties, executions and covenants whatsoever (in each case, whether accrued, absolute, contingent or otherwise, known or unknown, or due or to become due, express or implied, in law or in equity, or based on contract, tort or otherwise) that any Seller Releasing Party may have against any of the Seller Released Parties, now or in the future, in each case related to (a) the Transferred Equity Interests, (b) the Business, the Transferred Assets, the Assumed Liabilities or the ownership or operation thereof, (c) this Agreement, or (d) any other cause, matter or thing related to the Acquired Entities or the transactions contemplated hereby, including any claim for breach of contract, breach of representation or warranty or negligent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Buyer Entities, on behalf of the Buyer Releasing Parties, and Sellers, on behalf of the Seller Releasing Parties, understands that the Buyer Releasing Parties or Seller Releasing Parties, as applicable, currently have sustained, or currently have or are subject to, or may in the future sustain or have or be subject to, as applicable, Claims, causes of action, Orders, assessments, damages, deficiencies, losses, fines, interest, liabilities (including any indebtedness), obligations, penalties, executions and covenants for which they might otherwise have made a claim, or sought a right or remedy, that are presently unknown or unsuspected. Each of the Buyer Entities, on behalf of the Buyer Releasing Parties, and Sellers, on behalf of the Seller Releasing Parties, acknowledges that the releases and waivers in this <u>Section 10.2</u> have been agreed upon and given in light of such facts and that the releases and waivers are intended to apply to all Claims, causes of action, Orders, assessments, damages, deficiencies, losses, fines, interest, liabilities (including any indebtedness), obligations, penalties, executions and covenants. IN THIS CONNECTION, EACH OF THE BUYER ENTITIES, ON BEHALF OF THE BUYER RELEASING PARTIES, AND SELLERS, ON BEHALF OF THE SELLER RELEASING PARTIES, UNDERSTANDS AND AGREES AS PART OF THE INDUCEMENT FOR THE CONSIDERATION GIVEN FOR SUCH RELEASES AND WAIVERS THAT THE BUYER

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ENTITIES, ON BEHALF OF THE BUYER RELEASING PARTIES, AND SELLERS, ON BEHALF OF THE SELLER RELEASING PARTIES, WAIVES THE PROVISIONS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH SECTION READS AS FOLLOWS, AND ANY OTHER STATE, FEDERAL, PROVINCIAL OR FOREIGN STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The Buyer Released Parties and Seller Released Parties are intended third-party beneficiaries of this <u>Section 10.2</u>, with full rights of enforcement of this <u>Section 10.2</u> as if a party hereto.

Section 10.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Retention of Counsel</u>. In any dispute or proceeding arising under or in connection with this Agreement after the Closing, (a) Sellers shall have the right, at their election, to retain Skadden, Arps, Slate, Meagher & Flom LLP ("<u>Skadden</u>") to represent it in such matter, even if such representation shall be adverse to the Buyer Entities or the Acquired Entities, (b) each Buyer Entity, for itself and its Representatives (including the Acquired Entities), successors and assigns, hereby irrevocably consent to any such representation in any such matter and (c) each Buyer Entity, for itself and for its Representatives (including the Acquired Entities), successors and assigns, hereby irrevocably waive any actual or potential conflict arising from any such representation in the event of (i) any adversity between the interests of Sellers or its direct or indirect equity holders, on the one hand, and the Buyer Entities or the Acquired Entities, on the other hand, in any such matter or (ii) any Protected Communication.

Section 10.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Protected Communications</u>. The Parties agree that, immediately prior to the Closing, without the need for any further action, (a) all right, title and interest of any Acquired Entity in and to all Protected Communications shall thereupon transfer to and be vested solely in Sellers, and (b) all expectations of client confidence and protections from disclosure, including attorney–client privileges and work product protections, associated with or arising from any Protected Communications that would have been exercisable by any Acquired Entity shall thereupon be vested exclusively in Sellers and shall be exercised or waived solely as directed by Sellers. From and after the Closing, neither the Buyer Entities nor the Acquired Entities shall, or shall have any right to, use or access the Protected Communications. Notwithstanding the foregoing, if a dispute arises between any Buyer Entity and any Acquired Entity, on the one hand, and any other Person (other than Sellers or any of their Representatives), on the other hand, such Buyer Entity and Acquired Entity may exercise all protections from disclosure, including attorney–client privileges and work product protections, associated with or arising from any Protected Communications; <u>provided</u> that none of the Buyer Entities, any Acquired Entity or any Person acting on any of their behalf, shall, without the prior written consent of Sellers, waive or attempt to waive, or take any action that could result in a waiver of, any such protection against disclosure, including the attorney-client privileges or work product protection of, or provide to such Person or its Representatives, any Protected Communication.

Section 10.5&nbsp;&nbsp;&nbsp;&nbsp;<u>No Waiver of Privilege, Protection From Disclosure or Use</u>. The Parties understand and agree that nothing herein, including <u>Section 10.3</u> and <u>Section 10.4</u>, shall be deemed to be a waiver of any applicable attorney–client privilege or other protection from

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disclosure or use related to any Protected Communication. Each Party understands and agrees that it has undertaken reasonable efforts to prevent the disclosure of Protected Communications. Notwithstanding those efforts, the Parties understand and agree that the consummation of the transactions contemplated hereby could result in the inadvertent disclosure of Protected Communications. The Parties further understand and agree that any disclosure of any Protected Communications shall not waive or otherwise prejudice any claim of confidentiality, privilege or protection from disclosure.

**ARTICLE XI<u><br>MISCELLANEOUS PROVISIONS</u>**

Section 11.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment</u>. This Agreement may be amended, supplemented or changed only by a written instrument signed by the Buyer Entities and Seller Parent (on behalf of Sellers); <u>provided</u> that notwithstanding anything to the contrary set forth herein, this <u>Section 11.1</u>, <u>Section 11.7</u> or <u>Section 11.10</u> (and any related definitions to the extent an amendment, supplement or change of such definitions would modify the substance of any of the foregoing provisions) may not be amended, supplemented or changed in a manner that is in any material respect adverse to the Financing Sources without the prior written consent of the Financing Sources then party to the Commitment Letters.

Section 11.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>. No failure on the part of any Party to exercise any power, right, privilege or remedy hereunder, and no delay on the part of any Party in exercising any power, right, privilege or remedy hereunder, shall operate as a waiver of such power, right, privilege or remedy, and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No Party shall be deemed to have waived any claim or cause of action arising out hereof, or any power, right, privilege or remedy hereunder, unless the waiver of such claim, cause of action, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered by the waiving Party, and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

Section 11.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement; Counterparts</u>. This Agreement, the Confidentiality Agreement and the Ancillary Agreements are the entire agreement, and supersede all prior agreements and understandings, both written and oral, among or between any of the Parties related to the subject matter hereof and thereof. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall be one and the same instrument. Delivery of an executed counterpart hereof by electronic transmission (including email or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall be effective as delivery of an original counterpart hereof.

Section 11.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Applicable Law; Jurisdiction; WAIVER OF JURY TRIAL</u>. This Agreement, and all claims, disputes and causes of action (whether in contract or in tort or otherwise, or whether at law (including at common law or by statute) or in equity) that may be based on, arise out of or relate hereto or the negotiation, execution, performance or subject matter hereof, shall be governed by the Laws of the State of Delaware applicable to agreements made and to be performed solely therein, without giving effect to principles of conflicts of law. Except as provided in <u>Section 1.5</u>, with respect to any such claim, dispute or cause of action, each Party (a) irrevocably and unconditionally consents and submits to the exclusive jurisdiction

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and venue of the Court of Chancery of the State of Delaware or, to the extent such court does not have subject matter jurisdiction, the U.S. District Court for the District of Delaware or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware, (b) agrees that all such claims, disputes and causes of action shall be heard and determined exclusively in the courts identified in <u>clause (a)</u> of this <u>Section 11.4</u>, (c) waives any objection to laying venue in any such claim, dispute or cause of action in such courts, (d) waives any objection that any such court is an inconvenient forum or does not have jurisdiction over any Party and (e) agrees that service of process upon such Party in any such claim, dispute or cause of action shall be effective if such process is given as a notice under <u>Section 11.8</u>. **EACH PARTY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY CLAIM, DISPUTE OR CAUSE OF ACTION that may be based on, arise out of or relate HERETO or the negotiation, execution, performance or subject matter hereof.**

Section 11.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Remedies; Specific Performance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided herein, prior to the Closing, all remedies herein expressly conferred upon a Party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy shall not preclude the exercise of any other remedy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Parties acknowledge and agree that irreparable damage would occur if any of the provisions hereof were not performed in accordance with their specific terms or were otherwise breached and that monetary damages, even if available, would not be an adequate remedy therefor. Accordingly, the Parties shall be entitled to equitable relief (including an injunction or injunctions) to prevent breaches or threatened breaches hereof and to enforce specifically the performance of terms and provisions hereof, including that each Party shall be entitled to equitable relief (including an injunction or injunctions) to cause each other Party to consummate the Acquisition, the Liabilities Assumption and the other transactions contemplated hereby in accordance with <u>Section 1.2</u>, in each case, in any court referred to in <u>Section 11.4</u>, without proof of actual damages (and each Party waives any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which they are entitled at law or in equity. No Party shall assert (i) that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason or (ii) that a remedy of monetary damages would provide an adequate remedy for any such breach. If any Party brings any Claim to enforce specifically the performance of the terms of provisions hereof, then, notwithstanding anything to the contrary herein, the Outside Date shall automatically be extended by (1) the period of time between the commencement of such Claim and the date on which such Claim is fully and finally resolved, <u>plus</u> twenty (20) Business Days, <u>plus</u> (b) any such other time period as finally determined by the court presiding over such Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, it is expressly agreed that Sellers will be entitled to specific performance of Buyer's obligation to consummate the Acquisition and Liabilities Assumption only in the event that (i) a Buyer Closing Failure has occurred and (ii) provided that Buyer has complied with its covenants and agreements in <u>Section 5.12(a)</u>, the Debt Financing has been funded or will be funded at the Closing in accordance with the Debt Commitment Letters (or definitive agreements related thereto). For the avoidance of doubt, under no circumstance shall the Sellers be permitted or entitled to receive both a grant of specific

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performance pursuant to this <u>Section 11.5</u> and, if the Closing occurs, payment of the Termination Payments pursuant to <u>Section 7.2(b)</u>.

Section 11.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment of Expenses</u>. Except as provided herein, whether or not the Closing occurs, each Party shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the transactions contemplated hereby.

Section 11.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignability; Third-Party Rights</u>. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated, in whole or in part, by any Party without the prior written consent of the other Parties, and any such assignment without such prior written consent shall be null and void; <u>provided</u>, <u>however</u>, that (a) the Buyer Entities may transfer or assign their rights and obligations to any Financing Source as collateral security for the Financing; <u>provided</u>, <u>further</u>, that the Buyer Entities shall not be released from any of its Liabilities hereunder by reason of such transfer or assignment, and (b) each Seller may assign any of their rights under <u>Section 5.19</u> and <u>Exhibit K</u> without the prior written consent of the Buyer Entities. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the Parties and their respective successors and permitted assigns. Except as provided herein (including in <u>Section 5.2</u> and <u>Section 5.6(f)</u> and <u>Article IX</u>), nothing herein is intended to or shall confer upon any Person (other than the Parties) any right, benefit or remedy of any nature whatsoever.

Section 11.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. All notices and other communications hereunder shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confirmation of receipt by nonautomatic means, whether electronic or otherwise), (b) when sent by email (with written confirmation of transmission) or (c) one (1) Business Day after the day sent by an internationally recognized overnight courier (with written confirmation of receipt), in each case, at the following addresses and email addresses (or to such other address or email address as a Party may have specified by notice given to the other Party under this <u>Section 11.8</u>):

if to Sellers, as follows:

c/o Centene Corporation<br>7700 Forsyth Boulevard<br>St. Louis, MO 63105<br>Email:&nbsp;&nbsp;&nbsp;&nbsp;christopher.a.koster@centene.com<br>Attention: &nbsp;&nbsp;&nbsp;&nbsp;Christopher Koster

with copies (which shall not be notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP<br>1440 New York Avenue, NW<br>Washington, DC 20005<br>Attention:&nbsp;&nbsp;&nbsp;&nbsp;Jeremy London<br>&nbsp;&nbsp;&nbsp;&nbsp;Micah Kegley<br>Email:&nbsp;&nbsp;&nbsp;&nbsp;jeremy.london@skadden.com<br>&nbsp;&nbsp;&nbsp;&nbsp;micah.kegley@skadden.com

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if to the Buyer Entities, as follows:

Evolent Health, Inc.

800 N. Glebe Road, Suite 500

Arlington, Virginia 22203<br>Attention: &nbsp;&nbsp;&nbsp;&nbsp;Jonathan Weinberg, General Counsel<br>Email:&nbsp;&nbsp;&nbsp;&nbsp;jweinberg@evolenthealth.com

with a copy (which shall not be notice) to:

Bass, Berry & Sims PLC<br>150 Third Ave. South, Suite 2800<br>Nashville, Tennessee 37201<br>Attention: &nbsp;&nbsp;&nbsp;&nbsp;Angela Humphreys; Price Wilson<br>Email:&nbsp;&nbsp;&nbsp;&nbsp;ahumphreys@bassberry.com; pwilson@bassberry.com

Section 11.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. Any term or provision hereof that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

Section 11.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Financing</u>. Notwithstanding anything in this Agreement to the contrary, each Party, on behalf of itself and each of its Affiliates, hereby (a) agrees that it will not bring or support any action, cause of action, claim, cross-claim or third-party claim or any proceeding, whether in law or in equity, whether in contract or in tort or otherwise, involving the Financing Sources, arising out of or related to, this Agreement, the Financing or any of the agreements (including the Commitment Letters and each Fee Letter) entered into in connection with the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder in any forum other than exclusively in the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof) and irrevocably submits itself and its property with respect to any such proceeding to the exclusive jurisdiction of such courts, (b) agrees that any such proceeding shall be governed by the laws of the State of New York (without giving effect to any conflicts of law principles that would result in the application of the laws of another state), (c) agrees that service of process upon such Person in any such proceeding shall be effective if notice is given in accordance with <u>Section 11.4</u>, (d) knowingly, intentionally and voluntarily waives, to the fullest extent permitted by applicable law, trial by jury in any proceeding brought against any Financing Source in any way arising out of or related to, this Agreement, the Financing, the Commitment Letters, any Fee Letter or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, (e) agrees that notwithstanding anything to the contrary contained herein, none of Sellers, Company, any of their respective Affiliates nor any of their respective stockholders, partners, members, officers, directors, employees, controlling persons, agents and representatives shall have any rights or claims against any Financing Source related to

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or arising out of this Agreement, the Financing, the Commitment Letters, any Fee Letter or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, whether at law or equity, in contract, in tort or otherwise, (f) **KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW TRIAL BY JURY IN ANY PROCEEDING BROUGHT AGAINST ANY FINANCING SOURCE IN ANY WAY ARISING OUT OF OR RELATED TO, THIS AGREEMENT, THE FINANCING, THE COMMITMENT LETTERS, ANY FEE LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE PERFORMANCE OF ANY SERVICES THEREUNDER** and (g) agrees that the Financing Sources are express third-party beneficiaries of, and may enforce, any of the provisions herein reflecting the foregoing agreements in <u>Section 11.1</u>, <u>Section 11.7</u> and this <u>Section 11.10</u>. This <u>Section 11.10</u> shall not limit the rights of the parties to the Financing under the Commitment Letters or any other definitive agreement in respect of the Financing.

Section 11.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Publicity</u>. Without the prior written consent of the other Parties, no Party shall issue any press release or make any other public announcement related hereto or the transactions contemplated hereby, except (a) to the extent required by applicable Law or the rules of any securities exchange on which such Party's or such Party's Affiliates securities are listed; <u>provided</u> that, in each case, the disclosing Party provides the other Parties with a reasonable opportunity to review and comment on such disclosure and (b) for any communication by Sellers, any Acquired Entity or any of their respective Representatives to the employees, members or other business relations of the Acquired Entities.

Section 11.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Construction</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>No Strict Construction</u>. The Parties have been represented by counsel during the negotiation and execution hereof and, therefore, waive the application of any applicable Law, holding or rule of construction providing that ambiguities in a Contract or other document shall be construed against the Party drafting such Contract or document. Each Party has participated in the drafting and negotiation hereof. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship of any of the provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Time</u>. When calculating the period of time prior to which, within which or after which any act is to be done or step taken pursuant hereto, (i) the date that is the reference date in calculating such period shall be excluded and (ii) if the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day. Unless specified otherwise herein, any reference herein to a specific time shall be to such time in the North American Central Time Zone.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Dollars</u>. Unless otherwise specifically indicated, any reference herein to "$" means U.S. dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Gender and Number</u>. Any reference herein to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>Articles, Sections and Headings</u>. When a reference is made herein to an Article or a Section, such reference shall be to an Article or a Section hereof unless otherwise indicated. The table of contents and headings herein are for reference purposes only and shall not affect in any way the meaning or interpretation hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;<u>Include</u>. Whenever the words "include," "includes" or "including" are used herein, they shall be deemed to be followed by the words "without limitation."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;<u>Hereof</u>. The words "hereof," "hereto," "hereby," "herein" and "hereunder" and words of similar import when used herein shall refer to this Agreement as a whole and not to any particular provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;<u>Extent</u>. The word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase shall not mean simply "if."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;<u>Contracts; Employee Plans; Laws</u>. (i) Any Contract or Employee Plan referred to herein or in the Disclosure Schedule means such Contract or Employee Plan as from time to time amended, modified or supplemented (including by a statement of work or similar agreement) prior to the Closing Date, and (ii) any Law defined or referred to herein means such Law as from time to time amended, modified or supplemented prior to the date hereof, and includes all rules and regulations promulgated under such Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;<u>Persons</u>. References to a person are also to its successors and permitted assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;<u>Exhibits and Disclosure Schedule</u>. The Exhibits hereto and the Disclosure Schedule are incorporated and made a part hereof and are an integral part hereof. The Disclosure Schedule shall be organized into sections that correspond to the Sections hereof. Any item set forth in any section of the Disclosure Schedule that corresponds to a Section shall apply to and qualify such Section and any other Section if such item's relevance to such other Section is reasonably apparent on its face. Each capitalized term used in any Exhibit or in the Disclosure Schedule but not otherwise defined therein has the meaning given to such term herein. The Disclosure Schedule may include items that are not material in order to avoid any misunderstanding, and such inclusion, or any references to dollar amounts herein or in the Disclosure Schedule, shall not be deemed to be an acknowledgement or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes hereof or otherwise. The inclusion of any information, item or other disclosure in the Disclosure Schedule shall not be construed as (i) an admission of any liability or obligation of Sellers with respect to any third Person, (ii) an admission against the interest of Sellers to any third Person or (iii) a basis for establishing any standard for what is or is not in the ordinary course of business or defining any other term or establishing any other standard set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;<u>Assets; Ownership of Equity Securities</u>. Unless the context otherwise requires, (i) any reference herein to "assets" shall include tangible assets (including real property) and intangible assets and (ii) any reference herein to the ownership of Equity Interests shall refer to both record ownership and beneficial ownership of such Equity Interests.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;<u>Made Available</u>. A document or information shall be deemed to have been "made available" or otherwise delivered to Buyer if such document or information is accessible by Buyer or any of its Representatives in the Data Room or otherwise has been delivered (by email or otherwise) to Buyer or its Representatives at least one (1) Business Day prior to the date hereof.

Section 11.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Definitions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;As used herein, each of the following underlined terms has the meaning specified in this <u>Section 11.13(a)</u>:

"<u>Accounting Principles</u>" mean <u>Exhibit H.</u>

"<u>Accrued Taxes</u>" means the sum of the amounts of obligations for Income Taxes of the Acquired Entities for Pre-Closing Straddle Periods (regardless of whether or not then due) as to which taxable period or portion thereof the relevant Tax Return has not yet been filed as of the Closing Date, calculated as of the end of the day on the Closing Date after giving effect to the transactions contemplated hereby and in a manner consistent with the principles of <u>Section 8.2</u>; <u>provided</u> that Accrued Taxes shall be calculated in accordance with the past practices (including reporting positions, jurisdictions, elections and accounting methods) of the Acquired Entities in preparing Tax Returns unless otherwise required by applicable Law (determined consistent with the principles of <u>Section 8.1</u>), and for the avoidance of doubt, by excluding any item of income, gain, loss, deduction, or credit includible with respect to Seller Consolidated Taxes for which no Acquired Entity has primary Liability.

"<u>Acquired Entities</u>" means the Company and its Subsidiaries (other than NIA Pennsylvania).

"<u>Affiliate</u>" means, for any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person; <u>provided</u> that, for purposes of the immediately preceding clause, the term "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), for any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise; <u>provided</u>, <u>further</u>, that, from and after the Closing, no member of the Seller Group shall be an Affiliate of the Buyer Entities or the Acquired Entities.

"<u>Affiliated Group</u>" means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign Income Tax Law) of which any Acquired Entity is or has been a member.

"<u>Aggregate Spread Value</u>" means, in respect of each Ultimate Parent Equity Award that is a stock option, an amount equal to (i) the number of shares of Ultimate Parent common stock subject to such stock option, <u>multiplied by</u> (ii) the difference, if any, of (1) the Replacement Award VWAP, <u>minus</u> over (2) the per-share exercise price for such stock option.

"<u>Ancillary Agreement</u>" means the Bill of Sale and Assignment Agreement, the Transition Services Agreement, the Software License Agreement, the Commercial Agreements, the Registration Rights Agreement, the Lock-Up Agreement and the Restrictive Covenant Agreement.

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"<u>Base Business Enterprise Value</u>" means $650,000,000.

"<u>Borrowed Money Indebtedness</u>" means, with respect to any Person at any date, without duplication: (i) all obligations of such Person for borrowed money (excluding any trade payables, accounts payable, and any other current liabilities); and (ii) any accrued interest and fees related to any of the foregoing

"<u>Business</u>" means the research, development, implementation, customization, marketing, testing, maintenance, provision, support, licensing, commercialization, promotion, distribution, sale and offering for sale of the following specialty healthcare management services, in each case as conducted by (A) the Acquired Entities and (B) the Acquired Entities and the Seller Group solely with respect to the Transferred Assets as of the date hereof: (i) prior, retrospective, and concurrent authorization services and specialty-matched medical necessity reviews for: (1) advanced radiology imaging, (2) diagnostic cardiac imaging and interventional cardiac procedures, (3) interventional pain management procedures and musculoskeletal surgeries, (4) physical medicine services including physical, occupational and speech therapy and chiropractic services, (5) radiation oncology therapies, (6) genetic testing and (7) sleep management; (ii) the provision of genetic testing payment integrity services; (iii) the provision of analytic tools related to the foregoing; (iv) clinical guideline development and maintenance only related to the foregoing; (v) limited physical medicine network development and oversight only related to the foregoing; and (vi) DecisionPoint, the Business's automated prior authorization solution; <u>provided</u>, <u>however</u>, that the Business shall not include (x) any behavioral health services provided by any member of the Seller Group or (y) any of Ultimate Parent's (through one or more of its Subsidiaries) population health, utilization management (other than to the extent expressly included in the items (i) through (vi) above) or health plan services; <u>provided</u>, <u>further</u>, that the Business shall include the Transferred Assets.

"<u>Business Benefit Plan</u>" means each Seller Employee Plan and each Company Employee Plan.

"<u>Business Day</u>" means a day, other than a Saturday, a Sunday or other day on which commercial banks in New York, New York, are authorized or required by Law to close.

"<u>Business Employees</u>" means each employee of (i) an Acquired Entity, or (ii) a member of the Seller Group who is listed in <u>Section 11.13(a)(i)</u> of the Disclosure Schedule.

"<u>Buyer Consolidated Taxes</u>" means Taxes of (i) any member of an affiliated group as defined in Section 1504 of the Code that has filed a consolidated return for U.S. federal income Tax purposes, or (ii) any consolidated, combined or unitary group (or member thereof) under state, local, or non-U.S. Law, of which any of the Acquired Entities (or any successor) is or was a member following to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar U.S., state or local, or non-U.S. Law.

"<u>Buyer Group</u>" means Buyer Parent and its Subsidiaries.

"<u>Buyer Material Adverse Effect</u>" means (i) any event, change, effect, development or occurrence that would prevent, materially delay or materially impede a Buyer Entity's consummation of the transactions contemplated hereby or (ii) any event, change, effect, development or occurrence that, individually or in the aggregate with any other event, change,

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effect, development or occurrence, has, or would reasonably be expected to have, a material adverse effect on the businesses, financial condition or results of operations of the Buyer Group, taken as a whole; <u>provided</u>, <u>however</u>, that, solely for purposes of this clause (ii), none of the following (or any change, effect, development or occurrence related to the following) shall be a Buyer Material Adverse Effect or be considered in determining whether a Buyer Material Adverse Effect has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;changes in general economic conditions, including changes in exchange rates, interest rates or monetary policy, or the credit, financial, currency, securities or capital markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;changes in general conditions in the industry in which Buyer Group operates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;any natural (including weather-related) or man-made disaster, disease or virus (including COVID-19), pandemic (including the COVID-19 pandemic), epidemic, act of terrorism, sabotage, cyberattack, military action or war, or any escalation or worsening thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;&nbsp;&nbsp;&nbsp;changes in general legal, regulatory or political conditions after the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;&nbsp;&nbsp;&nbsp;changes in Law, GAAP, or any accounting requirements applicable to the industry in which the Buyer Group operates or the interpretation of any of the foregoing after the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;&nbsp;&nbsp;&nbsp;any action or omission required to be taken or omitted by Buyer pursuant to this Agreement or which is otherwise taken or omitted at the written consent or request of Sellers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)&nbsp;&nbsp;&nbsp;&nbsp;any breach hereunder by a Seller or any action taken by a Seller or any of its Representatives; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8)&nbsp;&nbsp;&nbsp;&nbsp;any failure by the Buyer Group to meet any internal or published projection for any period (<u>provided</u> that the underlying cause of any such failure may be, or be considered in determining, a Buyer Material Adverse Effect to the extent not otherwise excluded under the foregoing clauses (1)–(8));

<u>provided</u>, <u>however</u>, that, with respect to clauses (1), (2), (3), (4), or (5), any such event, change, effect, development or occurrence shall be taken into account if it is disproportionately adverse to the Buyer Group, taken as a whole, when compared to other, similarly situated Persons operating in the industry in which the Buyer Group operates; and <u>provided</u>, <u>further</u>, that if no Buyer Parent Shares are to be issued hereunder, then (ii) of the definition of Buyer Material Adverse Effect shall be deemed deleted and of no further force or effect for purposes of this Agreement including <u>Section 6.3</u>.

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"<u>Buyer Parent Per Share Proceeds Amount</u>" means $29.50 (or a lesser amount if requested by Buyer Parent in writing and consented to in writing by Seller Parent in its sole and absolute discretion; <u>provided</u> that, for the avoidance of doubt, if Seller Parent does not consent in writing to any such lesser amount, the Buyer Parent Per Share Proceeds Amount shall be $29.50).

"<u>Buyer Parent Share Proceeds Amount</u>" means the product of (i) the aggregate number of shares of Buyer Parent Class A Common Stock sold in Offerings (not to exceed 8,474,576), <u>multiplied by</u> (ii) the Buyer Parent Per Share Proceeds Amount; <u>provided</u> that the Buyer Parent Share Proceeds Amount shall not be less than $0.

"<u>Buyer Parent Shares</u>" means the difference of (i) 8,474,576 shares of Buyer Parent Class A Common Stock <u>minus</u> (ii) the aggregate number of shares of Buyer Parent Class A Common Stock sold in Offerings, if any; <u>provided</u> that the Buyer Parent Shares shall not be less than 0.

"<u>CARES Act</u>" means the Coronavirus, Aid, Relief and Economic Security Act (H.R. 748) (together with all amendments thereto and the statutes, rules and regulations promulgated thereunder) and any successor to such statutes, rules or regulations.

"<u>Cash Consideration Amount</u>" means an amount equal to the (i) the Estimated Business Enterprise Value, <u>minus</u> (ii) $250,000,000, <u>plus</u> (iii) the Buyer Parent Share Proceeds Amount.

"<u>Claim</u>" means any arbitration, criminal charge, claim, lawsuit, other legal proceeding, action, order, writ, injunction, demand, charge, complaint, grievance, demand, notice of violation, litigation, proceeding, mediation, audit, inquiry, dispute, criminal prosecution, citation, summons, subpoena or investigation of any nature by or before any Governmental Authority, whether civil, criminal, administrative, judicial, investigative, regulatory or otherwise, whether at law or in equity, whether formal or informal, whether public or private.

"<u>Closing Date Cash</u>" means an amount equal to all cash and cash equivalents (including marketable securities and short-term investments held in bank accounts or investment accounts the registered owner of which is an Acquired Entity), taken as a whole, and determined in accordance with GAAP; <u>provided</u> that Closing Date Cash shall (i) include the amount of any checks and drafts made out to any of the Acquired Entities that have been received by any such Acquired Entity but not yet cleared and any wires and deposits transmitted to any such account and in transit, and (ii) exclude the amount of any checks and drafts made out by any of the Acquired Entities that have been sent by any such Acquired Entity but not yet cleared and any wires and deposits transmitted by any such account and in transit, in each case, as of the Measurement Time; <u>provided</u>, <u>further</u>, that Closing Date Cash shall not include any Restricted Cash.

"<u>Closing Date Indebtedness</u>" means an amount equal to the sum of the Indebtedness of the Acquired Entities and the Transaction Expenses, without double counting and outstanding as of immediately prior to Closing.

"<u>Code</u>" means the Internal Revenue Code of 1986.

"<u>Collective Bargaining Agreement</u>" means any collective bargaining agreement or any other labor-related agreement or arrangement with any labor union, trade union or labor organization.

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"<u>Commercial Tax Agreement</u>" means any contract entered into the ordinary course of business the principal subject matter of which is not Tax (such as financing agreements with Tax gross-up obligations or leases with Tax escalation provisions).

"<u>Company Employee Plans</u>" means each Employee Plan that is sponsored or maintained by an Acquired Entity.

"<u>Confidentiality Agreement</u>" means, collectively, (i) that certain letter agreement, dated July 7, 2022, by and between Ultimate Parent and Buyer, and (ii) that certain letter agreement, dated August 24, 2022, by and between Ultimate Parent and Buyer (the "<u>Clean Team Confidentiality Agreement</u>").

"<u>Consent</u>" means any consent, approval, authorization, permission or waiver of, or registration, declaration, waiting period expiration or other exemption.

"<u>Contract</u>" means any agreement, deed, bond, mortgage, lease, license, instrument, indenture, note, commitment, undertaking, arrangement or contract or other instrument or obligation that is legally binding, in each case, whether written or oral.

"<u>Copyleft Software</u>" means any Software licensed or distributed as "free" or "open source" Software (e.g., Linux) as defined by the Free Software Foundation or the Open Source Initiative, as applicable, that require as a condition of use, modification, or distribution of such open source Software that other Software incorporated into or with, derived from, or distributed with such open source Software, be (A) disclosed or distributed in source code form, (B) licensed to a third party for the purpose of making derivatives, or (C) redistributable by such third party at no charge, which includes Software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models substantially equivalent to any of the following: GNU's General Public License (GPL) or Lesser/Library GPL (LGPL), the Sun Community Source License (SCSL), and the Sun Industry Source License (SISL).

"<u>COVID-19</u>" means SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks.

"<u>COVID-19 Measures</u>" means any quarantine, "shelter in place," "stay at home," social distancing, shut down, closure, sequester, safety, vaccine or similar Law, directive, guidelines or recommendations promulgated by any Governmental Authority or quasi-governmental organization, including the Centers for Disease Control and Prevention, the World Health Organization and the Occupational Safety and Health Administration, in each case, in connection with or in response to COVID-19.

"<u>Data Room</u>" means the "Minuet" electronic data room folders hosted by Datasite.

"<u>Data Security Requirements</u>" means, collectively, all of the following to the extent governing Processing of Personal Information, or otherwise as related to privacy or breach notification requirements with respect to Personal Information and applicable to the Acquired Entities and to the conduct of its Business: (i) each Acquired Entity's published and internal

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written policies to the extent relating to Personal Information; (ii) all applicable Privacy Laws; and (iii) any Contracts between such Acquired Entity, on the one hand, and its vendors, marketing affiliates, customers, business partners, or other Persons, on the other hand, to the extent governing use and disclosure of Personal Information, including any consents, authorizations, waivers of authorization, or other permission or third-party terms pursuant to which any Acquired Entity Processed or Processes Personal Information.

"<u>Disclosure Schedule</u>" means the disclosure schedule attached as <u>Schedule A.</u>

"<u>Employee Plans</u>" means each (i) "employee benefit plan" within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), (ii) other material benefit and compensation plan, policy, program, practice, arrangement or agreement, including pension, profit-sharing, savings, termination, executive compensation, phantom stock, change-in-control, retention, salary continuation, vacation, sick leave, disability, death benefit, insurance, hospitalization, medical, dental, life, employee loan, educational assistance, fringe benefit, deferred compensation, retirement or post-retirement, severance, equity or equity-based, incentive and bonus plan, contract, policy, program, practice, arrangement or agreement, and (iii) other material employment, consulting or other individual agreement, plan, practice, policy, contract, program, and arrangement.

"<u>Enhancement Act</u>" means the Paycheck Protection Program and Health Care Enhancement Act (H.R. 266) (together with all amendments thereto and the statutes, rules and regulations promulgated thereunder) and any successor to such statutes, rules or regulations.

"<u>Entity</u>" means any corporation (including any nonprofit corporation), general partnership, limited partnership, limited liability partnership, estate, trust, company (including any company limited by shares, limited liability company or joint stock company) or other association, organization or entity (including any Governmental Authority).

"<u>Environmental Claim</u>" means any Claim related to any Environmental Law or Environmental Permit, including those related to an actual or alleged Release of, or human exposure to, any Hazardous Materials or violation of any Environmental Law or Environmental Permit.

"<u>Environmental Laws</u>" means all Laws related to pollution or protection of the environment or human health and safety, including laws related to releases or threatened releases of Hazardous Materials into the indoor or outdoor environment (including air, surface water, groundwater, land, surface and subsurface strata) or otherwise related to the manufacture, processing, distribution, use, treatment, storage, Release, transport or handling of Hazardous Materials and all Laws related to endangered or threatened species of fish, wildlife and plants, and the management or use of natural resources.

"<u>Environmental Permit</u>" means any Permit issued under any applicable Environmental Law.

"<u>Equity Interests</u>" means, for any Person, any (i) shares or units of capital stock or voting securities, membership or limited liability company interests or units, partnership interests or other ownership interests (whether voting or nonvoting) in such Person, (ii) other interest or

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participation (including phantom shares, units or interests or stock appreciation rights) in such Person that confers on the holder thereof the right to receive a share of the profits and losses of, or distribution of assets of, such Person, (iii) subscriptions, calls, warrants, options or commitments of any kind or character related to, or entitling any Person or entity to purchase or otherwise acquire any of the interests in the foregoing clauses (i) and (ii), or (iv) securities convertible into or exercisable or exchangeable for any of the interests in the foregoing clauses (i)–(iii).

"<u>ERISA</u>" means the Employee Retirement Income Security Act of 1974.

"<u>Estimated Business Enterprise Value</u>" means an amount equal to the solution of (i) the Base Business Enterprise Value, <u>plus</u> (ii) the Estimated First Adjustment Amount.

"<u>Estimated First Adjustment Amount</u>" means an amount equal to the solution of (i) the Estimated Closing Date Cash, <u>plus</u> (ii) the Estimated Net Working Capital Adjustment Amount, <u>minus</u> (iii) the Estimated Closing Date Indebtedness; <u>provided</u> that the Estimated First Adjustment Amount may be positive or negative.

"<u>Final Specified Customer Net Working Capital</u>" means the Specified Customer Net Working Capital determined in accordance with the Accounting Principles.

"<u>Financing Sources</u>" means the entities that have committed to arrange or provide or otherwise entered into agreements in connection with all or any portion of the Financing or other financings in connection with the transactions contemplated hereby, including the parties to the Commitment Letters and parties to any joinder agreements, note purchase agreements, indentures or credit agreements entered into pursuant thereto or related thereto and, in each case, their respective successors and assigns.

"<u>First Adjustment Amount</u>" means an amount equal to the solution of (i) the Closing Date Cash, <u>plus</u> (ii) the Net Working Capital Adjustment Amount, <u>minus</u> (iii) the Closing Date Indebtedness; <u>provided</u> that the First Adjustment Amount may be positive or negative.

"<u>Fraud</u>" means (i) a knowing and deliberate common law fraud under the Laws of the State of Delaware in the making of a materially false representation or warranty expressly set forth in <u>Article II</u>, <u>Article III</u> or <u>Article IV</u>; <u>provided</u> that Fraud does not include any fraud based on negligence, gross negligence or recklessness or (ii) any action or omission that constitutes a material breach of any covenant or agreement herein; <u>provided</u> that such action or omission was taken (1) with the knowledge that it was a breach of a covenant or agreement herein and (2) with the intent to commit a material breach hereof.

"<u>GAAP</u>" means U.S. generally accepted accounting principles in effect as of the date hereof.

"<u>Governmental Authority</u>" means any government, court, regulatory or administrative agency, commission or authority or other governmental instrumentality, whether federal, state or local, domestic, foreign or multinational, or any contractor acting on behalf of such agency, commission, authority or governmental instrumentality.

"<u>Governmental Health Care Programs</u>" means (i) the Medicare program established under and governed by the applicable provisions of Title XVIII of the Social Security Act,

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(ii) the Medicaid program governed by the applicable provisions of Title XIX of the Social Security Act and any state's applicable Laws implementing the Medicaid program and (iii) any other federal health care program as defined in 42 U.S.C. 1320a-7b, and any similar or successor programs with, paid for by, or for the benefit of any Governmental Authority.

"<u>Hazardous Materials</u>" means (i) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls and radon gas, (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants" or "pollutants" or words of similar meaning and regulatory effect or (iii) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law.

"<u>Health Care Laws</u>" means all Laws related to the provision of health care services or health care regulatory matters, in each case, to the extent applicable to the Business, including the following: (i) any Law prohibiting or regulating fraud and abuse or the referral of health care items or services (including the following statutes: the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); the civil False Claims Act (31 U.S.C. § 3729 et seq.); Sections 1320a-7, 1320a-7a and 1320a-7b of Title 42 of the United States Code; (commonly referred to as the "Federal Exclusion Statutes" (and including the Federal Anti-Kickback Statute)); the Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Federal physician self-referral law (42 U.S.C. § 1395nn), the Federal Program Fraud Civil Remedies Act (31 U.S.C. § 3801 et seq.) and the Federal Health Care Fraud Law (18 U.S.C. § 1347)); (ii) Laws related to Governmental Health Care Programs; (iii) the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) and the regulations promulgated thereunder; (iv) any state health care professional licensure Laws; (v) any Laws related to billing or claims for reimbursement for health care services, including Laws related to patient charges, timely repayment of overpayments, and submissions to any payor; (vi) HIPAA; (vii) all Laws relating to utilization review, payors, third party administrators, preferred provider networks, and risk bearing organizations as applicable to the Business; and (viii) any similar federal, state or local Laws.

"<u>HIPAA</u>" means the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations set forth at 45 C.F.R. Parts 160, 162 and 164.

"<u>HSR Act</u>" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"<u>Income Tax</u>" means any U.S. federal, state, local or non-U.S. Tax determined by reference to income, gains, net worth, gross receipts, or any Taxes imposed in lieu of such a Tax.

"<u>Indebtedness</u>" means, for any Person, (i) the principal amount, <u>plus</u> any related accrued and unpaid interest and fees or prepayment premiums or penalties, of all indebtedness for borrowed money of such Person incurred under a loan agreement or evidenced by any note, bond, debenture or other debt security, (ii) all obligations of such Person in respect of letters of credit, surety bonds, performance bonds, bankers' acceptances, or similar obligations to the extent drawn upon, (iii) obligations of a lessee under leases that are required to be recorded as

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capital leases in accordance with the Accounting Principles (excluding any obligations for operating leases or leases for real property), (iv) any monetary obligations of a Person secured by a Lien (other than Permitted Liens) against the assets of such Person (other than trade payables entered into in the ordinary course of business), (v) Accrued Taxes, (vi) obligations under foreign exchange contracts, interest rate and currency swap arrangements or any other arrangements designed to provide protection against fluctuations in interest or currency rates, (vii) obligations to pay any potential future earnout, purchase price adjustment or release of "holdback" (assuming the maximum amount thereof) in connection with a prior acquisition, but excluding trade payables incurred in the ordinary course of business), (viii) obligations for the employer portion of any payroll Taxes deferred under the CARES Act; (ix) Liabilities for earned but unpaid 401(k), deferred compensation, profit sharing, matching contribution or claim, premium or other costs associated with a Business Benefit Plan; (x) Liabilities related to any underfunded liability under any Business Benefit Plan that is a nonqualified deferred compensation plan, defined benefit pension plan or retiree health or welfare plan that is sponsored or maintained by such Person; (xii) any guarantees of such Person (including the incurrence of a Lien) with respect to any of the foregoing obligations in clauses (i) through (xii) of any other Person; and (xii) any accrued interest and fees (including prepayment penalties, premiums, breakage costs, fees and other costs and expenses associated with repayment) related to any of the foregoing; <u>provided</u>, <u>however</u>, that Indebtedness of an Acquired Entity shall not include any liabilities or obligations solely between or among any of the Acquired Entities.

"<u>IP Rights</u>" means all intellectual property and/or proprietary rights throughout the world, including all U.S. and foreign, state, provincial and federal (a) issued patents and pending patent applications, and any and all divisions, continuations, continuations in part, reissues, continuing patent applications, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention, certificates of registration and like rights; inventions, invention disclosures, discoveries and improvements, whether or not patentable ("<u>Patents</u>"), (b) trademarks, service marks, trade names, designs, logos and slogans, all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith ("<u>Trademarks</u>"), (c) registered and unregistered copyrights in any work of authorship (including mask works, databases and Software) and all registrations and applications to register the same ("<u>Copyrights</u>"), (d) trade secrets (including those trade secrets defined in the United States Uniform Trade Secrets Act and under corresponding foreign Law), including in formulas, compositions, processes, techniques, business and technical information, know-how, and non-public information ("<u>Trade Secrets</u>") and (e) Internet domain names and social media accounts.

"<u>IRS</u>" means the U.S. Internal Revenue Service or any successor agency.

"<u>IT Assets</u>" means computer and other information technology systems and assets, including hardware (including desktop computers, laptop computers, tablets, servers, cellular telephones, "smart phones," communications equipment and related devices) ("<u>Hardware</u>"), Software, and documentation and reference materials owned or controlled by the Business or a member of the Seller Group for use in the operation of the Business.

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"<u>Laws</u>" means any laws (statutory, common or otherwise), constitutions, treaties, conventions, ordinances, codes, rules, regulations, guidance, manual, Orders or other similar requirements enacted, adopted, promulgated or applied by a Governmental Authority.

"<u>Liability</u>" means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential and whether due or to become due).

"<u>Lien</u>" means any mortgage, lien, pledge, charge, security interest or other security agreement; <u>provided</u>, <u>however</u>, that Lien does not include any restriction on transfer arising under an applicable securities Law.

"<u>Losses</u>" means all losses, Liabilities, damages, Taxes, penalties, fines, assessments, judgments, damages, settlement amounts, forfeitures, fees, costs and expenses (including the reasonable and documented fees and expenses of counsel and experts and their staffs); <u>provided</u>, <u>however</u>, that Losses shall not include any punitive or exemplary damages except to the extent awarded in a Third-Party Claim.

"<u>Malicious Code</u>" means any virus, Trojan horse, worm, or other software routines or hardware components designed to permit unauthorized access, disablement, erasure or otherwise designed to harm Software, hardware or data.

"<u>Material Adverse Effect</u>" means any event, change, effect, development or occurrence that, individually or in the aggregate with any other event, change, effect, development or occurrence, has, or would reasonably be expected to have, a material adverse effect on the businesses, financial condition or results of operations of the Business, taken as a whole; <u>provided</u>, <u>however</u>, that none of the following (or any change, effect, development or occurrence related to the following) shall be a Material Adverse Effect or be considered in determining whether a Material Adverse Effect has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;changes in general economic conditions, including changes in exchange rates, interest rates or monetary policy, or the credit, financial, currency, securities or capital markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;changes in general conditions in the industry in which the Acquired Entities and the Business operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;any natural (including weather-related) or man-made disaster, disease or virus (including COVID-19), pandemic (including the COVID-19 pandemic), epidemic, act of terrorism, sabotage, cyberattack, military action or war, or any escalation or worsening thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;changes in general legal, regulatory or political conditions after the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;changes in Law, GAAP, or any accounting requirements applicable to the industry in which the Acquired Entities and the Business operate or the interpretation of any of the foregoing after the date hereof;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;the announcement, pendency or anticipated consummation of the Acquisition, the Liabilities Assumption or any of the other transactions contemplated hereby, the negotiation, execution or performance hereof, the identity of the Buyer Entities or any facts or circumstances related to the Buyer Entities or the announcement or other disclosure of the Buyer Entities' plans or intentions for the conduct of any of the Business, the Transferred Assets, the Assumed Liabilities or the Acquired Entities after the Closing, including the effect of any of the foregoing on the relationships, contractual or otherwise, of or any Acquired Entity, the Business, the Transferred Assets or the Assumed Liabilities with clients, customers, employees, suppliers, vendors, service providers or Governmental Authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;any action or omission required to be taken or omitted by Sellers, any Acquired Entity or the Business pursuant to this Agreement or which is otherwise taken or omitted at the written consent or request of a Buyer Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;any breach hereunder by a Buyer Entity or any action taken by a Buyer Entity or any of its Representatives; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;any failure by an Acquired Entity or the Business to meet any internal or published Projection for any period (<u>provided</u> that the underlying cause of any such failure may be, or be considered in determining, a Material Adverse Effect to the extent not otherwise excluded under the foregoing clauses (i)–(viii));

<u>provided</u>, <u>however</u>, that, with respect to clauses (i), (ii), (iii), (iv), or (v), any such event, change, effect, development or occurrence shall be taken into account if it is disproportionately adverse to the Business, taken as a whole, when compared to other, similarly situated Persons operating in the industry in which the Acquired Entities and the Business operate.

"<u>Measurement Time</u>" means 12:01 a.m. on the Closing Date; <u>provided</u>, <u>however</u>, that, if the Closing occurs on the first Business Day of a calendar month, then the Measurement Time shall be 12:01 a.m. on the first day of the calendar month in which the Closing occurs and the Closing shall be effective for tax and accounting purposes as of such Measurement Time.

"<u>Net Working Capital</u>" means an amount equal to the difference of (i) the aggregate value of the current assets that are owned by the Acquired Entities or that are Transferred Assets, in each case, in the balance sheet accounts listed in <u>Exhibit I</u>, <u>minus</u> (ii) the aggregate value of the current liabilities of Acquired Entities or that are Assumed Liabilities, in each case, in the balance sheet accounts listed in <u>Exhibit I</u>, in each case under the forgoing clauses (i) and (ii), calculated without double counting as of the Measurement Time and determined in accordance with the Accounting Principles; <u>provided</u>, <u>however</u>, that Net Working Capital shall exclude all Closing Date Cash, Restricted Cash, Closing Date Indebtedness, Income Tax assets (including deferred Income Tax assets), Income Tax liabilities (including deferred Income Tax liabilities), Post-Signing Insurance Proceeds, operating lease obligations, right of use assets and capitalized development costs that are classified as short-term assets, in each case, regardless of whether any such items are current assets or current liabilities of the Acquired Entities under GAAP. For

------

illustrative purposes only, <u>Exhibit I</u> sets forth the calculation of Net Working Capital assuming that the Closing Date was June 30, 2022.

"<u>Net Working Capital Adjustment Amount</u>" means an amount equal to the difference of (i) the Net Working Capital, <u>minus</u> (ii) the Target Net Working Capital; <u>provided</u> that the Net Working Capital Adjustment Amount may be positive or negative.

"<u>Offering</u>" means the sale following the date hereof and prior to the Closing Date by Buyer Parent of shares of Buyer Parent Class A Common Stock pursuant to an effective Registration Statement (other than Form S-4 or Form S-8 or any similar or successor form) filed under the Securities Act.

"<u>Order</u>" means any judgment, decree, injunction, rule, order, decision, decree, ruling or assessment of any arbitrator or Governmental Authority.

"<u>Organizational Documents</u>" means any corporate, partnership or limited liability organizational documents, including certificates or articles of incorporation, bylaws, certificates of formation, operating agreements (including limited liability company agreements and agreements of limited partnership), certificates of limited partnership, partnership agreements, shareholder agreements and certificates of existence, as applicable.

"<u>Owned Intellectual Property</u>" means all IP Rights that are owned or purported to be owned by any Acquired Entity or any member of the Seller Group to the extent included in the Transferred Assets, including all Owned Software.

"<u>Owned Software</u>" means all Software owned or purported to be owned by any Acquired Entity or any member of the Seller Group to the extent included in the Transferred Assets.

"<u>Permit</u>" means any permit, license, registration, certificate, franchise, qualification, waiver, authorization, provider or supplier number, clearance or similar rights issued, granted or obtained by or from any Governmental Authority.

"<u>Permitted Liens</u>" means (i) mechanics', carriers', materialmens', workers', repairers', landlords' and similar Liens, (ii) Liens related to any amounts not yet delinquent or are being contested in good faith, and in each case for which adequate accruals or reserves have been established, (iii) Liens for Taxes not yet due and payable or the amount of which is being contested in good faith, and for which appropriate reserves have been established in accordance with GAAP, (iv) Liens on real property (including easements, rights of way, covenants, conditions, licenses, reservations, zoning ordinances, encroachments, servitudes, and similar restrictions) affecting the underlying fee interest of any real property, (v) zoning, entitlement, building codes, permits, utility easements, rights of way, environmental and other land use laws regulating the use or occupancy of real property and improvements or the activities conducted thereon that are imposed by any Governmental Authority having jurisdiction over such real property that are not violated by the current use or occupancy of such real property or the operation of the businesses of the Acquired Entities as currently conducted, (vi) public roads and highways or title to any portion of the real property lying within the right of way or boundary of any public road or private road that do not materially impair the occupancy, use or value of such

------

real property, (vii) to the extent terminated in connection with the Closing, Liens securing payment, or any other obligations, of the Acquired Entities for Indebtedness, (viii) licenses of, or other grants of rights or interests with respect to, or obligations related to, IP Rights, (ix) Liens arising under worker's compensation, unemployment insurance, social security, retirement or similar laws, (x) Liens that are not material to the Business and (xi) Liens listed in <u>Section 11.13(a)(ii)</u> of the Disclosure Schedule.

"<u>Person</u>" means any individual or Entity.

"<u>Personal Information</u>" means information that identifies a specific natural person or when used in combination with other data elements is capable of identifying a specific natural person, the use, disclosure, transmission, receipt, collection, processing or maintenance of or access to which is regulated by one or more Laws, including, without limitation, "Protected Health Information" and "Electronic Protected Health Information" (as those terms are defined in 45 CFR § 160.103).

"<u>Pre-Closing Straddle Period</u>" means the portion of any Straddle Period ending on the Closing Date.

"<u>Pre-Closing Tax Period</u>" means any taxable period ending on or before the Closing Date.

"<u>Pre-Closing Taxes</u>" means (i) any Taxes of or with respect to an Acquired Entity or the owner of any Transferred Asset for any Pre-Closing Tax Period (including, for the avoidance of doubt, the Pre-Closing Straddle Period), (ii) any Taxes that any Acquired Entity is liable for, including under U.S. Treasury Regulation Section 1.1502-6 (or under any similar provision of state, local or non-U.S. Law) as a result of being a member of (or leaving) any Affiliated Group on or before the Closing Date, as a transferee or successor, by Contract (other than a Commercial Tax Agreement) or otherwise by operation of Law, which Taxes relate to a Pre-Closing Tax Period or an event or transaction occurring or relationship existing on or prior to the Closing, or (iii) any payroll, unemployment, social security or Medicare Taxes deferred pursuant to Section 2302 of the CARES Act or similar legislation, orders or guidance for any Pre-Closing Tax Period; <u>provided</u> that "Pre-Closing Taxes" shall not include (1) any Taxes included in the Estimated Business Enterprise Value or (without duplication) the Final First Adjustment Amount, (2) the portion of any Transfer Taxes payable by Buyer pursuant <u>Section 8.5</u>, or (3) any Taxes arising as a result of transactions entered into on the Closing Date after the Closing outside of the ordinary course of business and not contemplated by this Agreement.

"<u>Preliminary Specified Customer Net Working Capital</u>" means the Specified Customer Net Working Capital, set forth in the First Adjustment Amount as finally determined.

"<u>Privacy Laws</u>" means HIPAA, the Payment Card Industry Data Security Standards (PCI-DSS), and any Laws governing the Processing of Personal Information, in each case to the extent applicable to any Acquired Entity.

"<u>Process</u>" or "<u>Processing</u>" means the creation, collection, use, storage, processing, distribution, transfer (including cross-border transfers), import, export, safeguarding, disposal, access, transmission or disclosure or other activity regarding data (whether electronically or in any other form or medium) of Personal Information.

------

"<u>Protected Communications</u>" means, at any time on or prior to the Closing, all communications in whatever form, whether written, oral, video, electronic or otherwise, that shall have occurred between or among any of Sellers, an Acquired Entity or any of their respective equity holders or Representatives and attorneys (including Skadden) related to or in connection with this Agreement, the events and negotiations leading to this Agreement, any of the transactions contemplated herein or any other potential sale or transfer of control transaction involving an Acquired Entity.

"<u>Purchase Price</u>" means an amount equal to the sum of (i) the Base Business Enterprise Value, <u>plus</u> (ii) the First Adjustment Amount, <u>plus</u> (iii) the Second Adjustment Amount.

"<u>Reference Date</u>" means the date that is five (5) years preceding the date hereof.

"<u>Registration Statement</u>" shall mean a registration statement of Buyer Parent under the Securities Act which covers Buyer Parent Class A Common Stock.

"<u>Related to the Business</u>" means exclusively related to the ownership and operation of the Business.

"<u>Release</u>" means any release, spill, emission, leaking, pumping, emitting, depositing, discharging, injecting, escaping, leaching, dispersing, dumping, pouring, disposing or migrating into, onto or through the environment (including air, surface water, ground water, land surface or subsurface strata).

"<u>Replacement Award VWAP</u>" means $82.8735.

"<u>Representatives</u>" means, for any Person, such Person's officers, directors, managers, employees, contractors, consultants, agents, financial advisors, attorneys, accountants, other advisors, Affiliates and other representatives.

"<u>Restricted Cash</u>" means any cash or cash equivalents owned by any Acquired Entity that are not freely useable by such Acquired Entity because of any restriction on use or distribution in any Contract, including (a) deposits (including collateral deposits, security deposits and escrow amounts) with third parties and (b) cash collateral under any letter of credit.

"<u>RWI Retention Amount</u>" means $4,875,000, in the aggregate; <u>provided</u> that to the extent the Retention (as defined in the RWI Policy) is greater than $3,250,000 on the 12-month anniversary of the Closing Date, the RWI Retention Amount shall be reduced to $3,250,000 in the aggregate, on such date.

"<u>SEC</u>" means the U.S. Securities and Exchange Commission.

"<u>Second Adjustment Amount</u>" means an amount equal to the difference of (i) the Final Specific Customer Net Working Capital, <u>minus</u> (ii) Preliminary Specified Customer Net Working Capital; <u>provided</u> that the Second Adjustment Amount may be positive or negative.

------

"<u>Second Adjustment Date</u>" means the earlier of (i) the final settlement of all contract reconciliations between the Specified Customers and the Company for contract years ending prior to January 1, 2023 or (ii) December 31, 2023.

"<u>Securities Act</u>" means the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.

"<u>Sell-Side Fundamental Representations</u>" means the representations and warranties in <u>Sections 2.1</u>, <u>2.2</u>, <u>2.4</u>, <u>2.6</u>, <u>3.1</u>, <u>3.2</u> (other than the last sentence thereof) and <u>3.22</u>.

"<u>Seller Consolidated Taxes</u>" means Taxes of (i) any member of an affiliated group as defined in Section 1504 of the Code that has filed a consolidated return for U.S. federal income Tax purposes, or (ii) any consolidated, combined or unitary group (or member thereof) under state, local, or non-U.S. Law, of which any of the Acquired Entities (or any predecessor) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar U.S., state or local, or non-U.S. Law.

"<u>Seller Employee Plans</u>" means each Employee Plan that is sponsored or maintained by Sellers or any of their Affiliates (other than any Acquired Entity) that covers or otherwise provides for the payment or provision of compensation or benefits to any Business Employee or their respective beneficiaries or dependents.

"<u>Seller Group</u>" means, collectively, Seller Parent and its Subsidiaries (other than the Acquired Entities).

"<u>Seller Material Adverse Effect</u>" means any event, change, effect, development or occurrence that, individually or in the aggregate with any other event, change, effect, development or occurrence, prevents, materially delays or materially impedes, or would reasonably be expected to prevent, materially delay or materially impede, Sellers' consummation of the transactions contemplated hereby.

"<u>Sellers' Knowledge</u>" means the actual knowledge, after reasonable inquiry, of the individuals listed in <u>Section 11.13(a)(iii)</u> of the Disclosure Schedule.

"<u>Shared Services</u>" means (i) all Contracts of Sellers or any of their Subsidiaries (other than an Acquired Entity) as of the Closing Date under which goods, services or other rights are made available to any Acquired Entity, on the one hand, and Sellers or any of their Subsidiaries (other than an Acquired Entity), on the other hand, and (ii) all services and benefits provided by Sellers or any of their Subsidiaries (other than an Acquired Entity) as of the Closing Date to any Acquired Entity.

"<u>Software</u>" means all computer software, programs, operating systems, databases, and sets of statements or instructions, in all forms (including Source Code) and other items and documentation related thereto.

"<u>Source Code</u>" means any collection of code and instructions in a form that is readily suitable for review and edit by computer programmers, including related programmer comments and documentation embedded therein.

------

"<u>Specified Customers</u>" means the Material Customers set forth in <u>Section 11.13(a)(iv)</u> of the Disclosure Schedule.

"<u>Specified Customer Net Working Capital</u>" means the net amounts due from related contract reconciliations with each Specified Customer. For illustrative purposes only, <u>Exhibit I</u> sets forth the calculation of Specified Customer Net Working Capital assuming that the Closing Date was June 30, 2022.

"<u>Straddle Period</u>" means any taxable period that includes (but does not end on) the Closing Date.

"<u>Subsidiary</u>" of any Person means any Entity (i) of which 50% or more of the outstanding share capital, voting securities or other voting equity interests are owned, directly or indirectly, by such Person, (ii) of which such Person is entitled to elect, directly or indirectly, at least 50% of the board of directors (or managers) or similar governing body of such Entity or (iii) if such Entity is a limited partnership or limited liability company, of which such Person or one of its Subsidiaries is a general partner or managing member or has the power to direct the policies, management or affairs.

"<u>Target Net Working Capital</u>" means $31,265,000.

"<u>Tax Contest</u>" means any audit, assessment, action, suit or proceeding or other contest with respect to Taxes.

"<u>Tax Return</u>" means any return, form, declaration, report, claim for refund or information return, certificate, bill, statement or other written information filed or submitted or required to be filed or submitted with any Taxing Authority related to Taxes, including any supplement, schedule or attachment thereto, and including any amendment thereof.

"<u>Taxes</u>" means any U.S. or non-U.S. federal, state, county, local, provincial or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, any penalties or assessable payments under Section 4980H of the Code, capital unit, license, payroll, wage or other withholding, employment, social security (or similar), severance, stamp, occupation, premium, windfall profits, customs duties, unemployment, disability, value added, healthcare, unclaimed property, escheat, alternative or add on minimum, estimated and other taxes of any kind whatsoever and any fee, custom, impost, assessment, obligation, levy, tariff, charge or duty in the nature of a tax (including deficiencies, penalties, interest, additions to tax, additional amounts and other charges or fees attributable thereto).

"<u>Taxing Authority</u>" means the IRS and any other Governmental Authority responsible for the administration, imposition, regulation, determination or collection of any Tax.

"<u>Transaction Expenses</u>" means (a) all fees, costs and expenses incurred prior to or at the Closing and payable by the Acquired Entities to accountants, attorneys, financial advisors, investment banks and other professional advisors in connection with the preparation and

------

negotiation of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, in each case, to the extent not paid as of immediately prior to the Closing and (b) the amount of any change-in-control payments, transaction bonuses, retention payments or other similar payments payable by any of the Acquired Entities solely as a result of the Closing to any current or former director, manager, officer, employee or individual independent contractor of the Seller Group (including the Business Employees) from or incurred in connection with this Agreement or the transactions contemplated hereby and the employer portion of payroll, social security, unemployment or similar Taxes arising therefrom.

"<u>Treasury Regulations</u>" means the regulations of the United States Department of the Treasury promulgated under the Code, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;In addition to the terms defined in <u>Section 11.13(a)</u>, as used herein, each capitalized term listed below has the meaning identified in the Section set forth opposite such term below.

2021 Buyer 10-K&nbsp;&nbsp;&nbsp;&nbsp;Article IV

2022 Audited Financial Statements&nbsp;&nbsp;&nbsp;&nbsp;Section 5.17

Accrued PTO&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(e)

Acquisition&nbsp;&nbsp;&nbsp;&nbsp;Section 1.1

Acquisition Proposal&nbsp;&nbsp;&nbsp;&nbsp;Section 5.14

Additional Financial Information&nbsp;&nbsp;&nbsp;&nbsp;Section 5.17

Affiliate Contract&nbsp;&nbsp;&nbsp;&nbsp;Section 3.20

Agreement&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Allocation Percentage&nbsp;&nbsp;&nbsp;&nbsp;Section 1.4(a)(iii)

Alternate Debt Financing&nbsp;&nbsp;&nbsp;&nbsp;Section 5.12(a)(i)

Assumed Employee Liabilities&nbsp;&nbsp;&nbsp;&nbsp;Section 1.9(c)

Assumed Liabilities&nbsp;&nbsp;&nbsp;&nbsp;Section 1.9

Bankruptcy and Equity Exceptions&nbsp;&nbsp;&nbsp;&nbsp;Section 2.2

Bill of Sale and Assignment Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(iv)

Binder Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 4.14

Books and Records&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(g)

Business Leased Real Property&nbsp;&nbsp;&nbsp;&nbsp;Section 3.6(b)

Buyer&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Buyer Closing Failure&nbsp;&nbsp;&nbsp;&nbsp;Section 7.1(d)(ii)

Buyer Confidential Information&nbsp;&nbsp;&nbsp;&nbsp;Section 5.21

Buyer Entities&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Buyer FSAs&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(h)

Buyer Indemnified Persons&nbsp;&nbsp;&nbsp;&nbsp;Section 9.1(a)

Buyer Parent&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Buyer Parent Class A Common Stock&nbsp;&nbsp;&nbsp;&nbsp;Section 4.4

Buyer Parent Class B Common Stock&nbsp;&nbsp;&nbsp;&nbsp;Section 4.4

Buyer Parent Common Stock&nbsp;&nbsp;&nbsp;&nbsp;Section 4.4

Buyer Parent Preferred Stock&nbsp;&nbsp;&nbsp;&nbsp;Section 4.4

Buyer Plans&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(b)(iii)

Buyer Related Persons&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(c)

Buyer Released Parties&nbsp;&nbsp;&nbsp;&nbsp;Section 10.2(a)

Buyer Releasing Parties&nbsp;&nbsp;&nbsp;&nbsp;Section 10.2(a)

Buyer Savings Plan&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(d)

------

Buyer SEC Documents&nbsp;&nbsp;&nbsp;&nbsp;Section 4.5(a)

Buyer SEC Financial Statements&nbsp;&nbsp;&nbsp;&nbsp;Section 4.5(b)

Buyer Tax Returns&nbsp;&nbsp;&nbsp;&nbsp;Section 8.1(b)

Buy-Side Representations&nbsp;&nbsp;&nbsp;&nbsp;Section 10.1(e)

Claim Date&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Claim Notice&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Closing&nbsp;&nbsp;&nbsp;&nbsp;Section 1.2

Closing Date&nbsp;&nbsp;&nbsp;&nbsp;Section 1.2

Closing Delay Notice&nbsp;&nbsp;&nbsp;&nbsp;Section 1.2

Commercial Agreements&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(e)

Commitment Letters&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Company&nbsp;&nbsp;&nbsp;&nbsp;Recitals

Company Related Persons&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(c)

Consent Required Contracts&nbsp;&nbsp;&nbsp;&nbsp;Section 5.11(a)

Continuation Period&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(b)(i)

COVID-19 Relief Programs&nbsp;&nbsp;&nbsp;&nbsp;Section 3.23

Customer BA Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 3.14(h)

D&O Costs&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(b)

D&O Indemnifiable Claim&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(b)

D&O Indemnifying Party&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(b)

Debt Commitment Letter&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Debt Financing&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Dispute Notice&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(c)

Disputed Items&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(c)

Earnout Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 5.19

Earnout Shares&nbsp;&nbsp;&nbsp;&nbsp;Section 5.19

Employee Records&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(k)

Equity Award Schedule&nbsp;&nbsp;&nbsp;&nbsp;Section 3.11(h)

Estimated Closing Date Cash&nbsp;&nbsp;&nbsp;&nbsp;Section 1.4(a)(i)

Estimated Closing Date Indebtedness&nbsp;&nbsp;&nbsp;&nbsp;Section 1.4(a)(i)

Estimated Net Working Capital Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.4(a)(i)

Excluded Assets&nbsp;&nbsp;&nbsp;&nbsp;Section 1.8

Excluded IP Rights&nbsp;&nbsp;&nbsp;&nbsp;Section 1.8(h)

Excluded IT Assets&nbsp;&nbsp;&nbsp;&nbsp;Section 1.8(i)

FCPA&nbsp;&nbsp;&nbsp;&nbsp;Section 3.19

Fee Letter&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Filing&nbsp;&nbsp;&nbsp;&nbsp;Section 2.3(a)

Final First Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(d)

Final Second Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.6(d)

Financial Statements&nbsp;&nbsp;&nbsp;&nbsp;Section 3.3(a)

Financing&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Financing Letters&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

First Adjustment Statement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(a)

First Review Period&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(b)

Florida Company Commercial Agreement Amendment&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(c)

Form D Approval&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(c)

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FSA Participants&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(h)

HSR Act Clearance&nbsp;&nbsp;&nbsp;&nbsp;Section 6.1(a)

Indemnified Party&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Indemnifying Party&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Indemnitee Affiliates&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(d)

Independent Accountant&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(c)

Legal Restraint&nbsp;&nbsp;&nbsp;&nbsp;Section 6.1(b)

Liabilities Assumption&nbsp;&nbsp;&nbsp;&nbsp;Section 1.1

Lock-Up Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(vii)

Material Contract&nbsp;&nbsp;&nbsp;&nbsp;Section 3.7(a)

Material Customers&nbsp;&nbsp;&nbsp;&nbsp;Section 3.7(a)(i)

Material Suppliers&nbsp;&nbsp;&nbsp;&nbsp;Section 3.7(a)(ii)

MHI&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Negative First Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(d)

Negative Second Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.6(d)

NIA Pennsylvania&nbsp;&nbsp;&nbsp;&nbsp;Section 5.23

Non-Florida Commercial Agreements&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(e)

NYSE&nbsp;&nbsp;&nbsp;&nbsp;Section 4.2

Objection Notice&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Outside Date&nbsp;&nbsp;&nbsp;&nbsp;Section 7.1(b)(i)

Outstanding Buyer Common Shares&nbsp;&nbsp;&nbsp;&nbsp;Section 4.4

Parties&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Payment Statement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.4(a)

Personal Electronic Devices&nbsp;&nbsp;&nbsp;&nbsp;Section 1.8(q)

Positive First Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.5(d)

Positive Second Adjustment Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 1.6(d)

Post-Signing Insurance Proceeds&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(f)

Pre-Closing Indemnified Person&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(f)

Pre-Closing Tax Refund&nbsp;&nbsp;&nbsp;&nbsp;Section 8.3

Preferred Equity Commitment Letter&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Preferred Equity Financing&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(a)

Preservation Date&nbsp;&nbsp;&nbsp;&nbsp;Section 5.8(a)

Pre-Signing Buyer Reports&nbsp;&nbsp;&nbsp;&nbsp;Article IV

Privacy Consents&nbsp;&nbsp;&nbsp;&nbsp;Section 3.5(m)

Projections&nbsp;&nbsp;&nbsp;&nbsp;Section 10.1(c)

Purchase Price Allocation&nbsp;&nbsp;&nbsp;&nbsp;Section 8.4

R&W Insurance Policy&nbsp;&nbsp;&nbsp;&nbsp;Section 4.14

Registration Rights Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(v)

Regulatory Concession&nbsp;&nbsp;&nbsp;&nbsp;Section 5.3(c)

Replacement Award&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(c)

Required Amount&nbsp;&nbsp;&nbsp;&nbsp;Section 4.11(c)

Required Filings&nbsp;&nbsp;&nbsp;&nbsp;Section 2.3(b)(iii)

Required Information&nbsp;&nbsp;&nbsp;&nbsp;Section 5.12(b)(i)

Restrictive Covenant Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(vi)

Retained Liabilities&nbsp;&nbsp;&nbsp;&nbsp;Section 1.10

Second Adjustment Statement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.6(a)

------

Second Review Period&nbsp;&nbsp;&nbsp;&nbsp;Section 1.6(b)

Seller 401(k) Plan&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(d)

Seller FSAs&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(h)

Seller Indemnified Persons&nbsp;&nbsp;&nbsp;&nbsp;Section 9.1(b)

Seller Names&nbsp;&nbsp;&nbsp;&nbsp;Section 1.8(h)

Seller Parent&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Seller Released Parties&nbsp;&nbsp;&nbsp;&nbsp;Section 10.2(b)

Seller Releasing Parties&nbsp;&nbsp;&nbsp;&nbsp;Section 10.2(b)

Seller Tax Returns&nbsp;&nbsp;&nbsp;&nbsp;Section 8.1(a)

Sellers&nbsp;&nbsp;&nbsp;&nbsp;Preamble

Sell-Side Representations&nbsp;&nbsp;&nbsp;&nbsp;Section 10.1(c)

Skadden&nbsp;&nbsp;&nbsp;&nbsp;Section 10.3

Software License Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(iii)

Solvent&nbsp;&nbsp;&nbsp;&nbsp;Section 4.10

Specified Business Employees&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(c)

Specified Retained Liabilities&nbsp;&nbsp;&nbsp;&nbsp;Section 1.10(i)

Tail Policy&nbsp;&nbsp;&nbsp;&nbsp;Section 5.6(c)

Termination Fee&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(b)

Termination Fee Expenses&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(b)

Termination Fee Interest&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(b)

Termination Payments&nbsp;&nbsp;&nbsp;&nbsp;Section 7.2(b)

Third Party&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(a)

Third-Party Claim&nbsp;&nbsp;&nbsp;&nbsp;Section 9.2(b)

Transfer&nbsp;&nbsp;&nbsp;&nbsp;Section 1.1

Transfer Taxes&nbsp;&nbsp;&nbsp;&nbsp;Section 8.5

Transferred Asset&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7

Transferred Business Employee Devices&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(l)

Transferred Contracts&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(b)

Transferred Domain Names&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(i)

Transferred Employee&nbsp;&nbsp;&nbsp;&nbsp;Section 5.4(b)(i)

Transferred Employment-Related Agreements&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(c)

Transferred Equity Interests&nbsp;&nbsp;&nbsp;&nbsp;Recitals

Transferred IT/IP Assets&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(l)

Transferred Leases&nbsp;&nbsp;&nbsp;&nbsp;Section 1.7(a)

Transition Services Agreement&nbsp;&nbsp;&nbsp;&nbsp;Section 1.3(a)(ii)

Ultimate Parent&nbsp;&nbsp;&nbsp;&nbsp;Section 5.2

Ultimate Parent Equity Awards&nbsp;&nbsp;&nbsp;&nbsp;Section 3.11(h)

Underwriter&nbsp;&nbsp;&nbsp;&nbsp;Section 4.14

WARN Act&nbsp;&nbsp;&nbsp;&nbsp;Section 3.12(c)

[Signature Pages Follow]

------

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered as of the first date written above.

**EVOLENT HEALTH, INC.** <br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>____________________

Name: Seth Blackley

Title: Chief Executive Officer

**EVOLENT HEALTH LLC**<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>____________________

Name: Seth Blackley

Title: Chief Executive Officer

[Signature Page to Stock and Asset Purchase Agreement]

------

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered as of the first date written above.

**MAGELLAN HEALTH, INC.**<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Derrick Duke</u>____________________

Name: Derrick Duke

Title: President and CEO

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**MAGELLAN HEALTHCARE, INC.**

By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Derrick Duke</u>____________________

Name: Derrick Duke

Title: President and CEO

[Signature Page to Stock and Asset Purchase Agreement]

## Exhibit 2.6

**Exhibit 2.6**

**AMENDMENT NO. 1 TO STOCK AND ASSET PURCHASE AGREEMENT**

This AMENDMENT NO. 1, dated as of January 20, 2023 (this "<u>Amendment</u>"), is by and among Evolent Health, Inc., a Delaware corporation ("<u>Buyer Parent</u>"), Evolent Health LLC, a Delaware limited liability company ("<u>Buyer</u>" and, together with Buyer Parent, the "<u>Buyer Entities</u>"), and Magellan Health, Inc., a Delaware corporation ("<u>Seller Parent</u>"). Each capitalized term used but not defined in this Amendment has the meaning given to it in the Stock and Asset Purchase agreement, dated as of November 17, 2022 (the "<u>Purchase Agreement</u>"), by and among Buyer Parent, Buyer, Seller Parent and Magellan Healthcare, Inc., a Delaware corporation.

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, Section 11.1 of the Purchase Agreement provides that the Purchase Agreement may be amended only by a written instrument signed by the Buyer Entities and Seller Parent (on behalf of Sellers); and

&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, the Buyer Entities and Seller Parent desire to amend the Purchase Agreement as set forth in this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;**NOW, THEREFORE**, in consideration of the foregoing and covenants and agreements herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment to Disclosure Schedule</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Annex D to the Disclosure Schedule is amended and restated to be in the form of <u>Exhibit A</u> to this Amendment.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Except to the extent specifically amended in or supplemented by this Amendment, the Purchase Agreement remains unchanged and in full force and effect, and this Amendment shall be governed by and subject to the terms of the Purchase Agreement, as amended by this Amendment. Each reference in the Purchase Agreement to "hereof," "hereunder" or words of similar import, and all references to the Purchase Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind or nature (other than in this Amendment or as otherwise expressly provided) shall be deemed to mean the Purchase Agreement as amended by this Amendment regardless of whether this Amendment is expressly referenced therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The provisions of Sections 11.1, 11.2, 11.4, 11.5, 11.7, 11.9 and 11.11 of the Purchase Agreement are incorporated into this Amendment by reference and shall apply to this Amendment *mutatis mutandis*.

[Signature Pages Follow]

------

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered as of the first date written above.

EVOLENT HEALTH, INC.<br>

<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>______________

Name: Seth Blackley

Title: Chief Executive Officer

EVOLENT HEALTH LLC&nbsp;&nbsp;&nbsp;&nbsp;<br>

<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>_______________

Name: Seth Blackley

Title: Chief Executive Officer

MAGELLAN HEALTH, INC.<br>

By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Derrick Duke</u>_______________

Name: Derrick Duke

Title: President and CEO

## Exhibit 2.7

**Exhibit 2.7**

**AMENDMENT NO. 2 TO STOCK AND ASSET PURCHASE AGREEMENT**

This AMENDMENT NO. 2, dated as of February 17, 2023 (this "<u>Amendment</u>"), is by and among Evolent Health, Inc., a Delaware corporation ("<u>Buyer Parent</u>"), Evolent Health LLC, a Delaware limited liability company ("<u>Buyer</u>" and, together with Buyer Parent, the "<u>Buyer Entities</u>"), and Magellan Health, Inc., a Delaware corporation ("<u>Seller Parent</u>"). Each capitalized term used but not defined in this Amendment has the meaning given to it in the Stock and Asset Purchase agreement, dated as of November 17, 2022, as amended (the "<u>Purchase Agreement</u>"), by and among Buyer Parent, Buyer, Seller Parent and Magellan Healthcare, Inc., a Delaware corporation.

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, Section 11.1 of the Purchase Agreement provides that the Purchase Agreement may be amended only by a written instrument signed by the Buyer Entities and Seller Parent (on behalf of Sellers); and

&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, the Buyer Entities and Seller Parent desire to amend the Purchase Agreement as set forth in this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;**NOW, THEREFORE**, in consideration of the foregoing and covenants and agreements herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendments to Purchase Agreement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The definition of Net Working Capital in Section 11.13(a) of the Purchase Agreement is amended and restated to be as follows:

""<u>Net Working Capital</u>" means an amount equal to the difference of (i) the aggregate value of the current assets that are owned by the Acquired Entities or that are Transferred Assets, in each case, in the balance sheet accounts listed in Exhibit I, minus (ii) the aggregate value of the current liabilities of Acquired Entities or that are Assumed Liabilities, in each case, in the balance sheet accounts listed in Exhibit I, in each case under the forgoing clauses (i) and (ii), calculated without double counting as of the Measurement Time and determined in accordance with the Accounting Principles; <u>provided</u>, <u>however</u>, that Net Working Capital shall exclude all Closing Date Cash, Restricted Cash, Closing Date Indebtedness, Income Tax assets (including deferred Income Tax assets), Income Tax liabilities (including deferred Income Tax liabilities), Post-Signing Insurance Proceeds, operating lease obligations, right of use assets, **<u>accrued and unused vacation time and other paid time off as of the Closing Date of any Transferred Employee listed in Schedule I</u>** and capitalized development costs that are classified as short-term assets, in each case, regardless of whether any such items are current assets or current liabilities of the Acquired Entities under GAAP. For illustrative purposes only, Exhibit I sets forth the calculation of Net Working Capital assuming that the Closing Date was June 30, 2022."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Agreement is amended by adding <u>Exhibit A</u> hereto as Schedule I to the Purchase Agreement.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment to Disclosure Schedule</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Annex D to the Disclosure Schedule is amended and restated to be in the form of <u>Exhibit B</u> to this Amendment.

------

3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Except to the extent specifically amended in or supplemented by this Amendment, the Purchase Agreement remains unchanged and in full force and effect, and this Amendment shall be governed by and subject to the terms of the Purchase Agreement, as amended by this Amendment. Each reference in the Purchase Agreement to "hereof," "hereunder" or words of similar import, and all references to the Purchase Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind or nature (other than in this Amendment or as otherwise expressly provided) shall be deemed to mean the Purchase Agreement as amended by this Amendment regardless of whether this Amendment is expressly referenced therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The provisions of Sections 11.1, 11.2, 11.4, 11.5, 11.7, 11.9 and 11.11 of the Purchase Agreement are incorporated into this Amendment by reference and shall apply to this Amendment *mutatis mutandis*.

[Signature Pages Follow]

&nbsp;&nbsp;&nbsp;&nbsp;3

------

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered as of the first date written above.

EVOLENT HEALTH, INC.<br>

<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>_______________

Name: Seth Blackley

Title: Chief Executive Officer

EVOLNT HEALTH LLC&nbsp;&nbsp;&nbsp;&nbsp;<br>

<br>By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Seth Blackley</u>_______________

Name: Seth Blackley

Title: Chief Executive Officer

MAGELLAN HEALTH, INC.<br>

By:&nbsp;&nbsp;&nbsp;&nbsp;_<u>/s/ Derrick Duke</u>_______________

Name: Derrick Duke

Title: President and C

&nbsp;&nbsp;&nbsp;&nbsp;3

## Exhibit 10.28

**Exhibit 10.28**

**SEVERANCE AND** 

**CHANGE-IN-CONTROL AGREEMENT**

THIS SEVERANCE AND CHANGE-IN-CONTROL AGREEMENT (this "<u>Agreement</u>"), dated as of January 27, 2021 (the "<u>Effective Date</u>"), is made by and between Evolent Health, Inc., a corporation organized under the laws of the State of Delaware (the "<u>Company</u>") and Dan McCarthy ("<u>Executive</u>").

WHEREAS, the Board of Directors of the Company (the "<u>Board</u>") has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of a termination of employment or the occurrence of a Change in Control (as defined below) of the Company;

WHEREAS, the Board believes that it is in the best interests of the Company and its stockholders to provide Executive with an incentive to continue Executive's employment and to motivate Executive to maximize the value of the Company for the benefit of its stockholders; and

WHEREAS, the Board further believes that it is imperative to provide Executive with certain severance benefits upon termination of Executive's employment and with certain additional benefits upon a termination of employment in connection with a Change in Control of the Company to provide Executive with enhanced financial security and incentive to remain with the Company.

NOW, THEREFORE, in consideration of the promises, agreements and conditions contained in this Agreement, the Company and Executive agree as follows:

**SECTION I<br>DEFINITIONS**

For the purposes of this Agreement the following definitions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;"<u>Accrued Obligations</u>" means (a) any unpaid Base Salary through the Date of Termination, payable within 30 days following the Date of Termination, or on such earlier date as may be required by applicable law; (b) any Annual Bonus for a prior year earned but unpaid, payable at the time such bonuses would have been paid if Executive was still employed with the Company; (c) reimbursement for any unreimbursed business expenses incurred through the Date of Termination, payable in accordance with the Company's policy; and (d) all vested benefits under the Company's retirement, health and welfare and equity-based employee benefit plans to which Executive is entitled, payable in accordance with the terms of such plan or program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;"<u>Affiliate</u>" means any entity controlled by, controlling, or under common control with, the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;"<u>Annual Bonus</u>" means Executive's annual bonus under the Company's or an Affiliate's annual executive bonus program, as in effect from time to time, under which Executive is covered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp; "<u>Annual Salary</u>" means Executive's annual base salary, exclusive of any bonus pay, commissions or other additional compensation, in effect on the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;"<u>Cause</u>" means:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Executive's failure to perform any of Executive's material duties to the Company, including, without limitation, a breach of the Company's code of ethics, conflict of interest or employment policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Executive's misappropriation of a material business opportunity of the Company, including securing or attempting to secure any personal profit in connection with any transaction entered into on behalf of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Executive's misappropriation (or attempted misappropriation) of any Company funds or property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Executive's conviction of, indictment for (or its procedural equivalent), or entering of a guilty plea or plea of no contest with respect to (or its procedural equivalent), a felony or any other crime involving dishonesty or theft of property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Executive's commission of one or more acts of sexual harassment in violation of applicable federal, state or local laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Executive's use of illegal drugs, abuse of controlled substances, or abuse or excessive use of alcohol, which (in the case of alcohol use) interferes with or affects Executive's responsibilities to the Company or which reflects negatively upon the integrity or reputation of the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Executive's breach of the terms of this Agreement, any other employment agreement, any confidentiality agreement, non-competition agreement or non-solicitation agreement or any other material agreement between Executive and the Company, after giving effect to the notification provisions, if any, and the mechanisms to remedy or cure such breach as described in any such agreement.

The Company shall determine whether conduct constituting "Cause" has occurred for purposes of this Agreement. For purposes of this definition, (i) "Company" includes any Subsidiary or Affiliate and (ii) "Cause" is not limited to events that have occurred before a termination of Executive's employment or services with the Company, nor is it necessary that the Company's finding of "Cause" occur prior to termination of such employment or services with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6&nbsp;&nbsp;&nbsp;&nbsp;"<u>Change in Control</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;During any period of twenty-four (24) consecutive calendar months, individuals who were directors of the Company on the first day of such period (the "<u>Incumbent Directors</u>") cease for any reason to constitute a majority of the Board; <u>provided</u>, however, that any individual becoming a director subsequent to the first day of such period, whose election, or nomination for election by the Company's stockholders, was made pursuant to the Stockholders Agreement by and among the Company, the Advisory Board, TPG Growth II BDH, L.P., TPG Eagle Holdings L.P. and UPMC, dated as of June 4, 2015 or was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a "person" (as used in Section 13(d) of the Securities Exchange Act of 1934, as amended) (a "<u>Person</u>"), in each case other than the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The consummation of (i) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (A) the Company or (B) any of its

------

Subsidiaries, but in the case of this clause (B) only if Company Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (i) being hereinafter referred to as a "<u>Reorganization</u>") or (ii) the sale or other disposition of all or substantially all the assets of the Company to an entity that is not an Affiliate (a "<u>Sale</u>"), in each case, if such Reorganization or Sale requires the approval of the Company's stockholders under the law of the Company's jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of the Company in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the Persons who were the "beneficial owners" (as used in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (or a successor rule thereto)) of the securities eligible to vote for the election of the Board ("<u>Company Voting Securities</u>") outstanding immediately prior to the consummation of such Reorganization or Sale continue to beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the corporation or other entity resulting from such Reorganization or Sale (including a corporation or other entity that, as a result of such transaction, owns the Company or all or substantially all the Company's assets either directly or through one or more subsidiaries) (the "<u>Continuing Company</u>") in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Company Voting Securities (excluding, for such purposes, any outstanding voting securities of the Continuing Company that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any corporation or other entity involved in or forming part of such Reorganization or Sale other than the Company), (2) no Person (excluding any employee benefit plan (or related trust) sponsored or maintained by the Continuing Company or any entity controlled by the Continuing Company) beneficially owns, directly or indirectly, fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Continuing Company and (3) at least fifty percent (50%) of the members of the board of directors of the Continuing Company were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company unless such liquidation or dissolution is part of a transaction or series of transactions described in paragraph (b) above that does not otherwise constitute a Change of Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Any Person, corporation or other entity or "group" (as used in Section 13(d) of the Securities Exchange Act of 1934, as amended) (other than (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate or (iii) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the voting power of the Company Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company Voting Securities; <u>provided</u>, however, that for purposes of this subparagraph (d), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (C) any acquisition by an underwriter temporarily holding such Company Voting Securities pursuant to an offering of such securities or any acquisition by a pledgee of Company Voting Securities holding such securities as collateral or temporarily holding such securities upon foreclosure of the underlying obligation or (D) any acquisition pursuant to a Reorganization or Sale that does not constitute a Change of Control for purposes of subparagraph (b) above.

------

Notwithstanding anything to the contrary, to the extent that nonqualified deferred compensation as defined in and subject to Section 409A is payable under this Agreement upon a Change in Control, an event shall not be considered to be a Change in Control with respect to such nonqualified deferred compensation unless such event is also a "change in ownership," a "change in effective control" or a "change in the ownership of a substantial portion of the assets" of the Company within the meaning of Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7&nbsp;&nbsp;&nbsp;&nbsp;"<u>Change in Control Protection Period</u>" means the period commencing thirty (30) days prior to a Change in Control and ending twenty-four (24) months after a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8&nbsp;&nbsp;&nbsp;&nbsp;"<u>COBRA</u>" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.9&nbsp;&nbsp;&nbsp;&nbsp;"<u>Code</u>" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations issued thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.10&nbsp;&nbsp;&nbsp;&nbsp; "<u>Date of Termination</u>" means the effective date of Executive's termination of employment and service with the Company and its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.11&nbsp;&nbsp;&nbsp;&nbsp;"<u>Good Reason</u>" means the occurrence, without Executive's written consent, of any of the events or circumstances set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;a material reduction in Executive's annual Base Salary or Target Bonus, as the same may be increased from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;the assignment of duties to Executive inconsistent in any material respect with Executive's position, authority or responsibilities with the Company, or any other action or omission by the Company which results in a material diminution of such position, authority or responsibilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;a relocation of Executive's principal work location by more than fifty (50) miles from such location as of immediately prior to the Date of Termination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;a material diminution of the authority, duties or responsibilities of the supervisor to whom Executive reports; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;any material breach of this Agreement by the Company.

Good Reason shall not exist unless Executive gives the Company notice of the event giving rise to Good Reason within sixty (60) days of the date Executive has knowledge of such event. Such notice shall specifically delineate such claimed breach and shall inform the Company that it is required to cure such breach (if curable) within ninety (90) days (the "<u>Cure Period</u>") after such notice is given in accordance with <u>Section VII</u>. If such breach is not so cured (or is not curable), Executive may resign for Good Reason within three (3) months following the end of the Cure Period. If such breach is cured within the Cure Period or if such breach is not cured but Executive does not resign for Good Reason within three (3) months following the end of the Cure Period, Good Reason shall not exist hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.12&nbsp;&nbsp;&nbsp;&nbsp; "<u>Section 409A</u>" means Section 409A of the Code and any regulations or other formal guidance promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.13&nbsp;&nbsp;&nbsp;&nbsp;"<u>Subsidiary</u>" means any entity in which the Company, directly or indirectly, possesses fifty percent (50%) or more of the total combined voting power of all classes of its stock.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.14&nbsp;&nbsp;&nbsp;&nbsp;"<u>Target Bonus</u>" means Executive's target Annual Bonus under the Company's or Affiliate's annual bonus program, as in effect from time to time, under which Executive is covered.

**SECTION II<br>SEVERANCE PAYMENTS AND BENEFITS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Change in Control Protection Period</u>. If, during a Change in Control Protection Period, the Company terminates Executive's employment without Cause or Executive terminates employment for Good Reason, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Severance Payment</u>. Executive will be paid an amount equal to one and one-half (1.5) times the sum of Executive's Annual Salary and Target Bonus in effect immediately prior to the Date of Termination. Such severance shall be paid in a lump sum within sixty (60) days following the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Bonus for Year of Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;If the Date of Termination occurs during the first six (6) months of the year, Executive will be paid a pro-rata portion of the Target Bonus in effect on the Date of Termination, determined by multiplying the amount of the Target Bonus by a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty-five (365).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Date of Termination occurs during the last six (6) months of the year, Executive will be paid a pro-rata portion of the Annual Bonus based on actual performance for such year, determined by multiplying the amount of the Annual Bonus that would be due for the full year by a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty-five (365).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Such pro-rated Target Bonus or Annual Bonus shall be paid in a lump sum at the same time the Annual Bonus would have been paid if Executive continued to be employed by the Company, but in any event in the calendar year following the year during which the Date of Termination occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>COBRA Payments</u>. If Executive timely elects coverage under COBRA under any group health plan of the Company or an Affiliate, the Company will pay Executive a taxable monthly amount that, after applicable federal, state and local tax withholdings, is equal to the portion of the cost of coverage that is subsidized by the Company for active employees as in effect from time to time until the earlier of: (i) eighteen (18) months following the Date of Termination and (ii) the expiration of the Executive's COBRA coverage. The first monthly payment shall be paid to Executive within sixty (60) days following the Date of Termination and, thereafter, each subsequent monthly payment shall be paid on the first payroll date in each month following the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity Awards</u>. Notwithstanding anything to the contrary in any equity plan of the Company or its Affiliates or Executive's award agreement thereunder, any and all outstanding equity awards granted to Executive under any equity plan of the Company or its Affiliates will be treated as follows: (i) all time-based vesting conditions applicable to such awards will be treated as satisfied in full and shall lapse on the Date of Termination, and (ii) any performance-based vesting conditions applicable to such awards shall be deemed to have been

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satisfied at the greater of target and actual performance through the Date of Termination. Such awards will be settled in accordance with, and otherwise be subject to, the terms of the equity plan of the Company or its Affiliates or Executive's award agreement thereunder; <u>provided</u>, however, that any vested restricted stock units shall be settled upon Executive within sixty (60) days following the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Outside of Change in Control Protection Period</u>. If the Company terminates Executive's employment without Cause, or Executive terminates employment for Good Reason, in either case other than during a Change in Control Protection Period, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Severance</u>. Executive will be paid an amount equal to one (1) times the sum of Executive's Annual Salary in effect immediately prior to the Date of Termination, payable for a period of twelve (12) months following the Date of Termination in accordance with the Company's normal payroll practices and commencing within sixty (60) days following the Date of Termination; <u>provided</u>, however, that any payments that would otherwise be payable during the period following the Date of Termination until the payment commencement date shall be accumulated without interest and paid on such commencement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Bonus for Year of Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;If the Date of Termination occurs during the first six (6) months of the year, Executive will be paid a pro-rata portion of the Target Bonus in effect on the Date of Termination, determined by multiplying the amount of the Target Bonus by a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty-five (365).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Date of Termination occurs during the last six (6) months of the year, Executive will be paid a pro-rata portion of the Annual Bonus based on actual performance for such year, determined by multiplying the amount of the Annual Bonus that would be due for the full year by a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty-five (365).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Such pro-rated Target Bonus or Annual Bonus shall be paid in a lump sum at the same time the Annual Bonus would have been paid had Executive continued to be employed by the Company, but in any event in the calendar year following the year during which the Date of Termination occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>COBRA Payments</u>. If Executive timely elects coverage under COBRA under any group health plan of the Company or an Affiliate, the Company will pay Executive a taxable monthly amount that, after applicable federal, state and local tax withholdings, is equal to that portion of the cost of coverage that is subsidized by the Company for active employees as in effect from time to time until the earlier of: (i) twelve (12) months following the Date of Termination and (ii) the expiration of the Executive's COBRA coverage. The first monthly payment shall be paid to Executive within sixty (60) days following the Date of Termination and thereafter each subsequent monthly payment shall be paid on the first payroll date in each month following the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity Awards</u>. Notwithstanding anything to the contrary in any equity plan of the Company or its Affiliates or Executive's award agreement thereunder, any and all outstanding equity awards granted to Executive under any equity plan of the Company or its

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Affiliates shall be treated as follows: (i) for purposes of any time-based vesting conditions applicable to such awards, Executive shall be deemed to have completed an additional twelve (12) months of employment following the Date of Termination, and (ii) satisfaction of any performance-based vesting conditions applicable to such awards shall be determined at the end of the applicable performance period based on actual performance through the end of the performance period , and pro-rated based on (A) the number of days Executive was employed by the Company during the vesting measurement period through the Date of Termination plus twelve (12) months (but not to exceed the performance period) over (B) the number of days in the performance period. Such awards will be settled in accordance with, and otherwise be subject to, the terms of the equity plan of the Company or its Affiliates or Executive's award agreement thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination for Any Other Reason</u>. If Executive's employment and service with the Company and its Affiliates is terminated for any reason other than by the Company without Cause or by Executive for Good Reason, including due to Executive's retirement, death or disability, no amounts or benefits will be payable or provided under this Agreement, except the Accrued Amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Release</u>. Notwithstanding anything contained in this Agreement to the contrary, the Company shall not be obligated to provide any payments or benefits to Executive under <u>Section 2.1</u> or <u>Section 2.2</u> hereof other than the Accrued Obligations unless Executive executes and delivers to the Company a general release of claims in favor of the Company and its Affiliates and their respective employees, officers and directors in such form as is reasonably requested by the Company, and such release becomes irrevocable by its terms, no later than sixty (60) days after the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;<u>No Duplication</u>. In no event shall payments and benefits provided in accordance with this Agreement be made in respect of more than one of Section 2.1 or 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Offset</u>. Notwithstanding the provisions of this Section II, the Company's obligation to make the severance payments and benefits described herein shall be reduced by any amounts owed by Executive to the Company and its Affiliates; <u>provided</u>, however, that offsets of amounts owed by Executive that are nonqualified deferred compensation (within the meaning of Section 409A) shall only be made in accordance with Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity Award Vesting</u>. Notwithstanding anything to the contrary in any equity plan of the Company or its Affiliates or in any award agreement thereunder, any requirement of an equity award held by Executive that Executive remain an employee of the Company or an Affiliate or a member of the Board through an applicable vesting date shall be deemed satisfied if Executive remains an employee of, or provides services as a consultant to, the Company or an Affiliate, or continues as a member of the Board, through such vesting date.

**SECTION III<br>TAX INFORMATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Withholding</u>. The Company shall deduct from payments to be paid to Executive or any beneficiary all federal, state and local withholding and other taxes and charges required to be deducted under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Section 409A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The intent of the parties is that payments and benefits under this Agreement shall comply with or be exempt from Section 409A and this Agreement shall be interpreted in accordance with such intentions. Notwithstanding the foregoing, neither the

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Company, its Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive (or any other individual claiming a benefit through Executive) as a result of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Section 409A and references to the "Date of Termination," a "termination," "termination of employment" or like terms shall mean "separation from service," within the meaning of Section 409A, from the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company. In the event the payment period under this Agreement commences in one calendar year and ends in a second calendar year, the payments shall not be paid (or installments commenced) until the second calendar year. For purposes of Section 409A, Executive's right to receive installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;If Executive is deemed on the Date of Termination to be a "specified employee" within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment or benefit subject to Section 409A that is payable on account of a "separation from service," such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such "separation from service" of Executive, and (ii) the date of Executive's death (the "<u>Delay Period</u>"). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to Executive in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

**SECTION IV<br>RESTRICTIVE COVENANTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidential Information</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Executive acknowledges that the Company and its Affiliates continually develop Confidential Information (as defined below), that Executive may develop Confidential Information for the Company or its Affiliates and that Executive may learn of Confidential Information during the course of Executive's employment. Executive will comply with the policies and procedures of the Company and its Affiliates for protecting Confidential Information and shall not disclose to any person or use, other than as required by applicable law or for the proper performance of Executive's duties and responsibilities to the Company and its Affiliates, any Confidential Information obtained by Executive incident to Executive's employment or other association with the Company or any of its Affiliates. Executive understands that this restriction shall continue to apply after Executive's employment terminates, regardless of the reason for such termination. The confidentiality obligation under this <u>Section 4.1</u> shall not apply to information which is generally known or readily available to the public at the time of disclosure or becomes generally known through no wrongful act on the part of Executive or any other person having an obligation of confidentiality to the Company or any of its Affiliates or is required to be disclosed in order to enforce this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Affiliates and any copies, in whole or in part, thereof (the "<u>Documents</u>"), whether or not prepared by Executive, shall be the sole and exclusive property of the Company and its Affiliates. Executive shall safeguard all Documents and shall surrender to the Company at the time Executive's employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in Executive's possession or control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;"<u>Confidential Information</u>" means any and all information of the Company and its Affiliates that is not generally known by those with whom the Company or any of its Affiliates competes or does business, or with whom the Company or any of its Affiliates plans to compete or do business and any and all information, publicly known in whole or in part or not, which, if disclosed by the Company or any of its Affiliates would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its Affiliates, (ii) the products and services of the Company and its Affiliates, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Affiliates, (iv) the identity and special needs of the customers of the Company and its Affiliates and (v) the people and organizations with whom the Company and its Affiliates have business relationships and the nature and substance of those relationships. Confidential Information also includes any information that the Company or any of its Affiliates has received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Non-Competition and Non-Solicitation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Executive agrees and acknowledges that the business (the "<u>Business</u>") of the Company is any business activity engaged in, or actively contemplated by the Company (or any Subsidiary) to be engaged in, by the Company (or any Subsidiary) and with which Executive or was involved on or prior to the Date of Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Executive agrees that, except as the Company expressly agrees in writing, during the Restricted Period (defined below), Executive shall not within the Territory (defined below), directly or indirectly, as an owner, partner, affiliate, stockholder, joint venturer, director, employee, consultant, contractor, principal, trustee or licensor, or in any other similar capacity whatsoever of or for any person or entity (other than for the Company):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;engage in, own, manage, operate, sell, finance, control, advise or participate in the ownership, management, operation, sales, finance or control of, be employed or employed by, or be connected in any manner with, any business that competes with (i) the Business or (ii) if Executive has provided services directly to any health maintenance organization, health insurance company or similar health insurance plan, owned or operated by a customer of the Company, during the Restricted Period, such customer (each, a "<u>Competitor</u>"). Notwithstanding this <u>Section 4.2(b)(i)</u>, Executive may accept employment with a Competitor whose business is diversified, <u>provided</u> that (A) such employment is with a portion of the Competitor's business that does not provide products or services that are the same as, are similar to, or compete with the Company's products or services ("<u>Competing Products or Services</u>") and (B) prior to Executive's acceptance of such employment with Competitor, the Company receives separate written assurances satisfactory to the Company from such Competitor and from Executive that Executive will not provide any Competing Products or Services;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;approach, solicit, divert, interfere with, or take away, the business or patronage of any of the actual or prospective members, customers, or clients of the Company, with whom Executive had material Business-related contact and/or about which Executive had access to and/or knowledge of Confidential Information, for a purpose that is competitive with the Business; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;solicit (whether as an employee, consultant, agent, independent contractor, or otherwise) any person who is, or who at any time during the six (6)-month period prior to the Date of Termination had been, employed or engaged by the Company, or induce or take any action which is intended to induce any such person to terminate his or her employment or relationship, or otherwise cease his or her relationship, with the Company, or interfere in any manner with the contractual or employment relationship between the Company and any employee of or any other person engaged by the Company.

"<u>Restricted Period</u>" shall mean the period of time beginning on the Effective Date and ending on the date that is (i) eighteen (18) months following the Date of Termination where <u>Section 2.1</u> applies because the termination occurs during a Change in Control Protection Period or (ii) twelve (12) months following the Date of Termination where <u>Section 2.2</u> applies because the termination occurs other than during a Change in Control Protection Period.

"<u>Territory</u>" shall mean the United States of America (including the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, as well as the District of Columbia) and any other country or territory with respect to which Executive has been materially engaged in Business-related activities on behalf of the Company and/or about which Executive has had access to and/or knowledge of Confidential Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary in <u>Section 4.2(b)</u> of this Agreement, Executive is permitted to own, individually, as a passive investor (with no director designation rights, voting rights or veto rights or other special governance or voting rights), up to a one percent (1%) interest in any publicly traded entity that is a Competitor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;Executive shall disclose in writing all of Executive's relationships as a director, employee, consultant, contractor, principal, trustee, licensor, agent, or otherwise, with a Competitor or any other business entity, to the Company until the end of the Restricted Period. Executive shall not disparage the Company or any of its officers, directors, or employees; <u>provided</u>, however, that this <u>Section 4.4</u> shall not prohibit or constrain truthful testimony by Executive compelled by any valid legal process or valid legal dispute resolution process. Notwithstanding anything herein to the contrary, nothing in this <u>Section IV</u> shall prevent either party hereto from enforcing such party's rights or remedies hereunder or that such party may otherwise be entitled to enforce or assert under any other agreement or applicable law, or shall limit such rights or remedies in any way.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;During the Restricted Period, Executive shall notify in writing any prospective new employer or entity otherwise seeking to engage Executive that the provisions of this <u>Section IV</u> exist prior to accepting employment or such other engagement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;The terms of this <u>Section IV</u> are reasonable and necessary in light of Executive's position with the Company and responsibility and knowledge of the operations of the Company and its Subsidiaries and are not more restrictive than necessary to protect the legitimate interests

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of the parties hereto. In addition, any breach of the covenants contained in this <u>Section IV</u> would cause irreparable harm to the Company, its Subsidiaries and Affiliates and there would be no adequate remedy at law or in damages to compensate the Company, its Subsidiaries and Affiliates for any such breach. In the event of a breach or threatened breach by Executive of any of the provisions of this Agreement, Executive hereby consents and agrees that money damages would not afford an adequate remedy and that the Company shall be entitled to seek a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages, and without the necessity of posting any bond or other security, where permissible under applicable law. Any equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages, or other available relief. Notwithstanding the foregoing, this Agreement is not intended to, and shall be interpreted in a manner that does not, limit or restrict Executive from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Securities Exchange Act of 1934).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Survival of Restrictive Covenants</u>. Upon termination of Executive's employment for any reason whatsoever, the obligations of Executive pursuant to this <u>Section IV</u> shall survive and remain in effect for the periods described herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;<u>No Waiver of Legal Remedies</u>. The restrictions in this Agreement are in addition to and not in lieu of any other obligation of Executive to protect confidential information and trade secrets and any rights and remedies which the Company may have at law or in equity. Nothing in this Agreement is intended to or should be interpreted as diminishing any rights and remedies the Company has. Enforcement of rights and remedies pursuant to this Agreement by the Company and/or any other entity shall not be construed as a waiver of any other rights or remedies at law or equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Protected Rights</u>. Notwithstanding any other provision of this Agreement, nothing contained in this Agreement limits Executive's ability to file a charge or complaint with the Securities and Exchange Commission or any other federal, state or local government agency or commission (collectively, "Government Agencies"), or prevents Executive from providing truthful testimony in response to a lawfully-issued subpoena or court order. Further, this Agreement does not limit Executive's ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing non-privileged documents or other information, without notice to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Defend Trade Secrets Act</u>. Executive is hereby notified that under the Defend Trade Secrets Act: (a) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (i) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law, or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (b) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

**SECTION V<br>DISPUTES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Dispute Resolution</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Jurisdiction and Venue</u>. Executive and the Company irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the District of Delaware and (ii) the courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement. Executive and the Company agree to commence any such action, suit or proceeding either in the United States District Court for the District of Delaware or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of Delaware with jurisdiction over New Castle County. Executive and the Company further agree that service of any process, summons, notice or document by U.S. registered mail to the other party's address set forth below shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which Executive has submitted to jurisdiction in this <u>Section 5.1</u>. Executive and the Company irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or in (A) the United States District Court for the District of Delaware or (B) the courts of the State of Delaware, and hereby and thereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Jury Trial.</u> Executive and the Company hereby waive, to the fullest extent permitted by applicable law, any right either of Executive may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidentiality</u>. Executive hereby agrees to keep confidential the existence of, and any information concerning, a dispute described in this <u>Section 5.1</u>, except that Executive may disclose information concerning such dispute to the court that is considering such dispute or to Executive's legal counsel (<u>provided</u> that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

**SECTION VI<br>SUCCESSORS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The provisions of this <u>Section VI</u> shall continue to apply to each subsequent employer of Executive bound by this Agreement in the event of any merger, consolidation or transfer of all or substantially all of the business or assets of that subsequent employer. This Agreement shall inure to the benefit of the Company, such successors and any assigns. The term "the Company" as used herein shall include such successors, and any assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

**SECTION VII<br>NOTICES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing (including email, <u>provided</u>, that such email states that it is a notice delivered pursuant to this <u>Section 7.1</u>) and shall be given at the address or email address set forth below (or to such other address or email address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address

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or email address shall be effective only upon actual receipt). All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding business day in the place of receipt.

To the Company: &nbsp;&nbsp;&nbsp;&nbsp;

Evolent Health, Inc.

800 N. Glebe Road, Suite 500

Arlington, VA 22203

Attention: General Counsel

Email: JWeinberg@evolenthealth.com

To Executive: At Executive's most recent mailing address in the records of the Company, or at Executive's employee email address (during employment).

**SECTION VIII<br>MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;Any compensation paid or payable to Executive pursuant to this Agreement which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, or under any policy of the Company adopted from time to time, will be subject to such deductions and clawback (recovery) as may be required to be made pursuant to such law, government regulation, order, stock exchange listing requirement or policy of the Company. Executive specifically authorizes the Company to withhold from future salary or wages any amounts that may become due under this provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2&nbsp;&nbsp;&nbsp;&nbsp;This Agreement embodies the entire agreement of the Company and Executive relating to separation or severance pay and, except as specifically provided herein, no provisions of any employee manual, personnel policies, corporate directives or other agreement or document shall be deemed to modify the terms of this Agreement. Except as otherwise provided in <u>Section 5.1</u>, no amendment or modification of this Agreement shall be valid or binding upon Executive or the Company unless made in writing and signed by the Company and Executive. This Agreement supersedes all prior understandings and agreements addressing severance or separation pay to which Executive and the Company or an Affiliate are or were parties, including any previous change in control agreement, severance plan, offer letter provisions, or other employment agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3&nbsp;&nbsp;&nbsp;&nbsp;No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4&nbsp;&nbsp;&nbsp;&nbsp;No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall not modify the "at will" nature of Executive's employment, nor shall it confer upon Executive any right to continue employment or service with the Company or its affiliates, nor shall this Agreement interfere in any way with the right of the Company or its affiliates to terminate Executive's employment or service at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6&nbsp;&nbsp;&nbsp;&nbsp;The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain

------

in full force and effect. If a judicial determination is made that any provision of this Agreement constitutes an unreasonable or otherwise unenforceable restriction against Executive, such provision shall be rendered void only to the extent that such judicial determination finds the provision to be unreasonable or otherwise unenforceable with respect to Executive. In this regard, Executive hereby agrees that any judicial authority construing this Agreement shall be empowered to reform any portion of this Agreement, including without limitation the scope of the Business, the Territory, and the Restricted Period, in order to make the covenants herein binding and enforceable with respect to Executive, and to apply the provisions of this Agreement and to enforce against Executive the remaining portion of such provisions as the judicial authority determines to be reasonable and enforceable. All of the covenants contained in this Agreement shall be construed as an agreement independent of any other provisions in this Agreement, and the existence of any claim or cause of action Executive may have against the Company and/or its affiliates (other than in connection with a material breach of this Agreement by the Company) shall not constitute a defense to the enforcement by the Company and/or its affiliates of such covenants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7&nbsp;&nbsp;&nbsp;&nbsp;The Agreement shall be construed, administered and governed in all respects under and by the applicable laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by ".pdf" format or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

*[Remainder of page left intentionally blank.]*

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IN WITNESS WHEREOF, the parties have signed this Agreement to be effective as of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp; **EVOLENT HEALTH, INC.**

---

| | |
|:---|:---|
| By: | /s/ Jonathan Weinberg |
|  | Name: Jonathan Weinberg |
|  | Title: General Counsel |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**EXECUTIVE**

---

| |
|:---|
| /s/ Dan McCarthy |
| Dan McCarthy |

---

## Exhibit 21.1

**Exhibit 21.1**

**List of Subsidiaries**

---

| | |
|:---|:---|
| **Legal Name** | **Jurisdiction of Organization** |
| Evolent Health LLC | Delaware |
| NCIS Holdings, Inc. | Delaware |
| NCH Management Systems, Inc. | California |
| Evolent Assurance Solutions, LLC | Vermont |
| EH Holding Company, Inc. | Delaware |
| Justify Holdings, Inc. | Kentucky |
| Evolent Health International Private Ltd. | India |
| Evolent Care Partners Holding Company, Inc. | Delaware |
| Evolent Care Partners of Texas, Inc. | Texas |
| The Accountable Care Organization Ltd. | Michigan |
| Evolent Care Partners of North Carolina, Inc. | North Carolina |
| MTS III Vital Decisions Blocker Corp | Delaware |
| Vital Decisions Acquisition LLC | Delaware |
| Vital Decisions, LLC | New Jersey |
| Endzone Merger Sub, Inc. | Delaware |
| EVH Growth Iceman Intermediate, Inc. | Delaware |
| Implantable Provider Group, Inc. | Delaware |
| Surgical Collections Group, Inc. | Delaware |
| Evolent Health International Philippines, Inc. | Philippines |

---

## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in Registration Statement Nos. 333-212709 and 333-266495 on Form S-3 and Registration Statement Nos. 333-204785, 333-225714, and 333-257118 on Form S-8 of our reports dated February 24, 2023, relating to the financial statements of Evolent Health, Inc. and subsidiaries (the "Company") and the effectiveness of the Company's internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2022.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 24, 2023

## Exhibit 31.1

**Exhibit 31.1**

**Certification Pursuant to Section 302 of the**

**Sarbanes-Oxley Act of 2002**

I, Seth Blackley, certify that:

1. I have reviewed this Annual Report on Form 10-K of Evolent Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Dated: | February 24, 2023 | /s/ Seth Blackley |
| | | Name: Seth Blackley |
| | | Title: Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certification Pursuant to Section 302 of the**

**Sarbanes-Oxley Act of 2002**

I, John Johnson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Evolent Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Dated: | February 24, 2023 | /s/ John Johnson |
| | | Name: John Johnson |
| | | Title: Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

**Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906**

**Of the Sarbanes-Oxley Act of 2002**

I, Seth Blackley, Chief Executive Officer of Evolent Health, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2022 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Dated: | February 24, 2023 | /s/ Seth Blackley |
| | | Name: Seth Blackley |
| | | Title: Chief Executive Officer |

---

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 32.2

**Exhibit 32.2**

**Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906**

**Of the Sarbanes-Oxley Act of 2002**

I, John Johnson, Chief Financial Officer of Evolent Health, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2022 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Dated: | February 24, 2023 | /s/ John Johnson |
| | | Name: John Johnson |
| | | Title: Chief Financial Officer |

---

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

<br>