CLOVER HEALTH INVESTMENTS, CORP. Item 1.01 Entry Into A Material Definitive Agreement.
Amended and Restated Registration Rights Agreement
In connection with the Closing, onJanuary 7, 2021 ,Clover Health , the Sponsor, SCH's independent directors, certain stockholders of Clover and the other parties thereto entered into an Amended and Restated Registration Rights Agreement (the "Registration Rights Agreement"), pursuant to whichClover Health agreed to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Clover Health Common Stock and other equity securities ofClover Health that are held by the parties thereto from time to time. Additionally, the Registration Rights Agreement contains certain restrictions on transfer with respect to the shares of Clover Health Common Stock held by the Sponsor and certain stockholders of Clover immediately following the Closing (not including the shares of Clover Health Class A Common Stock issued in thePIPE Investment pursuant to the terms of the Subscription Agreements) (the "Lock-up Shares"), including a lock-up of such shares in each case ending on the earlier of (i) the date that is 180 days after the Closing Date and (ii) (a) for 33.33% of the Lock-up Shares held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Clover Health Class A Common Stock equals or exceeds$12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 31 days after the Closing Date and (b) for an additional 50% of the Lock-up Shares held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Clover Health Class A Common Stock equals or exceeds$15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 31 days after the Closing Date. The lock-up set forth in the Registration Rights Agreement supersedes the lock-up provisions set forth in Section 7 of that certain letter agreement, dated as ofApril 21, 2020 , by and among SCH, the Sponsor and each of the other parties thereto (the "Insider Letter") which provisions in Section 7 of the Insider Letter shall be of no further force or effect as of the date of the Registration Rights Agreement. The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by SCH, Sponsor and the other parties thereto in connection with SCH's initial public offering. The Registration Rights Agreement will terminate on the earlier of (i) the tenth anniversary of the date of the Registration Rights Agreement or (ii) with respect to any party thereto, on the date that such party no longer holds anyRegistrable Securities (as defined therein).
The foregoing description of the Registration Rights Agreement does not purport . . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the "Introductory Note" above is incorporated by reference into this Item 2.01. The material terms and conditions of the Merger Agreement are described in the section titled " BCA Proposal-The Merger Agreement " beginning on page 107 of the Proxy Statement/Prospectus, which is incorporated herein by reference. -------------------------------------------------------------------------------- OnJanuary 7, 2021 , the Company issued a press release announcing the Closing. The press release is attached hereto as Exhibit 99.2 and incorporated herein by reference. FORM 10 INFORMATION Item 2.01(f) of Form 8-K states that if the predecessor registrant was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as the Company was immediately before the Transactions, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of the Transactions, and as discussed below in Item 5.06 of this Current Report on Form 8-K, the Company has ceased to be a shell company. Accordingly, the Company is providing the information below that would be included in a Form 10 if the Company were to file a Form 10. Please note that the information provided below relates to the Company as the Combined Company after the consummation of the Transactions, unless otherwise specifically indicated or the context otherwise requires.
Forward-Looking Statements
This Current Report on Form 8-K ("Report"), or some of the information
incorporated herein by reference, contains forward-looking statements. All
statements contained in or incorporated by reference into this Report other than
statements of historical fact, including statements regarding our future results
of operations, financial position, market size and opportunity, our business
strategy and plans, the factors affecting our performance and our objectives for
future operations, are forward-looking statements. The words "believe," "may,"
"will," "estimate," "continue," "anticipate," "intend," "could," "would,"
"expect," "objective," "plan," "potential," "seek," "grow," "target," "if" and
similar expressions are intended to identify forward-looking statements. We have
based these forward-looking statements largely on our current expectations and
projections about future events and trends that we believe may affect our
financial condition, results of operations, business strategy, short-term and
long-term business operations and objectives and financial needs. These
forward-looking statements are subject to a number of risks, uncertainties and
assumptions, including those described in the section titled " Risk factors "
. . .
Item 3.02 Unregistered Sales of
The disclosure set forth in the "Introductory Note" of this Report under the section titled "Subscription Agreements" is incorporated by reference into this Item 3.02.
The shares of Class A Common Stock issued in the
Item 3.03 Material Modification to Rights of Security Holders.
The disclosure set forth under Item 5.03 of this Report is incorporated herein by reference.
Item 4.01 Changes in Registrant's Certifying Accountant.
OnJanuary 7, 2021 , the Audit Committee of the Company's Board of Directors dismissedMarcum LLP ("Marcum"), SCH's independent registered public accounting firm prior to the Transactions, effective following the completion of the Company's audit for the year endedDecember 31, 2020 , which consists only of the accounts of SCH, the special purpose acquisition company prior to the Transaction. The report of Marcum on SCH's financial statements as ofDecember 31, 2019 , and for the period fromOctober 18, 2019 (inception) throughDecember 31, 2019 , did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles, except for an explanatory paragraph in such report regarding substantial doubt about the Company's ability to continue as a going concern. During the period fromOctober 18, 2019 (inception) throughDecember 31, 2019 , and the subsequent period throughJanuary 7, 2021 , there were no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused it to make a reference to the subject matter of the disagreement in connection with its report covering such period. In addition, no "reportable events," as defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the period of Marcum's engagement and the subsequent period throughJanuary 7, 2021 . The Company provided Marcum with a copy of the foregoing disclosures prior to the filing of this Current Report and requested that Marcum furnish a letter addressed to theSEC stating, which is attached hereto as Exhibit 16.1, stating whether it agrees with such disclosures, and, if not, stating the respects in which is does not agree. OnJanuary 7, 2021 , the Audit Committee of the Board approved the engagement ofErnst & Young LLP ("EY") as the Company's independent registered public accounting firm to audit the Company's consolidated financial statements for the year endedDecember 31, 2021 . EY served as the independent registered public accounting firm of Clover prior to the Transactions.
Item 5.01. Changes in Control of Registrant.
The disclosure set forth in the "Introductory Note" above and in Item 2.01 of this Report is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
The disclosure set forth in Item 2.01 of this Report under the sections entitled "Directors and Executive Officers," "Director Compensation" and "Executive Compensation" is incorporated herein by reference.
Executive Officers and Directors
Upon the consummation of the Transactions, and in accordance with the terms of the Merger Agreement, each executive officer of SCH ceased serving in such capacities, andChamath Palihapitiya ,Ian Osborne ,Jacqueline D. Reses andJames Ryans ceased serving on SCH's board of directors. --------------------------------------------------------------------------------Vivek Garipalli ,Andrew Toy ,Chelsea Clinton ,Lee A. Shapiro andNathaniel S. Turner were appointed as directors ofClover Health , to serve until the end of their respective terms and until their successors are elected and qualified.Vivek Garipalli ,Lee A. Shapiro andNathaniel S. Turner were appointed to serve onClover Health's audit committee withMr. Shapiro serving as the chair and qualifying as an audit committee financial expert, as such term is defined in Item 407(d)(5) of Regulation S-K. Vivek Garipalli was appointed asClover Health's Chief Executive Officer,Andrew Toy was appointed asClover Health's President and Chief Technology Officer,Joseph Wagner was appointed asClover Health's Chief Financial Officer,Gia Lee was appointed asClover Health's General Counsel and Secretary, andJamie L. Reynoso was appointed asClover Health's Chief Operating Officer. Reference is also made to the disclosure in the Proxy Statement/Prospectus in the section titled " Director Election Proposal " beginning on page 174 and " Management of Clover Health Following the Business Combination " beginning on page 308 for biographical information about each of the directors and officers, which disclosure is incorporated herein by reference.
Compensatory Arrangements for Directors
In connection with the Closing,Clover Health's board of directors approved a compensation program forClover Health's non-employee directors who are determined not to be affiliated withClover Health (the "Non-Employee Director Compensation Policy"). Pursuant to the terms of the Non-Employee Director Compensation Policy, non-employee directors are eligible to receive fixed annual cash retainer fees as well as long-term equity compensation awards for their service onClover Health's board of directors. Additional fixed annual cash retainer fees are paid to non-employee directors for committee membership and chairperson service. A description of the Non-Employee Director Compensation Policy is included in the Proxy Statement/Prospectus in the section titled " Executive Compensation - Non-Employee Director Compensation Policy " beginning on page 321, which is incorporated herein by reference. The foregoing description of the Non-Employee Director Compensation Policy does not purport to be complete and is qualified in its entirety by the full text of the Non-Employee Director Compensation Policy, which is attached hereto as Exhibit 10.8 to this Report and is incorporated herein by reference.
Compensatory Arrangements for Executive Officers
Equity Awards Under the 2014 Equity Incentive Plan (the "2014 Plan")
Clover's board of directors granted the following stock awards under the 2014 Plan, effective immediately prior to the Closing toMr. Garipalli andMr. Toy (the "Pre-Closing Founder Grants").
• Garipalli Performance-Based Award - Clover granted
performance-based RSUs covering 7,164,581 shares of Class B Common Stock,
which will vest and become settled by satisfying each of the following
two conditions:
(1) Service - 20% will vest on each anniversary of the Closing, subject to
Mr. Garipalli's continued service to us as our CEO, Co-CEO or Executive Chairman through each vesting date; and (2) Performance - Measured beginning after the first anniversary of the Closing, 50% will vest upon our volume-weighted average stock closing price reaching$20 for 90 consecutive calendar days, and the remaining 50% will vest upon our volume-weighted average stock closing price reaching$25 for 90 consecutive calendar days; provided all such vesting occurs within 5 years of the Closing.
• Toy Performance-Based Award - Clover granted
RSUs covering 3,582,291 shares of Class B Common Stock, which will vest
and become settled by satisfying each of the following two conditions:
(1) Service - 20% will vest on each anniversary of the Closing, subject to
Mr. Toy's continued service to us through each vesting date; and (2) Performance - Measured beginning after the first anniversary of the . . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
In connection with the Domestication, SCH filed a Certificate of Domestication
and Certificate of Incorporation with the Secretary of State of the State of
Delaware , and SCH's Bylaws came into effect upon such filing. At Closing, such
Certificate of Incorporation and Bylaws were amended and restated to reflect the
Company's change in name to "Clover Health Investments, Corp.", the material
terms of which and the general effect upon the rights of holders of SCH's
capital stock are discussed in the Proxy Statement/Prospectus in the sections
titled " Domestication Proposal " beginning on page 157 and " Organizational
Documents Proposals " beginning on page 160, which are incorporated by
reference herein.
The disclosures set forth under the "Introductory Note" and in Item 2.01 of this
Report are also incorporated herein by reference. Copies of the Certificate of
Incorporation and the Bylaws are included as Exhibit 3.1 and 3.2 to this Report
and incorporated herein by reference.
Item 5.06. Change in Shell Company Status.
As a result of the Transactions, SCH ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Prospectus in the sections titled " BCA Proposal " beginning on page 107 and " Domestication Proposal " beginning on page 157, which are incorporated herein by reference. Further, the information set forth in the "Introductory Note" and under Item 2.01 to this Report is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The condensed financial statements ofClover Health and subsidiaries as ofSeptember 30, 2020 (unaudited) and for the nine months period endedSeptember 30, 2019 andSeptember 30, 2020 (unaudited) and the consolidated financial statements ofClover Health and subsidiaries as ofDecember 31, 2019 and 2018 and for each of the two years in the period endedDecember 31, 2019 are set forth in the Proxy Statement/Prospectus beginning on page F-1 and are incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information of SCH and Clover as ofSeptember 30, 2020 and for the year endedDecember 31, 2019 and the nine months endedSeptember 30, 2020 is set forth in Exhibit 99.1 hereto and is incorporated herein by reference (d) List of Exhibits. Incorporated by reference Filed or Exhibit furnished No. Exhibit title Form File No.
Exhibit No. Filing date herewith
2.1† Agreement and Plan of Merger, dated as of
October 5, 2020, by and among the
Registrant, Asclepius Merger Sub Inc. and
Clover Health Investments, Corp. 8-K 001-39252 2.1 10/6/2020
2.1(a) Amendment to the Agreement and Plan of
Merger, dated as of December 8, 2020 8-K 001-39252 2.1 12/10/2020
3.1 Amended and Restated Certificate of
Incorporation of the Registrant X
3.2 Amended and Restated Bylaws of the
Registrant X
4.1 Warrant Agreement, dated April 21, 2020,
between the Company and Continental Stock
Transfer & Trust Company, as warrant
agent. 8-K 001-39252 4.1 4/24/2020
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4.3 Specimen Class A Common Stock Certificate of
the Registrant S-4/A
333-249558 4.5
4.4 Specimen Class B Common Stock Certificate of
the Registrant S-4/A 333-249558 4.6 11/20/2020
4.5 Description of Registrant's Securities X
10.1 Amended and Restated Registration Rights
Agreement, dated as of January 7, 2021 , by and
among the Registrant, SCH Sponsor III LLC ,
certain former stockholders of Clover Health
Investments, Corp. , Dr. James Ryans , Jacqueline
D. Reses and the other parties thereto X
10.2+ Form of Indemnification Agreement X
10.3+ Amended and Restated 2014 Equity Incentive
Plan, and forms of agreement thereunder X
10.4+ 2020 Equity Incentive Plan, and forms of
agreement thereunder X
10.5+ 2020 Employee Stock Purchase Plan X
10.6+ Management Incentive Plan, and forms of
agreement thereunder X
10.7+ Executive Incentive Bonus Plan X
10.8+ Non-Employee Director Compensation Policy X
10.9+ Employment Agreement dated as of December 31,
2020, by and between the Registrant and Vivek
Garipalli X
10.10+ Employment Agreement dated as of December 31,
2020, by and between the Registrant and Andrew
Toy X
10.11+ Offer Letter dated as of December 20, 2018, by
and between the Registrant and Gia Lee X
16.1 Letter from Marcum LLP to the Securities and
Exchange Commission X
21.1 List of Subsidiaries X
99.1 Unaudited pro forma condensed combined
financial information of Social Captial
Hedosophia Holdings Corp. III and Clover Health
Investments, Corp. as of September 30, 2020 and
for the year ended December 31, 2019 and the nine
months ended September 30, 2020 X
99.2 Press Release dated January 7, 2021 X
99.3 Executive Compensation X
99.4 Certain Relationships and Related Transactions
X
† Schedules to this exhibit have been omitted in accordance with Regulation S-K
Item 601(b)(2). The registrant hereby agrees to furnish supplementally a copy
of any omitted schedule to the
+ Indicates a management contract or compensatory plan, contract or arrangement
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