Calumet, Inc 10-Q for FY2026 Q3
Calumet, Inc. (CLMT)
10-Q
2026-11-06
For: 2026-09-30
View Original
Added on
November 06, 2026
About this 10-Q
Calumet, Inc filed this 10-Q on November 6, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Calumet reported third quarter 2026 net income of $273.3 million versus $313.4 million, while Adjusted EBITDA with Tax Attributes rose to $347.2 million from $92.5 million and operating cash flow reached $218.5 million versus $23.5 million. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.68B
- up 56.1% from $1.08B a year earlier
- Net income
- $256.4M
- down 18.2% from net income of $313.4M a year earlier
- Diluted EPS
- $2.91
- down 19.4% from $3.61 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
Form 10-Q
______________________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
FOR THE QUARTERLY PERIOD ENDED September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 001-42172
______________________________________________________________
Calumet, Inc.
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________________
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
(317 ) 328-5660
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
______________________________________________________________
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On November 6, 2026, the registrant had 88,092,440 shares of common stock outstanding.
CALUMET, INC.
QUARTERLY REPORT
For the Three and Nine Months Ended September 30, 2026
Table of Contents
| Page | |||||
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes certain “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “will,” “may,” “intend,” “believe,” “expect,” “outlook,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar words. The statements regarding (i) demand for finished products in markets we serve; (ii) estimated capital expenditures as a result of required audits or required operational changes or other environmental and regulatory liabilities; (iii) our anticipated levels of, use and effectiveness of derivatives to mitigate our exposure to crude oil price changes, natural gas price changes and fuel products price changes; (iv) estimated costs of complying with the U.S. Environmental Protection Agency’s (“EPA”) Renewable Fuel Standard (“RFS”), including the prices paid for Renewable Identification Numbers (“RINs”) and the amount of RINs we may be required to purchase in any given compliance year, and the outcome of any litigation concerning our existing small refinery exemption (“SRE”) petitions; (v) our ability to monetize federal clean fuel production tax credits (“CFPCs”) under Section 45Z of the Internal Revenue Code and the price we expect to receive for CFPCs; (vi) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures; (vii) our access to capital to fund capital expenditures and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; (viii) our access to inventory financing under our supply and offtake agreements; (ix) the effect, impact, potential duration or other implications of supply chain disruptions and global energy shortages on our business and operations; (x) general economic and political conditions, including inflationary pressures, changes in global trade policy and tariffs, instability in financial institutions, the shutdown of the U.S. federal government, general economic slowdown or a recession, political tensions, conflicts and war (such as the ongoing conflicts in the Middle East, Venezuela and Ukraine and their regional and global ramifications); (xi) the future effectiveness of our information technology planning systems to further enhance operating efficiencies and provide more effective management of our business operations; (xii) our expectation regarding our business outlook with respect to the Montana Renewables business; (xiii) ability to maintain an effective system of internal controls; (xiv) the expected benefits of the Conversion (as defined herein) to us and our stockholders; (xv) our expectation that the DOE Loan (as defined herein) will enable MRL (as defined herein) to complete the MaxSAF® construction on time and on budget; and (xvi) our ability to maintain or improve our carbon intensity at our MRL facility, as well as other matters discussed in this Quarterly Report that are not purely historical data, are forward-looking statements. These forward-looking statements are based on our expectations and beliefs as of the date hereof concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our current expectations for future sales and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition or disposition transactions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause our actual results to differ from those in the forward-looking statements include those described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Annual Report”). Certain public statements made by us and our representatives on the date hereof may also contain forward-looking statements, which are qualified in their entirety by the cautionary statements contained in this paragraph. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
References in this Quarterly Report to “Calumet,” the “Company,” “we,” “our,” “us” or like terms refer to Calumet, Inc. and its subsidiaries.
3
PART I
Item 1. Financial Statements
CALUMET, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In millions, except per share data) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, less allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Derivative assets | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Other noncurrent assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued interest payable | |||||||||||
| Accrued salaries, wages and benefits | |||||||||||
| Current portion of RINs obligation | |||||||||||
| Derivative liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Long-term debt, less current portion | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable noncontrolling interest and other equity instruments | $ | $ | |||||||||
| Stockholders' equity: | |||||||||||
Common stock: par value $ | $ | $ | |||||||||
| Additional paid-in capital | |||||||||||
Warrants: | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | ( | ( | |||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
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CALUMET, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (In millions, except share and per share data) | ||||||||||||||||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||
| Selling | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| (Gain) loss on sale of business | ( | |||||||||||||||||||||||||
| Other operating expense | ||||||||||||||||||||||||||
| Operating profit | ||||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Debt extinguishment costs | ( | ( | ( | |||||||||||||||||||||||
| Gain (loss) on derivative instruments | ( | ( | ( | ( | ||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||
| Total other income (expense) | ( | ( | ( | ( | ||||||||||||||||||||||
| Net income (loss) before income taxes | ( | ( | ||||||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Net income (loss) | ( | |||||||||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | ||||||||||||||||||||||||||
| Net income (loss) attributable to Calumet, Inc. common shareholders: | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Earnings per share attributable to Calumet, Inc. common shareholders: | ||||||||||||||||||||||||||
| Basic and diluted | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||||||||
| Basic and diluted | ||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
CALUMET, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||||||||
| Defined benefit pension and retiree health benefit plans | ||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ||||||||||||||||||||||||||
| Comprehensive income (loss) | ( | |||||||||||||||||||||||||
| Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest | ||||||||||||||||||||||||||
| Comprehensive income (loss) attributable to Calumet, Inc. common shareholders: | $ | $ | $ | ( | $ | |||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
CALUMET, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Common Stock | Additional Paid-in Capital | Warrants | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||
| Common Shares | Shares Issued Par Value | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Settlement of tax withholdings on equity-based incentive compensation | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Settlement of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net (income) attributable to redeemable noncontrolling interest | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Warrants | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||
| Common Shares | Shares Issued Par Value | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Settlement of tax withholdings on equity-based incentive compensation | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Settlement of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net (income) attributable to redeemable noncontrolling interest | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Exercise of warrants | — | ( | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
7
| Common Stock | Additional Paid-in Capital | Warrants | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||
| Common Shares | Shares Issued Par Value | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Settlement of tax withholdings on equity-based incentive compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Settlement of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Common Stock | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||
| Common Shares | Shares Issued Par Value | Additional Paid-in Capital | Warrants | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||
| Settlement of tax withholdings on equity-based incentive compensation | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Settlement of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
8
CALUMET, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Operating activities | (In millions) | |||||||||||||
| Net income (loss) | $ | ( | $ | |||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Amortization of turnaround costs | ||||||||||||||
| Non-cash interest expense | ||||||||||||||
| Debt extinguishment costs | ||||||||||||||
| RINs (benefit) expense | ( | |||||||||||||
| Unrealized (gain) loss on derivative instruments | ( | |||||||||||||
| Gain on sale of business | ( | |||||||||||||
| Equity based compensation | ( | |||||||||||||
| Lower of cost or market inventory adjustment | ( | |||||||||||||
| Other adjustments to reconcile net income (loss) to cash flow from operating activities | ||||||||||||||
| Changes in assets and liabilities | ||||||||||||||
| Accounts receivable | ( | |||||||||||||
| Inventories | ( | |||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Turnaround costs | ( | ( | ||||||||||||
| Other assets | ( | ( | ||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued interest payable | ( | ( | ||||||||||||
| Accrued salaries, wages and benefits | ( | |||||||||||||
| Other taxes payable | ||||||||||||||
| Other liabilities | ( | ( | ||||||||||||
| Net cash provided by (used in) operating activities | ( | |||||||||||||
| Investing activities | ||||||||||||||
| Additions to property, plant and equipment | ( | ( | ||||||||||||
| Proceeds from sale of business, net | ||||||||||||||
| Other | ( | |||||||||||||
| Net cash provided by (used in) investing activities | ( | |||||||||||||
| Financing activities | ||||||||||||||
| Proceeds from borrowings — revolving credit facility | ||||||||||||||
| Repayments of borrowings — revolving credit facility | ( | ( | ||||||||||||
| Proceeds from borrowings — MRL revolving credit agreement | ||||||||||||||
| Repayments of borrowings — MRL revolving credit agreement | ( | |||||||||||||
| Proceeds from borrowings — senior notes | ||||||||||||||
| Repayments of borrowings — senior notes | ( | ( | ||||||||||||
| Proceeds from inventory financing | ||||||||||||||
| Payments on inventory financing | ( | ( | ||||||||||||
| Proceeds from DOE Loan | ||||||||||||||
| Proceeds from asset financing arrangements | ||||||||||||||
| Payments on asset financing arrangements | ( | ( | ||||||||||||
| Repayments of borrowings - MRL Asset Financing Arrangements | ( | |||||||||||||
| Repayments of borrowings - MRL Term Loan Credit Agreement | ( | |||||||||||||
| Debt issuance costs, debt discounts and premiums | ( | ( | ||||||||||||
| Payments on other financing obligations | ( | ( | ||||||||||||
| Net cash provided by (used in) financing activities | ( | |||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||
| Interest paid, net of capitalized interest | $ | $ | ||||||||||||
| Capital expenditures included in accounts payable | $ | $ | ||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
9
CALUMET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Business
Calumet, Inc. (the “Company” or “Calumet”) is a publicly traded Delaware corporation. The Company manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers in various consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America.
2. Summary of Significant Accounting Policies
Reclassifications
Certain amounts in the prior year unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.
Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents and restricted cash include all highly liquid investments with a maturity of three months or less at the time of purchase. Cash and cash equivalents are deposited primarily in banking institutions with global operations. We believe we are not exposed to any significant credit risk related to cash and cash equivalents.
Restricted cash as of September 30, 2026 and December 31, 2025 represents cash that is restricted under the Department of Energy Loan Guarantee Agreement (the “DOE Loan”) because it is only available to make certain investments under the terms of the DOE Loan.
Renewable Identification Numbers (“RINs”) Obligation
Under the Renewable Fuel Standard (“RFS”) of the Clean Air Act, certain refineries are required to comply with annual Renewable Volume Obligations (“RVOs”) established by the U.S. Environmental Protection Agency (“EPA”). The EPA sets annual RVOs for the percentage of renewable fuels that must be blended into transportation fuels consumed in the United States. Compliance is satisfied through the blending of renewable fuels, the purchase and retirement of Renewable Identification Numbers (“RINs”), or the receipt of a Small Refinery Exemption (“SRE”). A RIN is a 38-character number assigned to each physical gallon of renewable fuel produced in or imported into the United States.
10
The Company accounts for its current-period RVO as an estimated liability measured by multiplying the net RINs obligation, based on actual production volumes, by the period-end market price of RINs. The resulting liability is recorded as a current liability and remeasured at each reporting date, with changes recognized in cost of sales. Gains and losses from the sale of RINs are also recorded in cost of sales. The RVO represents an obligation to retire RINs and cannot be settled in cash with the EPA but may be settled through the purchase of a RIN.
Historically, the Company has received SREs and was not required to purchase RINs. Beginning in 2022, EPA denied the Company’s SRE petitions for multiple compliance years, which resulted in the recognition of significant RINs liabilities. Those denials were subsequently challenged and, in several instances, vacated and remanded by federal courts.
In August 2025, EPA issued new hardship determinations that (i) reaffirmed prior grants of the Company’s 2018 SREs, (ii) issued new decisions for program years 2019 through 2023, and (iii) issued decisions on the Company’s 2024 petitions. Under those decisions, the Company received full or partial relief for its Shreveport and Montana refineries for program years 2019 through 2024, which reduced the number of RINs required to be retired. In August 2026, EPA issued new hardship determinations for program year 2025. Under those decisions, the Company received full relief for its Shreveport and Montana specialty asphalt facility.
The Company has filed petitions for judicial review of certain EPA decisions relating to the 2022 through 2024 program years in which the Company received only a partial exemption. The EPA has confirmed that it does not intend to pursue enforcement actions while SRE petitions or related litigation are pending and that, if required, the Company will be afforded a reasonable period to achieve compliance.
Expenses related to RFS compliance may continue to be significant. Adverse legal or regulatory developments, higher RIN prices, or a reduction or elimination of SRE availability could require the Company to purchase additional RINs, which could materially adversely affect results of operations and liquidity.
As of September 30, 2026 and December 31, 2025, the Company had a RINs Obligation recorded on the unaudited condensed consolidated balance sheets of $303.4 million and $169.3 million, respectively.
For the three and nine months ended September 30, 2026, the Company recorded a RINs benefit of $185.6 million and RINs expense of $109.7 million, respectively, in cost of sales in the unaudited condensed consolidated statements of operations. For the three and nine months ended September 30, 2025, the Company recorded a RINs benefit of $333.3 million and a RINs benefit of $145.1 million, respectively, in cost of sales in the unaudited condensed consolidated statements of operations. The RINs benefits recognized in the current year quarter and the prior year periods were primarily due to the small refinery exemptions received during the third quarter of each respective year.
Sale of Assets Related to Industrial Portion of Royal Purple® Business
On February 28, 2025, the Company announced that it entered into a definitive agreement with a wholly owned subsidiary of Lubrication Engineers, Inc., a portfolio company of Aurora Capital Partners, to sell assets related to the industrial portion of its Royal Purple® business, for $110.0 million, subject to certain customary adjustments. The Company retained the consumer portion of the Royal Purple® business. At the closing of the transaction on March 31, 2025, the Company received cash proceeds of $96.9 million, with a remaining deferred payment of $1.5 million received in 2026, net of working capital adjustments and transaction related expenses. During 2025, the Company initially recorded a $62.2 million gain on the sale of business in the consolidated statements of operations, which was subsequently adjusted in the third quarter of 2025 to $55.8 million. The total consideration is final, and no additional post-closing adjustments or continuing obligations remain. The Company has recognized the gain on sale based on the finalized consideration, and no further changes to the recorded gain or loss are expected.
New Accounting Standards
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the 2025 annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements Refer to Note 11 — “Income Taxes” for additional information.
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In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This ASU seeks to improve the disclosures about a public business entity’s expenses by providing more detailed information about the types of expenses in commonly presented expense captions. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact this update will have on our consolidated financial statements and footnotes.
In May 2026, the FASB issued ASU 2026-02, "Environmental Credits and Environmental Credit Obligations." This ASU seeks to improve the financial accounting for and disclosure of environmental credits and environmental credit obligations. This update provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within fiscal years beginning after December 15, 2028. We are currently evaluating the impact this update will have on our consolidated financial statements and footnotes.
3. Inventories
The cost of inventory is recorded using the method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. In certain circumstances, the Company may decide not to replenish inventory for certain products or product lines during an interim period, in which case, the Company may record interim LIFO adjustments during that period. During the three and nine months ended September 30, 2026 and 2025, the Company recorded no activity (exclusive of lower of cost or market (“LCM”) adjustments) in cost of sales in the unaudited condensed consolidated statements of operations due to the permanent liquidation of inventory layers.
Inventories consist of the following (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Titled Inventory | Supply and Offtake Agreements (1) | Total | Titled Inventory | Supply and Offtake Agreements (1) | Total | ||||||||||||||||||||||||||||||
| Raw materials | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Work in process | |||||||||||||||||||||||||||||||||||
| Finished goods | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
____________________________
(1)Amounts represent LIFO value and do not necessarily represent the value at which the inventory was sold. Refer to Note 5 — “Inventory Financing Agreements” for further information.
In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. During the three months ended September 30, 2026, the Company recorded a decrease in cost of sales in the unaudited condensed consolidated statements of operations for LCM of $7.6 million. During the three months ended September 30, 2025, the Company recorded an increase in cost of sales in the unaudited condensed consolidated statements of operations for LCM of $5.1 million. During the nine months ended September 30, 2026, the Company recorded a decrease in cost of sales in the unaudited condensed consolidated statements of operations for LCM of $29.4 million. During the nine months ended September 30, 2025, the Company recorded an increase in cost of sales in the unaudited condensed consolidated statements of operations for LCM of $3.1 million.
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4. Commitments and Contingencies
From time to time, the Company is a party to certain claims and litigation incidental to its business, including claims made by various taxation and regulatory authorities, such as the Internal Revenue Service, the EPA and the U.S. Occupational Safety and Health Administration (“OSHA”), as well as various state environmental regulatory bodies and state and local departments of revenue, as the result of audits or reviews of the Company’s business. In addition, the Company has property, business interruption, general liability, and various other insurance policies that may result in certain losses or expenditures being reimbursed to the Company.
Environmental
The Company conducts specialty refining, blending, and terminal operations and such activities are subject to stringent federal, regional, state, and local laws and regulations governing worker health and safety, the discharge of materials into the environment, and environmental protection. These laws and regulations impose obligations that are applicable to the Company’s operations, such as requiring the acquisition of permits to conduct regulated activities, restricting the manner in which the Company may release materials into the environment, requiring remedial activities or capital expenditures to mitigate pollution from former or current operations, requiring the application of specific health and safety criteria addressing worker protection, and imposing substantial liabilities for pollution resulting from its operations. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil, and criminal penalties; the imposition of investigatory, remedial, or corrective action obligations or the incurrence of capital expenditures; the occurrence of delays in the permitting, development, or expansion of projects and the issuance of injunctive relief limiting or prohibiting Company activities. Moreover, certain of these laws impose joint and several, strict liability for costs required to remediate and restore sites where petroleum hydrocarbons, wastes, or other materials have been released or disposed. In addition, new laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement, or other developments, some of which legal requirements are discussed below, could significantly increase the Company’s operational or compliance expenditures.
Remediation of subsurface contamination is in process at certain of the Company’s refinery sites and is being overseen by the appropriate state agencies. Based on current investigative and remedial activities, the Company believes that the soil and groundwater contamination at these refineries can be controlled or remediated without having a material adverse effect on the Company’s financial condition. However, such costs are often unpredictable and, therefore, there can be no assurance that the future costs will not become material.
Other Matters, Claims and Legal Proceedings
5. Inventory Financing Agreements
On January 17, 2024 (the “Effective Date”), the Company and J. Aron & Company LLC (“J Aron”) entered into a Monetization Master Agreement (the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and a Supply and Offtake Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products located at the Company’s Shreveport facility on the Effective Date and from time to time, up to maximum volumes specified for crude oil and categories of finished products, subject to the Company’s repurchase obligations with respect thereto. On March 30, 2026, the Company entered into the Second Omnibus Amendment Agreement with J. Aron and the other parties thereto, to extend the expiration date of the Shreveport Supply and Offtake
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Agreement to January 31, 2030. On September 11, 2026, the Company entered into the Fourth Amendment to the Master Agreement, which, among other things, increased the amount of permitted funding under the Shreveport Supply and Offtake Agreement.
On October 3, 2023, Montana Renewables, LLC (“MRL”) and Wells Fargo Commodities, LLC (“Wells Fargo”) entered into (a) an ISDA 2002 Master Agreement (the “Master Agreement”), (ii) a Schedule to the ISDA 2002 Master Agreement (the “Schedule”), (iii) a Credit Support Annex to the ISDA 2002 Master Agreement (the “Credit Support Annex”), and (iv) a Renewable Fuel and Feedstock Repurchase Master Confirmation (together with the Master Agreement, the Schedule and the Credit Support Annex, collectively the “MRL Supply and Offtake Agreement” and, together with the Shreveport Supply and Offtake Agreement, the “Supply and Offtake Agreements”). Pursuant to the MRL Supply and Offtake Agreement, Wells Fargo agreed to, among other things, (a) purchase from MRL renewable feedstocks and finished products located at MRL’s Great Falls facility, subject to MRL’s repurchase obligations with respect thereto, and (b) provide certain financial accommodations to MRL secured by liens on certain renewable feedstocks and finished products owned by MRL.
On February 18, 2025, the Company repaid in full the outstanding obligations of approximately $32.5 million under the MRL Supply and Offtake Agreement.
While title to certain inventories will reside with the counterparties to the arrangements, the Supply and Offtake Agreements are accounted for by the Company similar to a product financing arrangement; therefore, the inventories sold to the counterparties will continue to be included in the Company’s unaudited condensed consolidated balance sheets until processed and sold to a third party.
As of September 30, 2026 and December 31, 2025, the net carrying value of the Shreveport Supply and Offtake Agreement obligation was $156.1 million and $91.1 million, respectively, which are included in other long-term liabilities on the Company’s condensed consolidated balance sheets. For the three months ended September 30, 2026 and 2025, the Company incurred an expense of $2.6 million and $2.9 million, respectively, for financing costs related to the Supply and Offtake Agreements, which are included in interest expense in the Company’s unaudited condensed consolidated statements of operations. For the nine months ended September 30, 2026 and 2025, the Company incurred an expense of $8.1 million and $9.9 million, respectively, for financing costs related to the Supply and Offtake Agreements, which are included in interest expense in the Company's unaudited condensed consolidated statements of operations.
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6. Long-Term Debt
Long-term debt consisted of the following (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Senior secured revolving credit facility | $ | $ | |||||||||
| DOE Loan | |||||||||||
| Shreveport terminal asset financing arrangement | |||||||||||
| Montana terminal asset financing arrangement | |||||||||||
| Montana refinery asset financing arrangement | |||||||||||
| Finance lease obligations | |||||||||||
Unamortized debt issuance costs (1) | ( | ( | |||||||||
| Unamortized (discounts) and premium, net | ( | ||||||||||
| Total debt | $ | $ | |||||||||
| Less current portion of long-term debt | |||||||||||
| Total long-term debt | $ | $ | |||||||||
____________________________
(1)Deferred debt issuance costs are being amortized by the effective interest rate method over the lives of the related debt instruments. These amounts are net of accumulated amortization of $7.4 million and $23.2 million at September 30, 2026 and December 31, 2025, respectively.
Senior Secured Revolving Credit Facility
On January 23, 2026, the Company entered into the Ninth Amendment to the Third Amended and Restated Credit Agreement (the “Ninth Amendment”). The Ninth Amendment amended the Third Amended and Restated Credit Agreement, dated as of February 23, 2018 (the “Credit Agreement”), by and among Calumet GP, LLC, Calumet Specialty Products Partners, L.P., certain subsidiaries of the Company party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. Among other changes, the Ninth Amendment modified the Credit Agreement to (i) extend the maturity date to January 23, 2031, (ii) provide for commitments of $500.0 million, subject to borrowing base limitations, (iii) revise certain covenants, representations and warranties, events of default and other terms to permit the Company or one or more of its subsidiaries to consummate one or more new inventory financing transactions, subject in each case to the Company’s satisfaction of certain customary conditions and (iv) provide for a reduction of commitments under the Credit Agreement from $500.0 million to $425.0 million if any such inventory financing transaction is consummated. On March 12, 2026, the Company entered into the Tenth Amendment to the Credit Agreement (the “Tenth Amendment”), which modified certain provisions of the Credit Agreement in connection with the issuance of the Company’s 9.75 % Senior Notes due 2031.
On September 11, 2026, the Company entered into the Eleventh Amendment to the Third Amended and Restated Credit Agreement (the "Eleventh Amendment"). Among other changes, the Eleventh Amendment modified the Credit Agreement to provide for an increase in commitments from $500.0 million to $600.0 million, subject to borrowing base limitations.
The borrowing capacity at September 30, 2026, under the revolving credit facility was approximately $579.3 million. As of September 30, 2026, the Company had no outstanding borrowings under the revolving credit facility and outstanding standby letters of credit of $57.3 million, leaving approximately $522.0 million of availability.
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The revolving credit facility contains various covenants that limit, among other things, the Company’s ability to: incur indebtedness; grant liens; dispose of certain assets; make certain acquisitions and investments; redeem or prepay other debt or make other restricted payments such as distributions to unit holders; enter into transactions with affiliates; and enter into a merger, consolidation or sale of assets. Further, the revolving credit facility contains one springing financial covenant which provides that only if the Company’s availability to borrow loans under the revolving credit facility falls below the greater of (i) 10% of the borrowing base then in effect and (ii) $35.0 million (which amount is subject to certain increases), then the Company will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of at least 1.0 to 1.0. As of September 30, 2026, the Company was in compliance with all covenants under the revolving credit facility.
Senior Notes
On January 12, 2026, Calumet Specialty Products Partners, L.P. (the “Partnership”) and Calumet Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”), each a subsidiary of the Company, issued and sold $405.0 million aggregate principal amount of a new series of the Issuers’ 9.75 % Senior Notes due 2031 (the “Initial Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The Company received net proceeds of $393.0 million after deducting the initial purchasers’ discount and offering expenses. The Company used the net proceeds from the offering of the Initial Notes, together with cash on hand and borrowings under the Company’s revolving credit facility, to redeem all of the Issuers’ outstanding 2026 Notes and 2027 Notes.
On March 17, 2026, the Issuers issued and sold $150.0 million aggregate principal amount of additional 9.75 % 2031 Senior Notes (the “Additional Notes,” and together with the Initial Notes, the “2031 Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act. The Additional Notes were issued at 105.0 % of par, plus accrued interest from January 12, 2026, for net proceeds of approximately $154.9 million, after deducting offering expenses and accrued interest. The Company used the net proceeds from the offering of the Additional Notes to repay borrowings outstanding under the Company’s revolving credit facility. The 2031 Notes bear interest at a fixed rate of 9.75 % per annum and mature on February 15, 2031 when the balance of principal and accrued interest is due.
On March 7, 2024, the Issuers issued and sold $200.0 million in aggregate principal amount of 2029 Secured Notes in a private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net proceeds of $199.0 million, after deducting transaction expenses. The 2029 Secured Notes bear interest at a fixed rate of 9.25 % per annum and mature on July 15, 2029 when the balance of principal and accrued interest is due.
On June 27, 2023, the Issuers issued and sold $325.0 million in aggregate principal amount of 2028 Notes, in a private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net proceeds of $319.1 million after deducting transaction expenses. The 2028 Notes bear interest at a fixed rate of 9.75 % per annum and mature on July 15, 2028 when the balance of principal and accrued interest is due.
On January 16, 2025, the Issuers issued and sold $100.0 million aggregate principal amount of a new series of 9.75 % Senior Notes due 2028 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act. The 2028 Mirror Issuance Notes were issued at a discount for net proceeds of approximately $96.0 million after deducting the initial purchasers’ discount and estimated offering expenses. The 2028 Mirror Issuance Notes bore interest at a fixed rate of 9.75 % per annum and were originally scheduled to mature on July 15, 2028.
In July 2026, the Issuers redeemed all outstanding 2028 Mirror Issuance Notes prior to maturity. Accordingly, there were no 2028 Mirror Issuance Notes outstanding as of September 30, 2026.
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On January 20, 2022, the Issuers issued and sold $325.0 million in aggregate principal amount of 2027 Notes, in a private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net proceeds of $319.1 million after deducting the initial purchasers’ discount and offering expenses. The 2027 Notes bore interest at a fixed rate of 8.125 % per annum and were originally scheduled to mature on July 15, 2027. In January 2026, the Issuers redeemed all outstanding 2027 Notes prior to maturity. Accordingly, there were no 2027 Notes outstanding as of September 30, 2026.
On November 25, 2024, the Issuers completed a private exchange offer (the “Exchange Offer”) to certain eligible holders, pursuant to which approximately $354.4 million aggregate principal amount of the 2025 Notes were validly tendered by and accepted for exchange from eligible holders for consideration of approximately $354.4 million aggregate principal amount of newly issued 2026 Notes. The 2026 Notes bore interest at a fixed rate of 11.00 % per annum and were originally scheduled to mature on April 15, 2026. The Issuers partially redeemed $150.0 million and $80.0 million on May 24, 2025 and August 12, 2025, respectively, plus accrued and unpaid interest up to but not including the respective redemption date. In January 2026, the Issuers redeemed all outstanding 2026 Notes prior to maturity. Accordingly, there were no 2026 Notes outstanding as of September 30, 2026.
The effective interest rate of all of the Issuers’ senior notes is consistent with the stated rates.
Senior Notes
The 2028 Notes, 2029 Secured Notes and 2031 Notes (collectively, the “Senior Notes”) are subject to certain automatic customary releases, including the sale, disposition, or transfer of capital stock or substantially all of the assets of a subsidiary guarantor, designation of a subsidiary guarantor as unrestricted in accordance with the applicable indenture, exercise of legal defeasance option or covenant defeasance option, liquidation or dissolution of the subsidiary guarantor and a subsidiary guarantor ceases to both guarantee other Partnership debt and to be an obligor under the revolving credit facility. The Partnership’s operating subsidiaries may not sell or otherwise dispose of all or substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would cause a default under the indentures governing the Senior Notes.
The indentures governing the Senior Notes contain covenants that, among other things, restrict the Partnership’s ability and the ability of certain of the Partnership’s subsidiaries to: (i) sell assets; (ii) pay distributions on, redeem or repurchase the Partnership’s equity or redeem or repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional indebtedness or issue preferred equity; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions or other payments from the Partnership’s restricted subsidiaries to the Partnership; (vii) consolidate, merge or transfer all or substantially all of the Partnership’s assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. At any time when the Senior Notes are rated investment grade by either Moody’s Investors Service, Inc. (“Moody’s”) or S&P Global Ratings (“S&P”) and no Default or Event of Default, each as defined in the indentures governing the Senior Notes, has occurred and is continuing, many of these covenants will be suspended. As of September 30, 2026, the Company and the Issuers were in compliance with all covenants under the indentures governing the Senior Notes.
U.S. Department of Energy Facility
On January 10, 2025, MRL and the U.S. Department of Energy (the “DOE”), as guarantor and loan servicer, executed a Loan Guarantee Agreement (the “DOE Loan”) for a $1.44 billion guaranteed loan facility to fund the construction and expansion of the renewable fuels facility owned by MRL. The loan guarantee is structured in two tranches, with the first tranche of approximately $781.8 million disbursed on February 18, 2025 (the “Funding Date”) to fund eligible expenses previously incurred by MRL. The DOE Loan provided the ability to draw additional tranches of up to approximately $658.0 million through a delayed draw construction facility. Borrowings under the DOE Loan are obligations of our unrestricted subsidiaries MRL and MRHL solely, and are non-recourse to the Company and its restricted subsidiaries. The first tranche of the DOE Loan bears interest at a fixed rate of 4.884 % per annum and matures on December 31, 2039 when the balance of principal and accrued interest is due. As of September 30, 2026, the Company has capitalized $63.8 million of accrued interest into the principal balance of the DOE loan in accordance with the terms of the agreement which allows
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capitalization of up to $232.8 million of interest. Interest expense is calculated based on the total principal balance including any capitalized interest.
In connection with the funding of the first tranche under the DOE Loan, MRL terminated the MRL Asset Financing Arrangements, the MRL Term Loan Credit Agreement, the MRL Revolving Credit Agreement, and the MRL Supply and Offtake Agreement, using a portion of the proceeds to repurchase all associated equipment and repay each of the obligations.
Separately, the Company received $40.0 million of cash from Stonebriar Commercial Finance LLC (“Stonebriar”) on the Funding Date in satisfaction of the remaining conditions associated with the Montana Refinery Asset Financing Arrangement.
On August 28, 2026, MRL and the DOE entered into the First Amendment to the DOE Loan (the "First Amendment to DOE Loan"), which reduced the amount available under the second tranche from $658.0 million to $34.0 million, and modified certain conditions to future advances and other terms of the facility. The First Amendment to DOE Loan also revises certain liquidity, funding, construction and operating covenants, including eliminating the Base Cash Equity Reserve Account (the "BCERA) threshold requirement through December 31, 2026, and reducing such threshold to $20.0 million beginning January 1, 2027, compared to the original threshold of $80.0 million. The minimum required BCERA balance was further amended to increase to $30.0 million beginning March 31, 2027, and to $40.0 million beginning June 30, 2027. The Company received net proceeds of $31.6 million after deducting debt issuance costs. The second tranche of the DOE Loan bears interest at a fixed rate of 5.16 % per annum and matures on December 31, 2039 when the balance of principal and accrued interest is due.
Shreveport Terminal Asset Financing Arrangement
On July 25, 2025, Calumet Shreveport Refining, LLC (“Calumet Shreveport”), a subsidiary of the Company, entered into a Property Schedule No. 2 (“Property Schedule No. 2”) with Stonebriar, which supplements the Master Lease Agreement, dated as of February 12, 2021 (together with Property Schedule No. 2, the “Lease Agreement”), among Calumet Shreveport and Stonebriar. The Lease Agreement relates to a sale and leaseback transaction (the “Shreveport Terminal Asset Financing Arrangement”) whereby Calumet Shreveport sold and leased back certain of its property comprising the Shreveport refinery fuels terminal, truck rack and related piping and equipment for consideration of approximately $120.0 million. The assets sold and leased back do not include any fuels or specialty production inventory. The Lease Agreement has a seven-year term and requires Calumet Shreveport to make monthly rental payments of approximately $1.8 million, which represents a cost of capital of approximately 10.75 % per year. The Lease Agreement provides that, subject to certain conditions, Calumet Shreveport may terminate the lease and repurchase the leased assets after a term of six years for consideration of approximately $42.0 million. Concurrently with Calumet Shreveport’s entry into the Lease Agreement, the Company reaffirmed a Continuing Guaranty in favor of Stonebriar, pursuant to which the Company guarantees to Stonebriar the performance of Calumet Shreveport’s obligations under the Lease Agreement.
Concurrently with the entry into the Lease Agreement, Calumet Shreveport and Stonebriar terminated Property Schedule No. 1, dated as of February 12, 2021 (“Property Schedule No. 1”), among Calumet Shreveport and Stonebriar. The Company applied approximately $40.0 million of the proceeds of the Sale and Leaseback Transaction to pay all of Calumet Shreveport’s outstanding obligations under Property Schedule No. 1.
The Company has recorded the Shreveport Terminal Asset Financing Arrangement as a financial liability in the unaudited condensed consolidated balance sheets.
Montana Refinery Asset Financing Arrangement
On September 30, 2024, Calumet Montana Refining, LLC (“Calumet Montana”), a subsidiary of the Company, entered into a Master Lease Agreement (together with Equipment Schedule No. 1 thereto) with Stonebriar related to a sale and leaseback transaction (the “Montana Refinery Asset Financing Arrangement”). Pursuant to the Montana Refinery Asset Financing Arrangement, Calumet Montana sold to and leased back from Stonebriar certain equipment comprising the specialty asphalt facility located in Great Falls, Montana (the “Refinery Assets”), for a total purchase price of $150.0 million. Calumet Montana received $110.0 million of the total purchase price on September 30, 2024 and the remaining purchase price of $40.0 million on February 18, 2025 in connection with the funding of the first tranche of approximately $782 million under the DOE Loan.
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The Company has recorded the Montana Refinery Asset Financing Arrangement as a financial liability in the unaudited condensed consolidated balance sheets.
MRL Asset Financing Arrangements
In connection with the funding of the first tranche under the DOE Loan, MRL terminated the MRL Asset Financing Arrangements and the Company recorded debt extinguishment costs of approximately $34.8 million during the nine months ended September 30, 2025.
MRL Term Loan Credit Agreement
In connection with the funding of the first tranche under the DOE Loan, MRL terminated the MRL Term Loan Credit Agreement and the Company recorded debt extinguishment costs of approximately $12.3 million during the nine months ended September 30, 2025.
Master Derivative Contracts
The Company’s payment obligations under all of the Company’s master derivatives contracts for commodity hedging generally are secured by a first priority lien on the Company’s real property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the foregoing (including proceeds of hedge arrangements). The Company had no additional letters of credit or cash margin posted with any hedging counterparty as of September 30, 2026. The Company’s master derivatives contracts and Collateral Trust Agreement (as defined below) continue to impose a number of covenant limitations on the Company’s operating and financing activities, including limitations on liens on collateral, limitations on dispositions of collateral and collateral maintenance and insurance requirements.
Collateral Trust Agreement
The Company has a collateral trust agreement (the “Collateral Trust Agreement”) which governs how various secured Company creditors, including secured hedging counterparties, our creditor on a forward purchase contract for physical commodities, and holders of our 2029 Secured Notes share collateral pledged as security for the payment of respective payment obligations to them. The Collateral Trust Agreement limits to $150.0 million the extent to which forward purchase contracts for physical commodities are covered by, and secured under, the Collateral Trust Agreement and the Parity Lien Security Documents (as defined in the Collateral Trust Agreement). There is no such limit on financially settled derivative instruments used for commodity hedging. Subject to certain conditions set forth in the Collateral Trust Agreement, the Company has the ability to add secured parties from time to time.
Standby Letters of Credit
The Company has agreements with various financial institutions for standby letters of credit and other reserves. The standby letters of credit have been issued primarily to vendors. As of September 30, 2026 and December 31, 2025, the Company had outstanding standby letters of credit of $57.3 million and $75.2 million, respectively, under its senior secured revolving credit facility.
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Maturities of Long-Term Debt
As of September 30, 2026, principal payments on debt obligations and future minimum rentals on finance lease obligations are as follows (in millions):
| Year | Maturity | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total Principal Payments | $ | |||||||
| Unamortized debt issuance costs and debt (discounts) premiums, net | ( | |||||||
| Total debt | $ | |||||||
7. Derivatives
The Company is exposed to price risks due to fluctuations in the price of crude oil, refined products, renewable products, feedstocks, and natural gas. The Company uses various strategies to reduce its exposure to commodity price risk. The strategies to reduce the Company’s risk utilize both physical forward contracts and financially settled derivative instruments, such as swaps, collars, options and futures, to attempt to reduce the Company’s exposure with respect to:
•crude oil and renewable feedstock purchases and sales;
•fuel and renewable fuel product sales and purchases;
•natural gas purchases;
•precious metals purchases; and
•fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as New York Mercantile Exchange West Texas Intermediate (“NYMEX WTI”), Light Louisiana Sweet, Western Canadian Select (“WCS”), WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent.
The Company manages its exposure to commodity markets, credit, volumetric and liquidity risks to manage its costs and volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a variety of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of mitigating risks associated with an asset, liability and anticipated future transactions. The changes in fair value of the Company’s derivative instruments will affect its earnings and cash flows; however, such changes should be offset by price or rate changes related to the underlying commodity or financial transaction that is part of the risk management strategy. The Company does not speculate with derivative instruments or other contractual arrangements that are not associated with its business objectives.
Speculation is defined as increasing the Company’s natural position above the maximum position of its physical assets or trading in commodities, currencies or other risk bearing assets that are not associated with the Company’s business activities and objectives. The Company’s positions are monitored routinely by a risk management committee to ensure compliance with its stated risk management policy and documented risk management strategies. All strategies are reviewed on an ongoing basis by the Company’s risk management committee, which will add, remove or revise strategies in anticipation of changes in market conditions and/or its risk profiles. Such changes in strategies are to position the Company in relation to its risk exposures in an attempt to capture market opportunities as they arise.
As of September 30, 2026 and December 31, 2025, the Company was obligated to repurchase crude oil and refined products from its counterparty at the termination of the Supply and Offtake Agreement. The Company has determined that the redemption feature on the initially recognized liability related to the Supply and Offtake Agreement is an embedded derivative indexed to commodity prices. As such, the Company has accounted for the embedded derivative at fair value with changes in the fair value, if any, recorded in gain (loss) on derivative instruments in the Company’s unaudited
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condensed consolidated statements of operations. Refer to Note 5 — “Inventory Financing Agreements" for additional information.
The Company recognizes all derivative instruments at their fair values (refer to Note 8 — “Fair Value Measurements”) as either current assets or derivative liabilities or other noncurrent assets, net or other long-term liabilities in the unaudited condensed consolidated balance sheets. Fair value includes any premiums paid or received and unrealized gains and losses. Fair value does not include any amounts receivable from or payable to counterparties, or collateral provided to counterparties. Derivative asset and liability amounts with the same counterparty are netted against each other for financial reporting purposes in accordance with the provisions of our master netting arrangements.
The following tables summarize the Company's gross fair values of its derivative instruments, presenting the impact of offsetting derivative assets and liabilities in the Company's unaudited condensed consolidated balance sheets (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | Gross Amounts of Recognized Assets | Gross Amounts Offset | Net Amounts of Assets Presented | Gross Amounts of Recognized Assets | Gross Amounts Offset | Net Amounts of Assets Presented | |||||||||||||||||||||||||||||||||||
| Derivative instruments not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Specialty Products and Solutions segment: | |||||||||||||||||||||||||||||||||||||||||
| Crack spread swaps | Derivative assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total derivative instruments | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | Gross Amounts of Recognized Liabilities | Gross Amounts Offset | Net Amounts of Liabilities Presented | Gross Amounts of Recognized Liabilities | Gross Amounts Offset | Net Amounts of Liabilities Presented | |||||||||||||||||||||||||||||||||||
| Derivative instruments not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Specialty Products and Solutions segment: | |||||||||||||||||||||||||||||||||||||||||
| Inventory financing obligation | Other long-term liabilities | $ | ( | $ | — | $ | ( | $ | — | $ | $ | ||||||||||||||||||||||||||||||
| Crack spread swaps | Derivative liabilities / Other long-term liabilities | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||
| Montana/Renewables segment: | |||||||||||||||||||||||||||||||||||||||||
| Crude oil basis swaps | Derivative liabilities / Other long-term liabilities | ( | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||
| Total derivative instruments | $ | ( | $ | $ | ( | $ | — | $ | $ | ||||||||||||||||||||||||||||||||
Certain of the Company’s outstanding derivative instruments are subject to credit support agreements with the applicable counterparties which contain provisions setting certain credit thresholds above which the Company may be required to post agreed-upon collateral, such as cash or letters of credit, with the counterparty to the extent that the Company’s mark-to-market net liability, if any, on all outstanding derivatives exceeds the credit threshold amount per such credit support agreement. The majority of the credit support agreements covering the Company’s outstanding derivative instruments also contain a general provision stating that if the Company experiences a material adverse change in its business, in the reasonable discretion of the counterparty, the Company’s credit threshold could be lowered by such counterparty. The Company does not expect that it will experience a material adverse change in its business. The cash flow impact of the Company’s derivative activities are included within cash flows from operating activities in the unaudited condensed consolidated statements of cash flows.
21
Derivative Instruments Not Designated as Hedges
For derivative instruments not designated as hedges, the change in fair value of the asset or liability as well as the gain or loss at settlement for the period is recorded to gain (loss) on derivative instruments in the unaudited condensed consolidated statements of operations. The Company has entered into crack spread swaps and crude oil basis swaps that were not designated as cash flow hedges for accounting purposes. However, these instruments provide economic hedges of the purchases and sales of the Company’s natural gas, crude oil, gasoline and refined products.
The Company recorded the following gains (losses) in its unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 related to its derivative instruments not designated as hedges (in millions):
| Amount of Realized Gain (Loss) Recognized in Gain (Loss) on Derivative Instruments | Amount of Unrealized Gain (Loss) Recognized in Gain (Loss) on Derivative Instruments | |||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||
| Type of Derivative | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Specialty Products and Solutions segment: | ||||||||||||||||||||||||||
| Inventory financing obligation | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
| Crack spread swaps | ( | — | ( | — | ||||||||||||||||||||||
| Montana/Renewables segment: | ||||||||||||||||||||||||||
| Inventory financing obligation | — | — | — | |||||||||||||||||||||||
| Crude oil basis swaps | — | — | ( | — | ||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
| Amount of Realized Gain (Loss) Recognized in Gain (Loss) on Derivative Instruments | Amount of Unrealized Gain (Loss) Recognized in Gain (Loss) on Derivative Instruments | |||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Type of Derivative | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Specialty Products and Solutions segment: | ||||||||||||||||||||||||||
| Inventory financing obligation | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
| Crack spread swaps | ( | — | ( | — | ||||||||||||||||||||||
| Montana/Renewables segment: | ||||||||||||||||||||||||||
| Inventory financing obligation | — | ( | — | — | ||||||||||||||||||||||
| Crude oil basis swaps | — | — | ( | — | ||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
Derivative Positions
The Company enters into crack spread swaps sales contracts with counterparties to reduce its exposure to commodity price risk. The Company will also offset some of these sales contracts from time to time with crack spread purchase
22
contracts to reposition its overall exposure to commodity price risk. At September 30, 2026, the Company had the following notional contract volumes related to outstanding derivative instruments:
| Notional Contract Volumes by Year of Maturity | |||||||||||||||||
| Total Outstanding Notional | 2026 | Unit of Measure | |||||||||||||||
| Derivative instruments not designated as hedges: | |||||||||||||||||
| Crack spread swaps - sales | Barrels | ||||||||||||||||
| Crack spread swaps - purchases | Barrels | ||||||||||||||||
| Notional Contract Volumes by Year of Maturity | |||||||||||||||||
| Total Outstanding Notional | 2027 | Unit of Measure | |||||||||||||||
| Derivative instruments not designated as hedges: | |||||||||||||||||
| Crack spread swaps - sales | Barrels | ||||||||||||||||
| Crude oil basis swaps - purchases | Barrels | ||||||||||||||||
| Notional Contract Volumes by Year of Maturity | |||||||||||||||||
| Total Outstanding Notional | 2028 | Unit of Measure | |||||||||||||||
| Derivative instruments not designated as hedges: | |||||||||||||||||
| Crack spread swaps - sales | Barrels | ||||||||||||||||
8. Fair Value Measurements
In accordance with ASC 820, the Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. These tiers include the following:
•Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities
•Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly observable
•Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions
In determining fair value, the Company uses various valuation techniques and prioritizes the use of observable inputs. The availability of observable inputs varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded and other characteristics particular to the instrument. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants and the valuation does not require significant management judgment. For other financial instruments, pricing inputs are less observable in the marketplace and may require management judgment.
Recurring Fair Value Measurements
There have been no material changes in our derivative assets and liabilities measurements, pension assets, liability awards, and precious metals obligations from those previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
23
Hierarchy of Recurring Fair Value Measurements
The Company’s recurring assets and liabilities measured at fair value were as follows (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Crack spread swaps | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Inventory financing obligation | |||||||||||||||||||||||||||||||||||||||||||||||
| Total derivative assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Pension plan investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total recurring assets at fair value | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Crack spread swaps | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Crude oil basis swaps | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Inventory financing obligation | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Total derivative liabilities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Liability awards | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total recurring liabilities at fair value | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
The table below sets forth a summary of net changes in fair value of the Company’s Level 3 financial assets and liabilities (in millions):
| For the Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Fair value at January 1, | $ | $ | |||||||||
| Realized loss on derivative instruments | ( | ( | |||||||||
| Unrealized gain (loss) on derivative instruments | ( | ||||||||||
| Settlements | |||||||||||
| Fair value at September 30, | $ | ( | $ | ||||||||
| Total gain (loss) included in net income (loss) attributable to changes in unrealized gain (loss) relating to financial assets and liabilities held as of September 30, | $ | ( | $ | ||||||||
Nonrecurring Fair Value Measurements
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances.
Estimated Fair Value of Financial Instruments
Cash, cash equivalents and restricted cash
The carrying value of cash, cash equivalents and restricted cash are each considered to be representative of their fair value.
24
Debt
The estimated fair value of long-term debt at September 30, 2026 and December 31, 2025, consists primarily of senior notes. The estimated fair value of the Company’s 2026 Notes, 2027 Notes, 2028 Notes, 2028 Mirror Issuance Notes, 2029 Secured Notes, and 2031 Notes defined as Level 2 was based upon quoted prices for identical or similar liabilities in markets that are not active. The fair value of borrowings under the Company's senior secured revolving credit facility, DOE Loan, Shreveport terminal asset financing arrangement, Montana terminal asset financing arrangement, Montana refinery asset financing arrangement, and finance lease obligations is classified as Level 3 within the fair value hierarchy due to the absence of observable market quotations for these instruments. Fair value estimates for these obligations are based on valuation techniques that incorporate significant unobservable inputs, including assumptions regarding market interest rates for comparable debt instruments, credit spreads, remaining contractual terms and other factors specific to the underlying arrangements. The carrying value of these obligations is considered a reasonable approximation of fair value due to the variable-rate nature of the indebtedness or because the financing arrangements approximate market terms based on the Company's ability to borrow for similar arrangements at the time of valuation. Refer to Note 6, Long-Term Debt, for additional information regarding the Company's debt obligations.
The Company’s carrying value and estimated fair value of the Company’s Senior Notes, were as follows (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Level | Fair Value | Carrying Value | Fair Value | Carrying Value | |||||||||||||||||||||||||
2026 Notes, 2027 Notes, 2028 Notes, 2028 Mirror Issuance Notes, 2029 Secured Notes and 2031 Notes (1) | 2 | $ | $ | $ | |||||||||||||||||||||||||
____________________________
(1) As of September 30, 2026, the carrying value of the Company's Senior Notes included $12.5 million of unamortized debt issuance costs and $3.2 million of unamortized debt premium. As of December 31, 2025. the carrying value of the Company's Senior Notes included $7.2 million of unamortized debt issuance costs and $1.5 million of unamortized debt discounts.
9. Equity and Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in millions, except share and per share data) for the three and nine months ended September 30:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Numerator for basic and diluted earnings per share attributable to Calumet, Inc. common shareholders: | ||||||||||||||||||||||||||
| Net income (loss) attributable to Calumet, Inc. common shareholders | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Denominator for earnings per share: | ||||||||||||||||||||||||||
Weighted average number of basic and diluted common shares outstanding | ||||||||||||||||||||||||||
| Earnings per share in net income (loss) attributable to Calumet, Inc. common shareholders: | ||||||||||||||||||||||||||
| Basic and diluted | $ | $ | $ | ( | $ | |||||||||||||||||||||
Stock-based compensation expense (benefit) is included within general and administrative expense in the unaudited condensed consolidated statements of operations. For the three months ended September 30, 2026 and 2025, stock-based compensation expense totaled $38.0 million and $5.9 million of expense in each respective period. For the nine months ended September 30, 2026 and 2025, stock-based compensation expense totaled $83.4 million of expense and $7.4 million
25
of benefit in each respective period. The increase was primarily driven by non-cash stock-based compensation expense resulting from the mark-to-market remeasurement of the Company's liability-classified equity awards, which are remeasured each period based on changes in the Company's stock price.
During the second quarter of 2026, all 2,000,000 warrants issued in connection with the Company's July 2024 C-Corp conversion were exercised. As a result, the Company reclassified approximately $7.8 million from warrant equity to common stock and additional paid-in capital. As of September 30, 2026, no warrants to purchase common stock of Calumet, Inc. were outstanding.
10. Segments and Related Information
Segment Reporting
The Company determines its reportable segments based on how the business is managed internally for the products sold to customers, including how results are reviewed and resources are allocated. Effective January 1, 2026, the Company reorganized its business segments as a result of a change in how our chief operating decision maker (“CODM”) allocates resources, makes operating decisions, and assesses the performance of its business. As a result, as of January 1, 2026, the Company’s operations are managed by the CODM using the following reportable segments:
•Specialty Products and Solutions. The Specialty Products and Solutions segment consists of our customer-focused solutions and formulations businesses, covering multiple specialty product lines, anchored by our unique integrated complex in Northwest Louisiana. In this segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products.
•Montana/Renewables. The Montana/Renewables segment is composed of our Montana Renewables facility and our Great Falls specialty asphalt facility. At our Montana Renewables facility, we process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that are distributed into renewable markets in the western half of North America. At our Montana specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets.
•Performance Brands. The Performance Brands segment includes our fast-growing portfolio of high-quality, high-performing brands. In this segment, we blend, package, and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands.
The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies as disclosed in Note 2 — “Summary of Significant Accounting Policies,” except that the disaggregated financial results for the reporting segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting internal operating decisions. The Company accounts for inter-segment sales and transfers using market-based transfer pricing. The Company will periodically refine its expense allocation methodology for its segment reporting as more specific information becomes available and the industry or market changes. The CODM uses Adjusted EBITDA (a non-GAAP financial measure) to evaluate performance and allocate resources to each segment, primarily through periodic budgeting and segment performance reviews. The Company defines Adjusted EBITDA for any period as EBITDA adjusted for (a) impairment; (b) unrealized gains and losses from mark-to-market accounting for hedging activities; (c) realized gains and losses under derivative instruments excluded from the determination of net income (loss); (d) non-cash equity-based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (e) debt refinancing fees, extinguishment costs, premiums and penalties; (f) any net gain or loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) amortization of turnaround costs; (h) LCM inventory adjustments; (i) the impact of liquidation of inventory layers calculated using the LIFO method; (j) RINs mark-to-market adjustments; (k) RINs incurrence expense; and (l) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.
26
Reportable segment information for the three and nine months ended September 30, 2026 and 2025 is as follows (in millions):
| Three Months Ended September 30, 2026 | Specialty Products and Solutions | Performance Brands | Montana/ Renewables | Consolidated Total | ||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||
| External customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales | ||||||||||||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales eliminations | ( | |||||||||||||||||||||||||
| Sales | $ | |||||||||||||||||||||||||
Cost of sales | $ | $ | $ | |||||||||||||||||||||||
Other segment expenses | ||||||||||||||||||||||||||
Other segment items (1) | ( | |||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciling items to net income (loss): | ||||||||||||||||||||||||||
| Corporate expenses (2) | $ | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| LCM / LIFO (gain) loss | ( | |||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Debt extinguishment costs | ||||||||||||||||||||||||||
| Unrealized (gain) loss on derivatives | ||||||||||||||||||||||||||
| RINs incurrence (gain) expense | ( | |||||||||||||||||||||||||
| RINs mark-to-market (gain) loss | ( | |||||||||||||||||||||||||
| (Gain) loss on impairment and disposal of assets | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Equity-based compensation and other items | ||||||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Noncontrolling interest adjustments | ( | |||||||||||||||||||||||||
| Net income (loss) | $ | |||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | |||||||||||||||||||||||
| PP&E, net | $ | $ | $ | |||||||||||||||||||||||
27
| Three Months Ended September 30, 2025 | Specialty Products and Solutions | Performance Brands | Montana/ Renewables | Consolidated Total | ||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||
| External customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales | ||||||||||||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales eliminations | ( | |||||||||||||||||||||||||
| Sales | $ | |||||||||||||||||||||||||
Cost of sales | $ | $ | $ | |||||||||||||||||||||||
Other segment expenses | ||||||||||||||||||||||||||
Other segment items (1) | ( | ( | ||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Reconciling items to net income (loss): | ||||||||||||||||||||||||||
Corporate expenses (2) | $ | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| LCM / LIFO (gain) loss | ||||||||||||||||||||||||||
| Loss on sale of business | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Debt extinguishment costs | ( | |||||||||||||||||||||||||
| Unrealized (gain) loss on derivatives | ( | |||||||||||||||||||||||||
| RINs incurrence (gain) expense | ( | |||||||||||||||||||||||||
| RINs mark-to-market (gain) loss | ( | |||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||
| Equity-based compensation and other items | ||||||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Noncontrolling interest adjustments | ||||||||||||||||||||||||||
| Net income (loss) | $ | |||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | |||||||||||||||||||||||
| PP&E, net | $ | $ | $ | |||||||||||||||||||||||
28
| Nine Months Ended September 30, 2026 | Specialty Products and Solutions | Performance Brands | Montana/ Renewables | Consolidated Total | ||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||
| External customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales | ||||||||||||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales eliminations | ( | |||||||||||||||||||||||||
| Sales | $ | |||||||||||||||||||||||||
Cost of sales | $ | $ | $ | |||||||||||||||||||||||
Other segment expenses | ||||||||||||||||||||||||||
Other segment items (1) | ( | ( | ||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciling items to net income (loss): | ||||||||||||||||||||||||||
Corporate expenses (2) | $ | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| LCM / LIFO (gain) loss | ( | |||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Debt extinguishment costs | ||||||||||||||||||||||||||
| Unrealized (gain) loss on derivatives | ||||||||||||||||||||||||||
| RINs incurrence (gain) expense | ( | |||||||||||||||||||||||||
| RINs mark-to-market (gain) loss | ||||||||||||||||||||||||||
| (Gain) loss on impairment and disposal of assets | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Equity-based compensation and other items | ||||||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Noncontrolling interest adjustments | ( | |||||||||||||||||||||||||
| Net income (loss) | $ | ( | ||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | |||||||||||||||||||||||
| PP&E, net | $ | $ | $ | |||||||||||||||||||||||
29
| Nine Months Ended September 30, 2025 | Specialty Products and Solutions | Performance Brands | Montana/ Renewables | Consolidated Total | ||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||
| External customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales | ||||||||||||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Inter-segment sales eliminations | ( | |||||||||||||||||||||||||
| Sales | $ | |||||||||||||||||||||||||
Cost of sales | $ | $ | $ | |||||||||||||||||||||||
Other segment expenses | ||||||||||||||||||||||||||
Other segment items (1) | ( | ( | ||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Reconciling items to net income (loss): | ||||||||||||||||||||||||||
Corporate expenses (2) | $ | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| LCM / LIFO (gain) loss | ||||||||||||||||||||||||||
| (Gain) loss on sale of business | ( | |||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Debt extinguishment costs | ||||||||||||||||||||||||||
| Unrealized (gain) loss on derivatives | ( | |||||||||||||||||||||||||
| RINs incurrence (gain) expense | ( | |||||||||||||||||||||||||
| RINs mark-to-market (gain) loss | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Equity-based compensation and other items | ||||||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Noncontrolling interest adjustments | ||||||||||||||||||||||||||
| Net income (loss) | $ | |||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | |||||||||||||||||||||||
| PP&E, net | $ | $ | $ | |||||||||||||||||||||||
____________________________
(1) Other segment items includes realized derivative gains and (losses), foreign currency gains and (losses), pension costs, and other ancillary income and (expenses).
(2) Corporate expenses represents corporate costs that are not allocated to the operating segments. Corporate expenses are included in the tables above to reconcile total Segment Adjusted EBITDA attributable to the Company’s consolidated net income (loss).
Geographic Information
International sales accounted for less than ten percent of consolidated sales in the three and nine months ended September 30, 2026 and 2025.
The Company offers specialty, fuels, renewable fuels and packaged products primarily in categories consisting of lubricating oils, solvents, waxes, gasoline, diesel, jet fuel, asphalt, heavy fuel oils, renewable fuels, high-performance branded products, and other specialty and fuels products.
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The following table sets forth the major product category sales for each segment for the three months ended September 30, 2026 and 2025 (dollars in millions):
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Specialty Products and Solutions: | ||||||||||||||||||||||||||
| Lubricating oils | $ | % | $ | % | ||||||||||||||||||||||
| Solvents | % | % | ||||||||||||||||||||||||
| Waxes | % | % | ||||||||||||||||||||||||
| Fuels, asphalt and other by-products | % | % | ||||||||||||||||||||||||
| Total | $ | % | $ | % | ||||||||||||||||||||||
| Montana/Renewables: | ||||||||||||||||||||||||||
| Fuels, asphalt and other by-products | $ | % | $ | % | ||||||||||||||||||||||
| Renewable fuels | % | % | ||||||||||||||||||||||||
| Total | $ | % | $ | % | ||||||||||||||||||||||
| Performance Brands: | $ | % | $ | % | ||||||||||||||||||||||
| Consolidated sales | $ | % | $ | % | ||||||||||||||||||||||
The following table sets forth the major product category sales for each segment for the nine months ended September 30, 2026 and 2025 (dollars in millions):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||||||||
| Lubricating oils | $ | % | $ | % | |||||||||||||||||||
| Solvents | % | % | |||||||||||||||||||||
| Waxes | % | % | |||||||||||||||||||||
| Fuels, asphalt and other by-products | % | % | |||||||||||||||||||||
| Total | $ | % | $ | % | |||||||||||||||||||
| Montana/Renewables: | |||||||||||||||||||||||
| Fuels, asphalt and other by-products | $ | % | $ | % | |||||||||||||||||||
| Renewable fuels | % | % | |||||||||||||||||||||
| Total | $ | % | $ | % | |||||||||||||||||||
| Performance Brands: | $ | % | $ | % | |||||||||||||||||||
| Consolidated sales | $ | % | $ | % | |||||||||||||||||||
Major Customers
During the three months ended September 30, 2026, the Company had sales of approximately $176.1 million to one customer in the Montana/Renewables segment, which represented 10% or greater of consolidated sales. During the nine months ended September 30, 2026, the Company had no customer that represented 10% or greater of consolidated sales. During the three and nine months ended September 30, 2025, the Company had no customer that represented 10% or greater of consolidated sales.
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Major Suppliers
During the three months ended September 30, 2026, the Company had three suppliers that supplied approximately 83.2 % of its crude oil supply. During the nine months ended September 30, 2026, the Company had four suppliers that supplied approximately 88.4 % of its crude oil supply. During the three and nine months ended September 30, 2025, the Company had four 88.0 % and 88.2 % of its crude oil supply, respectively.
11. Income Taxes
Calumet, Inc. is a corporation and is subject to U.S. federal and state income taxes. Income taxes are accounted for under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and income tax basis of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards, using enacted tax rates in effect for the taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it is more likely than not such net deferred tax assets will not be realized. The Company assessed the realizability of the deferred tax assets (“DTAs”) and concluded that a full valuation allowance for the net DTAs is deemed appropriate as the DTAs, except for as described below, were not more likely than not to be realized under relevant accounting standards.
Prior to the quarter ended September 30, 2025, the Company maintained a full valuation allowance on its CFPCs. As a result of the successful monetization of its CFPCs during 2025 through third-party sales under Section 6418 of the Internal Revenue Code, the Company obtained sufficient positive evidence to support the realization of certain deferred tax assets that were previously subject to a valuation allowance. Accordingly, the Company released a portion of the valuation allowance related to those deferred tax assets.
Sale of Transferable Tax Credits
For the nine months ended September 30, 2026, the Company sold $72.6 million in transferable non-refundable tax credits. For the nine months ended September 30, 2025, the Company sold $25.0 million in transferable non-refundable tax credits.The Company does not expect any material recapture risk associated with the credits sold, and no contingent liabilities have been recorded as of the reporting dates.
Income Tax Expense
Historically, we have calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full year to income (loss) for the interim period. For the nine months ended September 30, 2026, we concluded that we could not calculate a reliable estimate of our annual effective tax rate due to inability to forecast the impacts of various mark-to-market items and their impact on our business and results of operations. Accordingly, we computed the effective tax rate for the three and nine month periods ending September 30, 2026 using actual results. Income tax benefit for the three and nine months ended September 30, 2026 was $28.0 million and $70.0 million, respectively. Income tax benefit for the three and nine months ended September 30, 2025 was $41.4 million and $40.8 million, respectively. The effective tax rate for the three and nine months ended September 30, 2026, was a benefit of 11.4 % and 33.4 %, respectively. The effective tax rate for the three and nine months ended September 30, 2025, was a benefit of 15.2 % and 109.4 %, respectively.
One Big Beautiful Bill Act
On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (the “OBBB”). The OBBB contains several changes to corporate taxation. The Company has assessed the impact of the OBBB, the provisions that impact us the most are the following:
•extension of the clean fuel production credit through December 31, 2029;
•requirement that feedstocks for fuel produced after December 31, 2025 must be produced or grown exclusively in the U.S., Mexico, or Canada in order for such fuel to be eligible for the clean fuel production credit;
•elimination of the special clean fuel production credit rate for SAF produced after December 31, 2025;
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•clean fuel production credits remain available for transfer and direct pay; and
•changes to limitations on deductions for interest expense.
We have evaluated the effects of the legislation on our financial position, results of operations and liquidity in the future; the effects of OBBB does not have a material impact on our financial position, results of operations and liquidity in 2026.
12. Unrestricted Subsidiaries
As defined in the indentures governing the Company’s outstanding senior notes, an unrestricted subsidiary means MRHL, MRL and any other subsidiary of the Company, other than Calumet Finance Corp., that is designated by the Company as an unrestricted subsidiary, but only to the extent that such subsidiary:
•has no indebtedness other than non-recourse debt owing to any person other than the Company or any of its restricted subsidiaries, except to the extent permitted by the indentures of the senior notes;
•is not party to any agreement, contract, arrangement or understanding with the Company or any restricted subsidiary of the Company unless the terms of any such agreement, contract, arrangement or other understanding are no less favorable to the Company or such restricted subsidiary than those that might be obtained at the time from persons who are not affiliates of the Company, except to the extent permitted by the indentures of the senior notes;
•is a person with respect to which neither the Company nor any of its restricted subsidiaries has any direct or indirect obligation (a) to subscribe for additional equity interests or (b) to maintain or preserve such person’s financial condition or to cause such person to achieve any specified levels of operating results, except to the extent permitted by the indentures of the senior notes; and
•has not guaranteed or otherwise directly or indirectly provided credit support for any indebtedness of the Company or any of its restricted subsidiaries.
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As of September 30, 2026 and December 31, 2025, respectively, MRHL and MRL were the only unrestricted subsidiaries of the Company. In accordance with the indentures governing the Company’s outstanding senior notes, the following tables set forth certain financial information of (i) the Company and its restricted subsidiaries, on a combined basis, (ii) the Company’s unrestricted subsidiaries, on a combined basis, and (iii) the Company and its subsidiaries, on a consolidated basis, in each case, as of September 30, 2026 and December 31, 2025, respectively (dollars in millions):
| September 30, 2026 | Parent Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Eliminations | Consolidated Total | ||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||||
| Restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Accounts receivable, net: | $ | $ | $ | $ | ||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | ||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Property, plant and equipment, net | $ | $ | $ | $ | ||||||||||||||||||||||
| Other noncurrent assets, net | $ | $ | $ | $ | ||||||||||||||||||||||
| Accounts payable | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Other current liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Current portion of long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Other long-term liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term debt, less current portion | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term financing instruments - related parties | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Redeemable noncontrolling interest and other equity instruments | $ | $ | $ | $ | ||||||||||||||||||||||
| Stockholders' equity | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| December 31, 2025 | Parent Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Eliminations | Consolidated Total | ||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||||
| Restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Accounts receivable - trade | $ | $ | $ | $ | ||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | ||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Property, plant and equipment, net | $ | $ | $ | $ | ||||||||||||||||||||||
| Operating lease right-of-use assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Other noncurrent assets, net | $ | $ | $ | $ | ||||||||||||||||||||||
| Accounts payable | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Other taxes payable | $ | $ | $ | $ | ||||||||||||||||||||||
| Other current liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Current portion of operating lease liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Current portion of long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term operating lease liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term debt, less current portion | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Redeemable noncontrolling interest | $ | $ | $ | $ | ||||||||||||||||||||||
| Stockholders' equity | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
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In connection with the execution of the First Amendment of the DOE Loan (see Note 6 — 'Long-Term Debt') , the Company converted $293.1 million of trade payables due from the Unrestricted Group to financing instruments subordinated to the DOE Loan.
The following table sets forth certain financial information of the Company’s unrestricted subsidiaries, on a combined basis, for the periods presented (in millions):
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Restricted | Unrestricted | Consolidated | Restricted | Unrestricted | Consolidated | |||||||||||||||||||||
| Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Gross profit (loss) | ( | |||||||||||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||
| Selling | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| (Gain) loss on sale of business | ||||||||||||||||||||||||||
| Other operating expense | ||||||||||||||||||||||||||
| Operating profit (loss) | ( | |||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
| Debt extinguishment costs | ( | ( | ||||||||||||||||||||||||
| (Gain) loss on derivative instruments | ( | ( | ( | ( | ||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||
| Total other income (expense) | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) before income taxes | ( | |||||||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ( | ( | |||||||||||||||||||||
| Net income (loss) | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | ||||||||||||||||||||||||||
| Net income (loss) attributable to Calumet, Inc. common shareholders: | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
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| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Restricted | Unrestricted | Consolidated | Restricted | Unrestricted | Consolidated | ||||||||||||||||||
| Sales | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit (loss) | ( | ||||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Selling | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Gain on sale of business | ( | ( | |||||||||||||||||||||
| Other operating expense | |||||||||||||||||||||||
| Operating profit (loss) | ( | ( | |||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ( | ( | |||||||||||||||||
| Debt extinguishment costs | ( | ( | ( | ( | |||||||||||||||||||
| (Gain) loss on derivative instruments | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Total other income (expense) | ( | ( | ( | ( | ( | ( | |||||||||||||||||
| Net income (loss) before income taxes | ( | ( | ( | ( | ( | ||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ( | ( | ||||||||||||||||||
| Net income (loss) | $ | ( | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | |||||||||||||||||||||||
| Net income (loss) attributable to Calumet, Inc. common shareholders: | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||
13. Redeemable Noncontrolling Interest
On August 5, 2022 (the “Closing Date”), MRHL issued and sold 12,500,000 preferred units (“Preferred Units”) in MRHL to an affiliate of Warburg Pincus LLC for $250.0 million for an immediate cash payment of $200.0 million and the agreement to pay the remaining $50.0 million in cash not later than October 3, 2022 (the “Deferred Purchase Price”) in exchange for a noncontrolling interest (“Percentage Interest”) of 14.2 % in MRHL. The Company received the cash payment for the Deferred Purchase Price on October 3, 2022. In connection with the closing of the DOE Loan, the Company contributed additional capital in MRHL, which reduced Warburg Pincus LLC's Percentage Interest to approximately 13.2 % in MRHL. The Preferred Units are not interest bearing and carry certain minimum return thresholds.
Holders of the Preferred Units are entitled to receive a preferred return equal to the greater of (i) an internal rate of return, or IRR (as defined in the Second Amended and Restated Limited Liability Company Agreement of MRHL (the “Second A&R LLC Agreement”), equal to 8.0 % and (ii) a multiple on invested capital, or MOIC (as defined in the Second A&R LLC Agreement), initially equal to 1.35 and increasing by 0.01 each anniversary of the Closing Date up to a maximum MOIC equal to 1.40 on or after the fifth anniversary of the Closing Date (the “Preferred Return”). Pursuant to the Second A&R LLC Agreement, MRHL is required to distribute all Available Cash (as defined in the Second A&R LLC Agreement), to the members of MRHL (the “Members”) in the following priority: (i) 37.5 % to the holders of the Preferred Units and 62.5 % to all other Members pro rata based on their Percentage Interests (as defined in the Second A&R LLC Agreement) until the holders of the Preferred Units receive the Preferred Return and (ii) thereafter, 100.0 % to the Members pro rata based on their Percentage Interests. Additionally, pursuant to the Second A&R LLC Agreement the Company is required to make distributions to the members sufficient to enable them to pay, on a quarterly basis, federal, state and local taxes arising from the allocations made to such members. Further, such distributions are determined by the Company and shall be made within (30) days after the close of each applicable quarter. Any tax liability distributions shall be treated as an advance against, and shall reduce the amount of, the next distribution that the members would otherwise receive pursuant to the agreement.
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At any time following the fifth anniversary of the Closing Date, if MRHL has not had an Initial Public Offering or Change of Control (each as defined in the Second A&R LLC Agreement), Warburg has the right to initiate an Initial Public Offering or Change of Control transaction pursuant to the terms of the Second A&R LLC Agreement. Upon the closing of a Qualified Initial Public Offering (as defined in the Second A&R LLC Agreement), each of MRHL and Warburg have the right to elect to convert all (but not less than all) of the Preferred Units (i) first by MRHL paying each holder of Preferred Units an amount in cash equal to such holder’s Preferred Return (to the extent not already paid) and (ii) thereafter, the Preferred Units automatically convert into the same number of common units of MRHL and will be entitled to participate in any distributions of Available Cash to the Members in proportion to their respective Percentage Interests. The Second A&R LLC Agreement also provides certain drag-along rights in connection with a Change of Control, subject to a minimum preferred return requirement for certain transactions that are consummated before the third anniversary of the Closing Date.
The redeemable noncontrolling interest in MRHL is reflected as temporary equity in the unaudited condensed consolidated balance sheets due to the redemption features. As of the reporting date, there are no triggering, change of control, early redemption or monetization events that are probable that would require us to revalue the Preferred Units.
Earnings Allocation and Distributions
Earnings of MRHL are attributed to the redeemable noncontrolling interest based on the contractual economic participation rights of the Preferred Units. Until the Preferred Return has been satisfied, the Company attributes 37.5 % of MRHL's net income in any quarter in which MRHL generates net income, on a discrete quarterly basis with no offset for losses in subsequent quarters. Once the Preferred Return has been satisfied, net income will be attributed based on the Members' respective Percentage Interests. Distributions to Preferred Unit holders are recorded separately as reductions of the redeemable noncontrolling interest carrying amount. No distributions were made or declared for the three or nine months ended September 30, 2026 and 2025, respectively. For the three and nine months ended September 30, 2026, the Company attributed $16.9 million of MRHL's net income to the redeemable noncontrolling interest.
The following table shows the change in the carrying value of redeemable noncontrolling interest in MRHL.
| Three Months Ended September 30, 2026 | ||||||||
| Balance at June 30, 2026 | $ | |||||||
| Net income attributable to redeemable noncontrolling interest | ||||||||
| Balance at September 30, 2026 | $ | |||||||
| Nine Months Ended September 30, 2026 | ||||||||
| Balance at December 31, 2025 | $ | |||||||
| Net income attributable to redeemable noncontrolling interest | ||||||||
| Balance at September 30, 2026 | $ | |||||||
14. Subsequent Events
On October 25, 2026, the Company's wholly owned subsidiaries, Calumet Specialty Products Partners, L.P. (the "Partnership") and Calumet Finance Corp.(together with the Partnership, the "Issuers"), redeemed $150.0 million of the outstanding 9.75 % Senior Notes due 2028 that were originally issued in June 2023, at a cash redemption price of 102.438 % of the principal amount, plus accrued and unpaid interest up to but not including the redemption date.
On November 4, 2026, the Company entered into agreements with Warburg Pincus, LLC to amend certain terms of its investment in MRHL. The agreements provide for, among other things, replaced the existing preferred units with new preferred units and warrants for Warburg Pincus to acquire up to 8.0 % ownership interest in MRHL, exercisable above a
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The historical unaudited condensed consolidated financial statements included in this Quarterly Report reflect all of the assets, liabilities and results of operations of Calumet, Inc. (“Calumet,” the “Company,” “we,” “our,” or “us”). The following discussion analyzes the financial condition and results of operations of the Company for the three and nine months ended September 30, 2026. Stockholders should read the following discussion and analysis of our financial condition and results of operations in conjunction with our 2025 Annual Report and our historical unaudited condensed consolidated financial statements and notes included elsewhere in this Quarterly Report.
Overview
We manufacture, formulate and market a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. We are headquartered in Indianapolis, Indiana and operate twelve facilities throughout North America.
Our operations are managed using the following reportable segments: Specialty Products and Solutions; Performance Brands; and Montana/Renewables. For additional information, see Note 10 — “Segments and Related Information” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements.” In our Specialty Products and Solutions segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, fuels and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. In our Performance Brands segment, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our Montana/Renewables segment is comprised of two facilities located in Great Falls, Montana — renewable fuels and specialty asphalt. At our renewable fuels facility, we process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that are distributed into renewable markets in the western half of North America. At our specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets.
Recent Developments
Continued Debt Reduction
On July 15, 2026, the Company's wholly owned subsidiaries, Calumet Specialty Products Partners, L.P. (the "Partnership") and Calumet Finance Corp. (together with the Partnership, the "Issuers"), redeemed all of the outstanding $100.0 million 9.75% Senior Notes due 2028 that were originally issued in January 2025 (the "2028 Mirror Notes"), at a cash redemption price of 102.438% of the principal amount, plus accrued and unpaid interest up to but not including the redemption date.
On July 31, 2026, we completed early termination and repayment of our Montana terminal asset financing arrangement for approximately $15.5 million.
On October 25, 2026, we redeemed $150.0 million of the outstanding 9.75% Senior Notes due 2028 that were originally issued in June 2023, at a cash redemption price of 102.438% of the principal amount, plus accrued and unpaid interest to but not including the redemption date. The Company remains focused on strong operations and continued use of cash from operations to pay down debt in future periods.
Upsized Senior Secured Revolving Credit Facility
On September 11, 2026, the Company entered into the Eleventh Amendment to the Third Amended and Restated Credit Agreement (the "Eleventh Amendment"). The Eleventh Amendment modified the Credit Agreement to provide for an increase in commitments from $500.0 million to $600.0 million, subject to borrowing base limitations as well as other changes. Refer to Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information.
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First Amendment to Loan Guarantee Agreement and CMR Lease
On August 28, 2026, MRL and the DOE entered into the First Amendment to the existing Loan Guarantee Agreement ("First Amendment to DOE Loan", "DOE Loan") The First Amendment to DOE Loan changes the nature of the expansion project of MRL's renewable fuels facility in Great Falls, Montana from a large new-build project to a project that is primarily repurposing existing equipment previously in crude oil service. Further, instead of a longer-term, large-scale project, the project is now structured as a series of smaller, defined scopes of work. Due to the more capital efficient nature of the revised project, the Company and DOE reduced the maximum principal amount under the DOE Loan to $815.8 million. The Company received proceeds of $34.0 million upon completion of the First Amendment to DOE Loan. Refer to Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information.
On November 4, 2026, Calumet Montana Refining, LLC ("CMR"), a restricted subsidiary of the Company, entered into a long-term lease agreement with MRL for certain CMR assets to be used in the MaxSAF® expansion, including a hydrotreater, hydrogen plant, naphtha splitter, and equipment to recover renewable propane. The lease is expected to provide CMR and the Restricted Group with approximately $30.0 million of annual lease income from the Unrestricted Group, subject to certain adjustments. The leased assets will enable MRL to increase SAF production volume, capture renewable propane, reduce naphtha yield, and increase total throughput, while CMR will continue to operate its specialty asphalt production facility in a new configuration following the asset lease. The completion of this lease provides MRL's renewables facility with a more capital efficient expansion approach in support of the First Amendment to the DOE Loan discussed above.
EPA Small Refinery Exemption for 2025 Compliance Year
On August 31, 2026, the EPA notified the Company that we were successful in receiving full exemptions on two small refinery exemption petitions filed by the Company for the 2025 compliance year. The Company's balance sheet liability accrual was reduced by approximately 71 million RINs, which were valued at approximately $170.5 million as of June 30, 2026. The remaining RIN balance sheet liability of approximately 129 million RINs were valued at approximately $309.7 million as of June 30, 2026 include the 2022-24 partial exemptions, which remain under discussion with the EPA. In addition, the partial exemptions are under judicial review, along with legal challenges brought by other industry participants.
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Crack Spread Swaps Sales Contracts
As of October 31, 2026, we had the following notional contracts related to outstanding crack spread swap contracts, which are derivative instruments not designated as hedges. Periodically, the Company may enter into an offsetting position to effectively close out its exposure under an existing contract as it approaches expiration.
| Period of Maturity | Total Outstanding Notional Volumes 2-1-1 Crack Spread Swap Sales (bpd) | Avg. Strike Price ($/bbl) for 2-1-1 Crack Spread Swap Sales Based on CBOB | ||||||||||||||||||||||||
| 4Q 2026 | 15,000 | $20.70 | ||||||||||||||||||||||||
| 1Q 2027 | 21,000 | $37.77 | ||||||||||||||||||||||||
| 2Q 2027 | 16,000 | $35.53 | ||||||||||||||||||||||||
| 3Q 2027 | 16,000 | $34.84 | ||||||||||||||||||||||||
| 4Q 2027 | 16,000 | $33.87 | ||||||||||||||||||||||||
| 1Q 2028 | 15,000 | $30.01 | ||||||||||||||||||||||||
| 2Q 2028 | 8,000 | $33.12 | ||||||||||||||||||||||||
| 3Q 2028 | 5,000 | $33.33 | ||||||||||||||||||||||||
| 4Q 2028 | 5,000 | $33.33 | ||||||||||||||||||||||||
See Note 7 — “Derivatives” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information related to the Company’s derivatives.
Update Regarding Renewable Volume Obligation
On March 27, 2026, EPA announced a final rule to establish required Renewable Fuel Standard Volumes and percentage standards for 2026 and 2027. The EPA’s updated Renewable Volume Obligations (“RVOs”) establish total demand of 26.81 billion RINs and 27.02 billion RINs for 2026 and 2027, respectively, providing a historic level of annualized support for the biofuels industry. The 2026 and 2027 volumes include some earlier renewable fuel volumes previously waived through small refinery exemptions (“SREs”) across the 2023–2025 compliance periods. These actions are expected to improve biobased diesel industry margins and industry utilization, and attract currently idled higher-cost biodiesel producers to re-enter the market in order to meet mandated demand. The RVO framework is aligned with a broader national focus on domestic energy security. The EPA has also proposed that beginning in 2028, foreign source renewable fuels and feedstocks will receive only half the RFS compliance value of American-made products, materially enhancing the competitive position of domestic producers. Against this favorable regulatory backdrop, MRL’s strategic location and proximity to domestic customers and suppliers and the fourth quarter expansion project position the Company for strong performance in the fourth quarter of 2026, continued momentum into 2027, and a sustained long-term competitive advantage.
Third Quarter 2026 Update
Outlook and Trends
We believe the business is positioned to deliver outsize performance, supported by fundamentally tighter global market conditions across refined fuels and specialty products. Our diversified customer base, resilient specialty portfolio, and multi-year capital investments into enhanced operational reliability position us to capitalize on the current margin environment. Global refined product markets tightened materially in response to conflict in the Middle East resulting in significantly elevated margin levels compared to historical averages. These levels enabled the Company to generate significant cash flow in the third quarter of 2026, and we expect these market conditions to persist in the medium term. Benchmark crack spreads have reached record levels amid the overlapping impacts of idled or offline Middle Eastern and Russian refining capacity and historically low U.S. refined product inventory levels. Because substantially all of our crude supply is sourced from North America, our supply chain is comparatively insulated from the seaborne disruptions affecting global markets. Similar dynamics are at play within our specialty products portfolio. With a significant portion of global Group III base oils supply trapped within the Persian gulf or having been removed from the market, we are experiencing increased demand as consumers substitute into Group I and Group II base oils where possible. The durability and
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magnitude of these conditions remain uncertain, and depend significantly on the recovery of shipping flows through the Strait of Hormuz.
Our Specialty Products and Solutions segment continues to benefit from an attractive margin environment across both specialty and commodity products. Fourth quarter results are expected to reflect reduced production volumes at our Shreveport facility due to a planned turnaround in October. In advance of the turnaround, we built inventory and secured external base oil supply to support customer demand during the planned outage. In our Performance Brands segment, rising input costs and constrained supply of Group III base oil and synthetic feedstocks continued to compress margins in the third quarter; with recent price increases in place, we expect margins to expand as input costs stabilize. Demand for our products in these businesses remained strong and we continue to leverage the benefits of our fully integrated specialty business in this market. We expect the current margin environment for both specialty products and fuel-based products to continue to be volatile, and above historical industry margins in the near-term due to the global conflict impacting feedstock pricing.
In our Montana/Renewables segment, we believe long-term demand for renewable fuel products will continue to grow supported by Federal, State, Provincial and local governmental mandates and incentives that have been enacted or announced in North America and globally. Collectively, these policies focus on domestic fuel security, strategic alignment with the agricultural industry as a source of renewable feedstocks, sustainability initiatives, transportation fuel cleanliness including ongoing reduction in particulates, and expansion of both voluntary and mandatory corporate decarbonization targets, particularly for hard-to-abate sectors including the global aviation industry. We believe that our advantage as a first-mover in sustainable aviation fuels market positions us as a preferred supplier to our potential offtake partners’ SAF strategies. The start-up of our MaxSAF® project allows us to shift our renewable product mix toward more SAF production which has historically realized higher pricing relative to renewable diesel, and we expect this change in product mix to support improved margin realizations immediately and long-term. Our margins in 2026 continue to be significantly above the prior year and have continued early on in the fourth quarter of 2026.
Montana Renewables continues to achieve its operational cost targets, while demonstrating success in monetizing Section 45Z CFPCs. Production volumes recovered following the completion of the MaxSAF® expansion and turnaround in the second quarter of 2026. Our overall enhanced operational performance reflects our focus on operational excellence since we completed commissioning in 2023.
We recently announced plans to significantly expand our SAF capacity by repurposing proven, installed refining equipment from the adjacent Montana specialty asphalt facility. Through this expansion, Montana Renewables expects to reach approximately 200 million gallons of annual SAF production and 17,000 barrels per day of total product sales by year-end 2028. The centerpiece of the revised plan is the redeployment of selected Montana specialty asphalt facility assets — a hydrotreater, hydrogen plant, and naphtha splitter — to Montana Renewables under a long-term lease. The tied-in hydrotreater creates a proprietary dual reactor system that runs in a “polishing” service rather than the industry-standard “cracking” service, delivering competitively advantaged SAF yields while lowering by-product production and reducing yield loss. Several additional modular components, including a third renewable fuels reactor currently offsite, provide the ability to expand capacity beyond 200 million gallons over time. The tie-in of the Montana specialty asphalt facility assets begins in November 2026.
Contingencies
For a summary of litigation and other contingencies, refer to Note 4 — “Commitments and Contingencies” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements.” Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued, which may result from these contingencies, will have a material adverse effect on our liquidity, financial condition or results of operations.
Financial Results
We reported net income of $273.3 million in the third quarter 2026 versus net income of $313.4 million in the third quarter 2025. Net income in the third quarter of 2026 was significantly impacted by the following non-cash items:
•$113.8 million unrealized loss on derivatives; and
•$176.7 million benefit for non-cash RINs related items.
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Net income in the third quarter of 2025 was significantly impacted by the following non-cash items:
•$323.9 million benefit for non-cash RINs related items.
We reported Adjusted EBITDA with Tax Attributes of $347.2 million in the third quarter 2026 versus $92.5 million in the third quarter 2025. We generated cash from operating activities of $218.5 million in the third quarter 2026 versus generating cash from operating activities of $23.5 million in the third quarter of 2025.
Refer to Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes to Net income (loss), our most directly comparable financial performance measure calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).
Specialty Products and Solutions segment Adjusted EBITDA was $248.1 million in the third quarter 2026 versus $80.2 million in the third quarter 2025. Compared to the prior period, Specialty Products and Solutions third quarter 2026 segment Adjusted EBITDA was positively impacted by expanded margins, as commercial pricing actions held amid volatile crude oil prices that ended the quarter higher, building on margin gains achieved the prior period. Commodity margins strengthened further during the quarter, as benchmark crack spreads remained at historically high levels on conflict-related supply disruptions and tight global refined product inventories.
Montana/Renewables segment Adjusted EBITDA was $85.4 million in the third quarter 2026 versus loss of $5.8 million in the third quarter 2025. Montana/Renewables segment Adjusted EBITDA with Tax Attributes was $110.6 million in the third quarter 2026 compared to $17.1 million in the prior period. Compared to the prior year, Montana/Renewables segment Adjusted EBITDA with Tax Attributes primarily reflected favorable sales pricing, driven by diesel market pricing and the EPA's SET-2 Renewable Volume Obligation ("RVO"), partly offset by higher material costs and operating expenses. These market conditions supported renewable fuel margins during the period and increased market confidence in industry fundamentals. The above results were further improved by gains in legacy fuel margins partially offset by weaker asphalt margins resulting from the lag in asphalt price increases following a period of elevated crude oil costs.
Performance Brands segment Adjusted EBITDA was $9.1 million in the third quarter 2026 versus $13.2 million in the third quarter 2025. Results included $7.0 million of business interruption insurance proceeds recognized during the quarter. The decline was driven by margin compression, as elevated input costs for Group III base oils and synthetic feedstocks continued to outpace realized price increases. This segment continues to execute targeted pricing initiatives aimed at offsetting sustained input cost pressures and improving margins.
Liquidity Update
As of September 30, 2026, we had total liquidity of $781.8 million comprised of $225.2 million of unrestricted cash, $34.6 million of restricted cash and $522.0 million of availability under our credit facility. As of September 30, 2026, our revolving credit facility had a $579.3 million borrowing base, $57.3 million in outstanding standby letters of credit and no outstanding borrowings. We believe we will continue to have sufficient liquidity from cash on hand, projected cash flow from operations, borrowing capacity and other means by which to meet our financial commitments, debt service obligations, contingencies, and anticipated capital expenditures for at least the next 12 months. Refer to Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for additional information.
Renewable Fuel Standard Update
Along with the broader refining industry, we remain subject to compliance costs under the RFS unless or until we receive a small refinery exemption from the EPA, which we have historically received. Administered by the EPA, the RFS provides annual requirements for the total volume of renewable transportation fuels that are mandated to be blended into finished transportation fuels. If a refiner does not meet its required annual Renewable Volume Obligation, the refiner can purchase blending credits in the open market, referred to as RINs.
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During the third quarter 2026, we recorded a total benefit of $185.6 million for RINs in cost of sales in the unaudited condensed statements of operations, as compared to a total benefit of $333.3 million for RINs in the third quarter 2025. The benefit recorded in each period included the impact of the SRE exemptions issued by EPA in each respective period, partially offset by the incurrence of RIN obligations during each respective period. Our gross RINs Obligation, which includes RINs that are required to be secured through either our own blending or through the purchase of RINs in the open market, is spread across four compliance categories (D3, D4, D5 and D6). The gross RINs obligations may be satisfied by our own renewables blending, RIN purchases, or receipt of small refinery exemptions.
Expenses related to RFS compliance have the potential to remain significant for our two segments containing fuels products. If legal or regulatory changes occur that have the effect of increasing our RINs Obligation or eliminating or narrowing the availability of the small refinery exemption under the RFS program, we could be required to purchase additional RINs in the open market, which may materially increase our costs related to RFS compliance and could have a material adverse effect on our results of operations and liquidity.
See Note 2 — “Summary of Significant Accounting Policies” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report for further information on the Company’s RINs obligation.
Unrestricted Subsidiaries
See Note 12 — “Unrestricted Subsidiaries” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report for further information regarding certain financial information of our unrestricted subsidiaries.
Key Performance Measures
Our sales and results of operations are principally affected by demand for specialty products, fuel product demand, renewable fuel product demand, global fuel crack spreads, the price of natural gas used as fuel in our operations, our ability to operate our production facilities at high utilization, and our results from derivative instrument activities.
Our primary raw materials are crude oil, renewable feedstocks, and other specialty feedstocks, and our primary outputs are specialty consumer-facing and industrial products, specialty branded products, fuel products, and renewable fuel products. The prices of crude oil, specialty products, fuel products, and renewable fuel products are subject to fluctuations in response to changes in supply, demand, market uncertainties and a variety of factors beyond our control. We monitor these risks and from time-to-time enter into derivative instruments designed to help mitigate the impact of commodity price fluctuations on our business. The primary purpose of our commodity risk management activities is to economically hedge our cash flow exposure to commodity price risk. We also may hedge when market conditions exist that we believe to be out of the ordinary and particularly supportive of our financial goals. We enter into derivative contracts for future periods in quantities that do not exceed our projected purchases of crude oil and natural gas and sales of fuel and renewable fuel products. Refer to Note 7 — “Derivatives” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information.
Our management uses several financial and operational measurements to analyze our performance. These measurements include the following:
•sales volumes;
•segment gross profit;
•segment Adjusted gross profit;
•segment Adjusted EBITDA;
•segment Adjusted EBITDA with Tax Attributes; and
•selling, general and administrative expenses.
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Sales volumes. We view the volumes of Specialty Products and Solutions products, Montana/Renewables products and Performance Brands products sold as an important measure of our ability to effectively utilize our operating assets. Our ability to meet the demands of our customers is driven by the volumes of feedstocks that we run at our facilities. Higher volumes typically improve profitability both through the spreading of fixed costs over greater volumes and the additional gross profit achieved on the incremental volumes.
Segment gross profit. Specialty Products and Solutions, Montana/Renewables and Performance Brands products’ gross profit are important measures of profitability of our segments. We define gross profit as sales less the cost of crude oil and other feedstocks, LCM/LIFO adjustments, and other production-related expenses, the most significant portion of which includes labor, plant fuel, utilities, contract services, maintenance, transportation, RINs, depreciation and amortization and processing materials. We use gross profit as an indicator of our ability to manage margins in our business over the long term. The increase or decrease in selling prices typically lags behind the rising or falling costs, respectively, of feedstocks throughout our business. Other than plant fuel, RINs mark-to-market adjustments, and LCM/LIFO adjustments, production related expenses generally remain stable across broad ranges but can fluctuate depending on maintenance activities performed during a specific period.
Segment Adjusted gross profit. Specialty Products and Solutions, Montana/Renewables and Performance Brands products segment Adjusted gross profit measures are useful as they exclude transactions not related to our core cash operating activities and provide metrics to analyze the profitability of the core cash operations of our segments. We define segment Adjusted gross profit as segment gross profit excluding the impact of (a) LCM inventory adjustments; (b) the impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; (d) RINs incurrence expense; (e) depreciation and amortization; and (f) all extraordinary, unusual or non-recurring items of revenue or cost of sales.
Segment Adjusted EBITDA and Segment Adjusted EBITDA with Tax Attributes. We believe that Specialty Products and Solutions, Montana/Renewables and Performance Brands segment Adjusted EBITDA and Adjusted EBITDA with Tax Attributes measures are useful as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay interest to our noteholders. Adjusted EBITDA and Adjusted EBITDA with Tax Attributes allows us to meaningfully analyze the trends and performance of our core cash operations as well as to make decisions regarding the allocation of resources to segments. Corporate Adjusted EBITDA primarily reflects general and administrative costs.
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Results of Operations for the Three and Nine Months Ended September 30, 2026 and 2025
Production Volume. The following table sets forth information about our continuing operations after giving effect to the elimination of all intercompany activity. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased blendstocks such as ethanol and specialty blendstocks, as well as the resale of crude oil.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| (In bpd) | (In bpd) | ||||||||||||||||||||||||||||||||||
Total sales volume (1) | 90,759 | 91,605 | (0.9) | % | 88,517 | 88,662 | (0.2) | % | |||||||||||||||||||||||||||
| Facility production: | |||||||||||||||||||||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||||||||||||||||||||
| Lubricating oils | 12,506 | 11,803 | 6.0 | % | 12,719 | 11,705 | 8.7 | % | |||||||||||||||||||||||||||
| Solvents | 8,261 | 8,120 | 1.7 | % | 7,720 | 7,876 | (2.0) | % | |||||||||||||||||||||||||||
| Waxes | 1,600 | 1,650 | (3.0) | % | 1,526 | 1,374 | 11.1 | % | |||||||||||||||||||||||||||
| Fuels, asphalt and other by-products | 39,861 | 43,130 | (7.6) | % | 38,310 | 37,382 | 2.5 | % | |||||||||||||||||||||||||||
| Total Specialty Products and Solutions | 62,228 | 64,703 | (3.8) | % | 60,275 | 58,337 | 3.3 | % | |||||||||||||||||||||||||||
| Montana/Renewables | |||||||||||||||||||||||||||||||||||
| Fuels, asphalt and other by-products | 13,243 | 11,195 | 18.3 | % | 11,888 | 10,690 | 11.2 | % | |||||||||||||||||||||||||||
| Renewable fuels | 10,888 | 11,187 | (2.7) | % | 8,595 | 11,059 | (22.3) | % | |||||||||||||||||||||||||||
| Total Montana/Renewables | 24,131 | 22,382 | 7.8 | % | 20,483 | 21,749 | (5.8) | % | |||||||||||||||||||||||||||
| Performance Brands | 1,924 | 1,583 | 21.5 | % | 1,938 | 1,621 | 19.6 | % | |||||||||||||||||||||||||||
| Total facility production | 88,283 | 88,668 | (0.4) | % | 82,696 | 81,707 | 1.2 | % | |||||||||||||||||||||||||||
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(1)Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements, sales of inventories and the resale of crude oil and other finished products to third-party customers. Total sales volume includes the sale of purchased blendstocks.
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The following table reflects our unaudited condensed consolidated results of operations and includes the non-GAAP financial measures EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes. For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes to Net income (loss), our most directly comparable financial performance measure calculated and presented in accordance with GAAP, refer to “— Non-GAAP Financial Measures.”
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Sales | $ | 1,682.9 | $ | 1,078.0 | $ | 4,157.7 | $ | 3,098.5 | |||||||||||||||
| Cost of sales | 1,139.7 | 704.3 | 3,683.6 | 2,849.8 | |||||||||||||||||||
| Gross profit | 543.2 | 373.7 | 474.1 | 248.7 | |||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Selling | 13.3 | 10.9 | 39.1 | 35.4 | |||||||||||||||||||
| General and administrative | 70.1 | 31.4 | 175.5 | 84.6 | |||||||||||||||||||
| (Gain) loss on sale of business | — | 6.4 | — | (55.8) | |||||||||||||||||||
| Other operating (income) expense | 6.1 | 2.1 | 17.0 | 11.3 | |||||||||||||||||||
| Operating income | 453.7 | 322.9 | 242.5 | 173.2 | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (50.8) | (53.6) | (153.9) | (165.0) | |||||||||||||||||||
| Debt extinguishment costs | (6.0) | 0.5 | (7.6) | (47.2) | |||||||||||||||||||
| Gain (loss) on derivative instruments | (153.2) | (1.5) | (294.6) | (4.4) | |||||||||||||||||||
| Other income (expense) | 1.6 | 3.7 | 4.0 | 6.1 | |||||||||||||||||||
| Total other expense | (208.4) | (50.9) | (452.1) | (210.5) | |||||||||||||||||||
| Net income (loss) before income taxes | 245.3 | 272.0 | (209.6) | (37.3) | |||||||||||||||||||
| Income tax (benefit) expense | (28.0) | (41.4) | (70.0) | (40.8) | |||||||||||||||||||
| Net income (loss) | $ | 273.3 | $ | 313.4 | $ | (139.6) | $ | 3.5 | |||||||||||||||
| EBITDA | $ | 332.6 | $ | 365.2 | $ | 48.6 | $ | 241.1 | |||||||||||||||
| Adjusted EBITDA | $ | 322.0 | $ | 69.6 | $ | 508.9 | $ | 162.8 | |||||||||||||||
| Adjusted EBITDA with Tax Attributes | $ | 347.2 | $ | 92.5 | $ | 572.6 | $ | 224.0 | |||||||||||||||
Non-GAAP Financial Measures
We include in this Quarterly Report the non-GAAP financial measures EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes. We provide reconciliations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes to Net income (loss), our most directly comparable financial performance measure.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:
•the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
•the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
•our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
•the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
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We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay interest to our noteholders. However, the indentures governing our senior notes contain covenants that, among other things, restrict our ability to pay dividends. We believe that excluding these transactions allows investors to meaningfully analyze trends and performance of our core cash operations.
We define EBITDA for any period as net income (loss) plus interest expense (including amortization of debt issuance costs), income taxes and depreciation and amortization. We believe net income (loss) is the most directly comparable GAAP measure to EBITDA.
We define Adjusted EBITDA for any period as EBITDA adjusted for (a) impairment; (b) unrealized gains and losses from mark-to-market accounting for hedging activities; (c) realized gains and losses under derivative instruments excluded from the determination of net income (loss); (d) non-cash equity-based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (e) debt refinancing fees, extinguishment costs, premiums and penalties; (f) any net gain or loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) amortization of turnaround costs; (h) LCM inventory adjustments; (i) the impact of liquidation of inventory layers calculated using the LIFO method; (j) RINs mark-to-market adjustments; (k) RINs incurrence expense; and (l) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by sales.
We define Adjusted EBITDA with Tax Attributes for any period as Adjusted EBITDA plus the notional value of CFPCs, less the difference between the notional value of any CFPCs sold and the amount realized from such sales during the period.
The definition of Adjusted EBITDA presented in this Quarterly Report is similar to the calculation of “Consolidated Cash Flow” contained in the indentures governing our Senior Notes (as defined in this Quarterly Report) and the calculation of “Consolidated EBITDA” contained in the Credit Agreement. We are required to report Consolidated Cash Flow to the holders of our Senior Notes and Consolidated EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments. Refer to Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report for additional details regarding the covenants governing our debt instruments.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes should not be considered alternatives to Net income (loss) or Operating income (loss) or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes do not reflect our liabilities for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes are only three of several measurements that management utilizes. Moreover, our definition of EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes in the same manner.
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The following table presents a reconciliation of Net income (loss), our most directly comparable GAAP financial performance measure to EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes for each of the periods indicated (in millions).
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes | |||||||||||||||||||||||
| Net income (loss) | $ | 273.3 | $ | 313.4 | $ | (139.6) | $ | 3.5 | |||||||||||||||
| Add: | |||||||||||||||||||||||
| Interest expense | 50.8 | 53.6 | 153.9 | 165.0 | |||||||||||||||||||
| Depreciation and amortization | 36.5 | 39.6 | 104.3 | 113.4 | |||||||||||||||||||
| Income tax (benefit) expense | (28.0) | (41.4) | (70.0) | (40.8) | |||||||||||||||||||
| EBITDA | $ | 332.6 | $ | 365.2 | $ | 48.6 | $ | 241.1 | |||||||||||||||
| Add: | |||||||||||||||||||||||
| LCM / LIFO (gain) loss | $ | (7.6) | $ | 5.1 | $ | (29.4) | $ | 3.1 | |||||||||||||||
| Unrealized (gain) loss on derivative instruments | 113.8 | (2.0) | 207.5 | (9.1) | |||||||||||||||||||
| Debt extinguishment costs | 6.0 | (0.5) | 7.6 | 47.2 | |||||||||||||||||||
| Amortization of turnaround costs | 8.7 | 11.1 | 27.9 | 31.9 | |||||||||||||||||||
| Loss on impairment and disposal of assets | 0.1 | — | 0.1 | — | |||||||||||||||||||
| (Gain) loss on sale of business | — | 6.4 | — | (55.8) | |||||||||||||||||||
| RINs incurrence (gain) expense | (106.8) | (303.1) | (27.5) | (257.4) | |||||||||||||||||||
| RINs mark-to-market (gain) loss | (69.9) | (20.8) | 161.6 | 145.1 | |||||||||||||||||||
Equity-based compensation and other items (1) | 51.6 | 9.5 | 116.0 | 6.1 | |||||||||||||||||||
| Other | 0.3 | (5.3) | 1.0 | 2.1 | |||||||||||||||||||
Noncontrolling interest adjustments (3) | (6.8) | 4.0 | (4.5) | 8.5 | |||||||||||||||||||
| Adjusted EBITDA | $ | 322.0 | $ | 69.6 | $ | 508.9 | $ | 162.8 | |||||||||||||||
Tax attributes (2) | 25.2 | 22.9 | 63.7 | 61.2 | |||||||||||||||||||
| Adjusted EBITDA with Tax Attributes | $ | 347.2 | $ | 92.5 | $ | 572.6 | $ | 224.0 | |||||||||||||||
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(1)For the three months ended September 30, 2026 and 2025, equity-based compensation and other includes $38.0 million and $5.9 million of non-cash equity based compensation expense, respectively, and $13.7 million and $3.5 million of expenses related to the supply and offtake agreement, respectively. For the nine months ended September 30, 2026 and 2025, equity-based compensation and other includes $83.4 million and $(7.4) million of non-cash equity based compensation expense (benefit), respectively, and $32.6 million and $13.5 million of expenses related to the supply and offtake agreement, respectively.
(2)Tax attribute amounts reflect 100% of the notional value of CFPCs generated for each respective period presented less any discounts on the sale of CFPCs. The CFPCs can be realized by applying the credits to the Company’s federal income tax liability or sold in a secondary market at a discounted rate.
(3) Noncontrolling interest adjustments reflect the portion of net income (loss) and Adjusted EBITDA add-back items attributable to the noncontrolling interest in MRHL, allocated based on the noncontrolling interest's proportionate ownership percentage. These adjustments are included to present Adjusted EBITDA on a basis attributable solely to Calumet, Inc.
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The following table presents a reconciliation of Montana/Renewables Segment Net income (loss), our most directly comparable GAAP financial performance measure to Montana/Renewables Segment Adjusted EBITDA and Montana/Renewables Segment Adjusted EBITDA with Tax Attributes for each of the periods indicated unaudited (in millions).
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Reconciliation of Montana/Renewables Segment Net income (loss) to Segment Adjusted EBITDA, and Segment Adjusted EBITDA with Tax Attributes | |||||||||||||||||||||||
| Net income (loss) | $ | 109.1 | $ | 103.7 | $ | 31.3 | $ | (124.6) | |||||||||||||||
| Add: | |||||||||||||||||||||||
| Depreciation and amortization | $ | 25.1 | $ | 27.9 | $ | 73.1 | $ | 84.0 | |||||||||||||||
| LCM / LIFO (gain) loss | (0.1) | 2.0 | (10.6) | (5.0) | |||||||||||||||||||
| Interest expense | 14.9 | 15.4 | 43.6 | 48.8 | |||||||||||||||||||
| Unrealized (gain) loss on derivative instruments | — | — | — | — | |||||||||||||||||||
| Debt extinguishment costs | 0.8 | (0.1) | 0.8 | 47.5 | |||||||||||||||||||
| Loss on impairment and disposal of assets | — | — | — | — | |||||||||||||||||||
| (Gain) loss on sale of business | — | — | — | — | |||||||||||||||||||
| RINs incurrence (gain) expense | (17.9) | (110.2) | (3.2) | (98.8) | |||||||||||||||||||
| RINs mark-to-market (gain) loss | (11.3) | (4.1) | 25.4 | 45.7 | |||||||||||||||||||
| Equity-based compensation and other items | — | — | — | 5.6 | |||||||||||||||||||
| Other | 0.2 | (4.3) | 0.9 | 3.9 | |||||||||||||||||||
| Income tax (benefit) expense | (28.6) | (40.1) | (73.1) | (40.1) | |||||||||||||||||||
Noncontrolling interest adjustments (2) | (6.8) | 4.0 | (4.5) | 8.5 | |||||||||||||||||||
| Adjusted EBITDA | $ | 85.4 | $ | (5.8) | $ | 83.7 | $ | (24.5) | |||||||||||||||
Tax attributes (1) | 25.2 | 22.9 | 63.7 | 61.2 | |||||||||||||||||||
| Adjusted EBITDA with Tax Attributes | $ | 110.6 | $ | 17.1 | $ | 147.4 | $ | 36.7 | |||||||||||||||
____________________________
(1)Tax attribute amounts reflect 100% of the notional value of CFPCs generated for each respective period presented less any discounts on the sale of CFPCs. The CFPCs can be realized by applying the credits to the Company’s federal income tax liability or sold in a secondary market at a discounted rate.
(2)Noncontrolling interest adjustments reflect the portion of net income (loss) and Adjusted EBITDA add-back items attributable to the noncontrolling interest in MRHL, allocated based on the noncontrolling interest's proportionate ownership percentage. These adjustments are included to present Adjusted EBITDA on a basis attributable solely to Calumet, Inc.
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Changes in Results of Operations for the Three Months Ended September 30, 2026 and 2025
Sales. Sales increased $604.9 million, or 56.1%, to $1,682.9 million in the three months ended September 30, 2026, from $1,078.0 million in the same period in 2025. Sales for each of our principal product categories in these periods were as follows:
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (In millions, except barrel and per barrel data) | |||||||||||||||||
| Sales by segment: | |||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||
| Lubricating Oils | $ | 307.2 | $ | 183.5 | 67.4 | % | |||||||||||
| Solvents | 156.0 | 97.7 | 59.7 | % | |||||||||||||
| Waxes | 50.0 | 37.0 | 35.1 | % | |||||||||||||
Fuels, asphalt and other by-products (1) | 558.0 | 360.9 | 54.6 | % | |||||||||||||
| Total Specialty Products and Solutions: | $ | 1,071.2 | $ | 679.1 | 57.7 | % | |||||||||||
| Total Specialty Products and Solutions sales volume (in barrels) | 5,902,568 | 5,992,000 | (1.5) | % | |||||||||||||
| Average Specialty Products and Solutions sales price per barrel | $ | 181.48 | $ | 113.33 | 60.1 | % | |||||||||||
| Montana/Renewables: | |||||||||||||||||
Fuels, asphalt and other by-products (2) | $ | 193.5 | $ | 114.8 | 68.6 | % | |||||||||||
| Renewable fuels | 325.4 | 204.4 | 59.2 | % | |||||||||||||
| Total Montana/Renewables | $ | 518.9 | $ | 319.2 | 62.6 | % | |||||||||||
| Total Montana/Renewables sales volume (in barrels) | 2,284,310 | 2,287,000 | (0.1) | % | |||||||||||||
| Average Montana/Renewables sales price per barrel | $ | 227.16 | $ | 139.57 | 62.8 | % | |||||||||||
| Performance Brands: | |||||||||||||||||
Total Performance Brands (3) | $ | 92.8 | $ | 79.7 | 16.4 | % | |||||||||||
| Total Performance Brands sales volume (in barrels) | 162,944 | 149,000 | 9.4 | % | |||||||||||||
| Average Performance Brands sales price per barrel | $ | 569.52 | $ | 534.90 | 6.5 | % | |||||||||||
| Total sales | $ | 1,682.9 | $ | 1,078.0 | 56.1 | % | |||||||||||
| Total sales volume (in barrels) | 8,349,822 | 8,428,000 | (0.9) | % | |||||||||||||
____________________________
(1)Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at the Shreveport, Princeton, Cotton Valley, Dickinson and Karns City facilities, and (b) polyol ester synthetic lubricants produced at the Missouri facility.
(2)Includes asphalt, heavy fuel oils and other products produced in connection with the production of fuels at the Montana specialty asphalt facility.
(3)Represents packaged and synthetic specialty products at our Porter, Texas and Shreveport, Louisiana packaging facilities.
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The components of the $392.1 million increase in Specialty Products and Solutions segment sales for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | (10.1) | |||
| Price | 402.2 | ||||
| Total Specialty Products and Solutions segment sales increase (decrease) | $ | 392.1 | |||
Specialty Products and Solutions segment sales increased period over period, driven primarily by higher sales prices in response to rising commodity prices, while sales volumes remained relatively consistent with the prior-year period.
The components of the $199.7 million increase in Montana/Renewables segment sales for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | (0.4) | |||
| Price | 200.1 | ||||
| Total Montana/Renewables segment sales increase (decrease) | $ | 199.7 | |||
Montana/Renewables segment sales increased during the current year period as a result of significant sales price increases in response to increased commodity prices, while sales volumes remained relatively consistent with the prior-year period.
The components of the $13.1 million increase in Performance Brands segment sales for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | 7.4 | |||
| Price | 5.7 | ||||
| Total Performance Brands segment sales increase (decrease) | $ | 13.1 | |||
Performance Brands segment sales increased period over period, driven by strong sales volumes and improved pricing, reflecting continued customer demand and the impact of pricing actions implemented to offset elevated input costs.
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Gross Profit. Gross profit increased $169.5 million to gross profit of $543.2 million in the three months ended September 30, 2026, from gross profit of $373.7 million in the same period in 2025. Gross profit for our business segments were as follows:
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (In millions, except barrel and per barrel data) | |||||||||||||||||
| Gross profit by segment: | |||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||
| Gross profit | $ | 420.1 | $ | 276.3 | |||||||||||||
| Percentage of sales | 39.2 | % | 40.7 | % | |||||||||||||
| Specialty Products and Solutions gross profit per barrel | $ | 71.18 | $ | 46.11 | |||||||||||||
| Montana/Renewables: | |||||||||||||||||
| Gross profit | $ | 105.9 | $ | 78.9 | |||||||||||||
| Percentage of sales | 20.4 | % | 24.7 | % | |||||||||||||
| Montana/Renewables gross profit per barrel | $ | 46.38 | $ | 34.50 | |||||||||||||
| Performance Brands: | |||||||||||||||||
| Gross profit | $ | 17.2 | $ | 18.5 | |||||||||||||
| Percentage of sales | 18.5 | % | 23.2 | % | |||||||||||||
| Performance Brands gross profit per barrel | $ | 105.33 | $ | 124.16 | |||||||||||||
| Total gross profit | $ | 543.2 | $ | 373.7 | |||||||||||||
| Percentage of sales | 32.3 | % | 34.7 | % | |||||||||||||
The components of the $143.8 million increase in Specialty Products and Solutions segment gross profit for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Three months ended September 30, 2025 reported gross profit | $ | 276.3 | |||
| Sales price | 402.2 | ||||
| Cost of materials | (193.0) | ||||
| LCM / LIFO inventory adjustments | 9.2 | ||||
| Volumes | (2.4) | ||||
| Operating costs (excl. RINs) | (9.3) | ||||
| RINs | (62.9) | ||||
| Three months ended September 30, 2026 reported gross profit | $ | 420.1 | |||
The increase in Specialty Products and Solutions segment gross profit for the three months ended September 30, 2026 as compared to the same period in 2025, was favorably impacted by higher sales prices in response to higher commodity prices. This increase was partially offset by higher cost of materials due to rising commodity prices and the unfavorable RIN impact due to the outsized SRE-related RIN liability relief recognized in the prior-year period, during which the Company received multi-year relief spanning several compliance periods in the third quarter of 2025, compared to relief limited to the 2025 compliance year in the current period.
53
The components of the $27.0 million increase in Montana/Renewables segment gross profit for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Three months ended September 30, 2025 reported gross profit | $ | 78.9 | |||
| Sales price | 200.1 | ||||
| Cost of materials | (88.6) | ||||
| LCM / LIFO inventory adjustments | 2.1 | ||||
| Volumes | — | ||||
| Operating costs (excl. RINs) | (1.8) | ||||
| RINs | (84.8) | ||||
| Three months ended September 30, 2026 reported gross profit | $ | 105.9 | |||
The increase in Montana/Renewables segment gross profit for the three months ended September 30, 2026, as compared to the prior period, was driven by favorable sales pricing, which was offset by the impact of higher material costs and RINs. The unfavorable RIN impact is due to the outsized SRE-related RIN liability relief recognized in the prior-year period, during which the Company received multi-year relief spanning several compliance periods in the third quarter of 2025, compared to relief limited to the 2025 compliance year in the current period.
The components of the $1.3 million decrease in Performance Brands segment gross profit for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Three months ended September 30, 2025 reported gross profit | $ | 18.5 | |||
| Sales price | 5.7 | ||||
| Cost of materials | (16.5) | ||||
| LCM / LIFO inventory adjustments | 1.5 | ||||
| Volumes | 2.5 | ||||
| Operating costs | 5.5 | ||||
| Three months ended September 30, 2026 reported gross profit | $ | 17.2 | |||
Performance Brands segment gross profit for the three months ended September 30, 2026, as compared to the prior period, decreased primarily due to higher cost of material as elevated input prices continue to pressure margins. These impacts were partially offset by higher sales prices, increased sales volumes and lower operating costs. The favorable operating costs impact included $7.0 million of proceeds for a business interruption insurance claim that was recognized during the current quarter. The segment continues to implement pricing actions to mitigate ongoing input cost inflation, although the timing of price realization relative to changes in feedstock costs continues to impact margins.
General and administrative. General and administrative expenses increased $38.7 million, to $70.1 million in the three months ended September 30, 2026 from $31.4 million in the same period in 2025. The increase was driven by $32.1 million of non-cash stock-based compensation expense resulting from the mark-to-market remeasurement of the Company's liability-classified equity awards, which are remeasured each period based on changes in the Company's stock price. The Company's stock price increased from $36.02 per share as of June 30, 2026 to $52.38 per share as of September 30, 2026, driving the increase in the non-cash compensation liability. This impact was coupled with an increase of $3.3 million in professional services fees in the current year period.
Loss on Derivative Instruments. There was a $153.2 million loss on derivative instruments in the three months ended September 30, 2026, compared to a $1.5 million loss in the same period in 2025. This is due to an increase in our realized derivative loss of $35.9 million and an increase in our unrealized derivative loss of $115.8 million between the comparative periods. The realized loss is the result of $25.7 million of crack spread swap settlements during the quarter as commodity prices and crack spreads improved significantly. The unrealized loss is the result of higher commodity prices and crack spreads in the current period.
54
Income Tax Expense (Benefit). There was a $28.0 million income tax benefit in the three months ended September 30, 2026, compared to a $41.4 million income tax benefit in the same period in 2025. The income tax benefit in both the current year period and the prior year period were related to the generation and related sales activity of CFPCs in our Montana/Renewables segment.
Changes in Results of Operations for the Nine Months Ended September 30, 2026 and 2025
Sales. Sales increased $1,059.2 million, or 34.2%, to $4,157.7 million in the nine months ended September 30, 2026, from $3,098.5 million in the same period in 2025. Sales for each of our principal product categories in these periods were as follows:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (In millions, except barrel and per barrel data) | |||||||||||||||||
| Sales by segment: | |||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||
| Lubricating Oils | $ | 780.1 | $ | 576.0 | 35.4 | % | |||||||||||
| Solvents | 417.1 | 303.9 | 37.2 | % | |||||||||||||
| Waxes | 130.6 | 115.4 | 13.2 | % | |||||||||||||
Fuels, asphalt and other by-products (1) | 1,460.9 | 961.8 | 51.9 | % | |||||||||||||
| Total Specialty Products and Solutions: | $ | 2,788.7 | $ | 1,957.1 | 42.5 | % | |||||||||||
| Total Specialty Products and Solutions sales volume (in barrels) | 17,837,548 | 16,838,000 | 5.9 | % | |||||||||||||
| Average Specialty Products and Solutions sales price per barrel | $ | 156.34 | $ | 116.23 | 34.5 | % | |||||||||||
| Montana/Renewables: | |||||||||||||||||
Fuels, asphalt and other by-products (2) | $ | 432.9 | $ | 320.1 | 35.2 | % | |||||||||||
| Renewable fuels | 650.8 | 578.8 | 12.4 | % | |||||||||||||
| Total Montana/Renewables | $ | 1,083.7 | $ | 898.9 | 20.6 | % | |||||||||||
| Total Montana/Renewables sales volume (in barrels) | 5,800,174 | 6,905,000 | (16.0) | % | |||||||||||||
| Average Montana/Renewables sales price per barrel | $ | 186.84 | $ | 130.18 | 43.5 | % | |||||||||||
| Performance Brands: | |||||||||||||||||
Total Performance Brands (3) | $ | 285.3 | $ | 242.5 | 17.6 | % | |||||||||||
| Total Performance Brands sales volume (in barrels) | 527,312 | 462,000 | 14.1 | % | |||||||||||||
| Average Performance Brands sales price per barrel | $ | 541.08 | $ | 524.89 | 3.1 | % | |||||||||||
| Total sales | $ | 4,157.7 | $ | 3,098.5 | 34.2 | % | |||||||||||
| Total sales volume (in barrels) | 24,165,034 | 24,205,000 | (0.2) | % | |||||||||||||
____________________________
(1)Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at the Shreveport, Princeton, Cotton Valley, Dickinson and Karns City facilities, and (b) polyol ester synthetic lubricants produced at the Missouri facility.
(2)Includes asphalt, heavy fuel oils and other products produced in connection with the production of fuels at the Montana specialty asphalt facility.
(3)Represents packaged and synthetic specialty products at our Porter, Texas and Shreveport, Louisiana packaging facilities.
55
The components of the $831.6 million increase in Specialty Products and Solutions segment sales for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | 116.2 | |||
| Price | 715.4 | ||||
| Total Specialty Products and Solutions segment sales increase (decrease) | $ | 831.6 | |||
Specialty Products and Solutions segment sales increased period over period, driven primarily by higher sales prices in response to rising commodity prices. Sales volumes increased compared to the prior year despite the temporary suspension of operations at our Shreveport facility during a portion of the first quarter of 2026. The higher sales volume primarily reflects increased customer demand in the current market environment.
The components of the $184.8 million increase in Montana/Renewables segment sales for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | (143.9) | |||
| Price | 328.7 | ||||
| Total Montana/Renewables segment sales increase (decrease) | $ | 184.8 | |||
Montana/Renewables segment sales increased during the current year period as a result of improved renewable fuel prices. This was partially offset by a decline in volume driven by a planned outage to support the MaxSAF® expansion project that reduced our renewable fuels production by 22.3% in comparison to the prior year period.
The components of the $42.8 million increase in Performance Brands segment sales for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Volume | $ | 34.4 | |||
| Price | 8.4 | ||||
| Total Performance Brands segment sales increase (decrease) | $ | 42.8 | |||
Performance Brands segment sales increased period over period, driven by strong sales volumes, despite the prior year period including contributions from the divested Royal Purple Industrial business.
Gross Profit (Loss). Gross profit (loss) increased $225.4 million to gross profit of $474.1 million in the nine months ended September 30, 2026, from gross profit of $248.7 million in the same period in 2025. Gross profit (loss) for our business segments were as follows:
56
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (In millions, except barrel and per barrel data) | |||||||||||||||||
| Gross profit (loss) by segment: | |||||||||||||||||
| Specialty Products and Solutions: | |||||||||||||||||
| Gross profit (loss) | $ | 389.1 | $ | 227.4 | |||||||||||||
| Percentage of sales | 14.0 | % | 11.6 | % | |||||||||||||
| Specialty Products and Solutions gross profit (loss) per barrel | $ | 21.81 | $ | 13.51 | |||||||||||||
| Montana/Renewables: | |||||||||||||||||
| Gross profit (loss) | $ | 29.9 | $ | (41.5) | |||||||||||||
| Percentage of sales | 2.7 | % | (4.6) | % | |||||||||||||
| Montana/Renewables gross profit (loss) per barrel | $ | 5.14 | $ | (6.01) | |||||||||||||
| Performance Brands: | |||||||||||||||||
| Gross profit (loss) | $ | 55.1 | $ | 62.8 | |||||||||||||
| Percentage of sales | 19.3 | % | 25.9 | % | |||||||||||||
| Performance Brands gross profit (loss) per barrel | $ | 104.58 | $ | 135.93 | |||||||||||||
| Total gross profit (loss) | $ | 474.1 | $ | 248.7 | |||||||||||||
| Percentage of sales | 11.4 | % | 8.0 | % | |||||||||||||
The components of the $161.7 million increase in Specialty Products and Solutions segment gross profit (loss) for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Nine months ended September 30, 2025 reported gross profit (loss) | $ | 227.4 | |||
| Sales price | 715.4 | ||||
| Cost of materials | (405.0) | ||||
| LCM / LIFO inventory adjustments | 23.5 | ||||
| Volumes | 26.0 | ||||
| Operating costs (excl. RINs) | (21.1) | ||||
| RINs | (177.1) | ||||
| Nine months ended September 30, 2026 reported gross profit (loss) | $ | 389.1 | |||
The increase in Specialty Products and Solutions segment gross profit (loss) for the nine months ended September 30, 2026 as compared to the same period in 2025, was primarily driven by higher sales prices in response to rising commodity prices, which more than offset increased material costs, as well as higher sales volumes. This improvement was partially offset by an unfavorable RIN impact, reflecting the outsized SRE-related RIN liability relief recognized in the prior-year period, during which the Company received multi-year relief spanning several compliance periods in the third quarter of
57
2025, compared to relief limited to the 2025 compliance year in the current period as well as and higher operating costs, including increased natural gas costs.
The components of the $71.4 million increase in Montana/Renewables segment gross profit (loss) for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Nine months ended September 30, 2025 reported gross profit (loss) | $ | (41.5) | |||
| Sales price | 328.7 | ||||
| Cost of materials | (181.9) | ||||
| LCM / LIFO inventory adjustments | 5.6 | ||||
| Volumes | (13.3) | ||||
| Operating costs (excl. RINs) | 10.0 | ||||
| RINs | (77.7) | ||||
| Nine months ended September 30, 2026 reported gross profit (loss) | $ | 29.9 | |||
The increase in Montana/Renewables segment gross profit (loss) for the nine months ended September 30, 2026 was driven by performance across both businesses within the segment. Montana Renewables improved primarily due to higher renewable fuel sales prices, which more than offset increased renewable feedstock costs. Gross profit was unfavorably impacted by lower renewable fuel sales volumes resulting from a planned outage to complete the MaxSAF® 150 expansion project. Montana specialty asphalts benefited from higher asphalt and conventional fuel sales prices in response to rising commodity prices. This improvement was partially offset by an unfavorable RIN impact on the specialty asphalt business, reflecting the outsized SRE-related RIN liability relief recognized in the prior-year period, during which the Company received multi-year relief spanning several compliance periods in the third quarter of 2025, compared to relief limited to the 2025 compliance year in the current period. Operating costs were favorable period over period, reflecting continued operating cost discipline from efficiency initiatives implemented throughout the prior calendar year.
The components of the $7.7 million decrease in Performance Brands segment gross profit (loss) for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows (in millions):
| Dollar Change | |||||
| Nine months ended September 30, 2025 reported gross profit (loss) | $ | 62.8 | |||
| Sales price | 8.4 | ||||
| Cost of materials | (36.3) | ||||
| LCM / LIFO inventory adjustments | 3.5 | ||||
| Volumes | 12.4 | ||||
| Operating costs | 4.3 | ||||
| Nine months ended September 30, 2026 reported gross profit (loss) | $ | 55.1 | |||
Performance Brands segment gross profit (loss) for the nine months ended September 30, 2026, as compared to the prior period, decreased $7.7 million. The decrease is primarily driven by higher material costs, particularly Group III base oils and synthetic feedstocks, which continued to outpace realized price increases. These impacts were partially offset by higher sales volumes, reflecting continued strong customer demand, as well as favorable operating costs. Sales volume
58
growth was achieved despite the prior-year period including contributions from the divested Royal Purple Industrial business.
General and administrative. General and administrative expenses increased $90.9 million, to $175.5 million in the nine months ended September 30, 2026 from $84.6 million in the same period in 2025. Consistent with the three-month discussion above, the increase was primarily driven by $90.8 million of non-cash stock-based compensation related to the increase in the Company's stock price.. This impact was partially offset by a $2.6 million decrease in professional services fees.
Gain on sale of business. There was a $55.8 million gain on sale of business in the prior year period for the sale of assets related to the industrial portion of the Royal Purple® business. There was no gain or loss for the sale of a business recorded in the current year period. Refer to Note 2 — “Summary of Significant Accounting Policies” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information related to the sale of assets related to the industrial portion of the Royal Purple® business.
Debt Extinguishment Cost. The $7.6 million expense for debt extinguishment costs in the nine months ended September 30, 2026 was primarily related to the redemption of the outstanding 2026 Notes, 2027 Notes and 2028 Mirror Issuance Notes during the period. The $47.2 million expense for debt extinguishment costs in the nine months ended September 30, 2025 was related to the repurchase of the equipment associated with the MRL Asset Financing Arrangements, repayment of outstanding loans under the MRL Term Loan Credit Agreement and MRL Revolving Credit Agreement and repayment of outstanding obligations under the MRL Supply and Offtake Agreement. Refer to Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information.
Loss on Derivative Instruments. There was a $294.6 million loss on derivative instruments in the nine months ended September 30, 2026, compared to a $4.4 million loss in the same period in 2025. This is primarily due to an increase in our realized derivative loss of $73.6 million and an increase in our unrealized derivative loss of $216.6 million between the comparative periods. The realized loss is primarily the result of $54.5 million of crack spread swap settlements during the current year period as commodity prices and crack spreads improved significantly. The unrealized loss is the result of higher commodity prices and crack spreads in the current period.
Income Tax Expense (Benefit). There was a $70.0 million income tax benefit in the nine months ended September 30, 2026, compared to a $40.8 million income tax benefit in the same period in 2025. The income tax benefit in both the current year period and the prior year period were related to the generation and sale of CFPCs in our Montana/Renewables segment.
Liquidity and Capital Resources
General
The following should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included under Part II, Item 7 in our 2025 Annual Report. There have been no material changes in that information other than as discussed below. Also, see Note 5 — “Inventory Financing Agreements” and Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report for additional discussions related to our Supply and Offtake Agreements and our long-term debt.
Cash Flows from Operating, Investing and Financing Activities
We believe that we have sufficient liquid assets, cash flow from operations, borrowing capacity and adequate access to capital markets to meet our financial commitments, debt service obligations and anticipated capital expenditures for at least the next 12 months. We continue to seek to lower our operating costs, selling expenses and general and administrative expenses as a means to further improve our cash flow from operations with the objective of having our cash flow from operations support all of our capital expenditures and interest payments. However, we are subject to business and operational risks that could materially adversely affect our cash flows. A material decrease in our cash flow from operations including a significant, sudden decrease in crude oil prices would likely produce a corollary effect on our borrowing capacity under our revolving credit facility and potentially our ability to comply with the covenants under our revolving credit facility. A significant, sudden increase in crude oil prices, if sustained, would likely result in increased
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working capital requirements which would be funded by borrowings under our revolving credit facility. In addition, our cash flow from operations may be impacted by the timing of settlement of our derivative activities. Gains and losses from derivative instruments that do not qualify as cash flow hedges are recorded in unrealized gain (loss) on derivative instruments until settlement and will impact operating cash flow in the period settled.
The following table summarizes our primary sources and uses of cash in each of the periods presented:
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (In millions) | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | 224.6 | $ | (7.6) | ||||||||||
| Net cash provided by (used in) investing activities | (64.8) | 55.8 | ||||||||||||
| Net cash provided by (used in) financing activities | (105.1) | 80.5 | ||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 54.7 | $ | 128.7 | ||||||||||
Operating Activities. Operating activities provided cash of $224.6 million during the nine months ended September 30, 2026 compared to using cash of $7.6 million during the same period in 2025. Cash flows from operations reflected the impact of the strong fuel crack spread and specialty products margin environment in the current year. This impact was partially offset by an increase in cash used to meet working capital requirements as our cash flows adjust to the increase in commodity prices.
Investing Activities. Investing activities used cash of $64.8 million during the nine months ended September 30, 2026 compared to providing cash of $55.8 million during the same period in 2025. The change is related to the net proceeds received for the sale of the Royal Purple Industrial business in the prior year period. Cash expenditures for additions to property, plant and equipment in the current period were higher than the prior period, primarily due to the MaxSAF® expansion related projects.
Financing Activities. Financing activities used cash of $105.1 million in the nine months ended September 30, 2026 compared to providing cash of $80.5 million during the same period in 2025. The use of cash in the current period is primarily due to the full repayment and extinguishment of the 2026 Notes, 2027 Notes and 2028 Mirror Issuance Notes and payments on the revolving credit agreement which has no outstanding borrowings as of September 30, 2026. This reduction in debt was partially offset by the issuance of the 2031 Notes and borrowings under the DOE Loan of $34.0 million in connection with the closing of the First Amendment to the DOE Loan. Cash provided by financing activities in the prior period primarily consisted of borrowings we received from the DOE Loan and 2028 Mirror Issuance Notes, offset by the payments we made to repay outstanding borrowings under the revolving credit agreement, repurchase the equipment associated with the MRL Asset Financing Arrangements, repay the outstanding loans under the MRL Term Loan Credit Agreement and MRL Revolving Credit Agreement, repay the outstanding obligations under the MRL Supply and Offtake Agreement, and partially redeem the 2026 Notes.
Capital Expenditures
Our property, plant and equipment capital expenditure requirements consist of capital improvement expenditures, replacement capital expenditures, environmental capital expenditures and turnaround capital expenditures. Capital improvement expenditures include the acquisition of assets to grow our business, facility expansions, or capital initiatives that reduce operating costs. Replacement capital expenditures replace worn out or obsolete equipment or parts. Environmental capital expenditures include asset additions to meet or exceed environmental and operating regulations. Turnaround capital expenditures represent capitalized costs associated with our periodic major maintenance and repairs.
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The following table sets forth our capital improvement expenditures, replacement capital expenditures, environmental capital expenditures and turnaround capital expenditures in each of the periods shown, including capitalized interest (in millions):
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Capital improvement expenditures | $ | 30.4 | $ | 7.9 | ||||||||||
| Replacement capital expenditures | 32.4 | 29.8 | ||||||||||||
| Environmental capital expenditures | 0.5 | 1.9 | ||||||||||||
| Additions to property, plant, and equipment | 63.3 | 39.6 | ||||||||||||
| Turnaround capital expenditures | 27.0 | 23.3 | ||||||||||||
| Total | $ | 90.3 | $ | 62.9 | ||||||||||
2026 Capital Spending Forecast
We are forecasting total capital expenditures of approximately $130.0 million to $160.0 million in 2026. Our forecasted capital expenditures are primarily related to maintenance and reliability projects and capital expenditures associated with MaxSAF®. We anticipate that capital expenditure requirements for the MaxSAF® project will be funded by MRL, an unrestricted subsidiary of the Company, through cash flows from operations, cash on hand and borrowings under the DOE Loan. We anticipate that capital expenditure requirements for our restricted subsidiaries group will be provided primarily through cash flows from operations, cash on hand, and by available borrowings under our revolving credit facility. If future capital expenditures require amounts in excess of our then-current cash flow from operations and borrowing availability under our revolving credit facility, we may be required to issue debt or equity securities in public or private offerings or incur additional borrowings under bank credit facilities to meet those costs.
Debt and Credit Facilities
As of September 30, 2026, our primary debt and credit instruments consisted of the following:
•$600.0 million senior secured revolving credit facility maturing in January 2031, subject to borrowing base limitations, with a maximum letter of credit sub-limit equal to $200.0 million, which amount may be increased to 90% of revolver commitments in effect with the consent of the Agent (as defined in the Credit Agreement) (“revolving credit facility”);
•$555.0 million of 9.75% Senior Notes due 2031 (“2031 Notes”);
•$200.0 million of 9.25% Senior Secured First Lien Notes due 2029 (“2029 Secured Notes”);
•$325.0 million of 9.75% Senior Notes due 2028 (“2028 Notes”);
•$879.6 million of borrowings under our DOE Loan;
•$108.6 million of financing through our Shreveport terminal asset financing arrangement; and
•$136.8 million of financing through our Montana refinery asset financing arrangement.
We were in compliance with all covenants under the debt instruments in place as of September 30, 2026 and believe we have adequate liquidity to conduct our business.
On January 23, 2026, the Company entered into the Ninth Amendment to the Third Amended and Restated Credit Agreement. The Ninth Amendment amended the Credit Agreement. Among other changes, the Ninth Amendment modified the Credit Agreement to (i) extend the maturity date to January 23, 2031, (ii) provide for commitments of $500.0 million, subject to borrowing base limitations, (iii) revise certain covenants, representations and warranties, events of default and other terms to permit the Company or one or more of its subsidiaries to consummate one or more new inventory financing transactions, subject in each case to the Company’s satisfaction of certain customary conditions and (iv) provide for a reduction of commitments under the Credit Agreement from $500.0 million to $425.0 million if any such inventory financing transaction is consummated.
On September 11, 2026, the Company entered into the Eleventh Amendment to the Third Amended and Restated Credit Agreement (the "Eleventh Amendment"). The Eleventh Amendment amended the Third Amended and Restated
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Credit Agreement, dated as of February 23, 2018 (the “Credit Agreement”), by and among Calumet GP, LLC, Calumet Specialty Products Partners, L.P. (the “Partnership”), certain subsidiaries of the Company party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. Among other changes, the Eleventh Amendment modified the Credit Agreement to provide for an increase in commitments from $500.0 million to $600.0 million, subject to borrowing base limitations.
See Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information related to the Company's Credit Agreement.
On January 12, 2026, the Issuers issued and sold $405.0 million aggregate principal amount of 2031 Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act. The Company subsequently redeemed all of the 2026 Notes and all of the 2027 Notes in January 2026.
On March 17, 2026, the Issuers issued and sold $150.0 million aggregate principal amount of additional 2031 Notes (the “Additional Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act. The Company used the net proceeds from the offering of the Additional Notes to repay borrowings outstanding under the Company’s revolving credit facility. See Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information.
The borrowing base on our credit facility increased from approximately $448.8 million as of September 30, 2025, to approximately $579.3 million at September 30, 2026. Our borrowing availability increased from approximately $209.8 million at September 30, 2025, to approximately $522.0 million at September 30, 2026. Total liquidity, consisting of unrestricted cash, restricted cash and available funds under our credit facility, increased from $384.4 million at September 30, 2025 to $781.8 million at September 30, 2026.
Inventory Financing
Refer to Note 5 — “Inventory Financing Agreements” in Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information regarding our Supply and Offtake Agreement.
Short-Term Liquidity
As of September 30, 2026, our principal sources of short-term liquidity were (i) $522.0 million of availability under our credit facility, (ii) an inventory financing agreement related to our Shreveport facility, (iii) $225.2 million of unrestricted cash on hand, and (iv) $34.6 million of restricted cash. Borrowings under our revolving credit facility can be used for, among other things, working capital, capital expenditures and other lawful partnership purposes including acquisitions. For additional information regarding our revolving credit facility, see Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report.
Long-Term Financing
In addition to our principal sources of short-term liquidity listed above, subject to market conditions, we may meet our cash requirements through the issuance of long-term notes or additional common shares.
From time to time, we issue long-term debt securities referred to as our senior notes. Our outstanding senior notes are unsecured obligations that rank equally with all of our other senior debt obligations to the extent they are unsecured. As of September 30, 2026, we had $325.0 million in 2028 Notes, $200.0 million in 2029 Secured Notes, and $555.0 million in 2031 Notes outstanding. In addition, as of September 30, 2026, we had $879.6 million of debt outstanding for the DOE Loan, $108.6 million of other debt outstanding for the Shreveport terminal asset financing arrangement and $136.8 million of other debt outstanding for the Montana refinery asset financing arrangement. Borrowings under the DOE Loan are obligations of our unrestricted subsidiaries MRL and MRHL solely, and are non-recourse to the Company and its restricted subsidiaries.
To date, our debt balances have not adversely affected our operations, our ability to repay or refinance our indebtedness. Based on our historical record, we believe that our capital structure will continue to allow us to achieve our business objectives.
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For additional information regarding our senior notes, refer to Note 6 — “Long-Term Debt” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report and Note 9 — “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data” of our 2025 Annual Report.
Master Derivative Contracts and Collateral Trust Agreement
For additional discussion regarding our master derivative contracts and collateral trust agreement, see “Master Derivative Contracts and Collateral Trust Agreement” under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report.
Critical Accounting Estimates
For additional discussion regarding our critical accounting estimates, see “Critical Accounting Estimates” under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks from adverse changes in commodity prices, the price of credits needed to comply with governmental programs, interest rates and foreign currency exchange rates. Information relating to quantitative and qualitative disclosures about material market risk is set forth below.
Commodity Price Risk
Derivative Instruments
We are exposed to price risks due to fluctuations in the price of crude oil, refined products, renewable products, feedstocks, natural gas and precious metals. We use various strategies to reduce our exposure to commodity price risk. We do not attempt to eliminate all of our risk as the costs of such actions are believed to be too high in relation to the risk posed to our future cash flows, earnings and liquidity. The strategies we use to reduce our risk utilize both physical forward contracts and financially settled derivative instruments, such as swaps, collars, options and futures, to attempt to reduce our exposure with respect to:
•crude oil and renewable feedstock purchases and sales;
•refined and renewable fuel product sales and purchases;
•natural gas purchases;
•precious metals; and
•fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as NYMEX WTI, Light Louisiana Sweet, WCS, WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent.
We manage our exposure to commodity markets, credit, volumetric and liquidity risks to manage our costs and volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a variety of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of mitigating risks associated with an asset, liability and anticipated future transactions and the changes in fair value of our derivative instruments will affect our earnings and cash flows; however, such changes should be offset by price or rate
changes related to the underlying commodity or financial transaction that is part of the risk management strategy. We do not speculate with derivative instruments or other contractual arrangements that are not associated with our business objectives. Speculation is defined as increasing our natural position above the maximum position of our physical assets or trading in commodities, currencies or other risk bearing assets that are not associated with our business activities and objectives. Our positions are monitored routinely by a risk management committee and discussed with the board of directors of the Company quarterly to ensure compliance with our stated risk management policy and documented risk management strategies. All strategies are reviewed on an ongoing basis by our risk management committee, which will add, remove or revise strategies in anticipation of changes in market conditions and/or in risk profiles. These changes in strategies are to position us in relation to our risk exposures in an attempt to capture market opportunities as they arise.
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Refer to Note 7 — “Derivatives” in the notes to our unaudited condensed consolidated financial statements under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for a discussion of the accounting treatment for the various types of derivative instruments, for a further discussion of our hedging policies and for more information relating to our implied crack spreads of crude oil, diesel, and gasoline derivative instruments.
Our derivative instruments and overall hedging positions are monitored regularly by our risk management committee, which includes executive officers. The risk management committee reviews market information and our hedging positions regularly to determine if additional derivatives activity is advised. A summary of derivative positions and a summary of hedging strategy are presented to our Board of Directors quarterly.
Compliance Price Risk
Renewable Identification Numbers
We are exposed to market risks related to the volatility in the price of credits needed to comply with governmental programs. The EPA sets annual volume obligations for the percentage of renewable fuels that must be blended into transportation fuels consumed in the U.S., and as a producer of transportation fuels from petroleum, we are subject to those obligations. To the extent we are unable to physically blend renewable fuels to satisfy the EPA requirement, we may purchase RINs in the open market to satisfy the annual obligations. We have not entered into any derivative instruments to manage this risk.
Holding other variables related to RINs obligations constant, a $1.00 increase in the price of RINs would be expected to have a negative impact on Net income (loss) of approximately $65.0 million per year.
Interest Rate Risk
Our exposure to interest rate changes on fixed and variable rate debt is limited to the fair value of the debt issued, which would not have a material impact on our earnings or cash flows. The following table provides information about the fair value of our fixed and variable rate debt obligations as of September 30, 2026 and December 31, 2025, which we disclose in Note 6 — “Long-Term Debt” and Note 8 — “Fair Value Measurements” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements.”
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||||||||
2026 Notes, 2027 Notes, 2028 Notes, 2028 Mirror Issuance Notes, 2029 Secured Notes and 2031 Notes (1) | $ | 1,122.7 | $ | 1,070.8 | $ | 1,083.7 | $ | 1,065.5 | |||||||||||||||
(1) As of September 30, 2026, the carrying value of the Company's Senior Notes included $12.5 million of unamortized debt issuance costs and $3.2 million of unamortized debt premium. As of December 31, 2025. the carrying value of the Company's Senior Notes included $7.2 million of unamortized debt issuance costs and $1.5 million of unamortized debt discounts.
For our variable rate debt, if any, changes in interest rates generally do not impact the fair value of the debt instrument but may impact our future earnings and cash flows. We had a $600.0 million revolving credit facility as of September 30, 2026, with borrowings for the revolving credit facility bearing interest at the prime rate or SOFR, at our option, plus the applicable margin. We had no outstanding variable rate debt as of September 30, 2026 and $94.6 million of outstanding variable rate debt as of December 31, 2025. Holding other variables constant (such as debt levels), a 100 basis point change in interest rates on our variable rate debt as of September 30, 2026, would be expected to have no impact on Net income (loss).
Foreign Currency Risk
We have minimal exposure to foreign currency risk and as such the cost of hedging this risk is viewed to be in excess of the benefit of further reductions in our exposure to foreign currency exchange rate fluctuations.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026.
Changes in Internal Control over Financial Reporting
No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Item 1. Legal Proceedings
We may, from time to time, be involved in litigation related to claims arising out of our operations in the ordinary course of business. Please read Note 2 — “Summary of Significant Accounting Policies” and Note 4 — “Commitments and Contingencies” in Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements,” which is incorporated herein by reference.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks discussed in Part I, Item 1A “Risk Factors” in our 2025 Annual Report. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in the risk factors discussed in Part I, Item 1A “Risk Factors” in our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Third Amended and Restated Limited Liability Company Agreement of MRHL
On November 4, 2026, the Company and certain of its subsidiaries completed a recapitalization of MRHL (the “Transaction”) pursuant to which, among other things: (i) the 12,500,000 preferred units of MRHL held by Warburg Pincus, were exchanged for 12,500,000 newly issued preferred units of MRHL (the “Preferred Units”), and the previously outstanding preferred units were cancelled, (ii) MRHL issued to Warburg Pincus a warrant (the “WP Warrant”) representing the right to acquire up to 8.0% of the common units of MRHL (calculated on a fully diluted basis after giving effect to the Transaction), at an exercise price based on a $750 million common equity value of MRHL, (iii) in connection with the issuance of the WP Warrant, Warburg Pincus relinquished its 13.17% equity ownership interest in MRHL and (iv) the members of MRHL entered into the Third Amended and Restated Limited Liability Company Agreement of MRHL (the “Third A&R LLC Agreement”), which amended and restated the existing limited liability company agreement of MRHL in its entirety and, among other things, established the rights, preferences and privileges of the Preferred Units and the WP Warrant, including with respect to payments under a long-term intercompany lease between MRL and Calumet Montana Refining, LLC, a restricted subsidiary, related to certain assets supporting the MaxSAF® expansion.
The Preferred Units rank (i) junior to an 11.0% intercompany promissory note of approximately $124.2 million owed by MRL as of August 28, 2026, (ii) pari passu with an 11.0% CLMT Unit of MRHL (the “CLMT Unit”) of $97.5 million as of August 28, 2026 (subject to certain exceptions) and (iii) senior to an 11.0% Subordinated A/P Unit of MRHL (the “Subordinated A/P Unit”) of approximately $168.9 million as of August 28, 2026 and the common units of MRHL with respect to distributions and liquidation, and are entitled to a preferred return based on an internal rate of return of 11.5% (increased from 8.0%), subject to upward adjustment based on the passage of time. The Company continues to indirectly own all of the issued and outstanding common units of MRHL.
The Third A&R LLC Agreement establishes a distribution waterfall among the holders of the units of MRHL and contains governance, transfer restrictions, and liquidity provisions customary for an agreement of this nature, including the right of Warburg Pincus to appoint one member of the Board of Managers of MRHL and to designate a Board observer, the right of Warburg Pincus to cause MRHL to initiate a change of control transaction or an initial public offering if the
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Preferred Units remain outstanding after December 1, 2030 (extended from August 5, 2027), or December 1, 2031 under certain exceptions, and tag-along and drag-along rights.
No cash was contributed by Warburg Pincus in connection with the transaction. The Preferred Units, the WP Warrant, the CLMT Unit and the Subordinated A/P Unit were issued by MRHL in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof.
The foregoing description of the Third A&R LLC Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Third A&R LLC Agreement, a copy of which is filed as Exhibit 10.4 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
Trading Plans
During the three months ended September 30, 2026, no director or officer of the Company adopted terminated
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Item 6. Exhibits
____________________________
*Filed herewith.
**Furnished herewith.
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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, thereunto duly authorized.
| CALUMET, INC. | ||||||||
Date: November 6, 2026 | By: | /s/ David Lunin | ||||||
| David Lunin | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Authorized Person and Principal Financial Officer) | ||||||||
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EXHIBIT 10.4
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MONTANA RENEWABLES HOLDINGS LLC
LIMITED LIABILITY COMPANY AGREEMENT
OF
MONTANA RENEWABLES HOLDINGS LLC
Dated as of November 4, 2026
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE DISPOSED OF AT ANY TIME, UNLESS THEY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS AGREEMENT ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH HEREIN.
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THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MONTANA RENEWABLES HOLDINGS LLC
OF
MONTANA RENEWABLES HOLDINGS LLC
This THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of MONTANA RENEWABLES HOLDINGS LLC, a Delaware limited liability company (the “Company”), is made and entered into as of November 4 , 2026 (the “Effective Date”) by and among the Members, and, solely for purposes of Section 2.02, Section 3.04, Section 7.01(a), Section 7.03, Section 7.05, Section 7.06, Section 8.03, Section 8.04, Section 9.04(b), Section 12.05, Section 12.07, Section 13.16, Section 13.18, and Section 14.03, Founder Parent. Capitalized terms, if not otherwise defined herein, shall have the meaning ascribed to such terms as set forth in Article XV.
RECITALS:
WHEREAS, the Company was formed on November 3, 2021 and entered into a limited liability company agreement of the Company, dated as of November 18, 2021, which was amended and restated on December 7, 2021, and which was further amended and restated on August 5, 2022 (as such second amended and restated limited liability company agreement was further amended on February 10, 2025 and February 19, 2025, the “Existing LLCA”);
WHEREAS, immediately prior to the execution of this Agreement, the Members entered into that certain Transaction Agreement, pursuant to which, among other things, (a) all of the Preferred Units of the Company issued and outstanding as of immediately prior to the Effective Date were exchanged for 12,500,000 Preferred Units of the Company under this Agreement and the WP Warrants, and (b) the CLMT Note and Subordinated Note were exchanged for the CLMT Unit and Subordinated A/P Unit, respectively; and
WHEREAS, the Members desire to amend and restate the Existing LLCA in its entirety as provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the parties hereto as follows:
Article I
ORGANIZATIONAL MATTERS
ORGANIZATIONAL MATTERS
Section 1.01.Formation. Pursuant to the Act, the Company was formed under the laws of the State of Delaware by filing a Certificate of Formation (the “Certificate”) with the Secretary of State of the State of Delaware and is ratified by the Members. The rights and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights or obligations of any Member are different by reason of any provision of
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this Agreement than they would be in the absence of such provision of this Agreement, this Agreement shall, to the extent permitted by the Act, control.
Section 1.02.Members.
(a)This Agreement is adopted by the Members and hereby amends and restates the Existing LLCA in its entirety.
(b)The Members agree to continue the Company as a limited liability company under the Act, on the terms and subject to the conditions set forth in this Agreement, as amended from time to time in accordance with its terms. The Members hereby agree that during the term of the Company, the rights, duties and obligations of the Members with respect to the Company will be determined in accordance with the terms and conditions of this Agreement and, to the extent not otherwise specified in this Agreement, the Act.
(c)The name and address of each Member is as set forth in Exhibit A. Except as otherwise provided in this Agreement or as provided by a separate written agreement with the Company, no Member is entitled to remuneration for being a Member or for acting in the Company’s business.
Section 1.03.Name. The name of the Company is “Montana Renewables Holdings LLC”. The business of the Company may be conducted under such name or any other name permitted by the Act as the Board may determine from time to time.
Section 1.04.Place of Business. The principal office of the Company will be as the Board may determine. The Company also may have such offices, anywhere within and without the State of Delaware, as the Board from time to time may determine, or the business of the Company may require.
Section 1.05.Registered Office and Registered Agent. The Company will continuously maintain a registered office and registered agent in the State of Delaware as required by the Act. The Company’s registered agent will be as stated in the Certificate. The Board shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction in which the Company owns property or transacts business to the extent such qualification or registration is necessary or advisable for the protection of the limited liability of the Members or to permit the Company lawfully to own property or transact business.
Section 1.06.Limited Liability. Except as otherwise required under the Act or expressly set forth herein, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall have no obligation whatsoever for any such debt, obligation or liability of the Company by reason of being a Member. To the fullest extent permitted by law, the failure of the Company to observe any formalities or requirements relating to its separate organizational existence as a limited liability company, the exercise of its power or the management of its business or affairs under the Act or this Agreement shall not be grounds for imposing liability on the Members for any debts, obligations or liabilities of the Company.
Section 1.07.Term of the Company. The existence of the Company shall be deemed to have commenced on the date of its formation and the term of the Company shall continue until dissolution of the Company in accordance with the provisions of this Agreement and the Act.
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Section 1.08.Purpose of the Company. The Company is organized for the purposes of engaging in any lawful act or activity for which a limited liability company may be organized under the laws of the State of Delaware, and the Company shall have the power to do any and all acts necessary or advisable in furtherance thereof.
Section 1.09.Tax Classification. The Company shall be treated as a partnership for U.S. federal, state and local income tax purposes, and each Member and the Company shall file all tax returns and shall take all tax and financial reporting positions in a manner consistent with such treatment.
Article II
CAPITAL CONTRIBUTIONS,
UNITS AND CAPITAL ACCOUNTS
CAPITAL CONTRIBUTIONS,
UNITS AND CAPITAL ACCOUNTS
Section 2.01.Capital Contributions; Units.
(a)As of the Effective Date, each Member has made, or shall be deemed to have made, contributions to the capital of the Company in an amount set forth opposite, and has received on or prior to the date hereof in exchange therefor the number of Units set forth opposite, such Member’s name on Exhibit A.
(b)Except as otherwise expressly provided in this Agreement, no Member shall be required to make any capital contribution, loan or advance to the Company or its Subsidiaries or guaranty or make any financial commitment with respect to any debt or other obligation of the Company or any of its Subsidiaries.
(c)Subject to the other provisions herein, including Section 5.07, there shall be four authorized classes of Units: (i) the Common Unit, (ii) the Preferred Units, (iii) the CLMT Unit, and (iv) the Subordinated A/P Unit. On any matter in which the holders of Units are entitled to vote, each holder of a Common Unit and a Preferred Unit shall be entitled to one vote per Unit held by such holder. Except as otherwise provided herein or required by law, the Common Units and the Preferred Units shall vote together and not as a separate class. The CLMT Unit and Subordinated A/P Unit shall not have any voting rights. A holder of a Unit is entitled to such distribution and participation rights with respect to such Unit as set forth in this Agreement. Each Member owns the number and class of Units set forth opposite the name of such Member on Exhibit A. Units may be issued in whole Units or in fractional Units.
Section 2.02.Priority A/P Note; CLMT Note; Subordinated A/P Note. Notwithstanding anything to the contrary herein, or in the terms of the CLMT Unit or Subordinated A/P Unit, including the form thereof, or any prior characterization of the foregoing as indebtedness, the Company and each Member hereby acknowledges and agrees that the CLMT Unit and Subordinated A/P Unit shall, in all instances, constitute Membership Interests and shall be characterized as equity and not indebtedness, and any Distributions or other payments in respect thereof, or in respect of the Priority A/P Note and any Permitted Intercompany A/P (other than Current Permitted Intercompany A/P, which shall be paid in the ordinary course and in accordance with the other terms herein) may only be made or paid in accordance with the express provisions of Section 3.01 and Section 3.02, the Act, and are subject to the other provisions herein, including Section 3.04. In the event of a conflict or inconsistency between the Priority A/P Note, the terms of the CLMT Unit (i.e., Exhibit D) or the Subordinated A/P Unit (i.e., Exhibit E), on the one hand, and this Agreement (excluding, for such purposes, Exhibit D and Exhibit E), on the other hand, the terms of this Agreement shall control. Founder Parent, on behalf of itself and each Founder Parent Controlled Affiliates, hereby waives, and agrees not to assert, any and all creditors’ rights that it or they may have or may have had in respect of the CLMT Note and the Subordinated A/P Note. The rights of Founder Parent and the
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Founder Parent Controlled Affiliates in respect of the Priority A/P Note, the CLMT Unit, the Subordinated A/P Unit and the CMR Lease are subject to Section 13.18.
Section 2.03.No Unit Certificates. Unless otherwise determined by the Board, ownership of the Units shall not be evidenced by means of unit certificates. If Units are certificated, they shall bear such legends as the Board may reasonably determine are appropriate in light of the restrictions under this Agreement and applicable securities laws.
Section 2.04.Preemptive Rights. Each Member and Warrant Unitholder shall have a right (the “Preemptive Right”) to purchase its Pro Rata Portion of any New Securities that the Company or any of its Subsidiaries may, from time to time, propose to sell or issue, on the terms and conditions it so proposes. If the Company or such Subsidiary proposes to undertake an issuance of New Securities, the Company shall give each such Member and Warrant Unitholder written notice (an “Issuance Notice”) of such intention, describing (a) the type of such New Securities, (b) the identity of the prospective subscriber(s) and (c) the price and the general terms and conditions upon which the Company or such Subsidiary proposes to issue such New Securities. Each such Member or Warrant Unitholder shall have 10 Business Days after the receipt of such Issuance Notice to agree to purchase up to its Pro Rata Portion of New Securities proposed to be issued, for the price and upon the terms and conditions specified in such Issuance Notice, by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. If any such Member or Warrant Unitholder fails to so respond in writing within such 10-Business Day period, then such Member or Warrant Unitholder shall forfeit the right hereunder to purchase its Pro Rata Portion of such New Securities. For a period of 90 days following the expiration of the 10-Business-Day period as described above, the Company or such Subsidiary may issue or sell any such New Securities not subscribed for, to the prospective subscriber(s) at a price and upon terms and conditions not more favorable to the prospective subscriber(s) thereof than specified in the Issuance Notice. If the Company or such Subsidiary has not issued or sold such New Securities within such period, neither the Company nor such Subsidiary shall thereafter issue or sell such New Securities, without first again offering such securities to such Members and Warrant Unitholders in the manner provided in this Section 2.04. Nothing in this Section 2.04 shall be construed as permitting an issuance of New Securities without obtaining any required approval under Section 5.07. The exercise or election not to exercise any right by any Member or Warrant Unitholder hereunder shall not adversely affect its right to participate in any other sale or issuance of New Securities pursuant to this Section 2.04.
Section 2.05.Additional Membership Interests and Units. Subject to the other provisions herein, including Section 2.04 and Section 5.07, the Company may, as determined by the Board, at any time or from time to time, create, authorize or issue additional Units or other Equity Securities (whether of an existing class or series or of a new class or series), with such rights, powers, designations, preferences, limitations, and restrictions, and on such other terms and conditions, and for such capital contributions or other consideration, as the Board may determine; provided that the Company shall not admit as a Member any Person acquiring any such Units unless such Person shall have executed and delivered a counterpart or joinder to this Agreement, upon which such Person shall be admitted as a Member and the Company shall amend Exhibit A to reflect such admission. Upon any creation, authorization or issuance of any Units or other Equity Securities in accordance with this Section 2.05, the Company may, subject to Section 5.07 and Section 13.03, amend this Agreement to reflect any such Units or other Equity Securities and the rights, powers, designations, preferences, limitations, restrictions, terms and conditions thereof.
Section 2.06.Admission, Withdrawal, Resignation. No additional or substitute Members may be admitted to, and no Member may withdraw or resign from, the Company except pursuant to the terms of this Agreement, including Article VII.
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Section 2.07.Members’ Meetings; Quorum; Votes. At any time, the Board or the Members collectively holding at least 10% of either the outstanding Common Units or Preferred Units may call for a meeting of the Members from time to time by providing three Business Days’ prior written notice to the Members (in accordance with Section 13.01); provided, however, that meetings of the Members shall not be required. At any Members’ meeting, the presence in person or by proxy of a Majority in Interest and (for so long as any Preferred Units remain outstanding) the WP Member shall constitute a quorum for such meeting, and the Board shall appoint a person to preside at the meeting and a person (which may be the same person) to act as secretary of the meeting. The Members may make use of telephones and other electronic devices to hold meetings if each Member is able to simultaneously participate with the other Members in all discussions and votes of the Members. For any action with respect to which the approval of the Members is required by the Act or this Agreement, if any, unless a higher or different approval is required under this Agreement (including in Section 5.07), the Certificate, or the Act, (a) the affirmative vote of a Majority in Interest present at a meeting of the Members shall be the act of all of the Members or (b) the Members may so act without a meeting if (i) 48 hours after a draft notice is given to all Members and such consent is approved and signed by Members holding Units sufficient under this Agreement and the Act to authorize or take such action at a meeting of the Members in which all Members were present and (ii) written notice of such action is given to the other Members promptly after the taking of such action.
Section 2.08.No Withdrawal of Capital. Except as otherwise expressly provided in this Agreement, (a) no Member shall be entitled to receive a return of or interest on its capital contributions and (b) no Member shall withdraw any portion of its capital contributions or receive any distributions from the Company as a return of capital on account of such capital contributions.
Section 2.09.No Deficit Restoration Obligation. At no time during the term of the Company or upon dissolution and liquidation thereof shall a Member with a negative balance in its Capital Account have any obligation to the Company or the other Members to restore such negative balance, except as may be required by non-waivable provisions of applicable law.
Section 2.10.No Interest on Capital Contribution. Except as otherwise set forth herein, no Member shall be paid interest on its Capital Account or any of its Capital Contributions.
Section 2.11.Priority A/P Unpaid Amount, Unpaid Preferred Return Amount, CLMT Unpaid Amount, Subordinated A/P Unpaid Amount Reduced to Zero. In the event that the Priority A/P Unpaid Amount, Unpaid Preferred Return Amount, CLMT Unpaid Amount, or Subordinated A/P Unpaid Amount is reduced to zero, the Priority A/P Note, the Preferred Units, the CLMT Unit or the Subordinated A/P Unit, as applicable, shall be deemed to have been redeemed and shall no longer be outstanding.
Section 2.12.WP Warrant
(a)Generally. The WP Member is hereby issued a warrant (the “WP Warrant”) that shall entitle the WP Member to purchase 7,187,554 duly authorized and validly issued Warrant Units from the Company, representing 8.00% of the outstanding Common Units of the Company on the Effective Date, calculated on a fully diluted basis (after giving effect to any Common Units and Warrant Units issuable upon exercise of the Stonebriar Warrant and the WP Warrant, respectively), at a purchase price per Warrant Unit of $9.07 (subject to adjustment as provided herein, the “Exercise Price”), subject to the terms, conditions, and adjustments set forth herein.
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(b)Term of Warrant. Subject to the terms, conditions, and adjustments set forth herein, at any time or from time to time during the Exercise Period, the WP Member may exercise the WP Warrant, in whole or in part, for the Warrant Units purchasable under the WP Warrant (subject to adjustment as provided herein).
Section 2.13.Exercise of WP Warrant
(a)Exercise Procedure. The WP Warrant may be exercised at any time or from time to time during the Exercise Period, in whole or in part, upon delivery by the WP Member to the Company of a written notice indicating (1) the number of Warrant Units in respect of which the WP Warrant is being exercised, (2) whether the WP Member is exercising the WP Warrant: (x) pursuant to Section 2.13(a)(i) as a Physical Settlement, (y) pursuant to Section 2.13(a)(ii) as a Net Cash Settlement, or (z) pursuant to Section 2.13(a)(iii) as a Net Unit Settlement, and (3) the number of Warrant Units subject to exercise pursuant to Section 2.13(a)(i), Section 2.13(a)(ii) or Section 2.13(a)(iii), and any other instructions or information as may be contemplated hereunder, including the effective date of exercise (each, an “Exercise Notice”). The WP Member may elect to exercise the WP Warrant in accordance with Section 2.13(a)(i), Section 2.13(a)(ii), Section 2.13(a)(iii) or any combination thereof.
(i)Physical Settlement. In the event that the WP Member elects to exercise the WP Warrant by paying the Aggregate Exercise Price in cash, the WP Member shall make, or cause to be made, payment of the Aggregate Exercise Price in respect of such exercise of the WP Warrant by delivery to the Company by wire transfer of immediately available funds to an account designated in writing by the Company no later than three (3) Business Days after the later of the Exercise Date and the date that the Company has provided the necessary account details to effect such wire transfer, and the WP Member shall receive from the Company a number of Warrant Units equal to the number of Warrant Units subject to such exercise (each, a “Physical Settlement”).
(ii)Net Cash Settlement. At any time or from time to time (A) from and after November 4, 2030 until the expiration of the Exercise Period or (B) during the Exercise Period (including prior to November 4, 2030) in connection with any IPO or Change of Control (in each case, concurrently with the consummation thereof), the WP Member may elect to exercise the WP Warrant, in whole or in part, and receive from the Company upon the exercise thereof, an amount in cash (which may not be a negative number), by wire transfer of immediately available funds (to a bank account designated by the WP Member), equal to the Aggregate Fair Market Value of the Warrant Units subject to such exercise as of the Exercise Date less the Aggregate Exercise Price in respect of such Warrant Units (each, a “Net Cash Settlement” and such cash amount, the “Cash Settlement Amount”), which Cash Settlement Amount shall be paid by the Company no later than (x) in the case of an exercise pursuant to the foregoing clause (A), twenty (20) Business Days after the date on which Fair Market Value is finally determined and (y) in the case of an exercise pursuant to the foregoing clause (B), the date on which such IPO or Change of Control is consummated (in each case, the “Cash Settlement Payment Date”). To the extent, and only for so long as, any portion of the Cash Settlement Amount is prohibited from being paid by the DOE Loan Documents, the Company may defer the Cash Settlement Payment Date with respect to such unpaid portion of the Cash Settlement Amount solely until any such unpaid portions of the Cash Settlement Amount are first permitted thereunder, at which time the Company shall pay such amounts as promptly as practicable thereafter (and in any event within ten (10) Business Days thereafter); provided that any portion of the unpaid Cash Settlement Amount shall
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accrue interest at a rate of 11.0% per annum, compounded monthly, starting from and after 90 days following the Exercise Date. If the Cash Settlement Amount is not prohibited from being paid by the DOE Loan Documents, but the Company does not then have sufficient lawful funds to pay such amount in full, the Company may defer the Cash Settlement Payment Date with respect to only such portion of the Cash Settlement Amount that it cannot lawfully pay, and shall use its reasonable best efforts to generate the additional funds necessary to pay the Cash Settlement Amount (or remaining unpaid portion thereof) in full, including by issuing or selling Equity Securities (which issuance or sale shall be consummated no later than 90 days following the Exercise Date but which obligation to use reasonable best efforts to cause such issuance or sale shall continue until the Cash Settlement Amount is fully repaid), at which time the Company shall pay such Cash Settlement Amount (or remaining unpaid portion thereof) as promptly as practicable thereafter (and in any event within ten (10) Business Days thereafter); provided that any portion of the unpaid Cash Settlement Amount shall accrue interest at a rate of 11.0% per annum, compounded monthly, starting from and after 90 days following the Exercise Date.
(iii)Net Unit Settlement. At any time or from time to time during the Exercise Period, the WP Member may elect to exercise the WP Warrant, in whole or in part, on a net Unit settlement basis (each, a “Net Unit Settlement”), and receive from the Company the number of Warrant Units (which may not be a negative number) computed using the following formula (the “Net Unit Settlement Exercise Formula”):
X = Y * (B - A) / B
Where:
X = the number of Warrant Units.
Y = the aggregate number of Warrant Units being exercised.
A = the Exercise Price (as may be adjusted in accordance with the terms set forth herein).
B = the Fair Market Value of each Warrant Unit.
In the event of a Reorganization Event in which the WP Member elects to exercise the WP Warrant as a Net Unit Settlement, the WP Member shall be entitled to receive the stock or other securities or property (including cash) which the WP Member would have been entitled to receive upon such Reorganization Event if, immediately prior to such Reorganization Event, the WP Member had completed such exercise of the WP Warrant and had been issued the number of Warrant Units calculated in accordance with the Net Unit Settlement Exercise Formula, subject to further adjustment as provided herein.
(b)Exercise Effective Date. The WP Warrant shall be deemed to have been exercised, in whole or in part, and the WP Member shall be deemed to have become a holder of record of such Warrant Units issuable upon such exercise (to the extent exercised as a Physical
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Settlement or Net Unit Settlement), for all purposes, as of 5:00 p.m., New York City time on the applicable Exercise Date, and (to the extent exercised as a Physical Settlement or Net Unit Settlement) the Company shall promptly thereafter issue such Warrant Units effective as of such time and shall update Exhibit A hereto to reflect such issuance; provided that, in the case of a Physical Settlement, the Company shall not be required to issue, any Warrant Units unless and until the Company has received payment in full of the Aggregate Exercise Price in respect of such exercise in accordance with the terms herein (provided that upon receipt of such payment the effective date of issuance will be the Exercise Date).
(c)Expenses. The Company shall pay, or reimburse the WP Member for the full amount of, all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of any Warrant Units upon exercise of the WP Warrant; provided that the Company shall not be responsible for (i) any income, franchise or similar taxes imposed on the WP Member or (ii) any transfer, stamp or similar taxes imposed in connection with any delivery or transfer of Warrant Units to any Person other than the WP Member; provided further that any such payment or reimbursement by the Company shall be subject to the DOE Loan Documents.
Section 2.14.Warrant Adjustments
In order to prevent dilution of the purchase rights granted under the WP Warrant, the Exercise Price and the number of Warrant Units issuable upon exercise of the WP Warrant shall be subject to adjustment from time to time as provided in this Section 2.14 (in each case, after taking into consideration any prior adjustments pursuant to this Section 2.14).
(a)Adjustment to Exercise Price Upon Issuance of Common Units. Except with respect to any Excluded Issuance and except in the case of an event described in Section 2.14(d) or Section 2.14(e), if the Company shall, at any time or from time to time after the Effective Date, issue or sell, or in accordance with Section 2.14(c) is deemed to have issued or sold, any Common Units or Common Equivalents without consideration or for consideration per Common Unit or Common Equivalent less than the greater of the Trigger Price and the Fair Market Value per Common Unit immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Exercise Price shall be reduced (and in no event increased) to an Exercise Price equal to the product obtained by multiplying the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), by a fraction (which shall in no event be more than one):
(i)the numerator of which shall be (A) the product obtained by multiplying the Common Units Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) by (B) the greater of the Trigger Price and the Fair Market Value per Common Unit immediately prior to such issuance or sale (or deemed issuance or sale) plus (C) the aggregate consideration, if any, received by the Company upon such issuance or sale (or deemed issuance or sale); and
(ii)the denominator of which shall be the product obtained by multiplying (A) the Common Units Deemed Outstanding immediately after such issuance or sale (or deemed issuance or sale) by (B) the greater of the Trigger Price and the Fair Market Value per Common Unit immediately prior to such issuance or sale (or deemed issuance or sale).
(b)Adjustment to Number of Common Units Upon Adjustment to Exercise Price. Upon any and each adjustment of the Exercise Price as provided in Section 2.14(a), the number of Warrant Units issuable upon the exercise of the WP Warrant immediately prior to any
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such adjustment shall be increased to a number of Warrant Units equal to the quotient obtained by dividing:
(i)the product of (A) the Exercise Price in effect immediately prior to any such adjustment and (B) the number of Warrant Units issuable upon exercise of the WP Warrant immediately prior to any such adjustment; by
(ii)the Exercise Price resulting from such adjustment.
(c)Effect of Certain Events on Adjustment to Exercise Price. For purposes of determining the adjusted Exercise Price under Section 2.14(a), the following shall be applicable:
(i)Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Effective Date, in any manner grant or sell (whether directly or indirectly, including by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to exercise, convert or exchange any such Convertible Securities is immediately exercisable, and the price per Common Unit or Common Equivalent issuable upon the exercise, conversion or exchange of such Convertible Securities (determined as provided in this Section 2.14(c)(i) and in Section 2.14(c)(iii)) is less than the greater of the Trigger Price and the Fair Market Value per Common Unit immediately prior to the time of the granting or sale of such Convertible Securities, then the total maximum number of Common Units or Common Equivalents issuable upon exercise, conversion or exchange of the total maximum amount of such Convertible Securities shall be deemed to have been issued as of the date of granting or sale of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price pursuant to Section 2.14(a)), at a price per Common Unit or Common Equivalent equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 2.14(a)) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange of all such Convertible Securities, by (B) the total maximum number of Common Units or Common Equivalents issuable upon the exercise, conversion or exchange of all such Convertible Securities. Except as otherwise provided in Section 2.14(c)(ii), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Units or Common Equivalents upon exercise, conversion or exchange of such Convertible Securities or the issue or sale of Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of this Section 2.14(c).
(ii)Change of Terms of Convertible Securities. Upon any change in any of (A) the total amount received or receivable by the Company as consideration for the granting or sale of any Convertible Securities referred to in Section 2.14(c)(i), (B) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance, exercise, conversion or exchange of any Convertible Securities referred to in Section 2.14(c)(i), (C) the rate at which Convertible Securities referred to in Section 2.14(c)(i) are convertible into or exchangeable for Common Units or Common Equivalents, or (D) the maximum number of Common Units or Common Equivalents issuable in connection with any Convertible Securities referred to in Section 2.14(c)(i), respectively (in each case, other than in connection with an
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Excluded Issuance), then (whether or not the original issuance or sale of such Convertible Securities resulted in an adjustment to the Exercise Price pursuant to this Section 2.14) the Exercise Price in effect at the time of such change shall be adjusted or readjusted, as applicable, to the Exercise Price which would have been in effect at such time pursuant to the provisions of this Section 2.14 had such Convertible Securities still outstanding provided for such changed consideration, conversion rate, or maximum number of Common Units or Common Equivalents, as the case may be, at the time initially granted, issued, or sold, but only if as a result of such adjustment or readjustment the Exercise Price then in effect is reduced, and the number of Warrant Units issuable upon the exercise of the WP Warrant immediately prior to any such adjustment or readjustment shall be correspondingly adjusted or readjusted pursuant to the provisions of Section 2.14(b).
(iii)Calculation of Consideration Received. If the Company shall, at any time or from time to time after the Effective Date, issue or sell, or be deemed to have issued or sold in accordance with this Section 2.14(c), any Common Units, Common Equivalents or Convertible Securities: (A) for cash, the consideration received therefor shall be deemed to be the net amount of cash received by the Company therefor; or (B) for consideration other than cash, the consideration received therefor shall be the fair market value of such consideration, as determined by the Board and the WP Member in good faith (subject to the dispute process set forth in Section 2.17 mutatis mutandis).
(iv)Other Distributions. Subject to the other provisions herein, if the Company shall, at any time or from time to time after the Effective Date, make or declare a Distribution on the Common Units or Common Equivalents payable in cash or securities of the Company (other than (1) a Distribution of Common Units, Common Equivalents or Convertible Securities in respect of outstanding Common Units or Common Equivalents, or (2) any Distribution in respect of any Instrument ranking senior to the Common Units under Section 3.01 and Section 3.02, or other property, then, and in each such event, on and as of the date of such Distribution, the Exercise Price shall be reduced by an amount equal to the amount Distributed upon or in respect of each outstanding Common Unit (whether cash or the fair market value of any non-cash distribution, as determined by the Board and the WP Member in good faith) (subject to the dispute process set forth in Section 2.17 mutatis mutandis) (the “Distribution Amount”); provided, however, that if the Distribution Amount is greater than the Exercise Price, the Exercise Price shall be reduced to zero, and in connection with such Distribution, (x) the WP Warrant shall be automatically exercised as a Physical Settlement (with an Exercise Price of zero) and the WP Member shall be issued the Warrant Units, in each case immediately prior to the consummation of such Distribution, and (y) the WP Member shall receive, simultaneously with the Distribution to the holders of Common Units or Common Equivalents, a Distribution of such securities, cash or other property in an amount equal to the difference between the Distribution Amount and the Exercise Price (to be treated as a Distribution with respect to the Warrant Units issued to the WP Member).
(d)Adjustment to Exercise Price and Common Units Upon Distribution, Subdivision or Combination of Common Units. If the Company shall, at any time or from time to time after the Effective Date, (i) make any distribution upon the Common Units or Common Equivalents payable in additional Common Units, Common Equivalents or in Convertible Securities, or (ii) subdivide (by any split, recapitalization, or otherwise) its outstanding Common Units or Common Equivalents into a greater number of Common Units or Common Equivalents,
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the Trigger Price and the Exercise Price in effect immediately prior to any such distribution or subdivision shall be proportionately reduced and the number of Warrant Units issuable upon exercise of the WP Warrant shall be proportionately increased. If the Company shall, at any time or from time to time after the Effective Date, combine (by combination, reverse split, or otherwise) its outstanding Common Units or Common Equivalents into a smaller number of Common Units or Common Equivalents, the Trigger Price and the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Units issuable upon exercise of the WP Warrant shall be proportionately decreased. Any adjustment under this Section 2.14(d) shall become effective at the close of business on the date the distribution, subdivision, or combination becomes effective.
(e)Adjustment to Exercise Price and Warrant Units Upon Reorganization, Reclassification, Consolidation, or Merger. In the event of any (i) Change of Control; (ii) capital reorganization of the Company, (iii) reclassification of the Units of the Company, (iv) consolidation or merger of the Company with or into another Person, (v) sale of all or substantially all of the Company’s assets to another Person or (vi) other similar transaction (other than any such transaction covered by Section 2.14(d)), in each case which entitles the holders of Common Units or Common Equivalents to receive (either directly or upon subsequent liquidation) shares of stock, securities, or assets with respect to or in exchange for Common Units or Common Equivalents (any transaction described in clauses (i)-(vi) or any similar transaction, including in connection with an IPO, a “Reorganization Event”), the WP Warrant shall, immediately after such Reorganization Event, remain outstanding and shall thereafter, in lieu of the number of Warrant Units then exercisable under the WP Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such Reorganization Event to which the WP Member would have been entitled upon such Reorganization Event if the WP Member had exercised the WP Warrant in full immediately prior to the time of such Reorganization Event and acquired the applicable number of Warrant Units then issuable under the WP Warrant as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of the WP Warrant); and, in such case, appropriate adjustment (as determined by the Board and the WP Member in good faith) shall be made with respect to the WP Member’s rights under the WP Warrant to ensure that the provisions of this Section 2.14 shall thereafter be applicable, as nearly as possible, to the WP Warrant in relation to any shares of stock, securities, or assets thereafter acquirable upon exercise of the WP Warrant. The provisions of this Section 2.14(e) shall similarly apply to successive Reorganization Events. The Company shall not effect any such Reorganization Event unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such Reorganization Event, shall assume, by written instrument on terms substantially identical to the WP Warrant, the obligation to deliver to the WP Member such shares of stock, securities, or assets which, in accordance with the foregoing provisions, such WP Member shall be entitled to receive upon exercise of the WP Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 2.14(e), the WP Member shall have the right to elect prior to the consummation of such Reorganization Event, to give effect to the exercise rights herein instead of giving effect to the provisions contained in this Section 2.14(e) with respect to the WP Warrant.
Notwithstanding the foregoing, in connection with any Change of Control that includes the Transfer of all of the Equity Securities of the Company and in which the consideration for all of the Common Units and Common Equivalents consists solely of cash, and (A) the cash consideration per Common Unit (together with the maximum amount of any deferred or contingent consideration, purchase price adjustment or amounts held in escrow) is greater than the Exercise Price, the WP Warrant shall be automatically exercised, concurrently with the consummation thereof, as a Net Cash Settlement (and the WP Member shall receive the
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Cash Settlement Amount concurrently with the consummation thereof, together with any deferred or contingent consideration, purchase price adjustment or amounts held in escrow, as and when released or paid to holders of the Common Units) and (B) the cash consideration per Common Unit (together with the maximum amount of any deferred or contingent consideration, purchase price adjustment or amounts held in escrow) is less than the Exercise Price, the WP Warrant shall terminate upon such consummation; provided that if the WP Warrant is cancelled pursuant to this clause (B), but upon any subsequent payment or release of any deferred or contingent consideration, purchase price adjustment or amounts held in escrow to holders of the Common Units would have resulted in an automatic exercise of the WP Warrant pursuant to the foregoing clause (A), then the WP Warrant shall be deemed to have been automatically exercised and the WP Member shall receive the Cash Settlement Amount it would have received upon such exercise, concurrently with the release or payment of any such amounts to the holders of the Common Units.
With respect to any other Change of Control (i.e., that does not include the Transfer of all of the Equity Securities of the Company or that does not include solely cash consideration for all of the Common Units and Common Equivalents), the WP Warrant shall remain outstanding following such Change of Control (subject to the other provisions here) and/or may be exercised in accordance with the terms herein.
(f)Certain Events.
(i)If at any time, as a result of an adjustment made pursuant to this Section 2.14, the WP Member, upon exercise of the WP Warrant, shall become entitled to receive any securities of the Company (or any other Person) other than Common Units, thereafter the number of such other securities so receivable upon exercise of the WP Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Units contained in this Section 2.14, and the provisions of this Agreement with respect to the Warrant Units shall apply on like terms to such other securities.
(ii)If any event of the type contemplated by the provisions of this Section 2.14 but not expressly provided for by such provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Units issuable upon exercise of the WP Warrant so as to protect, on an equitable basis, the respective rights and interests of the WP Member and the Company in a manner consistent with the provisions of this Section 2.14; provided, that no such adjustment pursuant to this Section 2.14(f) shall increase the Exercise Price or decrease the number of Warrant Units issuable as otherwise determined pursuant to this Section 2.14.
(iii)For the avoidance of doubt, notwithstanding anything to the contrary in this Section 2.14, none of the accrual, increase or payment of any yield, return, dividend or any distribution in respect of, the CLMT Unit or the Subordinated A/P Unit, shall constitute an issuance or sale (or deemed issuance or sale) of Common Units or Common Equivalents or a distribution on the Common Units, or shall result in any adjustment to the Exercise Price or the number of Warrant Units issuable upon exercise of the WP Warrant.
(g)Certificate of Adjustment.
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(i)As promptly as reasonably practicable (and in any event within three (3) Business Days) following any adjustment of the Exercise Price, the Company shall furnish to the WP Member a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
(ii)As promptly as reasonably practicable following the receipt by the Company of a written request by the WP Member, the Company shall furnish to the WP Member a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Units or the amount, if any, of other shares of stock, securities, or assets then issuable upon exercise of the WP Warrant.
(h)Notices. Whenever following the Effective Date, the Company proposes to issue or sell, or issues or sells, or in accordance with Section 2.14(c) is deemed to have issued or sold, any Common Units or Common Equivalents or consummates or proposes to consummate a Reorganization Event, the Company shall deliver to the WP Member a certificate signed by an executive officer of the Company setting forth, in reasonable detail, the number of Common Units or Common Equivalents issued or sold, or deemed issued or sold, the amount and the form of the consideration received by the Company, and the method of computation of such amount. In addition, in the event:
(i)that the Company shall take a record of the holders of its Common Units (or other Equity Securities, securities or property of the same or similar type as the Warrant Units at the time issuable upon exercise of the WP Warrant) for the purpose of entitling or enabling them to receive any distribution, to receive any right to subscribe for or purchase any Equity Securities, securities or other property, or to receive any Equity Securities, securities or other property;
(ii)of any IPO or Reorganization Event; or
(iii)of the voluntary or involuntary dissolution, liquidation, or winding-up of the Company;
then, and in each such case, the Company shall send to the WP Member with at least ten (10) Business Days prior notice, a written notice specifying, as the case may be, (A) the record date for such distribution or other right or action, and a description of such distribution or other right or action, or (B) the effective date on which such IPO and/or Reorganization Event, dissolution, liquidation, or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which holders of Common Units (or such other Equity Securities, securities or property of the same or similar type as the Warrant Units at the time issuable upon exercise of the WP Warrant) shall be entitled to exchange their Common Units (or such other Equity Securities or securities) for securities or other property deliverable upon such Reorganization Event, dissolution, liquidation, or winding-up, and the amount per Common Unit and character of such exchange applicable to the WP Warrant and the Warrant Units issuable thereunder.
Section 2.15.Anti-circumvention
The Company and Founder Parent shall not, by amendment (whether through merger, consolidation or otherwise) of this Agreement, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it
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hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of the WP Warrant and in the taking of all such action as may reasonably be requested by the WP Member in order to protect the exercise rights of the WP Member against dilution or other impairment, consistent with the tenor and purpose of the WP Warrant.
Section 2.16.Governmental Approvals
(a)Each of the Company and the WP Member (i) agree in good faith to review whether any approvals, authorizations, consents, ratifications, permissions, exemptions or waivers or the expiration, lapse or termination of any waiting period (including any extension thereof) under any applicable laws (collectively, “Consents”) from governmental bodies that would be required in connection with the exercise of the WP Warrant, and (ii) upon request of the WP Member, shall use reasonable best efforts to cooperate with the other party in seeking to obtain all such Consents. The Company and the WP Member shall as promptly as reasonably practicable following any request by the WP Member prepare and file all notifications, filings, registrations, submissions or other materials required or necessary to obtain the Consents of any other governmental bodies. All filings made in connection with the foregoing sentence shall be made in substantial compliance with the requirements of applicable law.
(b)Each of the Company and the WP Member shall (i) promptly notify and furnish the other party copies of any correspondence or communication (including, in the case of any oral correspondence or communication, a summary thereof) between it or any of its Affiliates or any of their respective representatives, on the one hand, and any governmental body, on the other hand, or any filing such party submits to any governmental body, (ii) consult with and permit the other party to review in advance any proposed filing and any written or oral communication or correspondence by such party to any governmental body, and (iii) consider in good faith the views of such other party in connection with any proposed filing and any written or oral communication or correspondence to any governmental body, in each case, solely to the extent relating to the Consents required in connection with the exercise of the WP Warrant as described in Section 2.16(a). Neither the Company nor the WP Member shall agree to, or permit any of its Affiliates or representatives to, participate in any meeting or discussion with any governmental body in respect of any filings, investigation, inquiry or any other matter relating to the Consents required in connection with the exercise of the WP Warrant unless it consults with the other party in advance and, to the extent permitted by such governmental body, gives the other party the opportunity to attend and participate in such meeting or discussion. The Company and the WP Member shall consult with one another in good faith and shall jointly determine the strategy for dealing with any governmental body regarding the application of any laws applicable to the transactions contemplated by the WP Warrant; provided that any such strategy, and any actions taken in connection with the exercise of the WP Warrant, shall be subject to the DOE Loan Documents and any Consents required thereunder.
(c)Notwithstanding anything herein to the contrary, nothing in the WP Warrant shall require, or be construed to require, the WP Member or any of its Affiliates to, in connection with obtaining Consent under any applicable law, (i) agree to (A) any sale, license, divestiture or other disposition or holding separate (through establishment of a trust or otherwise) of any capital stock, businesses, assets (tangible or intangible), properties or other interests of the WP Member, the Company, any of their subsidiaries or respective Affiliates, (B) the imposition of any limitation, restriction or condition on the ability of the WP Member, the Company, or any of their subsidiaries or respective Affiliates to conduct their respective businesses or own, acquire, hold or exercise full rights of ownership of any capital stock, businesses, assets (tangible or intangible), properties or other interests, (C) the imposition of any limitation, restriction or condition on the WP Member, the Company or any of their subsidiaries or respective Affiliates under any applicable law, or (D) any material modification or waiver of the terms and conditions of the WP Warrant, or (ii) litigate with or otherwise participate in any claim, action, suit,
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litigation, investigation, hearing, audit or arbitration with any governmental body in connection with obtaining any Consent pursuant to the WP Warrant.
Section 2.17.Warrant Unit Fair Market Value
(a)Prior to the date on which any Warrant Units, Common Units or Common Equivalents are listed or quoted on a Trading Market, and in the event that the WP Member elects to exercise the WP Warrant, in whole or in part (other than as a Physical Settlement), the WP Member and the Company shall negotiate in good faith to mutually agree on an estimate of the Fair Market Value of the Warrant Units, Common Units and Common Equivalents (such estimate, the “Estimated FMV”). The Estimated FMV as determined by each of the WP Member, the Company or the Valuation Firm (i) shall reflect management’s good faith, best estimates of future performance of the Company (after incorporating any good faith input and feedback from the WP Member), (ii) shall assume that the Company is being sold in an arms’ length transaction for full and fair value, without giving effect to any minority ownership or other similar discount, and (iii) shall not consider the public market valuation of Founder Parent.
(b)For the avoidance of doubt, the Fair Market Value per Common Unit shall be calculated on the basis of the agreed equity value of the Company, after deducting from the enterprise value (i) the then Unpaid Preferred Return Amount, (ii) the then outstanding amounts under the DOE Loan, (iii) the then Priority A/P Unpaid Amount, the then CLMT Unpaid Amount and the then Subordinated A/P Unpaid Amount, (iv) $137,500,000 (if the Exercise Date is following November 4, 2030) or $137,500,000 plus the then remaining annual payments of Rent (as defined in the CMR Lease) for the period between the Exercise Date and November 4, 2031 (if the Exercise Date is prior to November 4, 2030), in each case, which represents an amount of the option purchase price under the CMR Lease, and (v) any other Indebtedness permitted in accordance with the terms of this Agreement that is outstanding as of the determination date and would customarily be included as a deduction to enterprise value for valuation purposes; provided that (x) no component of such determination of the Fair Market Value shall be made by reference to an enterprise value without giving effect to the foregoing adjustments, (y) no other liabilities of any Group Company under any Affiliated Transaction shall be treated as indebtedness of, or as a claim senior to, the Common Units, or otherwise be used to adjust the enterprise value in determining the equity value unless such liabilities were permitted in accordance with the terms of this Agreement and would otherwise customarily be included as a deduction to enterprise value for valuation purposes, and (z) that the payments of Rent (as defined in the CMR Lease) shall not be included (or be treated as an ordinary operating expense of the Company) in estimating any EBITDA and/or free cash flow of the Company, and shall be disregarded in the calculations thereof. Without limitation to the foregoing, the adjustment from enterprise value to equity value shall include other customary adjustments (e.g., cash, inventory and other working capital).
(c)In the event that the WP Member and the Company have not mutually agreed on the Estimated FMV within fifteen (15) days of the Exercise Date, then, upon request of either the WP Member or the Company, the WP Member and the Company shall promptly jointly appoint a nationally recognized investment bank or valuation firm (“Valuation Firm”) to determine the Estimated FMV. Each of the WP Member and the Company shall furnish to the Valuation Firm such information and documents as it deems relevant including its own Estimated FMV (“Independent Valuation”) within ten (10) Business Days of appointing a Valuation Firm, with copies of such submission and all such documents and information being concurrently provided to the other party. The Valuation Firm shall provide an Estimated FMV within twenty (20) days of such appointment (or other deadline as mutually agreed between the WP Member and the Company).
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(i)In the event that the Valuation Firm’s Estimated FMV is greater than Estimated FMV determined by each of the WP Member and the Company in its Independent Valuation, then the Estimated FMV shall be the greater of the Estimated FMV as determined by either the WP Member or the Company in its Independent Valuation.
(ii)In the event that the Valuation Firm’s Estimated FMV is less than the Estimated FMV determined by each of the WP Member and the Company in its Independent Valuation, then the Estimated FMV shall be the lesser of the Estimated FMV as determined by either the WP Member or the Company in its Independent Valuation.
(iii)In the event that the Valuation Firm’s Estimated FMV is between the Estimated FMV determined by each of the WP Member and the Company in its Independent Valuation, then the Estimated FMV shall be the Estimated FMV as determined by the Valuation Firm.
(d)The costs and expenses of the Valuation Firm shall be allocated between the WP Member, on one hand, and the Company, on the other hand, based upon the percentage which the portion of the amount not awarded to each party based on its Independent Valuation bears to the amount proposed in its Independent Valuation. For example, if the Estimated FMV as determined by the WP Member is $40 and the Estimated FMV as determined by the Company is $30, and the Estimated FMV as finally determined in accordance with Section 2.17(b) is $34, then the costs and expenses of the Valuation Firm shall be allocated 60% (i.e., ($40 – $34) ÷ ($40 - $30)) to the WP Member and 40% (i.e., ($30 – $34) ÷ ($30 - $40)) to the Company.
(e)At the request of the WP Member, no more frequently than two (2) times in any calendar year, the Company shall provide the WP Member the Company’s Estimated FMV.
(f)For purposes of the WP Warrant, the Estimated FMV as finally determined in accordance with this Section 2.17 shall be the Fair Market Value of the Warrant Units or Common Units.
Section 2.18.Intended Tax Treatment. The Company and the WP Member intend that for U.S. federal and applicable state and local income tax purposes the WP Warrant shall be treated as a non-compensatory option. The Company and the WP Member shall file all tax returns and shall take all tax and financial reporting positions in a manner consistent with the foregoing intended tax treatment unless otherwise required by applicable law.
Article III
DISTRIBUTIONS AND PAYMENTS
DISTRIBUTIONS AND PAYMENTS
Section 3.01.Distributions and Payments. Except in the case of (x) payments of Current Permitted Intercompany A/P (which shall be paid in the ordinary course and in accordance with the other terms herein), and (y) Distributions, payments, repurchases or redemptions contemplated by Section 3.02, Section 3.06, Section 5.06, Section 7.06(b), Section 7.06(c), Section 13.16 and Article XIV, all Distributions, payments, repurchases or redemptions (or other payments to any Member) shall be made in the following order and priority:
(a)First, 100% to the holder of the Priority A/P Note until the Priority A/P Unpaid Amount has been reduced to zero;
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(b)Second, (i) prior to August 1, 2030, 100% to (x) the holders of the Preferred Units, pro rata, and (y) the holder of the CLMT Unit, in the case of clause (x) and (y), in accordance with their respective Pro Rata Portions, until the Unpaid Preferred Return Amount and the CLMT Unpaid Amount, respectively, have each been reduced to zero and (ii) on or after August 1, 2030, 100% to the holders of the Preferred Units, pro rata, until the Unpaid Preferred Return Amount has been reduced to zero;
(c)Third, (i) prior to August 1, 2030, 100% to the holder of the Subordinated A/P Unit, until the Subordinated A/P Unpaid Amount has been reduced to zero and (ii) on or after August 1, 2030, 100% to the holder of the CLMT Unit, until the CLMT Unpaid Amount has been reduced to zero, and thereafter 100% to the holder of the Subordinated A/P Unit until the Subordinated A/P Unpaid Amount has been reduced to zero; and
(d)Fourth, 100% to the holders of Common Units (including any Common Units issued upon exercise of any Warrants, including the WP Warrants) pro rata in accordance with the number of Common Units Deemed Outstanding.
Section 3.02.Servicing / Repayment Election.
(a)The Company may, at least 15 days prior to the beginning of any fiscal quarter after the Effective Date (each, an “Election Quarter”), deliver to each of the Founder Member, the WP Member and the Board a written notice (i) electing that all Distributions during such Election Quarter be made in accordance with this Section 3.02 (a “Servicing Election”) and (ii) setting forth the TTM FCCR as of the beginning of such Election Quarter; provided that a Servicing Election may only be made for an Election Quarter in which the payments contemplated by Section 3.02(b) are permitted under the DOE Loan and the ability of the Company to make a Servicing Election shall be subject to Section 3.02(c) and Section 3.02(d). Absent a Servicing Election for an Election Quarter, all Distributions for such Election Quarter shall be made in accordance with Section 3.01 (a “Repayment Election”).
(b)Subject to the other provisions in this Section 3.02, and Section 3.06, in the event that the Company makes a Servicing Election in respect of an Election Quarter, all Distributions made in such Election Quarter shall be made in the following order of priority: (i) first, to the holder of the Priority A/P Note, an amount equal to the increase in the Priority A/P Unpaid Amount in respect of the fiscal quarter preceding such Election Quarter, (ii) second, to the holders of the Preferred Units, pro rata, in an amount equal to the IRR Increase in respect of the fiscal quarter preceding such Election Quarter, (iii) third, to the holder of the CLMT Unit, an amount equal to the increase in the CLMT Unpaid Amount in respect of the fiscal quarter preceding such Election Quarter, and (iv) fourth, to the holder of the Subordinated A/P Unit, an amount equal to the increase in the Subordinated A/P Unpaid Amount in respect of the fiscal quarter preceding such Election Quarter; provided that the amounts set forth in clauses (i) through (iv) shall be paid in the order set forth above, no amount shall be paid pursuant to any such clause unless and until all amounts set forth in each preceding clause have been paid in full in cash, and any amount not so paid in an Election Quarter shall be treated in accordance with Section 3.02(e).
(c)The Company may not make a Servicing Election with respect to (i) any Election Quarter if the TTM FCCR is less than or equal to 1.8x as of the start of such Election Quarter (subject to Section 3.02(d)) or (ii) any Election Quarter beginning on or after January 1, 2030 if any Preferred Units remain outstanding at such time.
(d)If the TTM FCCR is less than or equal to 1.8x as of the start of an Election Quarter, the Company may make a modified Servicing Election for such Election Quarter; provided that with respect to such modified Servicing Election for such Election Quarter, no
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Distributions shall be made pursuant to clause (iii) of Section 3.02(b) unless and until the IRR Increase for such Election Quarter has been paid in full in cash, and no Distributions shall be made pursuant to clause (iv) of Section 3.02(b).
(e)In the event that any amounts in clauses (i) through (iv) of Section 3.02(b) are not paid in an Election Quarter subject to a Servicing Election, then such amounts shall remain outstanding and shall continue to accrue. Any Distributions in any subsequent Election Quarter subject to a Servicing Election shall be made in accordance with Section 3.02(b) beginning again in the order set forth therein (i.e., without any obligation to first pay any amounts that were not Distributed during any previous Election Quarter subject to a Servicing Election).
(f)In the event that the Company makes Distributions of all amounts in clauses (i) through (iv) of Section 3.02(b) in full during any Election Quarter subject to a Servicing Election, it shall be entitled to make any further Distributions during such Election Quarter in accordance with Section 3.01 (i.e., as if it had made a Repayment Election for such Election Quarter).
(g)Current Permitted Intercompany A/P may be paid in the ordinary course and in accordance with the other terms herein, regardless of whether the Company elects a Servicing Election or Repayment Election.
(h)Illustrative examples of payments and distributions based on a Repayment Election and a Servicing Election are set forth on Exhibit C.
Section 3.03.Restricted Distributions. Notwithstanding anything to the contrary contained herein, the Company, and the Board on behalf of the Company, shall not declare or make a Distribution, repurchase or redeem any Instrument (a) other than (i) in accordance with the Distribution priorities set forth in Section 3.01, Section 3.02, or Section 3.06, as applicable, or (ii) in accordance with Section 2.13 or Article XIV or (b) if such Distribution, repurchase or redemption would violate the Act or other applicable law or is prohibited by the DOE Loan.
Section 3.04.Insufficient Proceeds.
(a)If, in connection with any liquidation, dissolution or winding up of the Company or any Change of Control in which all of the outstanding Common Units are Transferred, the proceeds or assets available for Distribution are insufficient to reduce each of the CLMT Unpaid Amount and the Subordinated A/P Unpaid Amount to zero, such proceeds or assets shall be Distributed in strict accordance with Section 3.01, and thereafter the CLMT Unit, the Subordinated A/P Unit and any Common Units shall be automatically cancelled and retired and shall not be reissued, sold or transferred.
(b)In connection with any Change of Control in which not all of the outstanding Common Units are Transferred, the proceeds thereof shall be allocated in accordance with Section 3.01, and (i) if the Unpaid Preferred Return Amount is reduced to zero in connection therewith, the CLMT Unit, the Subordinated A/P Unit and the Common Units and Warrants shall remain outstanding and continue to participate in accordance with Section 3.01, and (ii) if the Unpaid Preferred Return Amount is not reduced to zero in connection therewith, the CLMT Unpaid Amount and the Subordinated A/P Unpaid Amount shall each be reduced to the amount (which may be zero) that the CLMT Unit or the Subordinated A/P Unit, as applicable, would have received under Section 3.01 had all of the outstanding Units been Transferred in such Change of Control, and the CLMT Unit, the Subordinated A/P Unit and the Common Units and Warrants shall remain outstanding and continue to participate in accordance with Section 3.01 as so adjusted. Nothing in this Section 3.04 shall be construed as permitting
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the Company, Founder Parent, Founder Parent Controlled Affiliates or any Member to participate in a Change of Control in which the Unpaid Preferred Return Amount is not reduced to zero without the prior written consent of the WP Member.
(c)In no event shall the terms of the CLMT Unit or the Subordinated A/P Unit be interpreted to supersede the priorities set forth in Section 3.01.
(d)Each of the Founder Member and the Founder Parent, on behalf of itself and the Founder Parent Controlled Affiliates, expressly acknowledges and agrees to the foregoing.
Section 3.05.Withholding. Each Member agrees to furnish the Company with any representations, forms, documentation or information as shall reasonably be requested by the Board, including where such request is made due to changes in law after the Effective Date and including information with respect to a Member’s direct or indirect beneficial owners (provided, that in no event shall a Member be required to reveal the identity of its beneficial owners or disclose information regarding beneficial owners which the Member is not permitted to disclose to the Company in the event that the Member can prove to the reasonable satisfaction of the Company that such Member is not permitted to disclose such information) (a) to assist the Company in determining the extent of, and in fulfilling, its withholding, reporting or other tax obligations, (b) as will permit payments or allocations of income made to or by the Company to be made without withholding or at a reduced rate of withholding, (c) in order to reduce the amount of taxes borne by the Company, or (d) that the Board deems necessary, in its good faith discretion, to ensure compliance with any laws or regulations applicable to the Company or its business. In respect of the information and forms required to be provided as prescribed by this Section 3.05, each Member (i) represents and warrants that any such information and forms furnished by or to be furnished by such Member are and will be true, correct and complete, (ii) agrees to promptly update any such information or forms (A) if at any time the Member becomes aware that such previously provided information or forms are no longer true, correct and complete, (B) upon the expiration, invalidity or obsolescence of any such provided information or forms, or (C) if reasonably requested to do so by the Board, and (iii) agrees to indemnify the Company and each other Member on an after-tax basis from any and all damages, costs and expenses resulting from a breach by such Member of the foregoing representation, warranty and/or agreement in this Section 3.05. At the option of the Board, the amount to be indemnified by a Member pursuant to the foregoing clause (iii) may be satisfied by reducing the Distributions which would otherwise be made to such Member under Section 3.01 until the Company has recovered the full amount to be indemnified (and the amount of such reduction shall be deemed to have been distributed to such Member for all purposes of this Agreement).
Section 3.06.Tax Distributions. Subject to Section 3.03, prior to any Distribution pursuant to Section 3.01 or Section 3.02 or, solely with respect to Distributions pursuant to this Section 3.06 to the WP Member, prior to the payment of any Current Permitted Company A/P, the Company shall make Distributions from available cash as reasonably determined by the Board (the “Tax Distributions”) to the Members intended to be sufficient to enable them to pay, on a quarterly basis, federal, state and local taxes arising from the allocations made to such Members pursuant to Article IV; provided that the Company shall be under no obligation to (i) incur indebtedness in order to fund a Tax Distribution or (ii) reserve cash for a Tax Distribution unless it is reasonably expected that the relevant Member(s) will be allocated taxable income for the quarter or otherwise be required to make estimated tax payments; provided, further, that such payments shall be made within 30 days after the close of each applicable quarter (other than in a quarter in which the Company liquidates or sells substantially all of its assets, in which case no Tax Distributions shall be made for such quarter). Subject to the following sentence, the amount of any such Tax Distribution shall equal the product of (x) the maximum combined federal, state and local tax rates applicable to individuals residing in New
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York, New York on ordinary income and net short-term capital gain or on net long-term capital gain (in each case, taking into account the net investment income tax), as applicable, and taking into account (a) the deductibility of state and local income taxes for federal income tax purposes, (b) the character of the income in question and (c) the holding period of any asset disposed of (the “Tax Rate”) and (y) the aggregate amounts of net taxable income or gain of the Company that were actually allocated or are estimated to be allocated to such Member for federal income tax purposes for such fiscal period and all prior fiscal periods (to the extent no Tax Distribution has previously been made with respect to such net taxable income or gain) reduced, but not below zero, by any tax deduction, loss or credit previously or currently allocated to such Member and not previously taken into account for purposes of the calculation of the amount of any Tax Distribution; provided, that any adjustments by reason of Sections 704(c), 734 or 743 of the Code shall not be taken into account in calculating the amount of any Tax Distribution. The amount of any Tax Distribution for a particular quarter shall take into account prior Tax Distributions as follows: (i) if available cash as reasonably determined by the Company is not sufficient to satisfy the required Tax Distribution for a particular quarter, the Company shall pay tax distributions first, 100% to the WP Member until the WP Member has received 100% of the full amount of such Tax Distributions and any deficit in respect of Tax Distributions that were required to be made to the WP Member from prior quarters but were not made as a result of the operation of this clause (i), and second, 100% to the other Members until the other Members have received 100% of the full amount of such Tax Distributions and any deficit in respect of Tax Distributions that were required to be made to the other Members from prior quarters but were not made as a result of the operation of this clause (i), and (ii) if it is determined that the aggregate amounts of Tax Distributions paid to any Member exceeded the product of (x) the Tax Rate and (y) the aggregate amounts of net taxable income or gain that were actually allocated to such Member for federal income tax purposes in the Company income tax returns filed with respect to such fiscal period and all prior fiscal periods, reduced, but not below zero, by any tax deduction, loss or credit previously or currently allocated to such Member, then the Tax Distribution to such Member for subsequent periods shall be reduced by the amount of overpayment. Any Tax Distributions shall be treated as an advance against, and shall reduce the amount of, the next distribution(s) that the Member would otherwise receive pursuant to Section 3.01 or Section 3.02.
Article IV
TAX MATTERS
TAX MATTERS
Section 4.01.Allocation of Profits and Losses.
(a)Except as otherwise provided in this Agreement, for Capital Account purposes, each item of income, gain, loss or deduction recognized by the Company shall be allocated among the Members in a manner such that if the Company were dissolved, its affairs wound up and its assets distributed to the Members in accordance with their respective Capital Account balances immediately after making such allocation, such distributions would, as nearly as possible, be equal to the distributions that would be made pursuant to Section 3.01.
(b)The Company shall maintain a Capital Account for each Member in accordance with the following provisions:
(i)Each Member’s Capital Account shall be increased by the amount such Member has contributed to the Company, any income or gain allocated to such Member pursuant to this Article, and the amount of any Company liabilities assumed by such Member or secured by any Company assets distributed to such Member.
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(ii)Each Member’s Capital Account shall be decreased by the amount of cash and the Gross Asset Value of any other Company property distributed to such Member pursuant to any provision of this Agreement, any expenses or losses allocated to such Member pursuant to this Article (including the Member’s share of expenditures described in Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) and the amount of any liabilities of such Member assumed by the Company.
(iii)In the event any Member’s Equity Interests are Transferred in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of such Member to the extent such Capital Account relates to the Transferred Equity Interest.
(iv)In connection with the issuance of the WP Warrants, the Board shall adopt the methodology set forth in the noncompensatory option regulations under Treasury Regulations Sections 1.704-1, 1.721-2 and 1.761-3, unless otherwise required by applicable law.
(c)For U.S. federal, state and local income tax purposes, items of income, gain, loss, deduction and credit shall be allocated to the Members in accordance with the allocations of the corresponding items for Capital Account purposes under this Article, except that items with respect to which there is a difference between tax and book basis will be allocated in accordance with the “remedial allocation method” described under Treasury Regulations Section 1.704-3(d).
(d)The provisions of this Article and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent therewith. The Company shall be authorized to make appropriate amendments to the allocations of items pursuant to this Article as necessary or desirable in order to comply with Section 704 of the Code or applicable Treasury Regulations thereunder; provided that no such change shall have an adverse effect upon the amount distributable to any Member pursuant to this Agreement.
(e)Notwithstanding any provision set forth in this Article, no item of deduction or loss shall be allocated to a Member to the extent the allocation would cause a negative balance in such Member’s Capital Account (after taking into account the adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) that exceeds the amount that such Member would be required to reimburse the Company pursuant to this paragraph or under applicable law. In the event some but not all of the Members would have such excess Capital Account deficits as a consequence of such an allocation of loss or deduction, the limitation set forth in this clause (e) shall be applied on a Member by Member basis so as to allocate the maximum permissible deduction or loss to each Member under Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. In the event any loss or deduction shall be specially allocated to a Member pursuant to either of the two preceding sentences, an equal amount of income of the Company shall be specially allocated to such Member prior to any allocation pursuant to clause (b) of this Section.
(f)In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate as quickly as possible any deficit balance in its Capital Account in excess of that permitted under clause (e) of this Section created by such adjustments, allocations or distributions. Any special allocations of items of income or gain pursuant to this clause (f) shall be taken into account in computing subsequent allocations pursuant to this Section so that the net amount of any items so allocated and all other items
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allocated to each Member pursuant to this Section shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of this Section if such unexpected adjustments, allocations or distributions had not occurred.
(g)In the event the Company incurs any nonrecourse liabilities, income and gain shall be allocated in accordance with the “minimum gain chargeback” provisions of Sections 1.704-1(b)(4)(iv) and 1.704-2 of the Treasury Regulations.
(h)The Company (i) may determine, in its sole discretion, to adjust the Capital Accounts of the Members to reflect the Fair Market Value of Company property in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) whenever a Unit in the Company is relinquished to the Company, or whenever an additional Member is admitted to the Company in accordance with this Agreement and (ii) shall adjust the Capital Accounts of the Members to reflect the Fair Market Value of Company property in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(e) in the case of a distribution of any property (other than cash) and when the Company is liquidated pursuant to Article X.
(i)The Board is hereby authorized to interpret and implement in its reasonable discretion the allocation rules relating to partnership noncompensatory options provided by Treasury Regulations Sections 1.704-1(b)(2)(iv)(s), -1(b)(4)(ix) and -1(b)(4)(x). Notwithstanding the foregoing, (A) if Capital Account reallocations are made in order to comply with Treasury Regulations Section 1.704-1(b)(2)(iv)(s)(3), corrective allocations of tax items shall be made as and to the extent required under Treasury Regulations Section 1.704-1(b)(4)(x), and (B) while any noncompensatory option is outstanding, the Company shall comply with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and, on the exercise of any such noncompensatory option, the Company shall comply with Treasury Regulations Section 1.704-1(b)(2)(iv)(s).
(j)The parties acknowledge that the initial Capital Account balance of the Preferred Members may be less than the amount to which such Preferred Members would be entitled, as of the date hereof, upon a hypothetical liquidation of the Company described in Section 4.01(a) (such shortfall, the “Member Capital Account Shortfall”). Notwithstanding the general provisions of Section 4.01(a) or any other provision herein to the contrary, to the extent possible and consistent with the principles of Treasury Regulations Section 1.704-1, no operating income will be allocated to holders of the Preferred Units with respect to such Member Capital Account Shortfall, and in the event of any amount actually paid to the Preferred Members in respect of the Member Capital Account Shortfall, unrealized gain from a revaluation of the assets of the Company pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f)) will be allocated first to holders of the Preferred Units to eliminate any such Member Capital Account Shortfall and, to the extent the payment exceeds the available amount of unrealized gain, the excess shall be treated as a “guaranteed payment” within the meaning of Section 707(c) of the Code. For avoidance of doubt, cash distributions to holders of the Preferred Units pursuant to Section 3.01(b) of this Agreement shall not be treated as payments in respect of the Member Capital Account Shortfall, and holders of the Preferred Units are expected to receive an allocation of income with respect to such distributions. Notwithstanding any provision herein to the contrary, in no event shall any partnership cost recovery items be allocated to any holders of the Preferred Units.
(k)All elections, decisions and other matters concerning the allocation of items of income, gain, loss, deduction and credit among the Members, and accounting procedures, not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Board in good faith. Such determination made in good faith by the Board shall, absent manifest error, be final and conclusive as to all Members.
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Section 4.02.Special Tax Audit Allocations. Notwithstanding anything contained in this Article to the contrary, in the event that the taxable income of the Company for federal income tax purposes (or any item thereof) is adjusted as the result of an audit by the Internal Revenue Service, the Members’ Capital Accounts shall be adjusted in a manner which reflects such adjustments as though corresponding book adjustments had been originally reflected in the profits and losses of the Company determined pursuant to the terms of this Article.
Section 4.03.Partnership Representative. In being admitted to the Company, each Member appoints and designates Calumet Montana Refining, LLC (or an Affiliate thereof designated by Calumet Montana Refining, LLC) as “partnership representative” of the Company for purposes of the Partnership Audit Rules (in such capacity, the “Company Representative”) and agrees that upon the request of the Company Representative it will execute, certify, acknowledge, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to evidence such consent. The Company Representative shall designate the “designated individual” for purposes of the Partnership Audit Rules. Each Member further agrees that any action taken by the Company Representative or the designated individual in connection with audits of the Company under the Code will, to the extent permitted by law, be binding upon the Members, provided, that neither the Company Representative nor the designated individual may settle or compromise any such audit in a manner that would materially adversely affect the Preferred Members relative to the Common Members without the prior written consent of the Preferred Members, which consent shall not be unreasonably withheld, conditioned or delayed. Except as required by applicable law, each Member further agrees that such Member will not treat any Company item inconsistently on such Member’s income tax return with the treatment of the item on the Company’s tax return and the Schedule K-1 provided to such Member.
Section 4.04.Duties. In the event the Company incurs any liability for taxes, interest or penalties pursuant to the Code or any corresponding provision of applicable state or local law:
(a)the Company Representative may cause the Members (including any former Member) to whom such liability relates, as determined by the Company Representative in its sole discretion, exercised in good faith, to pay, and each such Member hereby agrees to pay, such amount to the Company;
(b)without reduction in a Member’s (or former Member’s) obligation under clause (a), any amount paid by the Company that is attributable to a Member (or former Member), as determined by the Company Representative in its sole discretion, exercised in good faith, and that is not paid by such Member pursuant to clause (a) shall be treated for purposes of this Agreement as a distribution to such Member (or former Member); and
(c)the obligations of each Member (or former Member) under this Section 4.04 shall survive the transfer by such Member of its interest and the dissolution of the Company.
Section 4.05.Listed Transactions. The Company shall use commercially reasonable efforts not to “participate,” directly or indirectly, (i) in a “listed transaction” (as defined in Treasury Regulations Section 1.6011-4) or (ii) in a “prohibited tax shelter transaction” (as this term is defined under Section 4965 of the Code).
Section 4.06.Tax Filings. The Company shall use its reasonable efforts to make any filings, applications or elections to obtain any available exemption from, or refund of, any withholding or other taxes imposed by any taxing authority with respect to amounts distributable to or items of income allocable to any Member under this Agreement; provided, that
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any such Member shall provide such cooperation and assistance, including but not limited to executing and filing forms or other statements as are reasonably requested by the Company Representative to enable the Company or any other entity in which the Company owns a direct or indirect interest to make any such filings, applications or elections, to satisfy any applicable tax reporting or compliance requirements or to qualify for an exemption from or reduced rate of tax or other tax benefit or be relieved of liability for any tax. The Company Representative shall cause to be prepared and filed all necessary tax returns for the Company.
Section 4.07.Intended Tax Treatment.
(a)The Members intend that for U.S. federal and applicable state and local income tax purposes:
(i)the Subordinated A/P Unit, the CLMT Unit and the Preferred Units shall be treated as equity interests of the Company;
(ii)none of the distributions in Article III (or accruals thereof) shall be treated as guaranteed payments under Section 707(c) of the Code;
(iii)the Priority A/P Note shall be treated as indebtedness of the Company;
(iv)the WP Warrants shall be treated as noncompensatory options of the Company; and
(v)All liabilities of the Company incurred pursuant to the CMR Lease shall be treated as indebtedness of the Company.
(b)Each Member and the Company shall file all tax returns and shall take all tax and financial reporting positions in a manner consistent with the intended tax treatment set forth in clause (a) above unless otherwise required by applicable law.
Article V
MANAGEMENT
MANAGEMENT
Section 5.01.Board of Managers. The business and affairs of the Company shall be managed by or under the direction of a board of one or more Managers (the “Board”). Subject to Section 5.07, the Board shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes of the Company described herein, including all powers, statutory or otherwise, possessed by managers of a limited liability company under the laws of the State of Delaware. Each Manager is hereby designated a “manager” of the Company within the meaning of the Act. Without limiting the generality of the powers of the Board, the actions set forth in Exhibit B shall be taken by the Company or its Subsidiaries only upon the approval of the Board. Subject to Section 5.07, the Board will have the full, exclusive and complete discretion to manage, control and direct the business and affairs of the Company and, except only as otherwise authorized or delegated by the Board or as specifically provided in this Agreement, to make all decisions affecting the business and affairs of the Company. Except with the express authorization of the Board (or as expressly set forth herein), no individual Manager (in such Manager’s capacity as such) is authorized or empowered to execute, deliver or perform any agreements, acts, transactions or matters contemplated in this Agreement on behalf of the Company or as agent for the Company; provided that the foregoing shall not be deemed to limit any authorization of an officer of the Company (in his or her capacity as such) that is also a Manager to execute, deliver or perform agreements, acts, transactions or other matters if
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authorized by the Board in accordance with this Agreement (subject to Section 5.07). The Board, acting by unanimous consent (including the consent of the WP Manager) shall maintain a delegation of authority policy (the “Delegation of Authority Policy”).
Section 5.02.Composition of Board.
(a)Subject to Section 5.02(b) and Section 5.07, the Board shall consist of such number of individuals (each, a “Manager”) as may be fixed from time to time by a vote of a Majority in Interest.
(b)The Board shall consist of up to four Managers, of whom (i) three Managers shall be appointed by the Founder Member (the “Founder Managers”), and (ii) one Manager shall be appointed by the WP Member (the “WP Manager”) for so long as the WP Member owns any Preferred Units. The initial Founder Managers will be L. Todd Borgmann, Stephen P. Mawer and Bruce A. Fleming and the initial WP Manager will be Jeffrey Luse.
(c)The term of a Manager shall continue until his or her successor is elected and qualified or his or her earlier death, resignation, disqualification or removal in accordance herewith.
(d)A Manager may be removed with or without cause at any time only by the Member who is then entitled to designate such Manager.
(e)Meetings of the Board shall be governed by a Chairman, who shall be designated by a majority of the Managers then in office.
Section 5.03.Voting of the Board. At all meetings of the Board, each Manager shall have one vote. Subject to Section 5.07, the act of a majority of votes allowed to be cast by the Managers present at a duly convened meeting of the Board at which a quorum is present shall be the act of the Board. Every Manager entitled to vote at a meeting of the Board may authorize another voting Manager to act for him or her by proxy; provided that such proxy shall be executed in writing and filed with the secretary of the Company before the time of the meeting and shall be valid only for the particular meeting designated therein.
Section 5.04.Meetings; Quorum; Notice; Written Consent.
(a)Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by resolution of the Board. Special meetings of the Board may be called at any time by any Manager. The presence in person or by proxy of at least (i) a majority of the Managers then in office and (ii) the WP Manager, will constitute a quorum of the Board and will be required for any meeting of the Board. If a quorum is not present at any meeting of the Board, the Managers present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Managers and any Observer (if applicable) may participate in a meeting through use of conference telephone, videoconference or similar communications equipment, so long as all Managers and any Observer (if applicable) participating in such meeting can hear one another and be heard by the others. Participation in a meeting in such manner constitutes a presence in person at such meeting. Prompt notice of the taking of any action by the Board at a meeting without the presence of a particular Manager or Observer (if applicable) shall be given to such Manager or Observer (if applicable).
(b)A meeting of the Board may be held only with at least five Business Days’ notice to each Manager (in accordance with Section 13.01), or 48 hours’ notice delivered personally or by e-mail or other generally accepted means of electronic transmission with a
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verification of delivery (other than by automated response). Notice of a meeting need not be given to any Manager who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting the lack of notice to such Manager prior to its commencement.
(c)The Managers may act in their capacity as Managers without a meeting of the Board thereof if (i) a draft written consent is provided to and received by all Managers with at least a 48 hour review period and (ii) after such review period, such written consent is approved and signed by Managers that would be sufficient under this Agreement (including Section 5.07) and the Act to authorize or take such action at a duly convened meeting in which all Managers on the Board were present. Such written consent shall be filed with the records of the meetings of the Board and shall promptly be provided to any Manager who did not sign or approve such written consent and to the Observer (if applicable).
Section 5.05.Committees; Subsidiary Boards. The Board may establish committees of the Board composed of such Managers as determined by the Board (“Committees”); provided, that the WP Manager shall be entitled to be a member of any such Committee and the Observer (if applicable) shall be entitled to be a non-voting observer of any such Committee. The Board may delegate to such Committees such power and authority as the Board determines is appropriate; provided, that the Board may not delegate to a Committee any of the matters addressed by Section 5.07. Any Committee acting within the scope of its delegated authority will have the power and authority vested in such Committee by the Board. The WP Manager shall be provided with the rights in this Article V with respect to each Committee, board of directors or managers (or equivalent body) of any Subsidiary of the Company (or any committee thereof), and the provisions of this Article V shall apply mutatis mutandis with respect to such board of directors or managers (or equivalent body) or committee thereof.
Section 5.06.Expense Reimbursement. The Company shall pay or reimburse the reasonable out-of-pocket expenses incurred by each Manager and Observer (if applicable) in connection with attending the meetings of the Board and any committee thereof or acting in his or her capacity as an observer or a member of the Board and any committee thereof.
Section 5.07.Matters Requiring WP Manager Consent . Notwithstanding anything in this Agreement to the contrary, the Company shall not authorize, permit, take or commit to take, and shall cause each Subsidiary of the Company, to not authorize, permit, take or commit to take, directly or indirectly, any of the following actions, with respect to any Group Company, except, in each case, with a majority vote of the Board, which majority must include the affirmative vote and prior written consent of the WP Manager in its sole discretion (for so long as the WP Member is entitled to appoint the WP Manager pursuant to Section 5.02(b)):
(a)entry into or investment in any line of business other than the Business as currently conducted;
(b)the commencement, initiation, settlement, resolution or dismissal of any individual or series of related, litigation, arbitration or administrative proceedings for an amount in excess of $1,000,000;
(c)the amendment, restatement or waiver (whether by amendment, waiver, recapitalization, merger or otherwise) of the constituent documents of any Group Company in a manner that adversely affects the powers, preferences or rights of the Preferred Units or the Preferred Members;
(d)the creation, authorization or issuance of (i) any Common Units or other Equity Securities that are pari passu with Common Units unless such Common Units or other
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Equity Securities are issued at a price at or above the greater of (A) Fair Market Value and (B) a price per Common Unit that is at or above $20 per Common Unit (as proportionately adjusted for any Common Unit split or combination) (other than the issuance of Common Units under the Stonebriar Warrant pursuant to the exercise and in accordance with the terms thereof), (ii) any Equity Securities that are issued at a price below Fair Market Value (other than pursuant to a plan, program, policy, agreement or arrangement approved under clause (m)), (iii) any Equity Securities that rank senior to or pari passu with respect to the rights, preferences and privileges of the Preferred Units, or (iv) any additional CLMT Units or Subordinated A/P Units;
(e)the undertaking of an Initial Public Offering, unless the implied equity valuation of the equity securities of the IPO Company that are exchanged for Equity Securities of the Company in such Initial Public Offering is equal or greater than $1,600,000,000 and at least 20% of the IPO Company’s Equity Securities have been issued to the public (a “Qualified IPO”);
(f)the dissolution, liquidation or winding up of any Group Company or the commencement of a voluntary bankruptcy or other proceeding seeking reorganization or similar relief;
(g)the incurrence, issuance, assumption or guarantee of any Indebtedness following the Effective Date (other than Indebtedness incurred for the purpose of funding (and that is used to concurrently fund) the payment in full of the Unpaid Preferred Return Amount) (i) to the Founder Parent, the Founder Member or any of their respective Affiliates or Permitted Transferees, except for the Priority A/P Note to the extent expressly permitted hereby or (ii) to any third party, unless (A) the Group Companies’ pro forma Indebtedness (which shall include for such purposes any amounts payable to any Member that are senior to the Preferred Units, including any Current Permitted Intercompany A/P and the Priority A/P Note) remains below 2.5x the Company’s earnings before interest, taxes, depreciation and amortization over the past 12 months as such items are determined in the Company’s final audited financial statements for the relevant Fiscal Year (the “EBITDA Cap”), (B) the use of proceeds from such Indebtedness is solely to refinance any existing Indebtedness of the Group Companies and the Group Companies’ total Indebtedness does not increase in connection with or as a result of such refinancing, or (C) the incurrence, issuance, assumption or guarantee is in connection with an acquisition or growth project such that the Group Companies’ pro forma Indebtedness remains below the EBITDA Cap, as adjusted for the acquisition or growth project by the estimated EBITDA for such acquisition or growth project in an amount approved by the Board and the WP Member, provided, that the foregoing clause (ii) shall not restrict the Company from entering into or incurring Indebtedness under a third-party inventory financing facility as long as the aggregate Indebtedness outstanding thereunder does not exceed $200,000,000 in the aggregate;
(h)the selection or replacement of the auditors of any Group Company with any auditor other than to one of the “big four” independent certified public accountants;
(i)the making of, or any change in, any tax election that causes a material change to the classification for tax purposes of any Group Company;
(j)the payment or declaration of any dividend or the making of any distribution, except in accordance and strict compliance with the express provisions of this Agreement, including Article III, or the amendment or modification (whether by amendment, waiver, recapitalization or otherwise) to any provision herein with respect to the payment or declaration of any dividend or distribution;
(k)the repurchase or redemption of any Instrument, other than as expressly contemplated by this Agreement (including Article III, Section 2.11, Section 7.06 and Article XIV);
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(l)the hiring, termination or replacement of the chief executive officer of the Company or Montana Renewables LLC (“CEO”) or making any material compensation decisions or the entry into, amendment of or termination of any employment agreement with the CEO;
(m)the entry into, creation of, adoption of or amendment to any plan, program, policy, agreement or arrangement that provides for the issuance of Equity Securities to current or former employees, directors, consultants or other service providers of any Founder Parent Controlled Affiliate or to the Company or any of its Subsidiaries or the provision to any such Person of any right to receive cash or property by reference to the value of Equity Securities;
(n)the adoption of and any changes to (i) the actions set forth in Exhibit B or (ii) the Delegation of Authority Policy;
(o)the entry into, extension, amendment or modification, termination or enforcement of, or waiver with respect to, any transaction, agreement, contract, arrangement, understanding, dispute or other matter between or among or involving any Group Company, on the one hand, and the Founder Member, Founder Parent or any of their respective Affiliates (other than a Group Company), on the other hand (each, an “Affiliated Transaction”), except for any Permitted Intercompany Arrangement (excluding any amendment or modification of any Permitted Intercompany Arrangement) or any of the foregoing that are on arms’ length terms and that would not have or reasonably be expected to have an adverse impact on the Company, the Preferred Units (or any other Equity Securities of the Group Companies owned by the WP Member), or the WP Member’s rights under this Agreement or the Warrants);
(p)the increase to any of the Current Permitted Intercompany A/P, Permitted Intercompany A/P, Priority A/P Unpaid Amount, CLMT Issuance Price, CLMT Unpaid Amount, Subordinated A/P Issuance Price or Subordinated A/P Unpaid Amount, except in accordance with and as expressly contemplated and permitted by this Agreement;
(q)the incurrence of (i) any interest, late fees, penalties or other fees pursuant to any Affiliated Transaction, (ii) any accounts payable, or (iii) any other liabilities or amounts owing to the Founder Member, Founder Parent or any of their respective Permitted Transferees or Affiliates, except in accordance with and as expressly contemplated and permitted by this Agreement; or
(r)the entry into any agreement or commitment with respect to any of the foregoing actions or otherwise becoming bound or obligated to do or perform any of the foregoing actions.
Section 5.08.Board Observers. The WP Member shall be permitted to designate one non-voting observer to the Board (and any committee thereof) and each board of directors and similar governing body (and any committee thereof) of each Subsidiary of the Company (each, an “Observer”) for as long as the WP Member owns any Common Units or Warrants. Each Observer shall (a) be provided with copies of all materials, including notices, minutes and proposed and approved consents provided to members of the Board (or committee thereof) at substantially the same time such materials are provided to the Board (or committee thereof), (b) receive reasonable advance notice of all meetings of the Board (or committee thereof), including the time and place of such meeting, (c) have the right to attend, including telephonically or by video, and observe, but not vote at, meetings of the Board and any committee thereof.
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Article VI
OFFICERS
OFFICERS
Section 6.01.Designation. Subject to Section 5.07, the Board may appoint, employ or otherwise contract with any Persons for the transaction of the business of the Company or the performance of services for or on behalf of the Company, and the Board may delegate to any such Persons such authority to act on behalf of the Company as the Board may from time to time deem appropriate. The Board may, from time to time, appoint one or more persons to be officers of the Company. Any officer so appointed shall have such authority and perform such duties as the Board may, from time to time, delegate to him or her, and will exercise such powers and perform such duties as specified by the Board. Any individual may hold any number of offices, and an officer may, but need not, be a Member or Manager.
Section 6.02.Removal and Resignation. Subject to Section 5.07, the officers will serve at the pleasure of the Board, subject to all rights, if any, of such officer under any contract of employment, and subject to the foregoing, any officer may be removed, either with or without cause, by the Board. Any officer may resign at any time by giving written notice to the Board. Any resignation will take effect at the date of the receipt of that notice by the Board or at any later time specified in that notice, and, unless otherwise specified in that notice, the acceptance of the resignation will not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.
Section 6.03.Vacancies. Subject to Section 5.07, any vacancy in any office because of death, resignation, removal, disqualification of an officer, or for any other reason, will be filled by Board approval in accordance with Section 6.01.
Article VII
TRANSFERS
TRANSFERS
Section 7.01.Limitations on Transfer.
(a)No Member may Transfer, or enter into an agreement to Transfer, all or any portion of its Units, or other Equity Securities of the Company other than as expressly permitted by this Article VII, including the following permitted Transfers:
(i)Transfers by a Member to a Permitted Transferee in accordance with Section 7.03;
(ii)Transfers by a Tagging Member in a Tag-Along Transfer pursuant to, or consequent upon, the exercise of tag-along rights in accordance with Section 7.04 (subject to Section 7.02(b));
(iii)Transfers by a Drag-Along Member in a Drag-Along Transfer pursuant to, or consequent upon, the exercise of drag-along rights in accordance with Section 7.05;
(iv)Transfers in connection with any Required Liquidity Event in accordance with the terms herein, including Section 7.06;
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(v)any repurchase or redemption by the Company of any Units or other Equity Securities of the Company as expressly permitted by the terms of this Agreement; or
(vi)pursuant to, or consequent upon, the provisions of Article XIV.
(b)Notwithstanding any provisions of this Article VII to the contrary (including Section 7.01(a)), no Member shall be entitled to Transfer any Units, or other Equity Securities of the Company (including to a Permitted Transferee) unless such Transfer would not:
(i)violate the Securities Act or any state (or other jurisdiction) securities or “Blue Sky” laws applicable to the Company or the Units or other Equity Securities, as applicable;
(ii)require the Company to file a Registration Statement (except pursuant to, or consequent upon, a Required Liquidity Event in accordance with the terms herein, including Section 7.06 or the provisions of Article XIV);
(iii)cause the Company to become subject to the registration requirements of the Investment Company Act;
(iv)be a non-exempt “prohibited transaction” under ERISA or the Code or cause all or any portion of the assets of the Company to constitute “plan assets” under ERISA or Section 4975 of the Code;
(v)require any licensing or regulatory consent that has not been obtained (provided that, if requested by the Member, the Company shall use commercially reasonable efforts to obtain such consent at the sole cost and expense of such Member); or
(vi)cause the Company to become a “publicly traded partnership”, as such term is defined in Sections 469(k)(2) or 7704(b) of the Code.
(c)Upon the consummation of an IPO, the provisions of this Section 7.01 shall no longer apply.
Section 7.02.Certain Additional Limitations on Transfer.
(a)Notwithstanding anything contained herein to the contrary, none of the Founder Parent or Founder Member (or any of their Affiliates or Permitted Transferees) shall (i) permit the Transfer of all or any portion of the direct or indirect equity or beneficial interest in Founder Member (or any of its Affiliates or Permitted Transferees) or (ii) otherwise avoid or seek to avoid the provisions of this Agreement by issuing, or permitting the issuance of, any direct or indirect equity or beneficial interest in Founder Member (or any of its Affiliates or Permitted Transferees), in each case, in a manner which would fail to comply with this Agreement if such Founder Member (or any of its Affiliates or Permitted Transferees) had Transferred any interest in any Units or other Equity Securities of the Company directly. Notwithstanding the foregoing, this Section 7.02(a) shall not restrict, and shall not be construed to restrict, any transaction in the equity securities of Founder Parent or any issuance of securities by Founder Parent; provided that the value of such securities are not determined primarily by reference to the value of the Company or any of its Units or obligations.
(b)Notwithstanding anything contained herein to the contrary, without the prior written consent of the WP Member, no Member (other than the WP Member) may
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Transfer, or enter into an agreement to Transfer (and the Company and Founder Parent shall not permit any such Transfer or enter into any agreement relating to a Transfer in respect of), all or any portion of its Units except in a Change of Control that results in payment in full of the then Unpaid Preferred Return Amount in cash, with the proceeds of such Transfer being otherwise allocated in accordance with Section 3.01.
(c)Notwithstanding anything contained herein to the contrary, none of the Founder Member (or any of its Affiliates or Permitted Transferees) may Transfer, or enter into an agreement to Transfer, or permit to be Transferred any rights under the Priority A/P Note, the CMR Lease, any Permitted Intercompany Arrangement or any other Affiliated Transaction, without the express prior written consent of the WP Member.
(d)Any purported Transfer of Units or other Equity Securities of the Company in contravention of this Agreement or applicable law shall be null and void ab initio, and the Company shall not recognize any such purported Transfer for any purpose and shall not reflect in its Schedules any change in record ownership thereof pursuant to any such purported Transfer.
Section 7.03.Transfers to Permitted Transferees. A Member may Transfer any of its Units or other Equity Securities of the Company to a Permitted Transferee of such Member without the consent of the Company, the Board, or any other Member; provided that, if any such Permitted Transferee becomes a Member and such Permitted Transferee ceases to be a Permitted Transferee of Founder Parent (in the case of the Founder Member) or Warburg Pincus (in the case of the WP Member), then such former Permitted Transferee shall Transfer such Units or Equity Securities to a Permitted Transferee of Founder Parent or Warburg Pincus, as applicable, and Founder Parent and Warburg Pincus, as applicable, shall accept such Transfer or cause such Transfer to be accepted.
Section 7.04.Tag Along Rights.
(a)Subject to the other provisions herein, including Section 7.02(b) and Section 7.04(d), in the event that the Founder Member or any Affiliate or Permitted Transferee thereof (the “Tag-Along Transferor” and any Transfer pursuant to this Section 7.04, a “Tag-Along Transfer”) proposes to Transfer any Common Units to any Person that is not a Permitted Transferee of the Tag-Along Transferor, in one transaction or a series of related transactions, which transaction or series of transactions would constitute or result in a Change of Control, each Member that holds, as of such time, any Common Units and each Warrant Unitholder (each such Member and each Warrant Unitholder, a “Prospective Tagging Member”), as of the date of the Tag-Along Transfer, may exercise tag-along rights with respect to the Tag-Along Transfer in accordance with the terms, conditions and procedures set forth in this Section 7.04 (the Prospective Tagging Members exercising such rights, the “Tagging Members”); provided that the Tag-Along Transfer must satisfy the requirements of Section 7.04(d) or such Tag-Along Transfer shall be null and void ab initio. The Tag-Along Transferor shall provide the Preferred Members with written notice of any proposed Tag-Along Transfer at least 10 Business Days prior to entering into any definitive agreement with respect to such Tag-Along Transfer, together with drafts of such definitive documentation. The Tag-Along Transferor shall consider in good faith any comments of the Preferred Members to such definitive documents and shall implement any such comments to the extent necessary to ensure compliance of such definitive documents with this Agreement.
(b)At least 15 Business Days prior to the anticipated closing date of a Tag-Along Transfer, the Tag-Along Transferor shall give written notice (a “Tag-Along Notice”) of any Tag-Along Transfer to the Prospective Tagging Members and the Company. The Tag-Along Notice shall set forth the number of Common Units proposed to be Transferred, the name and
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address of the Transferee, the proposed date of the Tag-Along Transfer, the proposed form and amount of consideration for such Common Units, such Prospective Tagging Member’s Pro Rata Portion of its Common Units applicable to such Tag-Along Transfer as of the date thereof and any other material terms and conditions of the Tag-Along Transfer (including a copy, if any, of the proposed agreement to effect such Transfer of Common Units), including the enterprise value ascribed to the Company in such Tag-Along Transfer and the estimated equity value of each Common Unit implied by such enterprise value. Each Prospective Tagging Member shall have a period of 10 Business Days (the “Response Period”) from the date of the Tag-Along Notice within which to notify the Tag-Along Transferor whether such Prospective Tagging Member will elect to sell up to its Pro Rata Portion of Common Units in connection with such Tag-Along Transfer, by delivering an irrevocable written notice to the Tag-Along Transferor prior to the expiration of the Response Period specifying the number of Common Units that such Prospective Tagging Member desires to sell in the Tag-Along Transfer (a “Response Notice”), not to exceed such Prospective Tagging Member’s Pro Rata Portion. If the Tag-Along Transferor is unable to cause the Transferee to purchase all the Common Units proposed to be Transferred by the Tag-Along Transferor and the Tagging Members in accordance with this Agreement, then the number of Common Units each such Member (including the Tag-Along Transferor) is permitted to sell in such Tag-Along Transfer shall be reduced pro rata based on the number of Common Units held by such Member relative to the number of Common Units held by all Members participating in such Tag-Along Transfer (subject to the other applicable provisions herein, including the satisfaction of the requirements of Section 7.04(d)). In any Tag-Along Transfer, the Priority A/P Note, the Preferred Units, the CLMT Unit and the Subordinated A/P Unit shall be redeemed for cash (subject, in the case of the Preferred Units, to Section 7.02(b) and Section 7.04(d), and in the case of the CLMT Unit and the Subordinated A/P Unit, Section 3.04) and each Tagging Member shall be required to Transfer its Pro Rata Portion of Common Units and Warrants required to be sold in such Tag-Along Transfer. The Tag-Along Transferor shall have a period of 120 days (provided, that if it enters into a definitive agreement to consummate the Tag-Along Transfer within such time period, such period shall be extended by the period of time reasonably necessary to consummate the Tag-Along Transfer as contemplated by such definitive agreement, including to obtain regulatory approval of such Tag-Along Transfer) following the expiration of the Response Period to sell all the Common Units of the Tag-Along Transferor and the Tagging Members agreed to be purchased by the Transferee, on terms not materially more favorable to the Tag-Along Transferor than those specified in the Tag-Along Notice; provided, however, in the event the Tag-Along Transfer is not consummated during such 120 period (as extended), the Tag-Along Transferor may not Transfer any Units without again complying with this Section 7.04 and the other applicable provisions herein.
(c)Each Tagging Member shall (and shall only be required to) (i) make the same representations, warranties and covenants as made by the Tag-Along Transferor in connection with the Tag-Along Transfer, (ii) enter into agreements with respect to (A) the form and terms of any consideration, (B) indemnities and any post-closing liabilities and (C) any other agreements to the Transferee as made by the Tag-Along Transferor in connection with the Tag-Along Transfer and (iii) otherwise agree to the same terms and conditions to the Tag-Along Transfer as to which the Tag-Along Transferor agrees in such Tag-Along Transfer; provided, that in no event will the WP Member be required to agree to any restrictive covenants or restrictions other than a customary confidentiality restriction in connection with a Tag-Along Transfer. Notwithstanding the foregoing, all such representations, warranties, covenants, indemnities and agreements shall be made by the Tag-Along Transferor and each Tagging Member severally and not jointly, and any liability under any such indemnities or liability for breach of any such representations and warranties, covenants or agreement shall be borne by the Tag-Along Transferor and the Tagging Members severally and not jointly (except to the extent that funds may be paid out of an escrow established to cover breaches of representations, warranties and covenants of the Group Companies). Liability under any indemnities related to the Company or its Subsidiaries in any Tag-Along Transfer shall be allocated among the Tag-
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Along Transferor and the Tagging Members pro rata based on the portion of the U.S. dollar value of the total consideration (whether or not cash) received by the Tag-Along Transferor and the Tagging Members, respectively, in such Tag-Along Transfer in respect of their Common Units, and the aggregate amount of such liability for the Tag-Along Transferor and each Tagging Member shall not exceed the U.S. dollar value of the total consideration (whether or not cash) received by the Tag-Along Transferor or such Tagging Member, respectively, in such Tag-Along Transfer in respect of their Common Units, except in the case of fraud by the Tag-Along Transferor or such Tagging Member, as applicable.
(d)Notwithstanding anything to the contrary in this Article VII, including this Section 7.04, no Member may Transfer any Units (whether in a Tag-Along Transfer or otherwise) and the Tag-Along Transfer may not be consummated, unless (i) all of the proceeds of the Tag-Along Transfer are allocated and Distributed in accordance with Section 3.01, and with respect to the Common Units and Warrants, solely in respect of those Common Units and Warrants being Transferred in such Tag-Along Transfer, and (ii) the WP Member receives aggregate cash proceeds with respect to the Preferred Units in connection with such Tag-Along Transfer in an amount equal to the then Unpaid Preferred Return Amount as of the consummation of the Tag-Along Transfer, prior to or concurrently with the sale of the Common Units being sold by the Tag-Along Transferor in such Tag-Along Transfer. The sale of all Common Units being sold by the Tagging Members shall be consummated simultaneously with the sale of the Common Units being sold by the Tag-Along Transferor in such Tag-Along Transfer.
(e)All reasonable and documented out of pocket costs and expenses incurred by the Company, the Board, the Members, and any of their respective Affiliates in connection with any proposed Tag-Along Transfer (whether or not consummated), including all attorneys’ fees and charges, all accounting fees and charges and all finder, brokerage or investment banking fees, charges or commissions, shall be paid by the Company or its Subsidiaries.
(f)The provisions of this Section 7.04 shall not apply to any Transfers (i) to a Permitted Transferee, (ii) in connection with a Drag-Along Transfer in accordance with Section 7.05 or (iii) pursuant to, or consequent upon, the provisions of Article XIV.
(g)Upon consummation of an IPO, the provisions of this Section 7.04 shall automatically terminate and be of no further force or effect.
Section 7.05.Drag-Along Rights.
(a)Subject to the other provisions herein, including Section 7.02(b), Section 7.05(h) and Section 7.06, in connection with (i) any Change of Control initiated by the Founder Member or (ii) if the WP Member exercises its rights under Section 7.06 to effect a Drag-Along Transfer (the Founder Member or the WP Member, as applicable, the “Drag Initiator”), then in each case, the Drag Initiator may (but shall not be required to) exercise drag-along rights to cause a Change of Control to occur in accordance with the terms, conditions and procedures set forth in this Section 7.05 (the “Drag-Along Transfer”). In the event a Drag Initiator elects to exercise its drag-along right, it shall give written notice of such election (a “Drag-Along Notice”) to the Company and each other Member (each such other Member, a “Drag-Along Member”) not later than 15 Business Days prior to the anticipated consummation of the Drag-Along Transfer, setting forth the name of the Transferee(s) (the “Drag-Along Purchaser”), the proposed enterprise value ascribed to the Company in such Drag-Along Transfer and the estimated equity value of each Common Unit implied by such enterprise value, and all other material terms and conditions of the Drag-Along Transfer, as well as the number of Common Units that each Drag-Along Member shall be required to Transfer which shall be equal to such Drag-Along Member’s Pro Rata Portion of such Common Units. In any Drag-Along Transfer, the Priority A/P Note, the
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Preferred Units, the CLMT Unit and the Subordinated A/P Unit shall be redeemed for cash (subject, in the case of the Preferred Units, to Section 7.02(b) and Section 7.05(h), and in the case of the CLMT Unit and the Subordinated A/P Unit, Section 3.04) and each Drag-Along Member shall be required to Transfer its Pro Rata Portion of Common Units and Warrants required to be sold in such Drag-Along Transfer (such Instruments subject to the Drag-Along Transfer, the “Dragged Instruments”). Each Drag-Along Member shall, subject to Section 3.04, Section 7.02(b) and Section 7.05(h), have the right to receive in exchange for the Dragged Instruments, the same portion of the aggregate consideration that such Drag-Along Member would have received if the aggregate consideration received in the Drag-Along Transfer had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in Section 3.01 as in effect immediately prior to such Drag-Along Transfer (with respect to the Dragged Instruments) and, in the case of the Common Units (including any Common Units underlying the Warrants) the same form of consideration that will be received by the Drag Initiator in respect of its Common Units.
(b)The Drag-Along Transfer must satisfy the requirements of Section 7.05(h) and shall be subject to Section 7.06 or such Drag-Along Transfer shall be null and void ab initio. If the Drag-Along Transfer is initiated by the Board, the Company shall provide the Preferred Members with written notice of any proposed Drag-Along Transfer at least 10 Business Days prior to entering into any definitive agreement with respect to such Drag-Along Transfer, together with drafts of such definitive documentation. The Company shall consider in good faith any comments of the Preferred Members to such definitive documents and shall implement any such comments to the extent necessary to ensure compliance of such definitive documents with this Agreement.
(c)The Drag Initiator shall have a period of 120 days (provided, that if it enters into a definitive agreement to consummate the Drag-Along Transfer within such time period, such period shall be extended by the period of time reasonably necessary to consummate the Drag-Along Transfer as contemplated by such definitive agreement, including to obtain regulatory approval of such Drag-Along Transfer) from the date of the Drag-Along Notice to consummate the Drag-Along Transfer on the terms and conditions set forth in such Drag-Along Notice (the “Drag-Along Transfer Period”). If the Drag Initiator fails to consummate the Drag-Along Transfer within the Drag-Along Transfer Period, it shall not thereafter have the ability to exercise drag-along rights with respect to such Drag-Along Transfer without first complying with this Section 7.05.
(d)Each Drag-Along Member must (and shall only be required to) (i) make the same representations, warranties, covenants, indemnities and agreements as are made by the Drag Initiator in connection with the Drag-Along Transfer (it being understood that no Drag-Along Member will be required to make representations and warranties relating to the Company or its Subsidiaries and no Drag-Along Member will be required to make representations and warranties relating to any other Member, but shall be required to make customary fundamental representations about itself to the extent such representations are also made by the Drag Initiator, including with respect to matters of organization, authority, absence of liens and title to securities being Transferred), and (ii) agree to customary confidentiality restrictions, on reasonable terms for the type of transaction contemplated by the Drag-Along Transfer; provided, that in no event will any Drag-Along Member be required to agree to any non-competition restriction (including any restrictive covenant having a similar substantive effect), non-solicitation restriction or to any other restrictive covenant. Notwithstanding the foregoing, all such representations, warranties, covenants, indemnities and agreements shall be made by the Drag Initiator and each Drag-Along Member severally and not jointly, and any liability under any such indemnities or liability for breach of any representations and warranties or covenants or agreements shall be borne by the Drag Initiator and each Drag-Along Member severally and not jointly (except to the extent that funds may be paid out of an escrow established to cover breaches of representations, warranties
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and covenants of the Group Companies). Liability under any indemnities related to the Company or its Subsidiaries in any Drag-Along Transfer shall be allocated among the Drag Initiator and the Drag-Along Members pro rata based on the portion of the U.S. dollar value of the total consideration (whether or not cash) received by the Drag Initiator and the Drag-Along Members, respectively, in such Drag-Along Transfer in respect of their Common Units, and the aggregate amount of such liability for the Drag Initiator and each Drag-Along Member shall not exceed the U.S. dollar value of the total consideration (whether or not cash) received by the Drag Initiator or such Drag-Along Member, respectively, in such Drag-Along Transfer in respect of their Common Units, except in the case of fraud by the Drag Initiator or such Drag-Along Member, as applicable.
(e)Consideration placed in escrow or held back in a Drag-Along Transfer shall be allocated among the Drag Initiator and the Drag-Along Members participating in such Drag-Along Transfer such that if the Drag-Along Purchaser ultimately is entitled to some or all of such escrowed or held-back amounts, then the net ultimate proceeds received by the Drag Initiator and the Drag-Along Members participating in such Drag-Along Transfer shall still comply with the intent of Section 7.05(a) and Section 7.05(h) and the Drag Initiator and the Drag-Along Members participating in such Drag-Along Transfer shall receive the same portion of the net aggregate consideration in the Drag-Along Transfer as they would have received if such net aggregate consideration had been distributed by the Company as the last dollars distributed in complete liquidation pursuant to the rights and preferences set forth in Section 3.01 as if the ultimate resolution of such escrow or holdback had been known at the closing of the Drag-Along Transaction.
(f)In the event that any Transfer pursuant to this Section 7.05 is structured as a merger, consolidation, or similar business combination, each Drag-Along Member agrees, to the extent required or requested by the Drag Initiator, to vote in favor of the transaction.
(g)Notwithstanding anything to the contrary in this Section 7.05, there shall be no liability on the part of the Drag Initiator to the Company or the Drag-Along Members if a Drag-Along Transfer is not consummated for whatever reason, regardless of whether the Drag Initiator has delivered a Drag-Along Notice. The decision to consummate a Drag-Along Transfer pursuant to this Section 7.05 by the Drag Initiator shall be in the sole and absolute discretion of the Drag Initiator.
(h)Notwithstanding anything to the contrary in this Article VII, including this Section 7.05, no Member may Transfer any Units (whether in a Drag-Along Transfer or otherwise) and the Drag-Along Transfer may not be consummated, unless (i) the proceeds of the Drag-Along Transfer are allocated and Distributed, subject to Section 3.04, in accordance with Section 3.01 (or paid to the Members in such amounts as would be received in a Distribution in accordance with Section 3.01), and (ii) the WP Member receives aggregate cash proceeds with respect to the Preferred Units in such Drag-Along Transfer in an amount equal to the then Unpaid Preferred Return Amount as of the consummation of the Drag-Along Transfer, prior to or concurrently with the consummation of such Drag-Along Transfer.
(i)All reasonable and documented out of pocket costs and expenses incurred by the Company, the Board, the Members, and any of their respective Affiliates in connection with any proposed Drag-Along Transfer (whether or not consummated), including all attorneys’ fees and charges, all accounting fees and charges and all finder, brokerage or investment banking fees, charges or commissions, shall be paid by the Company or its Subsidiaries.
(j)Upon consummation of an Initial Public Offering, the provisions of this Section 7.05 shall automatically terminate and be of no further force or effect.
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Section 7.06.Required Liquidity Event.
(a)At any time commencing on December 1, 2030 (or commencing on December 1, 2031, if the WP Member shall have received prior to December 1, 2030 Distributions under Section 3.01 or Section 3.02 with respect to its Preferred Units (excluding, for the avoidance of doubt, Tax Distributions), in an amount no less than $125,000,000), the WP Member shall have the right, but not the obligation, to cause the Company to initiate, direct, negotiate, execute and consummate a transaction that would result in Change of Control or an IPO, without the consent of the Board, the Company or any other Member and without regard to any restrictions on Transfer set forth herein (any transaction resulting from such process, a “Required Liquidity Event”) by delivering a written notice to the Company (a “Liquidity Notice”). In connection with any Required Liquidity Event, the WP Member shall consult in good faith with the Board (including the Founder Managers) regarding the process therefor, shall keep the Board reasonably informed of the status thereof and shall consider in good faith the views of the Board and the Founder Member; provided that, following such consultation, all determinations with respect to such Required Liquidity Event shall be made by the WP Member in its sole discretion. To effect the Required Liquidity Event, the Company, its Subsidiaries, and each of their respective governing bodies shall take, and each of the other Members (and Founder Parent) shall promptly take, and cause their Affiliates to take (including the Founder Parent Controlled Affiliates), actions reasonably requested by the WP Member in connection with the Required Liquidity Event and any related transactions (including any auction or competitive bid process in connection with or preceding such Required Liquidity Event), including the following actions: (i) engaging a nationally recognized investment bank, financial advisor, IPO underwriter, legal counsels and/or other advisors to effect such Required Liquidity Event, in each case, selected by the WP Member and reasonably acceptable to the Company (such acceptance not to be unreasonably withheld, conditioned or delayed), (ii) cooperating in a reasonable and customary manner with such investment bank, financial advisor, IPO underwriter, legal counsels, and/or other advisors and their respective representatives in accordance with such procedures, (iii) identifying and cooperating in a reasonable and customary manner with any proposed buyer(s) or other interested parties, (iv) facilitating the due diligence process in respect of any such Required Liquidity Event, (v) executing and delivering definitive agreements in connection with the Required Liquidity Event (including preparing a registration statement, purchase agreement or such other documents as the WP Member may reasonably request) and any related ancillary agreements, documents and instruments, in each case, on such terms and conditions as the WP Member shall determine, and (vi) taking such other actions with respect thereto as the WP Member shall reasonably request, including to the extent applicable, amending any Affiliated Transactions and cooperating in good faith to provide transitional services as may be required in connection with a Required Liquidity Event and/or to eliminate or reduce any dependencies of the Group Companies, on the one hand, and the Founder Member and its Affiliates, on the other hand, including taking or causing to be taken, the actions contemplated by Section 4.4 of the Preferred Unit Purchase Agreement, and (vii) consenting to the Required Liquidity Event under any Affiliated Transaction (including the PTU Technology License). Each Member shall reasonably cooperate with the WP Member in effecting a Required Liquidity Event. In connection with the consummation of a Required Liquidity Event, any proceeds thereof shall be allocated and Distributed in accordance with Section 3.01. Prior to exercising the WP Member’s rights under this Section 7.06, the Company shall have a right of first offer to acquire (x) all but not less than all of, the Preferred Units, and (y) all but not less than all of, the WP Warrant, from the WP Member, for cash consideration in accordance with the terms set forth in Section 7.06(b) and Section 7.06(c) (a “Company Offer”).
(b)A Company Offer must be delivered to the WP Member within 30 days following the receipt by the Company of a Liquidity Notice (a “Company Offer Period”) and must set forth (x) the proposed purchase price in cash consideration (as provided in Section 7.06(c)), and (y) other material terms and conditions of the Company Offer, including whether
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the Company Offer includes both the Preferred Units and WP Warrant; provided that the Company Offer must be a bona fide offer on customary and market terms and not subject to any material contingencies, including any financing contingencies. The WP Member shall accept or reject the Company Offer in its sole discretion by written notice within 20 days following receipt of such Company Offer; provided that failure to accept or reject a Company Offer within such 20 day period shall be deemed a rejection of the Company Offer; provided further, that the WP Member may accept or reject the Company Offer, in part or in full (e.g., it may accept the Company Offer with respect to the Preferred Units and reject the Company Offer with respect to the WP Warrant). The purchase contemplated by the Company Offer must be consummated within 30 days after the delivery of the WP Member’s acceptance (if accepted). In the event (i) no Company Offer is made by the end of the Company Offer Period, (ii) a Company Offer was made during the Company Offer Period and was accepted by the WP Member, but the purchase contemplated by the Company Offer was not consummated within the 30 day period following the WP Member’s acceptance, or (iii) if a Company Offer was made during the Company Offer Period and such Company Offer was rejected by the WP Member, then the WP Member shall have the right to exercise its rights under Section 7.06 to effect a Required Liquidity Event, including to effect a Drag-Along Transfer in accordance with the terms of Section 7.05 and Section 7.06 and/or an IPO in accordance with the terms of Section 7.06 and Article XIV; provided, that if a Company Offer was made during the Company Offer Period and such Company Offer was rejected by the WP Member, then the WP Member shall only have the right to effect a Drag-Along Transfer that ascribes an equity value to the Company that exceeds the equity value implied by the Company Offer that was rejected by the WP Member (based on the value of the WP Warrants offered in the Company Offer). Subject to the Company and each Member’s compliance with this Section 7.06, the WP Member shall not be entitled to submit (A) more than one Liquidity Notice in any 15 consecutive month period and (B) a Liquidity Notice less than 12 months after the WP Member provides notice to the Company that it no longer wishes to pursue a process for a Required Liquidity Event initiated by the WP Member. For the avoidance of doubt, any process for a Required Liquidity Event initiated by the Company or any other Member shall not be deemed to be a Liquidity Notice of the WP Member.
(c)In any Company Offer, the proposed purchase price in cash consideration for the Preferred Units shall be no less than the Unpaid Preferred Return Amount as of the consummation of the purchase contemplated by the Company Offer, and the proposed purchase price in cash consideration for the WP Warrant or any Common Units (including those underlying the WP Warrant) shall be no less than the Fair Market Value of such Units at such time.
(d)All reasonable and documented out of pocket costs and expenses incurred by the Company, the Board, the WP Member, and any of its respective Affiliates in connection with any Required Liquidity Event (whether or not consummated), including all attorneys’ fees and charges, all accounting fees and charges and all finder, brokerage or investment banking fees, charges or commissions, shall be paid by the Company or its Subsidiaries.
(e)For the avoidance of doubt, in connection with the exercise of its rights pursuant to Section 7.06, including to effect any Required Liquidity Event, and without limitation to Section 9.02, none of the WP Member or any of its Affiliates or Responsible Parties shall owe fiduciary duties to the Company or its Subsidiaries or to the Members or any of their respective Affiliates.
Section 7.07.Rights and Obligations of Transferees. At the time of and as a condition precedent to any direct Transfer by a Member of Units, the Transferee of such Units (including Permitted Transferees of such Member) shall be required to become a party to this Agreement by executing and delivering a counterpart to this Agreement and such documents as may be necessary, in the reasonable opinion of the Board, to make such Transferee a party hereto
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and bound by the applicable terms hereof, whereupon such Transferee will be treated as a Member for all purposes of this Agreement.
Section 7.08.Blocker Transfer Rights. Notwithstanding anything to the contrary in this Agreement, including this Article VII, in connection with any Transfer of the WP Member’s interest in the Company (including in connection with a Tag-Along Transfer, in a Drag-Along Transfer, in a Required Liquidity Event, in any redemption by the Company, in connection with any Company Offer or in any other transaction), the Members and the Company acknowledge and agree that the WP Member shall be entitled to require a transfer, in whole or in part, of equity interests in the WP Member or one or more WP Blockers (whether through a direct sale, a share exchange, a merger or other transaction involving the sale of equity interests in the WP Member or one or more WP Blockers) instead of the WP Member effecting, in whole or in part, a direct Transfer of its interests in the Company, in such proportions as the WP Member may determine, and the owners of the WP Member or any applicable WP Blockers (as applicable) shall be entitled to receive the same price, form and amount of consideration in connection with the transfer of equity interests in the WP Member or any applicable WP Blockers that the WP Member would have received in a direct Transfer of its Units in the Company.
Article VIII
EXPENSES, BOOKS AND RECORDS; REPORTS
EXPENSES, BOOKS AND RECORDS; REPORTS
Section 8.01.Fees and Expenses. Subject to the other provisions herein, including Section 5.07 and Article III, the Company shall pay all current expenses of the Company owed to third parties that are not Members, and shall pay any expenses and fees payable pursuant to Section 5.06.
Section 8.02.Fiscal Year. Unless otherwise determined by the Board or required by law, the “Fiscal Year” of the Company shall be from January 1 through December 31 of each calendar year, for accounting and tax purposes. The Company shall cause the books of account to be closed promptly after the close of each Fiscal Year.
Section 8.03.Access. The WP Member shall have the right, at its own expense, at any reasonable time during regular working hours, on reasonable prior notice and for purposes reasonably related to the interest of the WP Member in its capacity as such, to (a) reasonably inspect facilities, properties, books and records of the Group Companies (and to make copies thereof) and (b) discuss the business, operation and condition of the Group Companies with the appropriate officers and/or members of management of Founder Parent and its Subsidiaries (including the Group Companies).
Section 8.04.Financial Statements and Reports.
(a)Annual Statements. The Company shall deliver, or cause to be delivered, to the WP Member, as reasonably promptly as practicable following the end of each Fiscal Year (and in any event within 120 days following the end of the Fiscal Year), a consolidated audited income statement and statement of cash flows for the Group Companies for such Fiscal Year and a consolidated audited balance sheet for the Group Companies as of the end of such Fiscal Year, all prepared in accordance with GAAP.
(b)Quarterly Statements. The Company shall deliver, or cause to be delivered, to the WP Member, as reasonably promptly as practicable following the end of each of the first three fiscal quarters of a Fiscal Year (and in any event within 60 days following the end of such fiscal quarter), a consolidated unaudited income statement and statement of cash flows
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for the Group Companies for such quarter and a consolidated balance sheet for the Group Companies as of the end of such quarter in accordance with GAAP (except for customary year-end adjustments and except for the absence of notes).
(c)Other Information. Founder Parent shall deliver, or cause to be delivered (including from any Subsidiary of the Founder Parent, including the Group Companies), to the WP Member, such other information and documentation relating to the Group Companies as may be reasonably requested by the WP Member (without limitation to Section 8.03).
(d)K-1s; Tax Information. The Company shall prepare and within 90 days following the end of each Fiscal Year, deliver, or cause to be delivered, to each Person who was or is a Member at any time during such Fiscal Year, an IRS Schedule K-1 and such other information, if any, with respect to the Group Companies as may be reasonably requested by such Person in order to file or prepare tax returns and reports or to obtain any available exemption from, reduction in, or refund of withholding or other taxes, or to claim any tax credit with respect thereto.
Article IX
EXCULPATION; WAIVER OF FIDUCIARY DUTIES AND INDEMNIFICATION
EXCULPATION; WAIVER OF FIDUCIARY DUTIES AND INDEMNIFICATION
Section 9.01.Exculpation. No Responsible Party (in his, her or its capacity as such) will be liable in damages or otherwise to the Company or any Member for any loss or damage incurred by reason of any act or omission performed or omitted by such Responsible Party in good faith in such capacity either on behalf of the Company or in furtherance of the interests of the Company, and performed or omitted in a manner reasonably believed by such Responsible Party to be within the scope of such Responsible Party’s authority, excluding, for the avoidance of doubt, any loss or damage incurred by reason of any acts or omissions that are found by a court of competent jurisdiction upon entry of a final and non-appealable judgment to constitute actual and intentional fraud by such Responsible Party or a breach of this Agreement by such Responsible Party.
Section 9.02.Waiver of Fiduciary Duty. This Agreement is not intended to, and does not, create or impose any implied duty (including any fiduciary duty and, for purposes of clarity, any prohibition on usurping opportunities of the Company or its Subsidiaries) otherwise existing at law or in equity on any Member, Manager, Observer or any affiliate, officer, director, manager, employee or agent of any Member in their capacity as such (each of the foregoing, a “Responsible Party”). To the fullest extent permitted by applicable law, and notwithstanding any duty otherwise existing at law or in equity, each of the Company, all Managers, any Member, and any other person or entity that is a party to or is otherwise bound by this Agreement (including (a) the Company in its capacity as a debtor or debtor in possession in a bankruptcy case commenced under 11 U.S.C. (a “Bankruptcy Case”), (b) any successor to the Company in a Bankruptcy Case or otherwise, including a trustee, a litigation trust or estate representative, including a representative under 11 U.S.C. section 1123(b), and (c) any creditor or committee of creditors or equity holders seeking or obtaining standing to assert claims of the estate in a Bankruptcy Case) (each of the foregoing, a “Bound Party”) hereby expressly waives all duties (including any fiduciary duty but excluding any duty to comply with this Agreement) and, for purposes of clarity, any prohibition on usurping opportunities of the Company, that absent such waiver, may be implied at law or in equity or otherwise owed to a Bound Party, and in doing so, recognizes, acknowledges and agrees that the duties and obligations of the Responsible Parties are only as expressly set forth in this Agreement; provided that a Responsible Party shall act in good faith and in a manner that it subjectively believes is in or not opposed to the best interests of the Company.
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Section 9.03.Indemnification and Expense Advancement.
(a)To the fullest extent permitted by law, the Company will indemnify and hold harmless each Responsible Party who was or is a party or is threatened to be made a party to any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise, by reason of any act or omission or alleged act or omission arising out of such Responsible Party’s activities on behalf of the Company if such activities were performed or omitted in good faith either on behalf of the Company or in furtherance of the interests of the Company, and were performed or omitted in a manner reasonably believed by such Responsible Party to be within such person’s authority, against losses, claims, demands, costs, damages, liabilities (joint or several), judgements, fines, settlements, expenses or other amounts for which such Responsible Party has not otherwise been reimbursed (including attorneys and accountant fees and expenses, judgment fines and amounts paid in settlement), actually and reasonably incurred by such Responsible Party in connection with such claim, action, suit or proceeding, regardless of whether the Responsible Party is a Responsible Person at the time any such loss, damage, or expense is paid or incurred, so long as such Responsible Party is not found by court of competent jurisdiction upon entry of a final and non-appealable judgment to have committed actual and intentional fraud or a breach of this Agreement (“Indemnified Costs”). Expenses, including attorneys’ fees and expenses, incurred by any such indemnified Responsible Party in defending any such claim, action, suit or proceeding as to which such indemnified Responsible Party is entitled to indemnification hereunder shall be paid by the Company periodically in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of a written undertaking by or on behalf of such indemnified Responsible Party to repay such amount if it shall ultimately be determined that such indemnified Responsible Party is not entitled to be indemnified by the Company. The right to indemnification and the advancement of expenses conferred in this Section 9.03 shall not be exclusive of any other right which any such Responsible Party may have or hereafter acquire under any other agreement (including the Preferred Unit Purchase Agreement), pursuant to law, vote of the Board or otherwise, and shall inure to the benefit of the heirs, successors, assigns and administrators of the Responsible Party. If this Section 9.03 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each such indemnified Responsible Party pursuant to this Section 9.03 to the fullest extent permitted by any applicable portion of this Section 9.03 that shall not have been invalidated.
(b)Notwithstanding anything herein to the contrary, the Founder Member (and its Affiliates and Permitted Transferees) shall not be entitled to indemnification, advancement of expenses or any other remedy under this Section 9.03 with respect to: (i) any matter for which the Founder Member or its Affiliates (other than the Group Companies) have an obligation to indemnify the Company, the Preferred Member or any other Member or the Company has an obligation to indemnify the Preferred Member or any other Member, in either case, whether arising under the Preferred Unit Purchase Agreement, the Asset Purchase Agreement, or otherwise, without regard to the availability of such indemnity as a result of the applicability of any deductible, threshold basket or any other limit on recovery, (ii) by reason of any loss or damage incurred by reason of any acts or omissions that are found by a court of competent jurisdiction upon entry of a final and non-appealable judgment to constitute actual and intentional fraud by such Responsible Party or, a breach of this Agreement by such Responsible Party.
(c)The Board shall cause the Company to purchase and maintain insurance on behalf of the Responsible Parties and/or the Company and its Subsidiaries against any liability asserted against any Responsible Party and incurred by any Responsible Party in such Responsible Party’s capacity as such or arising out of the Responsible Party’s status in such capacity, regardless of whether the Company would have the power to indemnify the
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Responsible Party against that liability under this Section 9.03. In furtherance of the foregoing, the Company shall obtain and maintain directors’ and officers’ liability insurance on terms and conditions (including for deductible and coverage limitation) reasonably satisfactory to the WP Member.
(d)The Company and each Member hereby acknowledges that certain Responsible Parties that are Affiliates of the WP Member have certain rights to indemnification, advancement of expenses and/or insurance provided by the WP Member (the “Fund Indemnitor”) and that the Company shall (a) be the indemnitor of first resort (i.e., its obligations to any Responsible Party are primary and any obligation of the Fund Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Responsible Party are secondary), (b) be required to advance the full amount of expenses incurred by any such Responsible Party pursuant to this Section 9.03 and shall be liable for the full amount of all Indemnified Costs pursuant to this Section 9.03 to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and any such Responsible Party), without regard to any rights any Responsible Party may have against the Fund Indemnitor, and (c) irrevocably waive, relinquish and release the Fund Indemnitor from any and all claims against the Fund Indemnitor for contribution, subrogation or any other recovery of any kind in respect thereof. No advancement or payment by the Fund Indemnitor on behalf of a Responsible Party with respect to any claim for which such Responsible Party has sought indemnification or advancement of expenses from the Company shall affect the foregoing and the Fund Indemnitor shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Responsible Party against the Company. The Fund Indemnitor is an express third party beneficiary of the terms of this Section 9.03.
(e)The remedies provided for in this Section 9.03 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Responsible Party.
(f)Notwithstanding the foregoing, each Member agrees that the waivers, limitations, acknowledgments and agreements set forth in this Section 9.03 shall not apply to any alleged claim or cause of action against any Responsible Party based upon any breach or nonperformance of this Agreement or other agreement to which such Responsible Party is a party, or any acts or omissions that are found by a court of competent jurisdiction upon entry of a final and non-appealable judgment to constitute actual and intentional fraud.
Section 9.04.Other Business Opportunities.
(a)Notwithstanding any duty otherwise existing at law or in equity, subject to Section 9.04(b), any Member and any person or entity affiliated with any of the Members may engage in or possess an interest in other business opportunities or ventures (unconnected with the Company) of every kind and description, independently or with others, including businesses that may compete with the Company. Neither a Member nor any person or entity affiliated with any Member shall be required to present any such business opportunity or venture to the Company, any other Member or any Manager, even if the opportunity is of the character that, if presented to any of such persons or entities, could be taken by them. None of the Company, any other Member, any Manager or any person or entity affiliated with any of the foregoing shall have any rights in or to such business opportunities or ventures or the income or profits derived therefrom by virtue of this Agreement, notwithstanding any duty otherwise existing at law or in equity. The provisions of this Section 9.04(a) shall apply to each Member solely in their capacity as such and shall not be deemed to modify any contract or arrangement.
(b)Notwithstanding anything herein to the contrary, including Section 9.04(a), for so long as any Preferred Units remain outstanding:
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(i)Founder Parent, Founder Parent Controlled Affiliates (other than the Group Companies but including, for the avoidance of doubt any officer of the Group Companies) and Permitted Transferees shall not, anywhere in the United States of America, Canada or anywhere the Group Companies conducts business, directly engage in or pursue (including by owning, acquiring or developing any asset property or right that primarily relates to the Business, in each case, except as expressly contemplated by a Permitted Intercompany Arrangement), or assist or facilitate any other Person engaging in or pursuing any business opportunities, ventures or activities relating to the production of renewable fuels or that are otherwise competitive with the Business (“Competitive Activities”); provided however the foregoing shall not preclude or limit Founder Parent, Founder Parent Controlled Affiliates or any Permitted Transferees from (A) owning, for passive investment purposes not intended to circumvent this Agreement, less than 5% of the publicly traded securities of any Person or (B) acquiring, investing or participating in any enterprise of any Person that engages in Competitive Activities but which Competitive Activities are ancillary to the primary business of such enterprise, so long as (x) such Competitive Activities comprise less than 10% of such Person’s annual consolidated revenues in the last fiscal year of such Person, (y) the assets of such Person relating to or used in Competitive Activities have a fair market value less than the Fair Market Value of all outstanding Equity Securities of the Company, and (z) the revenues generated by all Competitive Activities of Founder Parent, Founder Parent Controlled Affiliates (other than the Group Companies) and its Permitted Transferees do not exceed the revenues generated by the Company;
(ii)Founder Parent (on behalf of itself and its Founder Parent Controlled Affiliates and Permitted Transferees), the Members and the Company agree that the foregoing restrictions in this Section 9.04(b) are (A) reasonable given the Founder Member’s and its Founder Parent Controlled Affiliates’ role with the Group Companies and its Affiliates and necessary to protect the interests of the Group Companies and its Affiliates and (B) completely severable and independent agreements supported by good and valuable consideration and, as such, shall survive termination of this Agreement for any reason whatsoever for so long as any Preferred Units remain outstanding. Founder Parent (on behalf of itself and its Founder Parent Controlled Affiliates and Permitted Transferees), the Company and the Members further agree that any invalidity or unenforceability of any one or more of such restrictions shall not render invalid or unenforceable any remaining restrictions. Additionally, should a court of competent jurisdiction determine that the scope of any provision of this Section 9.04(b) is too broad to be enforced as written, the parties hereto hereby authorize the court or other legal body to reform the provision to such narrower scope as it determines to be reasonable and enforceable and the parties hereto intend that the affected provision be enforced as so amended. It is impossible to measure in money the damages that will accrue to the Group Companies or any of its Affiliates in the event that the Founder Parent, any Founder Parent Controlled Affiliates or any Permitted Transferees thereof breaches any of the restrictions in this Section 9.04(b) to which it is subject. In the event that the Founder Parent, any Founder Parent Controlled Affiliates or Permitted Transferees thereof engages in any conduct inconsistent with this Section 9.04(b), the WP Member shall be entitled to an injunction restraining the Founder Parent, any Founder Parent Controlled Affiliates or Permitted Transferees thereof (or requiring the Founder Member to restrain any Founder Parent Controlled Affiliates or any Permitted Transferees) from violating such restriction (without posting any bond). If the WP Member shall institute any action or proceeding to enforce any such restriction against the Founder Parent, any Founder Parent Controlled Affiliates and Permitted Transferees thereof, the Founder Parent (on behalf of itself, any Founder Parent Controlled Affiliates and any Permitted Transferees) hereby waives the claim or defense that the Company or the WP Member has an adequate remedy at law, and agrees not to assert in any such
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action or proceeding the claim or defense that the Company or the WP Member has an adequate remedy at law. The foregoing shall not prejudice the Company’s or the WP Member’s other rights or remedies under applicable law or equity.
Section 9.05.Third Party Beneficiary. The Company and the Members agree that each Responsible Party is an express third party beneficiary of this Article IX able to enforce this Article IX according to its terms as if such Responsible Party were a party hereto.
Article X
DISSOLUTION, LIQUIDATION AND TERMINATION
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 10.01.Events Causing Dissolution.
(a)The Company shall be dissolved and its affairs shall be wound up upon the earlier of (i) a determination by each of the Board, a Majority in Interest and (for so long as any Preferred Units remain outstanding) the WP Member to dissolve the Company and (ii) any dissolution required by operation of law.
(b)Dissolution of the Company shall be effective as of the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until there has been a winding up of the Company’s business and affairs, and all of the Company’s assets have been distributed as provided in Section 10.03 and in the Act.
(c)Notwithstanding any other provision of this Agreement, the bankruptcy of a Member shall not cause such Member to cease to be a Member of the Company and despite the occurrence of such an event, the business of the Company shall continue without dissolution.
Section 10.02.Necessary Filings. Upon the dissolution and completion of the winding up of the Company and the termination of this Agreement, the Board shall take all actions and make all filings necessary under the Act and other applicable law in order to give effect to such dissolution and the Members shall be promptly notified of such dissolution.
Section 10.03.Liquidation. Upon dissolution of the Company, as expeditiously as is reasonable, the liabilities of the Company shall be paid and Distributions shall be made in the following manner and order (and subject to Section 3.04):
(a)to creditors (excluding all Members and their Affiliates) who are creditors, in satisfaction of liabilities of the Company (whether by payment or by establishment or reserves); and
(b)to the Members (including in their capacity as creditors), in accordance with and pursuant to Section 3.01.
Section 10.04.Accounting on Liquidation. Upon liquidation, a proper accounting shall be made by the Company’s accountants of the Company’s assets, liabilities and results of operations through the last day of the month in which the Company is terminated.
Section 10.05.Return of Members’ Capital Contribution. A Member shall look solely to the Company’s assets for the return of such Member’s Capital Contribution. If the assets remaining after payment or discharge of all debts and liabilities of the Company are insufficient to return such Member’s Capital Contribution, the Member shall have no recourse against the Company or any Member (or any Affiliate thereof), and no Member shall be personally liable for the return of any such Capital Contribution and each Member hereby waives
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any and all claims it may have against any Member or any such Affiliate thereof in this regard and expressly acknowledges and agrees with the provisions of Section 3.04.
Section 10.06.Termination.
(a)At such time (the “Termination Date”) as all of the Company’s assets have been distributed as provided for in Section 10.03, the Company and this Agreement shall terminate.
(b)Upon the termination of this Agreement, no party shall have any liability or obligation to any other party hereunder; provided, that (i) the termination of this Agreement shall not relieve a party from liability for any breach of this Agreement on or prior to the Termination Date, and (ii) Article IX, this Article X, and Article XIII shall survive termination of this Agreement in accordance with their terms.
Article XI
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
Section 11.01.Representations and Warranties of the Members. Each Member represents and warrants, severally and not jointly, to the Company and the other Members, as to itself, that as of the date such Member became a Member, and as of any date such Member purchases any additional Units:
(a)if such Member is an entity, such Member is an entity duly organized, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under the laws of the state (or other jurisdiction) of its formation.
(b)such Member has the power and authority to execute and deliver this Agreement and to perform such Member’s obligations hereunder.
(c)the execution, delivery and performance of this Agreement by such Member has been duly authorized by all necessary action on the part of such Member, and this Agreement is legally binding upon and enforceable against such Member in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
(d)the execution, delivery and performance by such Member of this Agreement does not and will not (i) violate the provisions of any applicable law, order, judgment or decree of any court or other governmental agency or any arbitrator or, if such Member is an entity, the certificate of incorporation, bylaws, limited liability company agreement, limited partnership agreement or other governing documents of such Member, (ii) require the giving of any notice or the obtaining of any consent to or from any third party (other than consents under the DOE Loan obtained on or prior to the Effective Date) by such Member, or (iii) result in a breach, violation or default of or under (with or without due notice or lapse of time) any contract or agreement to which such Member is a party or by which such Member is bound.
(e)such Member (i) understands that this Agreement imposes restrictions and obligations on such Member, (ii) has read and understands the terms of this Agreement, (iii) has reviewed this Agreement with such Member’s own tax and legal advisors, or has had an opportunity to do so but has waived such opportunity, (iv) has relied solely on such advisors for
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tax and legal advice, and (v) will be responsible for such Member’s own tax liability resulting from this Agreement.
(f)such Member is an “accredited investor” as such term is defined in Regulation D of the Securities Act, is fully aware of the risks relating to an investment in the Company, and is capable of bearing a complete loss of such investment.
(g)such Member has acquired such Member’s interest in the Company for such Member’s own account, with the intention of holding the interest for investment and without any intention of participating directly or indirectly in any redistribution or resale of any portion of the interest in violation of the Securities Act or any applicable law.
(h)such Member understands that such Member’s interest in the Company has not been registered under the Securities Act, or the securities laws of any other jurisdiction, in reliance upon exemptions contained in those laws and that such interest is characterized as “restricted securities” under federal securities laws, that such Member’s interest may be resold without registration under the Securities Act only in certain limited circumstances and acknowledges that such Member is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed by the Securities Act.
Article XII
CERTAIN OTHER AGREEMENTS
CERTAIN OTHER AGREEMENTS
Section 12.01.Budget and Business Plans. The Company shall prepare a proposed annual operating and capital budget and business plan for the Group Companies for each Fiscal Year and shall submit such budget and business plan to the Board for approval not less than 30 days prior to the commencement of such Fiscal Year (any such budget and business plan so approved by the Board, the “Approved Budget and Business Plan”).
Section 12.02.Compliance with Laws. The Company shall ensure that each Group Company complies in all material respects with all applicable laws. Without limiting the generality of the foregoing, the Company shall in all material respects ensure that each Group Company holds (and maintains the validity of) all permits, licenses and authorizations from or with the relevant governmental authority required in respect of the due and proper establishment, business and operations of such Group Company.
Section 12.03.Bank Accounts. The Company shall ensure that each Group Company opens and maintains a bank account in its name with such bank as may be determined by the Board. Such accounts shall be operated as the Board, or the board of managers or directors of the relevant Group Company, shall resolve from time to time. The Company shall ensure that all payments to or by the Company or any other Group Company shall be paid into or withdrawn from such account or accounts.
Section 12.04.Affiliated Transactions.
(a)The Company shall keep the Board and the WP Manager (or the WP Member for so long as it owns Equity Securities) apprised of the details of any amendment, waiver, modification or enforcement of any transaction, agreement, contract, arrangement, understanding, dispute or other matter (as well as the status of any negotiations or discussions relating thereto) that is or could result in an Affiliated Transaction. Upon reasonable request, the WP Manager (or the WP Member for so long as it owns Equity Securities) shall have the right to
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review any documents or diligence materials relating to the negotiation, entry into, amendment of, waiver, modification or enforcement of any Affiliated Transaction.
(b)The Company and its Subsidiaries are party to, and may from time to time enter into Affiliated Transactions as expressly permitted herein. If, in the good faith determination of the WP Member, the Company or the applicable Subsidiary fails to diligently pursue the exercise or enforcement of any term or condition in any Affiliated Transaction or if the WP Member reasonably believes in good faith that the counterparty to such Affiliated Transaction is in breach or violation thereof, then the WP Member shall have the right, at the sole cost and expense of the Company to exercise or enforce any such term or condition on behalf of the Company or the applicable Subsidiary or to cause the Company to exercise or enforce any such term or condition (and the WP Member shall have the right to appoint officers of the Company to take such action, to the extent that the WP Member determines in good faith that such appointment is necessary in order to enforce or give effect to its rights under this Section 12.04).
(c)Notwithstanding anything to the contrary in this Agreement, the MSA or any Permitted Intercompany Arrangement, the reimbursement of any legal or other professional fees or expenses to the Founder Parent, the Founder Member or any of their Affiliates (or incurrence or payment of any such fees by the Group Company on behalf of the Founder Parent, the Founder Member or any of their Affiliates), shall require the written consent of the WP Member (for so long as it owns Equity Securities).
Section 12.05.G&A and Operating Expense Optimization. Each of the Company, the WP Member, the Founder Member and the Founder Parent shall (and the Founder Parent shall cause the Founder Parent Controlled Affiliates to) collaborate in good faith to review the go-forward G&A and operating expense plans of the Company, including to determine Company versus outsourced G&A and operating expense optimization, with a goal of effecting G&A and operating expense optimization plans prior to April 2027, which discussions shall include potentially engaging an outside consultant to assist in identifying and expediting the execution of potential cost savings on both the G&A and operating expense optimization.
Section 12.06.Intercompany Liabilities.
(a)If, during any calendar month, the Company incurs (i) any interest, late fees, penalties or other fees pursuant to the MSA or CMR Lease, or (ii) any Permitted Intercompany A/P (the aggregate amount of foregoing (i)-(ii) but not including any Current Permitted Intercompany A/P paid by the Company, collectively, “Intercompany Liability Amount”), then it shall submit a written notice to the Board (including the WP Manager), within 30 days after the end of each calendar month, which notice shall include specific documentation with respect to such Intercompany Liability Amount.
(b)The Company shall, promptly following the date on which any such amount ceases to qualify as Current Permitted Intercompany A/P, increase the Subordinated A/P Unpaid Amount by an amount equal to the Intercompany Liability Amount with respect to such applicable month (provided that no Subordinated A/P Yield shall accrue on any Intercompany Liability Amount from any Permitted Intercompany A/P that is added to the Subordinated A/P Unpaid Amount), and upon such increase, any obligation or liability of the Company or its Subsidiaries with respect to such Intercompany Liability Amount (together with any interest, late fee or penalty thereon or other amount with respect thereto) shall be automatically extinguished and the Founder Member and its Affiliates shall only have a right to such payment in accordance
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with the express terms of this Agreement (and not, for the avoidance of doubt, under any Affiliated Transaction or any other agreement).
Section 12.07.Phase 2B of the MaxSAF Expansion. The Founder Parent and the Company shall, and shall cause its Subsidiaries to, use its reasonable best efforts to complete, or cause to be completed, all parts of Phase 2B of the MaxSAF Expansion as promptly as practicable following the Effective Date.
Section 12.08.Special Purpose Provisions. Notwithstanding anything in this Agreement or in any other document governing the formation, management or operation of the Company to the contrary, and for so long as the WP Member or its Affiliates holds any Equity Securities the Members shall cause the Company to comply with the following requirements, and the Company shall:
(a)maintain its own separate books and records and bank accounts;
(b)at all times hold itself out to the public as a legal entity separate from the Members and any other Person;
(c)file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;
(d)not commingle its assets with assets of any other Person;
(e)conduct its business in its own name and comply with all organizational formalities to maintain its separate existence;
(f)maintain separate financial statements;
(g)pay its own liabilities only out of its own funds; provided, however, that the foregoing shall not require the Members to make any additional capital contributions to the Company;
(h)not hold out its credit or assets as being available to satisfy the obligations of others;
(i)allocate fairly and reasonably any overhead for shared office space;
(j)use separate stationery, invoices and checks; and
(k)correct any known misunderstanding regarding its separate identity.
Article XIII
MISCELLANEOUS
MISCELLANEOUS
Section 13.01.Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by electronic mail or delivered by hand, messenger or overnight or second-day courier service. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (a) if delivered by hand, messenger or overnight or second-day courier service, when delivered (or if sent via a nationally-recognized overnight or second-day courier service, freight prepaid,
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specifying next-business-day or second-business-day delivery, one Business Day or two Business Days, respectively, after deposit with the courier), or (b) if sent via electronic mail, when directed to the relevant electronic mail address, and receipt is confirmed by non-automated response. Notices to a Member must be delivered to the address set forth opposite the name of such Member on Exhibit A, and notices to the Company must be delivered to the principal executive offices of the Company, although any party may furnish, from time to time, other addresses for notices to it in accordance with this Section 13.01.
Section 13.02.Confidentiality. Each Member agrees not to disclose any proprietary, confidential or nonpublic information of or relating to the Company (and, for clarity, including the terms and conditions of this Agreement and any agreement by which any Member purchased Units from the Company, and the exhibits and schedules hereto and thereto) (collectively, “Confidential Information”); provided that the foregoing shall not prohibit any Member from disclosing any information: (a) (i) to such Member’s insurers, brokers, consultants, legal, accounting, financial, tax or other advisors (solely to render any such advisory services to such Member, including in the preparation of tax returns), (ii) to such Member’s direct and indirect past, current or future shareholders, members, partners, controlling persons, prospective shareholders, prospective members, prospective partners, managers, investors, directors, officers, employees, and lenders and other sources of financing, (iii) to enforce such Member’s rights and obligations hereunder in each case, so long as such Person agrees to keep such information confidential and so long as such Member is responsible for any breach thereof; (b) as required by applicable law or by legal process or formal demand of a governmental authority (including as required by any tax filings); provided that (i) to the extent legally allowed, the disclosing Member gives the Company prior notice thereof and reasonably cooperates with the Company, at the Company’s request and at the Company’s expense, so that the Company may, in its discretion, seek a protective order or other appropriate remedy, if available, and (ii) in the event that such protective order is not obtained (or sought by the Company after such notice), such Member (x) discloses only that portion of the Confidential Information which, in accordance with the advice of counsel, is legally required to be disclosed and (y) exercises its commercially reasonable efforts to obtain confidential treatment of such Confidential Information; provided that the foregoing proviso shall not apply in connection with routine inspections, examinations or inquiries by federal or state regulatory agencies and self-regulatory organizations that have requested or required the inspection of records that contain Confidential Information and are not targeted at the Company or the Confidential Information; (c) in the context of a proposed sale of his, her or its Units permitted by and in accordance with this Agreement to a third party who has first executed a confidentiality agreement in customary form reasonably satisfactory to the Company; (d) with respect to the WP Member, to its respective direct or indirect investors, limited partners or members and their representatives (and, to the extent required for such investors’, limited partners’ or members’ internal reporting obligations, Affiliates of such investor, limited partner or member) or to Persons who have expressed a bona fide interest in becoming direct or indirect investors, limited partners or members in the WP Member or any related investment funds, and to potential transferees of the WP Member’s and its Affiliates’ respective Equity Securities of the Company, in each case who have agreed to keep such information confidential, and to other third parties who reasonably need to know such information for purposes of monitoring the investment in the Group Companies by the WP Member or its Affiliates, including to any data analysis or data aggregation service providers pursuant to contracts between the WP Member or its Affiliates, on the one hand, and any service provider, on the other hand; or (e) as authorized in writing by the Board. The Members acknowledge that, in the event of such disclosure to a third party as permitted by this Section 13.02, other than a disclosure required by law, such third party shall be required to maintain the confidentiality of the Confidential Information to the same extent as the Members. Notwithstanding the foregoing, Confidential Information does not include information which (A) becomes generally available to the Member through public records or otherwise in the public domain, other than as a result of a disclosure by a Member; (B) was known and already in the
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possession of a Member at the time of disclosure to such Member, and the Member can demonstrate that such information was independently developed by its representatives or agents without the use of such Confidential Information; (C) becomes available to a Member on a non-confidential basis from a source other than the Company, any of its Subsidiaries or any of their representatives or agents, provided that such source is not bound by a confidentiality agreement with the Company or any of its Subsidiaries or any of their representatives or agents or otherwise prohibited from transmitting the information to such Member; provided that such information shall immediately become Confidential Information if the source that disclosed that information was subject to an obligation not to disclose such information to the Member that received such information; and (D) independently developed by a Member without the use of the Confidential Information.
Section 13.03.Amendments. Subject to Section 5.07 and this Section 13.03, this Agreement and the Certificate may be amended or modified (whether by amendment, waiver, recapitalization, merger or otherwise) only by a written amendment (whether by amendment, waiver, recapitalization, merger or otherwise) approved by: (a) a Majority in Interest; (b) if such amendment or modification (whether by amendment, waiver, recapitalization, merger or otherwise) would adversely affect the obligations, rights, preferences or privileges of the Preferred Units under this Agreement, the holders of a majority of the then outstanding Preferred Units; (c) if such amendment or modification (whether by amendment, waiver, recapitalization, merger or otherwise) would adversely affect the obligations, rights, preferences or privileges of any Member or group of Members in a manner that would be disproportionately adverse from the manner in which such amendment affects the obligations and rights of other Members, such adversely affected Member or a majority-in-interest of such group of adversely affected Members, as the case may be; (d) if such amendment or modification (whether by amendment, waiver, recapitalization, merger or otherwise) would adversely affect the obligations, rights, preferences or privileges of the WP Warrants or the Common Units issued or issuable in respect of the WP Warrants in a manner that would be disproportionately adverse from the manner in which such amendment affects the rights of the other Members or the other holders of the Common Units or Warrants, the WP Member; (e) if such amendment or modification (whether by amendment, waiver, recapitalization, merger or otherwise) would alter or eliminate the limited liability of any Member or all Members, such Member or all of the Members, respectively; and (f) if such amendment or modification (whether by amendment, waiver, recapitalization, merger or otherwise) would adversely affect the rights of the WP Member under this Agreement, the WP Member; provided that no such approval shall be required for any amendment to update Exhibit A in accordance with this Agreement.
Section 13.04.Governing Law; Jurisdiction. This Agreement and any dispute arising out of, relating to or in connection with this Agreement, shall be construed (both as to validity and performance), interpreted and enforced in accordance with the laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction. Any action against any party hereto relating to the foregoing shall be brought exclusively in the Court of Chancery of the State of Delaware located in Wilmington, Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state court located in Wilmington, Delaware or the United States District Court for the District of Delaware) and appellate courts thereof. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection that they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each party agrees that service of summons and complaint or any other process that might be served in any action may be made on such party by sending or delivering a copy of the process to the party to be served by registered mail, return receipt requested, at the address of the party provided for the giving of notices in Section 13.01. Nothing in this Section 13.04, however, shall affect the right of any party to serve legal process in any other manner permitted by law.
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Section 13.05.Waiver of Jury Trial. THE MEMBERS ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE THE MEMBERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT SUCH MEMBER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH MEMBER CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH MEMBER UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH MEMBER MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH MEMBER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.05.
Section 13.06.Entire Agreement. This Agreement, together with all exhibits, annexes, schedules and other agreements expressly referenced or contemplated herein, embodies the entire agreement and understanding of the Members and supersedes all prior agreements and understandings between the Members with respect to the subject matter hereof, including the Existing LLCA.
Section 13.07.Waivers. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is made expressly in writing and executed and delivered by the party against whom such waiver is claimed. No waiver of any breach shall be deemed to be a further or continuing waiver of such breach or a waiver of any other or subsequent breach. Except as otherwise expressly provided herein, no failure on the part of any party hereto to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof, or the exercise of any other right, power or remedy.
Section 13.08.Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not.
Section 13.09.Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective as valid, legal and enforceable under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Agreement, unless the severance of such provision could be in opposition to the parties’ intent with respect to such provision or the economic or legal substance of the transactions contemplated hereby would be affected in any manner materially adverse to any party hereto, in which case the parties hereto will negotiate revisions to this Agreement to preserve as nearly as possible or nearly as practicable the economic or legal substance of such invalid, illegal or unenforceable provision.
Section 13.10.Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Member and the Company shall execute and deliver any additional documents and instruments and perform any additional acts that the Company or any Member reasonably determines to be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated hereby.
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Section 13.11.Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. A photographic, photostatic, .pdf, facsimile, DocuSign or similar reproduction of a signature to this Agreement shall have the same effect as original signatures.
Section 13.12.Third Party Beneficiaries. Except as expressly provided in Article IX, this Agreement does not create any rights, claims or benefits inuring to any Person that is not a party hereto, and it does not create or establish any third party beneficiary hereto.
Section 13.13.No Third Party Liability. This Agreement may only be enforced against the named parties hereto. All claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), may be made only against the entities that are expressly identified as parties hereto; and no past, present or future controlling persons, management companies, portfolio companies, director, manager, officer, employee, trustee, incorporator, member, partner, equityholder, Affiliate, agent, attorney or representative of any party hereto (including any Person negotiating or executing this Agreement on behalf of a party hereto) or Affiliate of the foregoing Persons, unless party to this Agreement, shall have any liability or obligation with respect to this Agreement or with respect any claim or cause of action (whether in contract, tort, equity or otherwise) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including a representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement).
Section 13.14.Specific Performance. It is hereby agreed and acknowledged that it will be inadequate or impossible, or both, to measure in money the damages that would be suffered if the parties hereto fail to comply with any of the obligations herein imposed on them and that, in the event of any such failure, an aggrieved party hereto will be irreparably damaged and will not have an adequate remedy at law or in damages. Any such party shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to seek and obtain injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond or other security and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law or relief in money damages.
Section 13.15.Interpretation. Any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it, has no application and is expressly waived. If any claim is made by a party relating to any conflict, omission or ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will be implied because this Agreement was prepared by or at the request of any party or its counsel. The captions and headings in this Agreement are only for convenience and ease of reference and are not to be considered in construction or interpretation of this Agreement, nor as evidence of the intention of the parties hereto. Except where otherwise indicated, all references in this Agreement to Sections, Exhibits, Schedules, Annexes or Appendices shall refer to Sections, Exhibits, Schedules, Annexes or Appendices to or of this Agreement and are expressly incorporated by reference herein. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the context in which they are used may require. As used in this Agreement: (a) the words “include” and “including” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”; (b) the words “hereof”, “herein” and “herewith” and words of similar import shall be construed to refer to this Agreement in its entirety (together with its exhibits, schedules, annexes, appendices and other
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documents referred to herein), and not to any particular provision, section or subsection, unless otherwise stated; (c) the word “or” is not exclusive; (d) the words “shall”, “will” and “agrees” are mandatory and the word “may” is permissive, (e) the term “extent” in the phrase “to the extent” shall mean the degree to which a subject or other item extends and shall not simply mean “if”, (f) the term “any” shall mean “any and all” and the term “or” is used in the inclusive sense of “and/or” and (g) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
Section 13.16.Anti-Circumvention. Notwithstanding anything to the contrary herein and without limitation to any other provision herein, for so long as the WP Member owns any Equity Securities, (i) each of the Founder Parent, Founder Member and the Company shall not authorize, permit, take or commit to take, any action, and shall cause any Subsidiary of the Company or Founder Parent Controlled Affiliates, as applicable, to not authorize, permit, take or commit to take any action that, is intended to circumvent, or has the effect of circumventing, either directly or indirectly, any provision herein, including Article III and Article XII and (ii) each of the Founder Parent and Founder Member shall not, and shall cause each Founder Parent Controlled Affiliate not to, exercise any remedies under any Affiliated Transaction in a manner that would alter the Distribution or liquidation priorities set forth herein, or otherwise circumvent, either directly or indirectly, any provisions herein. Notwithstanding anything to the contrary herein, in the event any provision herein, including Article III and Article XII, is circumvented or not complied with for any reason, and/or if the Founder Parent, Founder Member or any of their respective Permitted Transferees or Affiliates (other than the Group Companies) receive any payment or Distribution from the Company in violation of this Agreement, including Article III, then any amounts and/or benefits received by such Person shall be held in trust by such Person for the benefit of the WP Member and promptly paid to the WP Member.
Section 13.17.No Appraisal Rights. No Member or holder of Units or other Equity Securities of the Company shall have any appraisal, dissenter or other similar rights with respect to any Units or other Equity Securities of the Company in connection with any Transfer, merger or consolidation, including any Required Liquidity Event, Change of Control, Drag-Along Transfer or IPO; provided that nothing in this Section 13.17 shall limit or otherwise affect any right of any Member pursuant to Section 2.17.
Section 13.18.Reserved Rights. For so long as any Preferred Units remain outstanding, each of Founder Parent, the Founder Member and the Founder Parent Controlled Affiliates retains the right to (a) take any action required to comply with or preserve its rights under the DOE Loan, (b) exercise remedies in respect of non-payment defaults (including insolvency, environmental, regulatory, change-of-control and material covenant defaults) under the Priority A/P Note, the CMR Lease and the MSA, (c) preserve claims, and (d) exercise cure rights; provided that none of them shall exercise remedies under the Current Permitted Intercompany A/P, Priority A/P Note, the CMR Lease or the MSA in a manner that would alter the priorities set forth in, or otherwise circumvent, Section 3.01 or Section 3.02 or any other provision herein or in the Side Letter while any Preferred Units remain outstanding.
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Article XIV
INITIAL PUBLIC OFFERING
INITIAL PUBLIC OFFERING
Section 14.01.Initial Public Offering.
(a)(x) Subject to Section 5.07, upon the election in writing of the Board or (y) if the WP Member exercises its rights under Section 7.06 to effect an IPO, the WP Member (the Board or the WP Member, as applicable, the “IPO Initiating Person”), may require that the Company initiate, undertake or facilitate an IPO, and solely in connection therewith and as required to effect such IPO, the Company may be reorganized or converted to one or more other entities (collectively, the “IPO Company”) by such means (including by merger or consolidation or other business combination, transfer of all or a part of the Company’s assets and/or transfer, exchange, conversion or redemption of Units) as reasonably determined by the IPO Initiating Person (a “IPO Restructuring”), provided that, (i) any IPO Restructuring shall be subject to Section 14.02, (ii) the Company and the WP Member shall use reasonable best efforts to effect any IPO Restructuring in a tax-efficient manner for the WP Member, including by effecting the transactions contemplated by Section 14.02(d); provided it is not materially adverse (on a tax or economic basis) to the other Members, and (iii) any IPO Restructuring shall permit the WP Member and/or one or more WP Blockers to effectuate a Blocker Merger as contemplated by Section 7.08 and Section 14.02(d).
(b)Upon the request of the IPO Initiating Person but subject to the other provisions of the Agreement, each Member hereby agrees that it will, at the expense of the Company, take all such actions and execute all such documents as may be reasonably requested by the IPO Initiating Person or required by law, regulations, or an underwriter to effect the IPO or IPO Restructuring in accordance with the provisions herein; provided, that all the rights of Member under this Agreement that do not expressly terminate by their terms prior to or concurrent with consummation of an IPO are preserved following the IPO. In furtherance of the foregoing, the Members shall enter into a stockholders’ or equivalent agreement with the IPO Company with terms that are substantially equivalent to, mutatis mutandis, the terms of this Agreement, including Article III, Article V, Article XIII, this Article XIV, and Article XV, and the IPO Company will include corresponding provisions, to the extent applicable, in its certificate of incorporation or equivalent organizational documents).
(c)All reasonable and documented out of pocket costs and expenses incurred by the Company, the Board, the WP Member, and any of its respective Affiliates in connection with any IPO Restructuring or Initial Public Offering (whether or not consummated), including all attorneys’ fees and charges, all accounting fees and charges and all finder, brokerage or investment banking fees, charges or commissions, and any Registration Expenses (as defined in the Registration Rights Agreement) shall, in each case, be paid by the Company or the IPO Company.
(d)This Article XIV is subject to the provisions of Section 7.06.
Section 14.02.Treatment of Units.
(a)In connection with an IPO Restructuring (and subject to the consummation of an IPO), and subject to the other provisions herein, including this Article XIV, the IPO Initiating Person may cause all or any portion of the Units held by the Members to be converted into, exchanged or redeemed for, or replaced with equity securities of the IPO Company having the same rights, preferences and obligations as such Units, and representing substantially the same interest (including with respect to economic and governance rights, preferences and privileges) in the IPO Company, as such Units represented in the Company immediately prior to
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such IPO Restructuring, and the WP Member shall be entitled to directly hold equity securities of the IPO Company of the same class as those offered by the IPO Company in the IPO (subject to Section 14.03 with respect to the Preferred Units).
(b)No amendment, modification or waiver of any right, preference or privilege of any Units or of any Member may be effected in connection with any IPO Restructuring unless approved in the manner contemplated by Section 5.07 and Section 13.03 mutatis mutandis.
(c)Notwithstanding anything to the contrary herein, including Article XIV, the WP Member and its Affiliates and Permitted Transferees shall have the right to freely transfer their equity securities of the Company or the IPO Company following an IPO, including by effectuating in-kind distributions of all or part of their respective equity securities to their respective direct or indirect equityholders.
(d)Notwithstanding anything to the contrary herein, including Article XIV, in connection with an IPO, at the election of the WP Member, the WP Member shall be permitted to cause the WP Member or one or more WP Blockers (as applicable), to be merged with and into the Company, the IPO Company or other applicable entity (each, a “Blocker Merger”), and the Company and the Members shall take such actions as may be necessary to effectuate any such Blocker Merger and will cooperate with the WP Member and any WP Blocker to effectuate any such Blocker Merger in a tax-efficient manner for the WP Member, in each case such that after any such Blocker Merger(s), the WP Member and the owners of the WP Member and any WP Blockers, will own, in the aggregate, equity securities in the IPO Company or such other entity as determined by the WP Member or any such WP Blocker with the same value, at the same price, and in the same form, having the same rights, preferences and privileges as the securities held by the WP Member immediately prior to any such Blocker Merger(s).
Section 14.03.Post-IPO Preferred Units.
(a)Notwithstanding anything to the contrary herein, including in this Article XIV, in connection with any Initial Public Offering (whether or not the WP Member is the IPO Initiating Person), the Company and the Board will use its reasonable best efforts to cause the Preferred Units to be redeemed in full in cash by Distributing proceeds sufficient to pay the full amount of the then Unpaid Preferred Return Amount; or to the extent the Company cannot cause the redemption in full of the Preferred Units, (i) the Company and the Board will use its reasonable best efforts to cause the greatest amount of the then Unpaid Preferred Return Amount to be Distributed to the owner of the Preferred Units, and (ii) no Member (other than the WP Member or its Affiliates) may be a selling stockholder in an IPO. Any redemption pursuant to this Section 14.03 shall be subject to the WP Member’s rights pursuant to Section 7.08, Section 14.01(a) and Section 14.02(d) to effect such redemption, in whole or in part, through a purchase by the Company of equity interests in the WP Member and/or one or more WP Blockers.
(b)Notwithstanding anything to the contrary herein, including in this Article XIV, in the event any of the Preferred Units are not redeemed in full prior to or concurrent with the Initial Public Offering, then such Preferred Units will remain outstanding and shall in all instances be incorporated in (i) any stockholders’ or equivalent agreement of the IPO Company and (ii) the certificate of incorporation and other organizational and governing documents of the IPO Company, in each case, with terms that are no less favorable to the owner thereof than the terms of the Preferred Units under this Agreement, and for the avoidance of doubt, the Unpaid Preferred Return Amount shall continue to accrue following the Initial Public Offering, and the IRR percentage shall be subject to increase following the Initial Public Offering as set forth in the definition of the Preferred Return.
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(c)At any time on or after the 12 month anniversary of the consummation of the Initial Public Offering, the owner of the Preferred Units may elect in writing to have all of its Preferred Units acquired by the IPO Company or the Founder Parent (the IPO Company or Founder Parent, as applicable and as determined by such owner, the “Put Purchaser” and such election, the “Put Election”) in exchange for cash at a price for all the Preferred Units equal to the Unpaid Preferred Return Amount as of the date of the consummation of the Put Election (such transaction, the “Put Purchase”).
(d)The Put Purchaser shall effect the direct or indirect acquisition of the Preferred Units (including through the acquisition of one or more WP Blockers pursuant to Section 7.08) as promptly as practicable, and in any event no later than the date that is 90 days following the date of the Put Election (the “Put Deadline”), by any means permitted by applicable law, including by incurring additional indebtedness and/or causing cash to be distributed from its Subsidiaries or making a cash contribution from Founder Parent (or its subsidiaries, other than the Group Companies) to the IPO Company. If a Put Election requires any regulatory approval or filings, the Put Purchaser shall, at the direction of the WP Member, take all actions required to secure such approval or make such filings. Following consummation of the Put Purchase, regardless of the identity of the Put Purchaser and regardless whether such Put Purchase is consummated in whole or in part through a direct purchase or the Preferred Units or through a purchase of equity interests in the WP Member or one or more WP Blockers, the Preferred Units acquired in such Put Purchase shall be deemed to be retired and shall no longer be outstanding.
(e)In the event that all of the Preferred Units are not acquired (directly or indirectly) by the Put Deadline, the owner of the Preferred Units shall have all remedies available at law or in equity, and such owner shall preserve all such rights and remedies including if it exercises its right to convert the Preferred Units pursuant to Section 14.03(f).
(f)Notwithstanding anything to the contrary herein, including in this Article XIV, the WP Member shall have the right (whether or not the WP Member is the IPO Initiating Person), but not the obligation, at any time prior to, concurrently with, or following the IPO, to convert or exchange all, or any part of, its Preferred Units (or any equity securities of the IPO Company received by the WP Member in the IPO Restructuring with respect to the Preferred Units), for such class of equity securities offered by the IPO Company in the IPO, representing an economic interest in the IPO Company with a value equal to the Unpaid Preferred Return Amount in respect of such Preferred Units (or, in the case of equity securities of the IPO Company received in the IPO Restructuring, in respect of the Preferred Units to which they relate); provided that (i) in connection with any such conversion or exchange elected concurrently with (or within five trading days of) the IPO, the value of the equity securities of the IPO Company to be issued upon such conversion or exchange shall be equal to the actual offering price of such equity securities in the IPO, and (ii) in connection with any such conversion or exchange more than five trading days after the IPO, the value of the equity securities of the IPO Company to be issued upon such conversion or exchange shall be equal to the trailing five trading day volume weighted average price of such equity securities on the stock exchange on which such equity securities trade. The Company or IPO Company, as applicable, shall effect such exchange or conversion as soon as reasonably practicable following a written election thereof by the WP Member and in any event within five (5) Business Days.
Article XV
DEFINITIONS
DEFINITIONS
Section 15.01.Certain Definitions. As used in this Agreement, the following terms have the following meanings:
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“10 Day VWAP” means the volume-weighted average of the price per Common Unit or Common Equivalent that are securities listed on a Trading Market, as displayed under the heading “Bloomberg VWAP” on the Bloomberg page for such security (or its equivalent successor if such page is not available) for the ten (10) Trading Days ending on the second Trading Day immediately preceding the Exercise Date. The 10 Day VWAP shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours. All such determinations shall be adjusted for any share dividend, share split, share combination, recapitalization or other similar transaction during such period.
“Act” means the Delaware Limited Liability Company Act, Delaware Code Annotated Title 6, section 18-101 et seq., as amended from time to time.
“Acquired Assets” means the assets acquired by Montana Renewables, LLC pursuant to the Asset Purchase Agreement.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; provided, that for purposes of this Agreement, (a) neither the WP Member nor any of its Affiliates shall be deemed to be an Affiliate of the Group Companies and (b) none of the portfolio companies (other than the Group Companies) of Warburg Pincus LLC or any of its Affiliates shall be deemed to be an Affiliate of the Group Companies. For the avoidance of doubt, Calumet, Inc., Calumet Specialty Products Partners, L.P., Calumet Montana Refining, LLC and Montana Renewables, Inc. shall be deemed to be Affiliates of the Group Companies.
“Aggregate Exercise Price” means an amount equal to (a) the number of Warrant Units in respect of which the WP Warrant is then being exercised, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of the WP Warrant.
“Aggregate Fair Market Value” means an amount equal to (a) the number of Warrant Units in respect of which the WP Warrant is then being exercised, multiplied by (b) the Fair Market Value in effect as of the Exercise Date in accordance with the terms of the WP Warrant.
“Agreement” has the meaning set forth in the preamble.
“Asset Purchase Agreement” means that certain asset purchase agreement, dated as of November 18, 2021, between Montana Renewables, LLC, as assignee, and Founder Member, as assignor.
“BNSF Sublease” means that certain Sublease Agreement, dated as of December 17, 2021, by and between Calumet Montana Refining, LLC, as sublessor, and Montana Renewables, LLC, as sublessee.
“Bankruptcy Case” has the meaning set forth in Section 9.02.
“Blocker Merger” has the meaning set forth in Section 14.02(d).
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“Board” has the meaning set forth in Section 5.01.
“Bound Party” has the meaning set forth in Section 9.02.
“Business” means the business operated by the Company and its Subsidiaries, including implementing and completing the Renewable Diesel Conversion and developing, acquiring, constructing, owning and operating of the Renewable Diesel Project, and any buildings, infrastructure, real property rights, contracts or other assets or facilities relating to the Renewable Diesel Project, sourcing of Feedstock, producing and selling renewable diesel, renewable jet fuel and renewable naphtha, and engaging in ordinary course commercial activity relating thereto, including applying for and obtaining eligibility to generate credits for renewable fuel production under applicable federal, state, and Canadian regulatory programs and generating credits related to same.
“Business Day” means any day other than a Saturday or Sunday, or any day on which national banking institutions in New York, New York are open to the public for conducting business and are not required or authorized to close.
“Capital Account” shall mean the capital account established for each Member and maintained pursuant to the terms of Article IV.
“Capital Contribution” means, with respect to any Member, an amount of cash or the initial Gross Asset Value of other non-cash property contributed (or deemed contributed) by such Member to the Company (or any predecessor thereof).
“Cash Settlement Amount” has the meaning set forth in Section 2.13(a)(ii).
“Cash Settlement Payment Date” has the meaning set forth in Section 2.13(a)(ii).
“Change of Control” means (a) any transaction or series of transactions (whether structured as a stock sale, merger, consolidation, reorganization, recapitalization, redemption, asset sale or otherwise), which results in the sale or transfer of a majority of the assets of the Company and its Subsidiaries taken as a whole (whether by means of an asset sale or by means of the sale of the equity issued by a subsidiary of the Company), to a Person or group of Persons, (b) the Transfer of all or a majority of the voting Equity Securities of the Company to a Person or group of Persons or (c) any other transaction in which the holders of the outstanding voting Equity Securities of the Company immediately prior to such transaction do not own at least a majority of the outstanding voting Equity Securities of the Company or its successor entity immediately following such transaction.
“CLMT Issuance Price” means $97,500,000 for the CLMT Unit in the aggregate as of August 28, 2026.
“CLMT Note” means that certain Promissory Note delivered by Montana Renewables, LLC to Calumet Specialty Products Partners, L.P., dated as of August 28, 2026, and which was terminated and exchanged for the CLMT Unit pursuant to the terms of the Transaction Agreement.
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“CLMT Unit” means that certain class of Unit described on Exhibit D hereto and designated as the CLMT Unit, having the right to Distributions as provided in Section 3.01 and Section 3.02, which was issued in exchange for the CLMT Note, and which does not have any right to participate in the management or affairs of the Company, including the right to vote in the election of the Board, vote on, consent to or otherwise participate in any decision of the Members, or any right to receive information concerning the business and affairs of the Company, in each case, except as expressly otherwise provided in this Agreement or required by the Act.
“CLMT Unpaid Amount” means, at any time, with respect to the CLMT Unit, an amount equal to the excess, if any, of (a) the sum of the aggregate CLMT Issuance Price and the aggregate CLMT Yield accrued as of such time, over (b) the aggregate amount of all Distributions made in respect of the CLMT Unit as of such time under this Agreement. The CLMT Unpaid Amount shall be set forth on Schedule I, and shall be updated by the Company from time to time in accordance with the terms of this Agreement.
“CLMT Yield” means, at any time, the amount accrued as of such time in respect of the CLMT Unit at a rate of 11.0% per annum, compounded annually, on the aggregate CLMT Unpaid Amount as of such time.
“CMR Lease” means that certain Second Amended and Restated Ground Lease Agreement, by and between Calumet Montana Refining, LLC, as Ground Lessor, and Montana Renewables, LLC, as Ground Lessee, as may be amended from time to time in accordance with the terms of this Agreement.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. Any reference to a section of the Code shall include a reference to any successor provision thereto.
“Common Equivalents” means, without duplication, any Equity Securities (including phantom units, unit appreciation rights, profits interests or other rights with equity features) of the Company that are pari passu with, or the value of which is measured by reference to, the value of Common Units or participate in profits on a basis pari passu with the Common Units (whether after achievement of a threshold amount or otherwise), in each case whether or not then vested, exercisable, convertible or exchangeable.
“Common Member” means any holder of Common Units.
“Common Units” means that certain class of Units designated as Common Units, having the rights and preferences of the Common Units described in this Agreement.
“Common Units Deemed Outstanding” means, at any given time, the total number of Common Units and Common Equivalents outstanding as of such time (calculated as though all in-the-money Convertible Securities (including the WP Warrant) have been exercised in full for cash, irrespective of whether such Convertible Securities have actually been exercised), excluding any Units held in treasury.
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“Company” has the meaning set forth in the Recitals.
“Company Offer” has the meaning set forth in Section 7.06(a).
“Company Offer Period” has the meaning set forth in Section 7.06(b).
“Competitive Activities” has the meaning set forth in Section 9.04(b)(i).
“Confidential Information” has the meaning set forth in Section 13.02.
“control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “controlled” and “controlling” have a correlative meaning.
“Convertible Securities” means any securities that are, directly or indirectly, convertible into or exercisable or exchangeable for Common Units or Common Equivalents, including Options.
“Current Permitted Intercompany A/P” means any Permitted Intercompany A/P incurred by the Company or its Subsidiaries in respect of any calendar month that has been specifically documented and provided to the Board (including the WP Manager), in a form reasonably satisfactory to the WP Member, and that is paid in accordance with the payment terms of the applicable invoice and, in any event, no later than 60 days after the end of the calendar month in which such Permitted Intercompany A/P was incurred (or, in the case of any true-up of excise, property or other taxes passed through under a Permitted Intercompany Arrangement, no later than 60 days after the amount thereof is determined); provided that no Permitted Intercompany A/P shall cease to be Current Permitted Intercompany A/P by reason of any deficiency in such documentation unless such deficiency remains uncured 30 days after written notice thereof from the WP Member to the Company; provided for the avoidance of doubt the Current Permitted Intercompany A/P shall not include any interest, late fee or penalty thereon or other amount that shall accrue with respect thereto.
“Deferral A/P Interest” means any interest, late fee, penalty or other amount that may accrue with respect to any Permitted MSA Deferral Amount or Permitted Lease Deferral Amount.
“Distribution” means any distribution or payment (however made, including any payment purportedly made under or in respect of the Current Permitted Intercompany A/P, Priority A/P Note, the CLMT Unit or the Subordinated A/P Unit) made by the Company to any Member (whether in such Member’s capacity as a holder of Equity Securities or as a creditor, but excluding any expense reimbursement payable pursuant to Section 5.06), whether in cash, property or securities of the Company and whether by liquidating distribution, redemption, repurchase, recapitalization or otherwise, in respect of any such Units or other Membership Interests or otherwise.
“Distribution Amount” has the meaning set forth in Section 2.14(c)(iv).
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“DOE” means the U.S. Department of Energy.
“DOE Loan” means that certain Loan Guarantee Agreement, dated as of January 10, 2025 among Montana Renewables, LLC, as Borrower, and the DOE, as Guarantor and Loan Servicer, as amended by that certain First Amendment to the Loan Guarantee Agreement, dated as of August 28, 2026, between the DOE and Montana Renewables, LLC.
“DOE Loan Documents” means, collectively, the DOE Loan (i.e., the Loan Guarantee Agreement), the Sponsor Support Agreement, the CAAA and the other financing documents entered into in connection therewith.
“Drag-Along Member” has the meaning set forth in Section 7.05(a).
“Drag-Along Notice” has the meaning set forth in Section 7.05(a).
“Drag-Along Purchaser” has the meaning set forth in Section 7.05(a).
“Drag-Along Transfer” has the meaning set forth in Section 7.05(a).
“Drag-Along Transfer Period” has the meaning set forth in Section 7.05(c).
“Dragged Instrument” has the meaning set forth in Section 7.05(a).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“Election Quarter” has the meaning set forth in Section 3.02(a).
“Equity Interest” shall mean any membership or other economic interest in the Company which is treated as equity for U.S. federal income tax purposes.
“Equity Securities” means any Membership Interest or Unit or ownership or other similar interest in the Company or the IPO Company, or any interest therein, or any security, option, warrant, or right convertible, exchangeable, or exercisable into any of the foregoing, including the Warrants.
“Estimated FMV” has the meaning set forth in Section 2.17(a).
“Excluded Issuance” means any issuance or sale by the Company after the Effective Date of: (a) Warrant Units issued upon the exercise of the WP Warrant; (b) Common Units issued upon the exercise of the Stonebriar Warrant, provided that it is not amended after the Effective Date to increase the number of Common Units issuable thereunder or to lower the exercise price thereof; (c) Equity Securities issued to members of management, employees, directors or other service providers pursuant to any equity incentive plan, agreement or arrangement approved by the Board (including any profits interests, phantom units or unit appreciation rights) following an IPO; and (d) Equity Securities issued in connection with any Initial Public Offering.
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“Exercise Date” means, for any given exercise of the WP Warrant, the exercise date indicated in the Exercise Notice (and if no exercise date is specified, the exercise date shall be deemed to be the date such Exercise Notice is delivered).
“Exercise Notice” has the meaning set forth in Section 2.13(a).
“Exercise Period” means the period commencing on the Effective Date and ending at 11:59 p.m. New York time on November 4, 2031; provided, that, in the event that the WP Member has delivered an Exercise Notice at any time during the Exercise Period, (a) if it is necessary to determine the Fair Market Value of the Warrant Units, then solely for purposes of settling such exercise the expiration of the Exercise Period shall be extended to the date that is twenty (20) Business Days following the resolution of the determination of Fair Market Value of the Warrant Units; or (b) if, in accordance with Section 2.16, obtaining any Consent is necessary in order to consummate the transactions contemplated by such exercise, then solely for purposes of settling such exercise the expiration of the Exercise Period shall be extended to the date that is twenty (20) Business Days following the receipt of any such Consents.
“Exercise Price” has the meaning set forth in Section 2.12(a).
“Existing LLCA” has the meaning set forth in the recitals.
“Fair Market Value” of Units or other property, assets or rights, as the case may be, means, with respect to a Unit or any other asset, as of the applicable date of determination, the value of such Unit or asset as determined by the Board in good faith based on such factors as the Board, in the exercise of its reasonable business judgment, considers relevant, assuming that the entire Company or other asset is being sold in an arms-length transaction and considering other factors that the Board may deem relevant to such fair market value (such as seasonal fluctuations in debt, working capital and net income and one-time and non-recurring events but without, however, giving effect to any discount for any lack of liquidity attributable to a lack of a public market or to minority ownership); provided that, for purposes of the WP Warrant and Sections 2.12 through 2.18, “Fair Market Value” of a Warrant Unit, Common Unit, Common Equivalent or other property, asset or right, as of any applicable date of determination, means (a) if such security is not listed on a national stock exchange or quoted on an inter-dealer quotation system or over-the-counter market (each a “Trading Market”), the Estimated FMV as finally determined in accordance with Section 2.17, (b) if such security is listed on any Trading Market, the 10 Day VWAP, and (c) if the Fair Market Value is being determined in connection with an exercise of the WP Warrant in connection with an IPO or Reorganization Event with an unaffiliated third party, the value ascribed to such security in such IPO or Reorganization Event; provided further that if such Reorganization Event is with an Affiliate of Founder Parent or the Company, the Fair Market Value shall be determined in accordance with Section 2.17.
“Feedstock” means any feedstock used in connection with the production of renewable diesel, renewable jet fuel and naphtha, including but not limited to soybean oil, seed oils, tallow, distillers corn oil, used cooking oil and various food and non-food vegetable oils.
“Fiscal Year” has the meaning set forth in Section 8.02.
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“Founder Member” means, collectively, Calumet Montana Refining, LLC, a Delaware limited liability company, and Montana Renewables, Inc., a Delaware corporation.
“Founder Parent” means Calumet, Inc., a Delaware corporation.
“Founder Parent Controlled Affiliate” means any Affiliate of the Founder Parent or other Person that is directly or indirectly controlled by the Founder Parent.
“Fund Indemnitors” has the meaning set forth in Section 9.03(d).
“GAAP” means United States generally accepted accounting principles.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset;
(b) Unless otherwise determined by the Board, the Gross Asset Value of all Company Assets shall be adjusted to equal their respective Fair Market Values as of the following times: (i) the acquisition of an additional Equity Interest by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of cash or property as consideration for an Equity Interest; (iii) the liquidation or dissolution of the Company within the meaning of Regulation Section 1.704-l(b)(2)(ii)(g); (iv) the issuance by the Company of a noncompensatory option as described in Treasury Regulations Section 1.704-1(b)(2)(iv)(f)(5)(iv); and (v) at such other times as the Board shall reasonably determine to be necessary or advisable in order to comply with applicable Treasury Regulations;
(c) the Gross Asset Value of any property distributed to any Member shall be adjusted to equal the Fair Market Value of such asset on the date of distribution;
(d) the Gross Asset Values of Company Assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) above is made in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph; and
(e) the Gross Asset Value of any asset has been determined or adjusted pursuant to subparagraph (a), subparagraph (b) or subparagraph (d) above, such Gross Asset Value shall thereafter be adjusted by the depreciation taken into account with respect to such asset.
“Group Companies” means the Company and its Subsidiaries.
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“Indebtedness” means, with respect to any Person, at any date, without duplication, all obligations of such Person under the applicable governing documentation to pay principal, interest, penalties, fees, guarantees, reimbursements, damages, costs of unwinding and other liabilities with respect to (a) indebtedness for borrowed money, whether current or funded, fixed or contingent, secured or unsecured, (b) indebtedness evidenced by bonds, debentures, notes, mortgages or similar instruments or debt securities, (c) leases that are capitalized in accordance with GAAP under which such Person is the lessee, and (d) direct or indirect guarantees or other forms of credit support of obligations described in clauses (a) through (c) above of any Person.
“Indemnified Costs” has the meaning set forth in Section 9.03(a).
“Independent Valuation” has the meaning set forth in Section 2.17(c).
“Initial Public Offering” or “IPO” means the first Public Offering.
“Instrument” means the Priority A/P Note, the Preferred Units, the CLMT Unit, the Subordinated A/P Unit, the Common Units and the Warrants or any other indebtedness, accounts payable, Equity Securities or other instrument representing any amounts payable to a Member, however arising.
“Investment Company Act” means the Investment Company Act of 1940, as amended from time to time, and the rules and regulations promulgated thereunder.
“IPO Company” has the meaning set forth in Section 14.01(a).
“IPO Initiating Person” has the meaning set forth in Section 14.01(a).
“IPO Restructuring” has the meaning set forth in Section 14.01(a).
“IRR” with respect to the Preferred Member means the result outputted by Microsoft Excel’s XIRR function (or if such program is no longer available, such other software program for calculating IRR determined by the Board and the holders of a majority of Preferred Units then outstanding) based on the following cash flow inputs: (a) as a negative cash flow value, such Preferred Member’s Capital Contributions occurring on such dates as such Capital Contribution were made, (b) as negative cash flow values occurring on the dates they are made, any Capital Contributions made by such Member after the Effective Date, and (c) as positive cash flow values occurring on the dates they are made, any distributions made by the Company with respect to the Preferred Units of such Preferred Member.
“IRR Increase” means, with respect to an Election Quarter, an amount equal to the increase in the Preferred Return for the fiscal quarter preceding such Election Quarter.
“Liquidity Notice” has the meaning set forth in Section 7.06(a).
“Majority in Interest” means Members holding a majority of the then-outstanding Common Units and Preferred Units.
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“Manager” has the meaning set forth in Section 5.02(a).
“Member” means each Person set forth on Exhibit A, for so long as such Person holds a Membership Interest in the Company, and each Person who is hereafter admitted as a member of the Company in accordance with the terms of this Agreement and the Act.
“Member Capital Account Shortfall” has the meaning set forth in Section 4.01(j).
“Membership Interest” means a Member’s entire interest in the Company, including the Member’s share of distributions pursuant to this Agreement and the Act, the right to vote on or participate in the management of the Company and the right to receive information concerning the business and affairs of the Company.
“MSA” means that certain Master Services Agreement, dated as of November 18, 2021, by and among Montana Renewables, LLC and Calumet Montana Refining, LLC, as amended by that certain First Amendment to the MSA, dated as of August 5, 2022, and that certain Second Amendment to the MSA, dated as of August 15, 2022, and as may be further amended from time to time as permitted by the express terms of this Agreement, including Section 5.07.
“Net Cash Settlement” has the meaning set forth in Section 2.13(a)(ii).
“Net Unit Settlement” has the meaning set forth in Section 2.13(a)(iii).
“New Securities” means any Equity Securities of the Company or its Subsidiary, whether or not currently authorized, other than (a) Equity Securities issued in connection with an additional Capital Contribution of a Member, or (b) Equity Securities issued in connection with an Initial Public Offering, in each case in accordance with the provisions herein.
“Observer” has the meaning set forth in Section 5.08.
“Option Purchase Price” has the meaning set forth in the CMR Lease.
“Options” means any warrants or other rights or options to subscribe for or purchase Common Units or Common Equivalents.
“Partnership Audit Rules” means Subchapter C of Chapter 63 of the Code and any subsequent amendment (and any Treasury Regulations or other guidance relating) thereto and, in each case, any analogous provisions of state, local and non-U.S. Law governing the preparation and filing of tax returns, interactions with taxing authorities, the conduct and resolution of examinations by taxing authorities and payment of resulting tax liabilities.
“Permitted Intercompany Arrangements” means, collectively, the MSA, the PTU Technology License, the CMR Lease and the BNSF Sublease, in each case between the Group Companies, on the one hand, and the Founder Member or its Affiliates (excluding the Group Companies), on the other hand, as in effect as of the Effective Date; provided, that any pricing
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terms in any Permitted Intercompany Arrangements are on a pass-through basis and do not and will not provide for any pricing markup or margin.
“Permitted Intercompany A/P” means any accounts payable incurred in the ordinary course of business of the Company and its Subsidiaries pursuant to a Permitted Intercompany Arrangement.
“Permitted Lease Deferral Amount” means the amount of any payments of Rent due to CMR or its Affiliates under the CMR Lease that are deferred pursuant to any Permitted Lease Deferrals.
“Permitted Lease Deferrals” means any deferrals of a monthly payment of Rent under the CMR Lease approved by the Board and CMR under the CMR Lease.
“Permitted MSA Deferral Amount” means the aggregate amount of any payments due to CMR or its Affiliates under the MSA that are deferred pursuant to any Permitted MSA Deferrals.
“Permitted MSA Deferrals” means any deferrals of payments (solely consisting of agreed-upon G&A amounts) under the MSA approved by the Board and CMR under the MSA.
“Permitted Transferee” means (a) with respect to the WP Member or its Affiliates, any Affiliates or any fund or entity managed or controlled by Warburg Pincus or its Affiliates, (b) with respect to the Founder Member or its Affiliates, Founder Parent or any wholly-owned Subsidiary of Founder Parent, provided that such Person is a creditworthy entity and not a restricted subsidiary under any financing arrangements of the Founder Member or its Affiliates, or (c) with respect to any other Member, Affiliates of such Member.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or any other entity or organization.
“Phase 2B of the MaxSAF Expansion” has the meaning set forth in Exhibit F attached hereto.
“Physical Settlement” has the meaning set forth in Section 2.13(a)(i).
“Pre-IPO Maximum IRR” means an IRR equal to 13.0%.
“Preferred Member” means any holder of the Preferred Units.
“Preferred Return” means, as of any date, an aggregate amount which provides the Preferred Member with an IRR equal to 11.5% through such date, which shall be increased by 0.35% on December 31, 2029 and every six months thereafter, provided that if, (i) prior to an IPO, the applicable IRR equals the Pre-IPO Maximum IRR, the applicable IRR shall remain at the Pre-IPO Maximum IRR until the date that it is 6 months following the consummation of the IPO, at which point the applicable IRR will increase to 13.35% and will continue to increase by
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0.35% every six months thereafter, without any limitation. For the avoidance of doubt, if the applicable IRR is less than the Pre-IPO Maximum IRR at the time of the IPO, the applicable IRR shall continue to increase by 0.35% every six months following December 31, 2029 (starting on the first such date after the consummation of the IPO, or starting on December 31, 2029 if the IPO is consummated prior to such date), in each case, without any limitation.
“Preferred Units” means that certain class of Units designated as Preferred Units, having the rights and preferences of the Preferred Units described in this Agreement.
“Preferred Unit Purchase Agreement” means that certain preferred unit purchase agreement, dated as of August 5, 2022, between the Company and the WP Member.
“Priority A/P Note” means that certain Promissory Note delivered by Montana Renewables, LLC to Calumet Montana Refining, LLC, dated as of August 28, 2026, with an initial principal amount as of August 28, 2026 of $124,215,238.
“Priority A/P Unpaid Amount” means, at any time, the outstanding balance under the Priority A/P Note; provided that (a) the Priority A/P Unpaid Amount shall not include at any time (or be increased by) any Deferral A/P Interest and (b) the interest under the Priority A/P Note shall be compounded annually. The Priority A/P Unpaid Amount shall be as set forth on Schedule I, and shall be updated by the Company from time to time in accordance with the terms of this Agreement. For the avoidance of doubt, every payment in respect of the Priority A/P Unpaid Amount shall reduce the outstanding balance under the Priority A/P Note.
“Pro Rata Portion” means:
(a) for purposes of Section 2.04, a number of New Securities determined by multiplying (i) the number of New Securities that the Company or its Subsidiary, as applicable, proposes to issue on the relevant issuance date by (ii) a fraction, the numerator of which is the number of Common Units held by the relevant Member or Warrant Unitholder (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised) immediately prior to such issuance date, and the denominator of which is the aggregate number of Common Units held by all Members and Warrant Unitholders (calculated as though all Warrant Unitholders have exercised all Warrants, in full for cash, irrespective of whether such Warrants have actually been exercised) immediately prior to such issuance date;
(b) for purposes of Section 3.01(b)(i), a fraction, (i) the numerator of which shall be (A) in the case of the CLMT Unit, the then-current CLMT Unpaid Amount and (B) in the case of the Preferred Units, the then-current Unpaid Preferred Return Amount, and (ii) the denominator of which shall be the sum of the then-current CLMT Unpaid Amount and the then-current Unpaid Preferred Return Amount;
(c) for purposes of Section 3.02(b), a fraction, (i) the numerator of which shall be (A) in the case of the Priority A/P Note, the increase in the Priority A/P Unpaid Amount for the fiscal quarter preceding such Election Quarter, (B) in the case of the Preferred Units, the IRR Increase for the fiscal quarter preceding such Election Quarter, (C) in the case of the CLMT
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Unit, the increase in the CLMT Unpaid Amount for the fiscal quarter preceding such Election Quarter, and (D) in the case of the Subordinated A/P Unit, the increase in the Subordinated A/P Unpaid Amount for the fiscal quarter preceding such Election Quarter, and (ii) the denominator of which shall be the sum of (i) the IRR Increase and (ii) the increase in each of the Priority A/P Unpaid Amount, the CLMT Unpaid Amount and the Subordinated A/P Unpaid Amount, in each case of the foregoing (i) and (ii), for the fiscal quarter preceding such Election Quarter;
(d) for purposes of Section 7.04, a number of Common Units, including Common Units underlying the Warrants, determined by multiplying (i) the total number of Common Units held by the Tagging Member, including Common Units underlying the Warrants of such Tagging Member (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised) by (ii) a fraction, the numerator of which is the number of Common Units proposed to be Transferred by the Tag-Along Transferor, including Common Units underlying any Warrants of the Tag-Along Transferor (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised) in such Tag-Along Transfer and the denominator of which is the aggregate number of Common Units held by the Tag-Along Transferor, including Common Units underlying any Warrants of the Tag-Along Transferor (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised); and
(e) for purposes of Section 7.05, a number of Common Units, including Common Units underlying the Warrants, determined by multiplying (i) the aggregate number of Common Units held by the Drag-Along Member, including Common Units underlying any Warrants of such Drag-Along Member (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised) by (ii) a fraction, the numerator of which is the aggregate number of Common Units proposed to be Transferred by the Drag Initiator, including Common Units underlying any Warrants of the Drag Initiator (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised) in such Drag-Along Transfer to the third party buyer in connection with such Drag-Along Transfer and the denominator of which is the aggregate number of Common Units held by the Drag Initiator, including Common Units underlying any Warrants of the Drag Initiator (calculated as though such Warrant Unitholder has exercised all Warrants held by it, in full for cash, irrespective of whether such Warrants have actually been exercised); provided that if the WP Member is the Drag Initiator and it does not hold any Common Units, then such Pro Rata Portion of Common Units by any other Member shall be deemed to be all of the Common Units held by such other Member, unless otherwise determined by the WP Member.
“Prospective Tagging Members” has the meaning set forth in Section 7.04(a).
“PTU Technology License” means that certain Patents and Know-How License Agreement, dated as of January 1, 2024, by and between Calumet Specialty Products Partners, L.P., and Montana Renewables, LLC.
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“Public Offering” means (a) any underwritten public offering and sale of equity securities (including Units) of the IPO Company holding all or substantially all of the assets of the Company, for cash pursuant to an effective Registration Statement (other than on Form S-4, Form S-8 or a comparable form (except in connection with a transaction described in clause (b) of this definition)) under the Securities Act, (b) the consummation of a merger or other business combination of the Company or any of its Subsidiaries holding all or substantially all of the assets of the Company (or any of their respective successors) with, or the acquisition of the Company or any of its Subsidiaries holding all or substantially all of the assets of the Company (or the equity interests of the Company or any Subsidiary of the Company holding all or substantially all of the assets of the Company), by a publicly-traded company or its subsidiary following which the former Members hold capital stock of the combined entity or its parent that is listed on any tier of the Nasdaq Stock Market or the New York Stock Exchange or any affiliate thereof, including but not limited to the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market and the NYSE American, or (c) a direct listing of equity securities (including Units) of the IPO Company holding all or substantially all of the assets of the Company on a national securities exchange.
“Put Deadline” has the meaning set forth in Section 14.03(d).
“Put Election” has the meaning set forth in Section 14.03(c).
“Put Purchase” has the meaning set forth in Section 14.03(c).
“Put Purchaser” has the meaning set forth in Section 14.03(c).
“Registration Rights Agreement” means that certain Registration Rights Agreement attached as Exhibit G hereto.
“Registration Statement” means any registration statement of the Company or the IPO Company under the Securities Act that permits the public offering of any of the equity securities of the Company or the IPO Company pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
“Regulatory Law” means any antitrust law or foreign investment law, regulation or security clearance.
“Renewable Diesel Conversion” means conversion of the refining capacity and capabilities of the Acquired Assets to process Feedstock, producing renewable diesel, renewable jet fuel and renewable naphtha and the undertaking of other associated works required for the operation of such Acquired Assets to establish a nameplate capacity of 12,000 barrels per stream day and fresh feed capacity of 12,000 barrels per stream day based upon mixed Feedstock, calculated in accordance with the underwriting model provided to the WP Member prior to August 5, 2022 or 11,000 barrels per stream day based upon soybean oil Feedstock.
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“Renewable Diesel Project” means the completed Renewable Diesel Conversion project.
“Repayment Election” has the meaning set forth in Section 3.02(a).
“Required Liquidity Event” has the meaning set forth in Section 7.06(a).
“Response Notice” has the meaning set forth in Section 7.04(b).
“Response Period” has the meaning set forth in Section 7.04(b).
“Responsible Party” has the meaning set forth in Section 9.02.
“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.
“Servicing Election” has the meaning set forth in Section 3.02(a).
“Stonebriar Warrant” means that certain Warrant Acquisition Agreement, dated as of December 11, 2024, by and between the Company and Stonebriar Commercial Finance LLC, as amended on January 17, 2025, and the Warrant issued pursuant thereto in the form attached as Exhibit A thereto.
“Subordinated A/P Issuance Price” means $168,913,163 for the Subordinated A/P Unit in the aggregate as of August 28, 2026.
“Subordinated A/P Note” means that certain Promissory Note delivered by Montana Renewables, LLC to Calumet Montana Refining, LLC, dated as of August 28, 2026, and which was terminated and exchanged for the Subordinated A/P Unit pursuant to the terms of the Transaction Agreement.
“Subordinated A/P Unit” means that certain class of Unit described on Exhibit E hereto and designated as the Subordinated A/P Unit, having the right to Distributions as provided in Section 3.01 and Section 3.02, which was issued in exchange for the Subordinated A/P Note, and which does not have any right to participate in the management or affairs of the Company, including the right to vote in the election of the Board, vote on, consent to or otherwise participate in any decision of the Members, or any right to receive information concerning the business and affairs of the Company, in each case, except as expressly otherwise provided in this Agreement or required by the Act.
“Subordinated A/P Unpaid Amount” means, at any time, with respect to the Subordinated A/P Unit, an amount equal to the excess, if any, of (a) the sum of (i) the aggregate Subordinated A/P Issuance Price, (ii) any Deferral A/P Interest, and (iii) the aggregate Subordinated A/P Yield accrued as of such time, over (b) the aggregate amount of all Distributions made in respect of the Subordinated A/P Unit as of such time under this Agreement. The Subordinated A/P Unpaid Amount shall be set forth on Schedule I, and shall be updated by the Company from time to time in accordance with the terms of this Agreement..
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“Subordinated A/P Yield” means, at any time, the amount accrued as of such time in respect of the Subordinated A/P Unit at a rate of 11.0% per annum, compounded annually, on the aggregate Subordinated A/P Unpaid Amount as of such time (excluding any portion of the Subordinated A/P Unpaid Amount that was increased by any Intercompany Liability Amount from any Permitted Intercompany A/P in accordance with Section 12.06(b)).
“Subsidiary” of any specified Person means any other Person (a) of which a majority of the outstanding voting securities or other voting equity interests are owned, directly or indirectly, by such specified Person or (b) with respect to which such specified Person or any of its Subsidiaries is a general partner or managing member or has the right to be allocated (through partnership interests or otherwise) a majority of such other Person’s gains or losses.
“Tag-Along Notice” has the meaning set forth in Section 7.04(b).
“Tag-Along Transfer” has the meaning set forth in Section 7.04(a).
“Tag-Along Transferor” has the meaning set forth in Section 7.04(a).
“Tagging Members” has the meaning set forth in Section 7.04(a).
“Tax Distribution” has the meaning set forth in Section 3.06.
“Tax Rate” has the meaning set forth in Section 3.06.
“Termination Date” has the meaning set forth in Section 10.06(a).
“Trading Day” mean a day on which trading in the Common Units (or Warrant Units, Common Equivalents or other properties, assets or rights, as applicable) occurs on the Trading Market.
“Transaction Agreement” means that certain Transaction Agreement, dated as of the Effective Date, among the Company, the Members and the other parties thereto.
“Transfer” means to sell, assign, hypothecate, encumber, mortgage, dispose of or otherwise transfer, whether or not by operation of law and whether directly or indirectly, provided that (a) the incurrence or refinancing of any indebtedness or “back leverage” or related transaction by any fund or entity managed or controlled by Warburg Pincus or its Affiliates, including any hypothecation, encumbrance or mortgage in connection therewith, in each case, at the time of any such action in an amount that does not exceed, in the aggregate, $65,965,250.24, plus any payment-in-kind (PIK) interest thereon and any fees, premium and expenses in connection therewith; (b) the grant by Warburg Pincus or its Affiliates of any security interest, lien, encumbrance, hypothecation or mortgage securing such indebtedness or “back leverage;” or (c) any foreclosure upon or exercise of remedies with respect to such security interest, lien, encumbrance, hypothecation or mortgage (including the transfer of Preferred Units to, and the admission as a Member of, the secured party in respect of any such financing or back leverage or such secured party’s assignee), in each case, shall not constitute a Transfer by the WP Member; provided that any such secured party or assignee shall take such Units subject to this Agreement
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and shall execute a joinder agreement pursuant to Section 7.07, but shall have all the rights of and shall be construed as the WP Member hereunder.
“Treasury Regulations” shall mean any applicable regulations promulgated under the United States Internal Revenue Code.
“Trigger Price” means $20.00, subject to adjustment as provided in Section 2.14.
“TTM FCCR” means, as of any date, the FCCR (as defined on, and calculated pursuant to, Exhibit H attached hereto) for the 12-month period immediately prior to such date.
“Units” means the Common Units and the Preferred Units and any other class of Units designated as such in accordance with the terms of this Agreement.
“Unpaid Preferred Return Amount” means, at any time, with respect to the Preferred Units, an amount equal to the excess of (a) the Preferred Return as of such time, over (b) the aggregate amount of all Distributions made in respect of the Preferred Units as of such time. The Unpaid Preferred Return Amount shall be set forth on Schedule I, and shall be updated by the Company from time to time in accordance with the terms of this Agreement.
“Valuation Firm” has the meaning set forth in Section 2.17(c).
“Warburg Pincus” means Warburg Pincus LLC.
“Warrant Unitholder” means each holder of a Warrant and/or any Common Units issued upon the exercise of a Warrant.
“Warrant Units” means the Common Units issuable upon exercise of the WP Warrant, as the number and kind thereof may be adjusted from time to time pursuant to Section 2.14, and shall include any other Units, Equity Securities, shares of stock or other securities, cash or other property of the Company or of any successor Person at any time receivable or issuable upon exercise of the WP Warrant (including following any Reorganization Event), in each case after giving effect to all adjustments provided for herein.
“Warrants” means those warrants issued by the Company as of the date hereof, including the WP Warrant and the Stonebriar Warrant.
“WP Blocker” means any entity that owns equity interests of the WP Member (directly or indirectly) and which is classified as a corporation for U.S. federal income tax purposes.
“WP Member” means WPGG 14 United Aggregator, L.P., a Delaware limited partnership, or any of its Permitted Transferees, for so long as it (or its Permitted Transferee) holds any Equity Securities.
“WP Warrant” means any Warrant held by the WP Member.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.
MEMBERS:
WPGG 14 United Aggregator, L.P.
By: /s/ Jeffrey Luse
Name: Jeffrey Luse
Title: Vice President
Name: Jeffrey Luse
Title: Vice President
Calumet Montana Refining, LLC
By: /s/ Todd Borgmann
Name: Todd Borgmann
Title: President & Chief Executive Officer
Name: Todd Borgmann
Title: President & Chief Executive Officer
Montana Renewables, Inc.
By: /s/ Gregory Morical
Name: Gregory Morical
Title: Senior Vice President, General Counsel & Secretary
Name: Gregory Morical
Title: Senior Vice President, General Counsel & Secretary
FOUNDER PARENT
Calumet, Inc.
By: /s/ Todd Borgmann
Name: Todd Borgmann
Title: President & Chief Executive Officer
Name: Todd Borgmann
Title: President & Chief Executive Officer
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Todd Borgmann, certify that:
1.I have reviewed this Quarterly Report of Calumet, Inc. (the “registrant”) on Form 10-Q for the quarter ended September 30, 2026;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 6, 2026 | /s/ Todd Borgmann | ||||
| Todd Borgmann President and Chief Executive Officer (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, David Lunin, certify that:
1.I have reviewed this Quarterly Report of Calumet, Inc. (the “registrant”) on Form 10-Q for the quarter ended September 30, 2026;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 6, 2026 | /s/ David Lunin | ||||
David Lunin Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
Exhibit 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Calumet, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of Todd Borgmann, President and Chief Executive Officer of the Company, and David Lunin, Executive Vice President and Chief Financial Officer of the Company, each certify that to his knowledge:
(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
November 6, 2026 | /s/ Todd Borgmann | ||||
Todd Borgmann President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
November 6, 2026 | /s/ David Lunin | ||||
David Lunin Executive Vice President and Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||