acquired before or after such change of control or early termination) will be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the Tax Receivable Agreement that tax rates remain constant, and, in the case of certain early termination elections, that any units that have not been exchanged are deemed exchanged for the market value of the Class A common stock at the time of termination. Consequently, it is possible in these circumstances that the actual cash tax savings realized by us may be significantly less than the corresponding Tax Receivable Agreement payment.
Registration Rights Agreement
We are party to a Registration Rights Agreement with certain pre-IPO investors, whereby we may be required to register under the Securities Act the sale of shares of our Class A common stock held by pre-IPO investors, including shares that may be issued to Continuing LLC Members upon exchange of their LLC Units. The Registration Rights Agreement also requires us to make available and keep effective shelf registration statements permitting sales of shares of Class A common stock into the market from time to time over an extended period, if requested. In addition, pre-IPO investors have the ability to exercise certain demand registration rights and/or piggyback registration rights in connection with underwritten registered offerings requested by pre-IPO investors or initiated by us.
Indemnification of Directors and Officers
We entered into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Other Related Party Transactions
Promissory Notes to Majority Member and Related Parties
During the year ended December 31, 2019:
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We paid, in full prior to the IPO, $11,711,000 to David Katzman, our Chairman and Chief Executive Officer, and certain affiliates trusts as the obligor under three promissory notes; and
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We paid $6,217,000 to our former CEO and a former consultant on promissory notes related to our repurchase of pre-IPO LLC Units.
Products and Services
During the year ended December 31, 2019:
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We reimbursed $7,433,000 of freight charges incurred through Camelot;
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We paid Camelot, $1,255,000 in management fees. These fees include charges relating to Steven Katzman, our Chief Operating Officer, Susan Greenspon Rammelt, our Chief Legal Officer, EVP Business Affairs, and Secretary, Jessica Cicurel, Alexander Fenkell, our co-founder, and Jordan Katzman, our co-founder, who provide senior leadership to us as well as certain other services. Steven Katzman, Susan Greenspon Rammelt, and Jessica Cicurel have been granted Incentive Bonus Units, which have resulted in equity-based compensation expense;
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We paid $1,716,000 in legal services to Benesch, Friedlander, Coplan & Aronoff LLP where the spouse of Susan Greenspon Rammelt, our Chief Legal Officer, EVP Business Affairs, and Secretary, is a partner at the firm;
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We purchased $6,025,000 in oral digital imaging equipment from Align Technologies, a former large equityholder of SDC Financial;
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We entered into an agreement with the David Katzman Revocable Trust (the “Trust”) to purchase all of the issued and outstanding membership units of a limited liability corporation (“SDC Plane”)