INOV Inovalon Holdings Inc

Item 2.01. Completion of Acquisition or Disposition of Assets.

The information provided in the Introductory Note and in Items 3.03, 5.01, 5.02, 5.03 and 8.01 of this Current Report are incorporated herein by reference.

On November 24, 2021, Parent completed the acquisition of the Company. Pursuant to the Merger Agreement, Merger Sub merged with and into the Company, with the Company surviving the Merger as the surviving corporation and a wholly owned subsidiary of Parent.

At the Effective Time of the Merger (the “Effective Time”), each share of Class A common stock, par value $0.000005 per share, of the Company (the “Company Class A Common Stock”), and each share of Class B common stock, par value $0.000005 per share, of the Company (the “Company Class B Common Stock” and, together with the Company Class A Common Stock, the “Company Common Stock”), in each case, outstanding immediately prior to the Effective Time (but excluding: (i) a portion of the shares of Company Class B Common Stock held by Dr. Dunleavy and certain of his affiliates and certain other holders of Company Class B Common Stock (the “Rollover Stockholders”), that, pursuant to Rollover Agreements, each dated August 19, 2021, separately entered into by Parent and the Rollover Stockholders, as amended from time to time, were exchanged for equity interests of Ocala Topco, Inc., a Delaware corporation, which in turn were exchanged for equity interests of Ocala Topco, LP, a Delaware limited partnership, (ii) shares of Company Common Stock held by Parent or Merger Sub (or any of their respective subsidiaries) or in the treasury of the Company, and (iii) shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that have not been voted in favor of the adoption of the Merger Agreement or consented thereto in writing and whose holders properly exercise and validly perfect appraisal rights with respect to such shares of Company Common Stock in accordance with, and who comply with, Section 262 of the Delaware General Corporation Law) were cancelled and extinguished and converted into the right to receive an amount in cash equal to $41.00 per share of Company Common Stock (the “Merger Consideration”).

Except as otherwise agreed between Parent and the applicable holder of an option to purchase shares of Company Common Stock (a “Company Option”), effective as of immediately prior to the Effective Time: (a) each Company Option that was outstanding and unexercised immediately prior to the Effective Time was cancelled and terminated and converted into the right solely to receive an amount in cash, if any and without interest, equal to the product obtained by multiplying (i) the aggregate number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option, less any applicable withholding taxes.

Except as otherwise agreed between Parent and the applicable holder of an award of restricted stock units with respect to shares of Company Common Stock that was subject to vesting or forfeiture (a “Company RSU Award”), effective as of immediately prior to the Effective Time, each Company RSU Award outstanding immediately prior to the Effective Time was cancelled and terminated and converted into the right solely to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the aggregate number of shares of Company Common Stock underlying such Company RSU Award by (ii) the Merger Consideration, less any applicable withholding taxes.

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Except as otherwise agreed between Parent and the applicable holder of an award of restricted shares of Company Common Stock that was subject to vesting or forfeiture (including performance-vesting conditions) (a “Company RS Award”), effective as of immediately prior to the Effective Time: (a) 30% of any unvested portion of a Company RS Award, held by an employee who has signed an Employee Acknowledgement and Release (as defined below) prior to November 24, 2021(each such award, a “Cash-Out Company RS Award”), that was outstanding immediately prior to the Effective Time was cancelled and terminated and converted into the right solely to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the aggregate number of shares of Company Common Stock underlying such Cash-Out Company RS Award (with any performance-based goals deemed to be achieved as of the Effective Time at “target” level of performance) by (ii) the Merger Consideration (such amount, the “RSA Consideration”), less any applicable withholding Taxes; and (b) each Company RS Award that is not a Cash-Out Company RS Award (including any unvested portion of a Company RS Award held by any employee who did not sign an Employee Acknowledgement and Release prior to November 24, 2021) that was outstanding immediately prior to the Effective Time was converted into a cash-based retention award, in an amount equal to the RSA Consideration payable in respect thereof, that remains subject to the same vesting schedule that applied immediately prior to the Effective Time, including any performance-based vesting criteria and other vesting requirements (unless otherwise modified by an employee acknowledgement and release agreement in a form reasonably acceptable to the Company and Parent that includes the terms and conditions set forth in the disclosure letter delivered by the Company to Parent and Merger Sub in connection with the execution of the Merger Agreement, including a full release of all claims against the Company and its subsidiaries and affiliates and an agreement by employee holders of Company RS Awards to waive the right to receive accelerated vesting, upon a termination without “cause” or a resignation for “good reason” (each, as defined in the 2015 Plan (as defined below)) that occurs at any time following the Effective Time, of any portion of a Company RS Award granted under the Company’s Amended & Restated 2015 Omnibus Incentive Plan (the “2015 Plan”) that remained unvested as of immediately prior to the Effective Time (an “Employee Acknowledgement and Release”), or any other similar document).

The description of the Merger and the Merger Agreement contained in this Item 2.01 does not purport to be complete and is subject to and qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on August 19, 2021, and is incorporated by reference herein.