UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter).
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. ¨
EXPLANATORY NOTE
On July 28, 2022, Lemonade, Inc., a Delaware corporation (“Lemonade”) completed the previously announced acquisition of Metromile, Inc., a Delaware corporation (the “Company,” “Metromile,” “we” or “our”) pursuant to the Agreement and Plan of Merger, dated as of November 8, 2021 (the “Merger Agreement”), by and among Lemonade, Citrus Merger Sub A, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Lemonade (“Acquisition Sub I”), Citrus Merger Sub B, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Lemonade (“Acquisition Sub II”) and Metromile. Pursuant to the Merger Agreement, Acquisition Sub I merged with and into Metromile, with Metromile surviving as a wholly owned subsidiary of Lemonade (the “First Merger”) and following the First Merger, Metromile merged with and into Acquisition Sub II, with Acquisition Sub II surviving as “Metromile, LLC” (the “Second Merger,” and together with the First Merger, the “Mergers”). As such, Metromile, LLC is the successor registrant to the Company. References to the Company following the Second Merger are to Metromile, LLC.
The Merger Agreement and the transactions contemplated thereby, including the Mergers, were previously described in the Registration Statement on Form S-4 (Registration No. 333-261629) filed by Lemonade with the Securities and Exchange Commission (the “SEC”) on December 27, 2021 (as amended, the “Registration Statement”) and the definitive joint proxy statement/prospectus of the Company, dated as of and filed with the SEC on December 29, 2021 (as supplemented, the “Joint Proxy Statement/Prospectus”).
Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to the Merger Agreement, the Mergers were consummated and became effective as of July 28, 2022. As a result of the Mergers, among other things, Metromile became a subsidiary of Lemonade under the name “Metromile, LLC” (the “Surviving Company”). The Mergers and the Merger Agreement were previously described in the Registration Statement and the Joint Proxy Statement/Prospectus.
Merger Consideration
| · | At the effective time of the First Merger (the “First Effective Time”), all shares of Metromile common stock, par value $0.0001 per share (the “Metromile Common Stock”), that were held in treasury by Metromile or were held directly by Lemonade or Acquisition Sub I immediately prior to the First Effective Time were cancelled and ceased to exist and no consideration was paid or payable in respect thereof; |
| · | Except as described in the preceding bullet point, each share of Metromile Common Stock that was issued and outstanding immediately prior to the First Effective Time (including the “Earnout Shares,” as such term is defined in that certain Sponsor Share Cancellation and Vesting Agreement, dated as of November 24, 2020, by and among INSU Acquisition Corp. II (“INSU”), Insurance Acquisition Sponsor II, LLC, and Dioptra Advisors II, LLC) was converted into the right to receive, without interest, 0.05263 validly issued, fully paid and non-assessable shares of Lemonade common stock (the “Exchange Ratio”); |
| · | Each share of common stock, par value $0.01 per share, of Acquisition Sub I that was issued and outstanding immediately prior to the First Effective Time was converted into one (1) validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of Metromile as the Surviving Company; and |
| · | At the effective time of the Second Merger (the “Second Effective Time”), each share of common stock, par value $0.01 per share, of Metromile that was issued and outstanding immediately prior to the Second Effective Time was cancelled and ceased to exist. Each limited liability company interest of Acquisition Sub II issued and outstanding immediately prior to the Second Effective Time remained outstanding as a limited liability company interest of the Surviving Company. |
Treatment of Fractional Shares
No fractional shares of Lemonade common stock were issued in connection with the Mergers. Each Metromile stockholder who would otherwise have been entitled to receive in the Mergers a fractional share of Lemonade common stock pursuant to the Merger Agreement, in lieu of such fractional share and upon surrender of such holder’s certificates representing shares of Metromile Common Stock or book-entry positions representing non-certificated shares of Metromile Common Stock, in each case outstanding as of immediately prior to the First Effective Time, will be paid in cash the dollar amount (rounded to the nearest whole cent), without interest and subject to any required tax withholding, determined by multiplying such fraction by the average of the volume-weighted average trading prices per share of Lemonade common stock on the New York Stock Exchange (as reported by Bloomberg L.P.) on each of the twenty (20) consecutive trading days ending on (and including) the trading day that was three (3) trading days prior to the date of the First Effective Time (as adjusted to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events). No such holder was entitled to dividends, voting rights or any other rights in respect of any fractional share of Lemonade common stock that would otherwise have been issuable as part of the merger consideration. The payment of cash in lieu of fractional share interests merely represents a mechanical rounding-off of the fractions in the exchange.
Treatment of Metromile Equity Awards
Effective as of the First Effective Time, Lemonade assumed Metromile’s 2011 Equity Incentive Plan, as amended, and 2021 Equity Incentive Plan, and the outstanding awards thereunder were converted to awards covering Lemonade common stock or into rights to receive cash payments, as set forth below.
Except as set forth in the immediately following sentence, each Metromile stock option, whether vested or unvested, that was outstanding and unexercised as of immediately prior to the First Effective Time was automatically converted into a stock option to acquire a number of shares of Lemonade common stock (rounded down to the nearest whole share) equal to the product of (i) the number of shares subject to the Metromile stock option and (ii) the Exchange Ratio, with an exercise price per share of Lemonade common stock (rounded up to the nearest whole cent) equal to (A) the per share exercise price of the Metromile stock option divided by (B) the exchange ratio. Each outstanding and unexercised Metromile stock option held by any individual who was not employed by or providing services to Metromile as of November 8, 2021 was converted into the right to receive an amount in cash, without interest, equal to the Option Consideration (as defined in the Merger Agreement). Any such Metromile stock option that had an exercise price per share that is greater than or equal to the per Metromile share cash consideration was cancelled for no consideration.
Except as set forth in the immediately following sentence, each Metromile restricted stock unit award (“Metromile RSU award”) that was outstanding immediately prior to the First Effective Time was automatically converted into a Lemonade restricted stock unit award (“Lemonade RSU award”) covering a number of shares of Lemonade common stock equal to (i) the number of shares of Metromile Common Stock underlying such Metromile RSU award multiplied by (ii) the exchange ratio. Each outstanding Metromile RSU award held by Metromile’s non-employee directors and each Metromile RSU award that was outstanding and eligible to vest based on the achievement of one or more performance criteria was cancelled and converted automatically into the right to receive an amount in cash, without interest, equal to the RSU Consideration (as defined in the Merger Agreement). For purposes of the foregoing, the determination of actual performance with respect to any performance-based Metromile RSU award and the number of shares underlying the Metromile RSU award that vested as of the First Effective Time as a result of such performance was made by Metromile prior to the First Effective Time in accordance with the terms and conditions of the applicable award agreement.
Aside from the foregoing adjustments, each Metromile stock option and Metromile RSU award that was converted into a Lemonade stock option or Lemonade RSU award remains subject to the same vesting and other terms and conditions that applied to such award immediately prior to the First Effective Time.
Treatment of Metromile Warrants
At the First Effective Time, each Metromile warrant exercisable for Metromile Common Stock (each, a “Metromile Warrant”) ceased to represent a Metromile Warrant and was assumed by Lemonade and converted automatically into a warrant denominated in shares of Lemonade common stock from Lemonade on the same terms and conditions (including vesting terms) as applied to such Metromile Warrant immediately prior to the First Effective Time (with the number of warrants and exercise price being adjusted based on the exchange ratio).
Treatment of Additional Shares
The transactions contemplated by the Merger Agreement, including the Mergers, did not constitute an “Acceleration Event” (as such term is defined in that certain Agreement and Plan of Merger and Reorganization, dated as of November 24, 2020 and as amended on January 12, 2021 and further amended on February 8, 2021, by and among INSU, INSU II Merger Sub Corp. and Metromile Operating Company (formerly known as MetroMile, Inc.) (the “INSU Merger Agreement”)). Accordingly, the “Additional Shares” (as such term is defined in the INSU Merger Agreement) were not issued as of immediately prior to the First Effective Time.
In accordance with the terms of the INSU Merger Agreement, if, (a) at any point following the First Effective Time and prior to February 9, 2023, the closing share price of Lemonade common stock over any twenty (20) trading days within any thirty (30) trading day period is greater than the quotient of (i) $15.00 divided by (ii) the exchange ratio, then, (b) as soon as practicable (but in any event within ten (10) business days) after such satisfaction, Lemonade will issue, on a ratable basis to the persons eligible to receive such Additional Shares, a number of shares of Lemonade common stock in an amount equal to the product of (i) 10,000,000 multiplied by (ii) the exchange ratio.
The information set forth in the “Explanatory Note” of this Current Report on Form 8-K (the “Current Report”) is incorporated by reference into this Item 2.01.
The foregoing description of the Merger Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Current Report filed by the Company on November 9, 2021 and is incorporated herein by reference. The Merger Agreement is not intended to be a source of factual, business or operational information about the Company or its subsidiaries.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On July 28, 2022, in connection with the consummation of the Mergers, the Company (i) notified The NASDAQ Capital Market (“Nasdaq”) of the consummation of the Mergers and (ii) requested that Nasdaq remove the Metromile Common Stock and Metromile Warrants from listing and file a Form 25 with the SEC to report the delisting of the Metromile Common Stock and Metromile Warrants from Nasdaq. Metromile expects that, in accordance with its request, Nasdaq will file a Notification of Removal from Listing and/or Registration on Form 25 on July 28, 2022 to provide notification of such delisting and to effect the deregistration of the Metromile Common Stock and Metromile Warrants under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon effectiveness of the Form 25, the Company intends to file with the SEC a Certification and Notice of Termination on Form 15 with the SEC to suspend Metromile's reporting obligations under Sections 13 and 15(d) of the Exchange Act. Trading of the Metromile Common Stock and Metromile Warrants on Nasdaq was halted prior to the opening of trading on July 28, 2022.
The information set forth in the Explanatory Note and under Items 2.01 and 8.01 is incorporated herein by reference into this Item 3.01.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in the Explanatory Note and under Items 2.01, 3.01, 5.01 and 5.03 is incorporated herein by reference into this Item 3.03.
Item 5.01 Changes in Control of Registrant.
As a result of the Mergers, at the First Effective Time, a change of control of Metromile occurred, and Metromile became a wholly-owned direct subsidiary of Lemonade.
The information set forth in the Explanatory Note and under Item 2.01 is incorporated herein by reference into this Item 5.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in the Explanatory Note and Item 2.01 of this Current Report is incorporated herein by reference into this Item 5.02.
Metromile, Inc.
In connection with the consummation of the Mergers, immediately following the Second Effective Time, the resignations of Dan Preston, Colin Bryant, John Butler, Sandra Clarke, Ryan Graves and Vikas Singhal from the Company's Board of Directors and any committees thereof became effective. Immediately following the Second Effective Time and pursuant to the Merger Agreement, each of Dan Preston, Regi Vengalil, Lindsay Alexovich, Junna Ro and Jesse McKendry ceased to be officers of the Company.
Surviving Company
In connection with the consummation of the Mergers, pursuant to the Merger Agreement, the managers of Acquisition Sub II (Daniel Schreiber and Shai Wininger) and the officers of Acquisition Sub II (Daniel Schreiber as President and Shai Wininger as Secretary) immediately prior to the Second Effective Time will remain as the managers and officers of the Surviving Company.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Pursuant to the Merger Agreement, effective following the consummation of the Mergers, the effectiveness of the certificate of incorporation and the bylaws of the Company ceased and the certificate of formation and limited liability company agreement of Acquisition Sub II in effect as of immediately prior to the Second Effective Time became the certificate of formation and limited liability company agreement of the Company, subject to certain changes as set forth in the Merger Agreement and except that the name of Acquisition Sub II was changed after the Second Effective Time to Metromile, LLC. Copies of the certificate of formation and limited liability company agreement of the Company are filed as Exhibits 3.1 and 3.2, respectively, to this Current Report and are incorporated by reference into this Item 5.03.
The information set forth in Item 2.01 of the Current Report is incorporated herein by reference into this Item 5.03.
Item 8.01 Other Events
On July 28, 2022, Lemonade issued a press release announcing the completion of the Mergers.
A copy of the press release is furnished as Exhibit 99.1 to this Current Report.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any omitted schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any schedules so furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: July 28, 2022 | METROMILE, INC. | |
| By: | /s/ Dan Preston | |
| Name: | Dan Preston | |
| Title: | Chief Executive Officer | |
Exhibit 3.1
CERTIFICATE OF FORMATION OF
METROMILE, LLC
Dated as of July 28, 2022
This Certificate of Formation of Metromile, LLC is being duly executed and filed by the undersigned, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.).
1. Name. The name of the limited liability company formed hereby is Metromile, LLC (the “Company”).
2. Registered Office. The address of the registered office of the Company in the State of Delaware is 1007 North Orange Street, 10th Floor, New Castle County, Wilmington, Delaware, 19801.
3. Registered Agent. The name and address of the registered agent for service of process on the Company in the state of Delaware is MWE Corporate Services, LLC, 1007 North Orange Street, 10th Floor, New Castle County, Wilmington, Delaware, 19801.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Metromile, LLC as of the date first above written.
| /s/ Daniel Schreiber | ||
| Name: | Daniel Schreiber | |
| Title: | Authorized Person | |
[Signature Page to Certificate of Formation of Metromile, LLC]
Exhibit 3.2
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
METROMILE, LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) has been adopted by the members of the Board of Managers (the “Board of Managers”) of Metromile, LLC, a Delaware limited liability company, f/k/a Citrus Merger Sub B, LLC, (the “Company”), effective as of July 28, 2022.
WHEREAS, the Company was formed on November 3, 2021, pursuant to the provisions of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended from time to time (the “DLLCA”) and the Board of Managers and the Company entered into the Limited Liability Company Agreement of the Company, effective as of November 3, 2021 (the “Original LLC Agreement”),
WHEREAS, the Company entered into that certain Agreement and Plan of Merger, dated as of November 8, 2021 (the “Merger Agreement”), by and among Lemonade, Inc., a Delaware corporation; Citrus Merger Sub A, Inc., a Delaware corporation; the Company; and Metromile, Inc., a Delaware corporation, and
WHEREAS, the Board of Managers has authorized and approved an amendment and restatement of the Original LLC Agreement on the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound hereby, the Board of Managers hereby amends and restates the Original LLC Agreement in its entirety as follows:
| 1. | Formation. A certificate of formation of the Company (the “Certificate”) was executed and filed with the Office of the Secretary of State of the State of Delaware on November 3, 2021, and was amended and restated upon the effectiveness of the certificate of merger of Metromile, Inc., a fully owned subsidiary of Lemonade, Inc., a Delaware corporation, with and into the Company (f/k/a Citrus Merger Sub B, LLC), executed and filed with the Office of the Secretary of State of the State of Delaware on July 28, 2022. |
| 2. | Name. The name of the Company shall be “Metromile, LLC”, or such other name as the Board of Managers may from time to time hereafter designate. |
| 3. | Definitions. Capitalized terms not otherwise defined herein shall have the meanings set forth therefor in Section 18-101 of the DLLCA. |
| 4. | Purpose. The Company is formed for the purpose of engaging in any lawful business permitted by the DLLCA or the laws of any jurisdiction in which the Company may do business. The Company shall have the power to engage in all activities and transactions which the Board of Managers deems necessary or advisable in connection with the foregoing. |
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| 5. | Offices. |
| (a) | The principal place of business and office of the Company shall be located at, and the Company’s business shall be conducted from, such place or places as the Board of Managers may designate from time to time. |
| (b) | The registered office of the Company in the State of Delaware is 1007 North Orange Street, 10th Floor, New Castle County, Wilmington, Delaware, 19801. The name and address of the registered agent of the Company is MWE Corporate Services, LLC, 1007 North Orange Street, 10th Floor, New Castle County, Wilmington, Delaware, 19801. The Board of Managers may from time to time change the registered agent or office by an amendment to the Certificate. |
| 6. | Member. Lemonade, Inc. (the “Member”) is the sole member of the Company. |
| 7. | Term. The term of the Company commenced on the date of filing of the Certificate in accordance with the DLLCA and shall continue until the Company is dissolved and its affairs are wound up in accordance with Section 13 of this Agreement and a certificate of cancellation is filed in accordance with the DLLCA. |
| 8. | Management of Company. The business and affairs of the Company shall be managed and controlled by or under the direction of the Board of Managers. The Board of Managers shall be authorized to make all decisions and to take all actions it determines necessary, advisable or desirable relating to the business, affairs, investments, and properties of the Company including, without limitation, the formation of or investment in, such subsidiary or affiliate companies of the Company as it determines advisable or desirable. All actions taken by the Board of Managers require the consent of a majority of the members of the Board of Managers and all references herein to actions taken by the Board of Managers shall be read to require a majority of the members of the Board of Managers. The Board of Managers shall initially be composed of two (2) members. |
| 9. | Capital Contributions. The Member may make capital contributions to the Company from time to time, but shall not be required to make any capital contributions. |
| 10. | U.S. Tax Status. In accordance with Section 301.7701-3(a) of the U.S. federal income tax regulations, the Company shall be disregarded as an entity separate from the Member. |
| 11. | Assignment. No assignments may be made without the consent of the majority of the Board of Managers. |
| 12. | Admission of Additional Members. The Board of Managers may admit additional members of the Company in its discretion; provided that the applicable provisions of this Agreement will be amended in accordance with Section 14 of this Agreement for any such new members. |
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| 13. | Dissolution. The Company shall dissolve and its business and affairs shall be wound up upon the written consent of all of the members of the Board of Managers or the entry of a decree of judicial dissolution under § 18-802 of the DLLCA. Upon the dissolution of the Company, the affairs of the Company shall be liquidated forthwith. The assets of the Company shall be used first to pay or provide for the payment of all of the debts of the Company, with the balance being distributed to the Member. |
| 14. | Amendments. This Agreement may be amended, supplemented, waived or modified at any time and from time to time only by a written instrument executed by all of the members of the Board of Managers. |
| 15. | Miscellaneous. Neither the Member nor any delegate of the Member (including, without limitation, any officer of the Company designated by the Board of Managers) shall not have any liability for the debts, obligations or liabilities of the Company except to the extent provided by the DLLCA. |
| 16. | Authorization. |
| (a) | Daniel Schreiber is hereby designated as an “authorized person” within the meaning of the DLLCA, and has executed, delivered and filed the Certificate with the Secretary of State of the State of Delaware. Upon the filing of the Certificate with the Secretary of State of the State of Delaware, Daniel Schreiber’s powers as an “authorized person” ceased. |
| (b) | Daniel Schreiber designated by the Board of Managers, acting individually, is hereby authorized and empowered, as an authorized person of the Company within the meaning of the DLLCA, or otherwise (the Board of Managers hereby authorizing and ratifying any of the following actions): |
| (i) | to execute and deliver and/or file (in the name and on behalf of the Company) any agreement of the Company and any amendments, restatements and/or supplements thereof, the certificate of formation of the Company, any other certificates, notices, applications and other documents (and any amendments, restatements and/or supplements thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Company to qualify to do business in a jurisdiction in which the Company desires to do business; or |
| (ii) | to prepare or cause to be prepared, and to sign, execute and deliver and/or file (in the name and on behalf of the Company) (A) such documents, instruments, certificates and agreements as may be necessary or desirable in furtherance of the Company’s purposes, (B) any certificates, forms, notices, applications and other documents to be filed with any government or governmental or regulatory body on behalf of the Company, (C) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with any bank account of the Company, and all checks, notes, drafts and other documents that may be required in connection with any such bank account or any banking facilities or services that may be utilized by the Company, (D) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as provided in this Section 16(b), each acting individually, shall be deemed to have been adopted by the Board of Managers or the Company, as applicable, for all purposes), and (E) any amendments, restatements and/or supplements of any of the foregoing. |
| (iii) | The authority granted to any person in this Section 16(b) may be revoked at any time by the Board of Managers by an instrument in writing signed by the Board of Managers. |
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| 17. | Officers. The Board of Managers may delegate its authority to act on behalf of the Company and to manage the business affairs of the Company to one or more officers of the Company appointed by the Board of Managers. The Board of Managers may from time to time create offices of the Company, designate the powers that may be exercised by such office, and appoint, authorize and empower any person as an officer of the Company (“Officer”) to direct such office. The Board of Managers may remove any Officer at any time and may create, empower and appoint such other Officers of the Company as the Board of Managers may deem necessary or advisable to manage the day-to- day business affairs of the Company. To the extent delegated by the Board of Managers, the Officers shall have the authority to act on behalf of, bind and execute and deliver documents in the name of and on behalf of the Company. No such delegation shall cause the Board of Managers to cease to be a manager. Except as otherwise expressly provided in this Agreement or required by any non-waivable provision of the DLLCA or other applicable law, no person other than the Board of Managers and such Officers designated by the Board of Managers shall have any right, power, or authority to transact any business in the name of the Company or to act for or on behalf of or to bind the Company. |
| 18. | Exculpation; Indemnification. |
| (a) | Right to Indemnification. The Company shall indemnify and hold harmless the members of its Board of Managers and executive officers (for the purposes of this Section 18, “executive officers” shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent permitted by the DLLCA or any other applicable law as it presently exists or may hereafter be amended, who was or is made or is threatened to be made a party or is otherwise involved in proceeding, by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a manager or officer of the Company, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by person; provided, however, that the Company may modify the extent of such indemnification by individual contracts with its managers and executive officers, in which case such contract shall supersede and replace the provisions hereof; and, provided, further, that the Company shall not be required to indemnify any manager or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Managers of the Company, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the DLLCA or any other applicable law or (iv) such indemnification is required to be made under subsection (c) of this Section 18. The Company shall have the power to indemnify (including the power to advance expenses in a manner consistent with subsection (b) of this Section 18) its other officers, employees and other agents as set forth in the DLLCA or any other applicable law. The Board of Managers shall have the power to delegate the determination of whether indemnification shall be given to any such person except executive officers to such officers or other persons as the Board of Managers shall determine. |
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| (b) | Right to Advance of Expenses. The Company shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a manager or executive officer of the Company, or is or was serving at the request of the Company as a manager or executive officer of another Company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any manager or executive officer in connection with such proceeding; provided, however, that if the DLLCA requires, an advancement of expenses incurred by a manager or executive officer in his or her capacity as a manager or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Company of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this section or otherwise. Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (c) of this Section 18, no advance shall be made by the Company to an executive officer of the Company (except by reason of the fact that such executive officer is or was a manager of the Company in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of managers who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such managers designated by a majority vote of such managers, even though less than a quorum, or (iii) if there are no such managers, or such managers so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Company. |
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| (c) | Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to managers and executive officers under this Section 18 shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the Company and the manager or executive officer. Any right to indemnification or advances granted by this Section 18 to a manager or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. To the extent permitted by law, the claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting the claim to the fullest extent permitted by law. In connection with any claim for indemnification, the Company shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DLLCA or any other applicable law for the Company to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the Company (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a manager of the Company) for advances, the Company shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Company, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his or her conduct was lawful. Neither the failure of the Company (including its Board of Managers, independent legal counsel or its members) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DLLCA or any other applicable law, nor an actual determination by the Company (including its Board of Managers, independent legal counsel or its members) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a manager or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the manager or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this section or otherwise shall be on the Company. |
| (d) | Non-Exclusive of Rights. The rights conferred on any person by this Section 18 shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate, this Agreement, agreement, vote of members or disinterested managers or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office. The Company is specifically authorized to enter into individual contracts with any or all of its managers, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DLLCA, or by any other applicable law. |
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| (e) | Survival of Rights. The rights conferred on any person by this Section 18 shall continue as to a person who has ceased to be a manager or executive officer or officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person. |
| (f) | Insurance. To the fullest extent permitted by the DLLCA or any other applicable law, the Company, upon approval by the Board of Managers, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this section |
| (g) | Amendments. Any repeal or modification of this Section 18 shall only be prospective and shall not affect the rights under this Section 18 in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the Company. |
| (h) | Saving Clause. If this Section 18 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each manager and executive officer to the full extent not prohibited by any applicable portion of this section that shall not have been invalidated, or by any other applicable law. If this Section 18 shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the Company shall indemnify each manager and executive officer to the full extent under any other applicable law. |
| (i) | No Conflict. Notwithstanding anything in this Agreement to the contrary, nothing contained in this Section 18 shall be interpreted to conflict with or supersede the indemnification obligations of the Company solely to the extent set forth in Section 4.10 (Indemnification; Directors’ and Officers’ Insurance) of the Merger Agreement. |
| (j) | Certain Definitions. For the purposes of this Section 18, the following definitions shall apply: |
| (i) | The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative. |
| (ii) | The term “expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding. |
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| (iii) | The term the “company” shall include, in addition to the resulting company, any constituent company (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its managers, officers, and employees or agents, so that any person who is or was a manager, officer, employee or agent of such constituent company, or is or was serving at the request of such constituent company as a manager, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this section with respect to the resulting or surviving company as he would have with respect to such constituent company if its separate existence had continued. |
| (iv) | References to a “manager,” “executive officer,” “officer,” “employee,” or “agent” of the Company shall include, without limitation, situations where such person is serving at the request of the Company as, respectively, a manager, executive officer, officer, employee, trustee or agent of another company, partnership, joint venture, trust or other enterprise. |
| (v) | References to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a manager, officer, employee or agent of the Company which imposes duties on, or involves services by, such manager, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this section. |
| 19. | Banking Matters. The Board of Managers and any Officer and any agent or employee of the Company, or other person designated by the Board of Managers or such Officer is hereby authorized and empowered (a) to (i) establish one or more domestic or international accounts (including but not limited to, depository, checking, disbursement, custodian, or investment accounts, and other accounts as deemed necessary or expeditious for business purposes of the Company) (“Accounts”), in the name of the Company with any bank, trust company, savings and loan institution, brokerage firm or other financial institution which the Board of Managers or said Officer shall from time to time designate as a depository of funds, securities or other property of the Company, for any purpose and on terms and conditions deemed appropriate by such person on behalf of the Company; and (ii) close Accounts of the Company now or hereafter established; and (b) to assign, limit or revoke any and all authority of any agent or employee of the Company, or other person designated by the Board of Managers or such Officer to (i) sign checks, drafts and orders for the payment of money drawn on the Company’s Accounts, and all notes of the Company and all acceptances and endorsements of the Company; (ii) execute or initiate electronic fund transfers; (iii) execute or initiate foreign currency exchange transactions; (iv) execute or initiate the investment of monies; and (v) initiate requests for information for any Account of the Company. |
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| 20. | Transfer of Interests. Notwithstanding anything to the contrary set forth herein, the Member shall be permitted to assign, convey, exchange, pledge, grant, hypothecate or transfer all or a portion of its membership interests, including all economic rights, voting and control rights and status rights as a member. Without limiting the foregoing, upon the sale, transfer, assignment or other disposition of all or a portion of the Member’s membership interests pursuant to a valid exercise of a remedy by any pledgee in accordance with a pledge agreement, security agreement or other collateral documentation entered into by the Member, the pledgee (or its designee) shall have the right (but not the obligation) to become a member hereunder and shall acquire all right, title and interest of the Member, whether voting, economic or otherwise and including all rights hereunder, and the Member shall be withdrawn and shall have no further right, title or interest hereunder. |
| 21. | Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware. |
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the date first written above.
| METROMILE, LLC | |||
| By: Lemonade, Inc., its sole member | |||
| By: | /s/ Daniel Schreiber | ||
| Name: | Daniel Schreiber | ||
| Title: | Chief Executive Officer | ||
| LEMONADE, INC. | |||
| By: | /s/ Daniel Schreiber | ||
| Name: | Daniel Schreiber | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Metromile, LLC Limited Liability Company Agreement]
Exhibit 99.1
Lemonade Completes Acquisition of Metromile
In return for under $145 million in stock, Lemonade receives over $155 million in cash, over $110 million in car premiums, an insurance entity with 49 state licenses, and precision data from half a billion auto trips
July 28, 2022—Lemonade (NYSE: LMND), the insurance company powered by AI and social impact, today announced the closing of the acquisition of car insurance provider Metromile. Metromile shareholders received 7.3 million LMND shares, while Lemonade received a business with over $155m in cash, over $110m in premiums, an insurance entity licensed in 49 states, and a team unsurpassed in harnessing precision data for auto insurance.
“We launched Lemonade Car a few months ago, and believe it’s the most delightful product on the market. We also believe auto insurance can be treacherous for newcomers, disadvantaged by a lack of data and scale, which is why we bought Metromile,” said Shai Wininger, Lemonade co-CEO and cofounder. “For ten years, Metromile’s intricate sensors monitored billions of miles of driving, while their AI cross-referenced these data with hundreds of thousands of claims, to accurately score each tap of the brake and turn of the wheel. Injecting all that intelligence into Lemonade Car could make the most delightful car insurance also the most competitive, precise, and fair. That’s why we’re so excited to welcome Metromile into the Lemonade family.”
Most Metromile employees will transition to roles at Lemonade, and Metromile CEO, Dan Preston, has assumed the role of Senior Vice President of Strategic Initiatives.
“It’s hard to imagine a better home for Metromile than Lemonade. While Metromile was at the forefront of using big data and AI in car insurance, Lemonade forged a parallel path for several complementary lines of insurance. That makes for a powerful combination,” said Dan Preston, SVP Strategic Initiatives, Lemonade. “The upshot is that Metromile’s mission to connect the world to personalized insurance receives a big boost today. While the Metromile brand will sunset over time, its promise to consumers will be realized bigger, better, and sooner now that we’ve joined forces. ”
The Metromile app and brand will continue in-market until all customers can be seamlessly transitioned to the Lemonade app and brand. MILE will cease trading on NASDAQ today.
About Lemonade
Lemonade offers renters, homeowners, car, pet, and life insurance. Powered by artificial intelligence and social impact, Lemonade’s full stack insurance carriers in the US and the EU replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything. A Certified B-Corp, Lemonade gives unused premiums to nonprofits selected by its community, during its annual Giveback. Lemonade is currently available in the United States, Germany, the Netherlands, and France, and continues to expand globally.
Follow @lemonade_inc on Twitter for updates.
FORWARD LOOKING STATEMENT
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements including with respect to the anticipated impact of the Metromile transaction. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: Our history of losses and the fact that we may not achieve or maintain profitability in the future; our ability to retain and expand our customer base; the fact that the “Lemonade” brand may not become as widely known as incumbents’ brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability to attain greater value from each user; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; the possibility that we could be forced to modify or eliminate our Giveback, which could undermine our business model; the examinations and other targeted investigations by our primary and other state insurance regulators that could result in adverse examination findings and necessitate remedial actions; our limited operating history; our ability to manage our growth effectively; the impact of intense competition in the segments of the insurance industry in which we operate on our ability to attain or increase profitability; the unavailability of reinsurance at current levels and prices, which could limit our ability to write new business; our ability to renew reinsurance contracts on comparable duration and terms to those currently in effect; our exposure to counterparty risks as a result of reinsurance; the loss of personal customer information, damage to our reputation and brand, or harm to our business and operating results as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app; our actual or perceived failure to protect customer information and other data, respect customers’ privacy, or comply with data privacy and security laws and regulations; our ability to comply with extensive insurance industry regulations and the need to incur additional costs or devote additional resources to comply with changes to existing regulations; our exposure to additional regulatory requirements specific to other vertical markets that we enter or have entered, including auto, pet and life insurance, and the need to devote additional resources to comply with these regulations; the ability of Lemonade to successfully integrate Metromile’s operations, product lines and technology; the ability of Lemonade to implement its plans, forecasts and other expectations with respect to Metromile’s business after the completion of the transaction and realize additional opportunities for growth and innovation; the ability of Lemonade to realize the anticipated synergies from the proposed transaction in the anticipated amounts or within the anticipated timeframes or costs expectations or at all; the ability to maintain relationships with Lemonade’s and Metromile’s respective employees, customers, other business partners and governmental authorities; and the other risks, uncertainties and important factors contained and identified; and our inability to predict the lasting impacts of COVID-19 to our business in particular, and the global economy generally. These and other important factors are discussed under the caption “Risk Factors” in our Form 10-K filed with the SEC on March 1, 2022 and in our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s beliefs as of the date of this press release. While we may elect to update such forward- looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.