QLH’s Class B Restricted Unit Plan (the “Plan”) authorizes QLH to issue Class B units to directors, employees, managers, independent contractors, and advisors of QLH and its subsidiaries upon approval of the BOD.

Class B units granted to employees are generally subject to a four-year vesting period, whereby the incentive awards become 25% vested on the first anniversary from the beginning of the requisite service period and then vest ratably on a monthly basis thereafter through the end of the vesting period.

As of September 30, 2020, the total number of Class B units that may be issued under the Plan was 177,300, of which no units remained available for future grant as of September 30, 2020.

The option pricing model assumptions for determining the fair value of the Class B units in the nine months ended September 30, 2020 and 2019 were as follows:

	Nine months ended September 30,
	2020			2019
Expected term (in years)	0.5 - 2 years			3 years
Expected volatility	70% - 88%				70	%
Expected dividend yield		—			—
Risk-free interest rate	0.11% - 1.41%				2.19	%
Discount for lack of marketability		25	%		30	%

The following is a summary of the Class B units’ activity for the nine months ended September 30, 2020:

	Number of units			Weighted- average grant date fair value/unit		Aggregate intrinsic value (in thousands)
Class B units
Outstanding as of December 31, 2019		163,800		$	61.62	$	28,622
Granted		25,500			105.85
Repurchased		(8,568	)		51.03
Forfeited or canceled		(3,432	)		74.22
Outstanding as of September 30, 2020		177,300		$	68.25	$	70,953

As of September 30, 2020, the Company had 82,161 vested units and 95,139 unvested units of Class B units with weighted average grant date fair value per unit of $55.96 and $87.79, respectively. The aggregate intrinsic value of the unvested shares of Class B units as of September 30, 2020 was $38.1 million. As of September 30, 2019, the Company had 49,242 vested units and 103,558 unvested units of Class B units with weighted average grant date fair value per unit of $42.93 and $70.43, respectively.

During the nine months ended September 30, 2020, 39,617 units were vested with aggregate intrinsic value of $10.1 million. During the three and nine months ended September 30, 2020 and 2019, the Company recognized $0.0 million and $0.8 million, and $0.0 million and $1.3 million, respectively, of equity-based compensation expense for the amount by which the amount paid to redeem the units exceeded the fair value at the date of redemption. These amounts are included within operating cash flow. Redemptions include redemptions arising in connection with the Insignia Recapitalization as well as optional unit repurchases by the Company following an employee’s termination of employment. Cash used to settle the redemptions was $0.0 million and $2.2 million, and $1.1 million and $5.8 million for the three and nine months ended September 30, 2020 and 2019, respectively.

The Company recorded equity-based compensation expense in the following expense categories in its condensed consolidated statements of operations (in thousands):

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2020		2019		2020		2019
Cost of revenue	$	18	$	19	$	58	$	158
Sales and marketing		158		116		313		1,272
Product development		94		79		723		455
General and administrative		336		306		1,459		1,196
Total equity-based compensation	$	606	$	520	$	2,553	$	3,081

As of September 30, 2020 and 2019, unrecognized compensation cost related to the Class B units was $8.2 million and $6.4 million, respectively, and will be recognized over a weighted-average period of 3.1 years as of September 30, 2020 and 3.3 years as of September 30, 2019.