Zevia PBC 8-K, filed Oct 23, 2026
Zevia PBC (ZVIA)
About this 8-K
Zevia PBC filed this 8-K on October 23, 2026, reporting on events of October 22, 2026.
Zevia PBC issued 15,000 Series A Senior Convertible Preferred Stock shares for $15.0 million, with a deferred $5.0 million closing conditioned on fiscal 2026 net sales of at least $172.5 million and Adjusted EBITDA no less than negative $3.0 million. AI summary
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Exhibit No. | Document Description |
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3.1 | ||
10.1 | ||
10.2 | ||
10.3* | ||
99.1 | ||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
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* | Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or attachment to the SEC upon its request. |
ZEVIA PBC |
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Date: October 23, 2026 | By: | /s/ Steven M. Staes |
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Name: | Steven M. Staes |
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Title: | General Counsel and Corporate Secretary |
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Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A SENIOR CONVERTIBLE PREFERRED STOCK OF ZEVIA PBC
Pursuant to Section 151 of the Delaware General Corporation Law (as amended, supplemented or restated from time to time, the “DGCL”), Zevia PBC, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 of the DGCL DOES HEREBY CERTIFY:
FIRST: That, the Amended and Restated Certificate of Incorporation of the Corporation (as amended, the “Certificate of Incorporation”) authorizes the issuance of up to Ten Million (10,000,000) shares of Preferred Stock, par value $0.001 per share, of the Corporation (“Preferred Stock”) in one or more series and expressly vests the Board of Directors of the Corporation (the “Board”) with the authority to fix by resolution the number of shares constituting such series, the powers, designations, preferences and relative, participating, optional or other rights (if any), and the qualifications, limitations or restrictions thereof (if any), of the Preferred Stock, including, without limitation, the dividend rate, conversion rights, redemption price, the original issuance price and liquidation preference, of any series of shares of Preferred Stock, and to fix the maximum number of shares to constitute such series, which may subsequently be increased or decreased (but not below the number of shares of that series then outstanding); and
SECOND: That, pursuant to the authority vested in the Board by the Certificate of Incorporation, the Board on October 21, 2026, adopted the following resolution designating a new series of Preferred Stock as “Series A Senior Convertible Preferred Stock,” which shall consist of 20,000 shares of the Preferred Stock, which the Corporation has the authority to issue:
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Section 4.3 of the Certificate of Incorporation and the provisions of Section 151 of the DGCL, a series of Preferred Stock of the Corporation designated as “Series A Senior Convertible Preferred Stock” is hereby authorized, and the designations, rights, preferences, powers, restrictions and limitations of the Series A Senior Convertible Preferred Stock shall be as follows:
TABLE OF CONTENTS
Page
1. | Designation | 1 |
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2. | Defined Terms | 1 |
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3. | Rank | 8 |
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4. | Dividends | 8 |
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| 4.1 | Accrual of Dividends | 8 |
| 4.2 | Payment of Dividends | 8 |
| 4.3 | Dividend Calculations | 9 |
| 4.4 | Dividends on the Class A Common Stock | 10 |
| 4.5 | Conversion Prior to or Following a Record Date | 10 |
5. | Liquidation | 10 |
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| 5.1 | Liquidation | 10 |
| 5.2 | Insufficient Assets | 10 |
| 5.3 | Notice Requirement | 10 |
6. | Voting | 10 |
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| 6.1 | As-Converted Voting | 10 |
| 6.2 | Series A Consent Rights | 11 |
7. | Redemption | 12 |
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| 7.1 | Fundamental Change Redemption | 12 |
| 7.2 | Investor’s Redemption | 12 |
| 7.3 | Fundamental Change Redemption Notice | 12 |
| 7.4 | Investor Redemption Notice | 13 |
| 7.5 | Insufficient Funds; Remedies For Nonpayment | 13 |
| 7.6 | Surrender of Certificates | 14 |
| 7.7 | Rights Subsequent to Redemption | 14 |
8. | Conversion | 14 |
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| 8.1 | Holders’ Optional Right to Convert | 14 |
| 8.2 | Mandatory Conversion | 15 |
| 8.3 | Procedures for Conversion; Effect of Conversion | 15 |
| 8.4 | Reservation of Stock | 16 |
| 8.5 | No Charge or Payment | 16 |
| 8.6 | Termination of Conversion Right in Connection with Redemption | 16 |
| 8.7 | Adjustment to Conversion Price and Number of Conversion Shares | 17 |
9. | Reissuance of Series A Preferred Stock | 24 |
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10. | Notices | 24 |
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11. | Amendments and Waiver | 24 |
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12. | Withholding | 24 |
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13. | Transfer Agent and Legends | 24 |
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| 13.1 | Restricted Stock Legend | 24 |
| 13.2 | Other Legends | 25 |
| 13.3 | Transfer Agent | 25 |
| 13.4 | Transfer Taxes and Expenses | 25 |
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1. Designation. There shall be a series of Preferred Stock that shall be designated as “Series A Senior Convertible Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting such series (“Shares”) shall be 20,000 with an Original Issuance Price of $1,000.00 per Share. The rights, preferences, powers, restrictions and limitations of the Series A Preferred Stock shall be as set forth herein. The Series A Preferred Stock shall be issued in book-entry form on the Corporation’s share ledger, subject to the rights of holders to receive certificated Shares under the DGCL.
2. Defined Terms. For purposes hereof, the following terms shall have the following meanings:
“Accreted Value” means, as of any date, the Original Issuance Price per Share plus all accrued and unpaid Dividends that have been added to the stated value as payment-in-kind and not paid in cash in accordance with Section 4.2.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person, including any investment fund, vehicle or account sponsored or managed by such Person or any other Person that controls, is controlled by, or is under common control with such Person (for clarity, an investment fund, vehicle or account shall be deemed to be an “Affiliate” of all other investment funds, vehicles and accounts under common management, directly or indirectly, with such Person); provided, however, that in no event shall any portfolio company managed by an Affiliate of the Investor be considered to be an Affiliate of the Investor, as applicable. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
“as-converted basis” means (i) with respect to the outstanding shares of Common Stock as of any date, all outstanding shares of Class A Common Stock calculated on a basis in which all shares of Class A Common Stock issuable upon conversion of the outstanding Shares of Series A Preferred Stock (at the Conversion Price in effect on such date) are assumed to be outstanding as of such date and (ii) with respect to any outstanding Shares of Series A Preferred Stock as of any date, the number of shares of Class A Common Stock issuable upon conversion of such Shares of Series A Preferred Stock on such date (at the Conversion Price in effect on such date).
“beneficially owns”, “beneficial ownership of”, or “beneficially owning” any securities shall have the meaning set forth in Rule 13d-3 of the rules and regulations under the Exchange Act; provided, that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable immediately (including assuming conversion of all Preferred Stock, if any, owned by such Person to Common Stock).
“Bloomberg” means Bloomberg Financial Markets and its successors.
“Board” has the meaning set forth in the Preamble.
“Bylaws” has the meaning set forth in Section 6.1.
“Business Day” means a day other than a Saturday, Sunday or other day on which the SEC or banks in the City of New York or Los Angeles, California are authorized or required by law to close.
“Cap Allocation” has the meaning set forth in Section 8.3(e).
“Cap Shares” has the meaning set forth in Section 8.3(e).
“Certificate of Designations” means this Certificate of Designations, Preferences and Rights of Series A Senior Convertible Preferred Stock of Zevia PBC, as it may be amended from time to time.
“Certificate of Incorporation” has the meaning set forth in the Preamble.
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“Class A Common Stock” means the Class A common stock, par value $0.001 per share, of the Corporation.
“Class B Common Stock” means the Class B common stock, par value $0.001 per share, of the Corporation.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Common Stock” means collectively the Class A Common Stock and the Class B Common Stock.
“Conversion Cap” has the meaning set forth in Section 4.2(b).
“Conversion Date” and “Conversion Dates” each have the meaning set forth in Section 8.3(b).
“Conversion Price” means, initially, $1.448 per Share, as adjusted from time to time in accordance with Section 8.7.
“Conversion Shares” means the shares of Class A Common Stock issuable upon conversion of the Series A Preferred Stock in accordance with the terms of Section 8.
“Corporation” has the meaning set forth in the Preamble.
“Credit Agreement” means that certain Loan and Security Agreement, dated as of February 22, 2022, by and among Zevia LLC, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, as amended, restated, amended and restated, supplemented or otherwise modified or replaced from time to time.
“Current Market Price” means, on any day, the average of the Daily VWAP for the five (5) consecutive Trading Days ending the Trading Day immediately prior to the day in question.
“Daily VWAP” means the consolidated volume-weighted average price per share of Class A Common Stock as displayed under the heading “Bloomberg VWAP” on the Bloomberg page for the “AQR” page corresponding to the “ticker” for such Class A Common Stock (or its equivalent successor if Bloomberg ceases to publish such price, or such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the closing price of one share of such Class A Common Stock on such Trading Day). The “volume weighted average price” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Deferred Closing Date” has the meaning given to such term in the Securities Purchase Agreement.
“DGCL” has the meaning set forth in the Preamble.
“Dividend Commencement Date” means the earliest of (i) the Deferred Closing Date, (ii) the date on which the Company files the 2026 Annual Report (as defined in the Securities Purchase Agreement) with the Commission and (iii) April 15, 2027.
“Dividend Payment Date” has the meaning set forth in Section 4.2(a).
“Dividend Rate” means 6.00% per annum, as adjusted pursuant to Section 7.5(b).
“Dividends” has the meaning set forth in Section 4.1.
“DTC” means The Depository Trust Company or any successor depositary.
“Equity Securities” has the meaning ascribed to such term in Rule 405 promulgated under the Securities Act as in effect on the date hereof, and in any event includes any stock, any partnership interest, any limited liability company interest and any other interest, right or security convertible into, or exchangeable or exercisable for, capital stock, partnership interests, limited liability company interests or otherwise having the attendant right to vote for directors or similar representatives.
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“Ex-Dividend Date” means the first date on which shares of Class A Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Corporation or, if applicable, from the seller of Class A Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
“Excess Deferred Dividend Amount” has the meaning set forth in Section 4.2(b).
“Excess Dividend Amount” has the meaning set forth in Section 4.2(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Expiration Date” has the meaning set forth in Section 8.7(e).
“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by a majority of the Board, or an authorized committee thereof.
“Fundamental Change” shall be deemed to have occurred when any of the following has occurred:
(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Corporation, its Wholly-owned Subsidiaries and the employee benefit plans of the Corporation and its Wholly-owned Subsidiaries, files any schedule, form or report under the Exchange Act that discloses that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the voting power of the Common Stock;
(b) the consummation of (i) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock is converted into, or exchanged for, stock, other securities, other property or assets; (ii) any share exchange, consolidation or merger of the Corporation pursuant to which the Common Stock will be converted into cash, securities or other assets; or (iii) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Corporation and its Subsidiaries, taken as a whole, to any person or group other than any of the Corporation’s Wholly-owned Subsidiaries; provided, however, that a transaction described in clause (i) or (ii) in which the holders of all classes of the Corporation’s Common Stock immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Stock of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (b);
(c) the stockholders of the Corporation approve any plan or proposal for the liquidation or dissolution of the Corporation;
(d) the Class A Common Stock ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors); or
(e) the TRA is terminated pursuant to Section 3.01(a) or Section 3.01(b) of the TRA.
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provided, however, that a transaction or transactions described in clause (b) above shall not constitute a Fundamental Change if at least 90% of the consideration received or to be received by the common stockholders of the Corporation, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions the Series A Preferred Stock becomes convertible into such consideration, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights. If any transaction in which the Common Stock is replaced by the securities of another entity occurs (or, in the case of a transaction that would have been a Fundamental Change but for the proviso immediately following clause (d) of this definition, following the effective date of such transaction) references to the Corporation in this definition shall instead be references to such other entity. For purposes of this definition, any transaction or event described in both clause (a) and in clause (b)(i) or (ii) above (without regard to the proviso in clause (b)) will be deemed to occur solely pursuant to clause (b) above (subject to such proviso).
“Fundamental Change Redemption” shall have the meaning specified in Section 7.1.
“Fundamental Change Redemption Date” shall have the meaning specified in Section 7.3(b).
“Fundamental Change Redemption Notice” shall have the meaning specified in Section 7.1.
“Fundamental Change Redemption Price” means, as of any date of redemption or Liquidation, as the case may be, the greater of (a) cash in an amount equal to the Investor Redemption Price and (b) an amount in cash and/or other assets (including securities) equal to the payment (including an amount in cash equal to the Fair Market Value of any non-cash consideration to be received by holders of shares of Class A Common Stock) that a holder of Shares of Series A Preferred Stock would have received had such holder, immediately prior to such redemption or Liquidation, as the case may be, converted such Shares then held by such holder into shares of Class A Common Stock at the applicable Conversion Price then in effect in accordance with Section 8.1, before any distributions are made to holders of Class A Common Stock and all other Junior Securities and subject to the rights of the holders of any Parity Securities or Senior Securities and the rights of the Corporation’s existing and future creditors.
“GAAP” means generally accepted accounting principles in the United States.
“Governmental Authority” means any government, court, regulatory or administrative agency, commission, arbitrator (public or private) or authority or other legislative, executive or judicial governmental entity (in each case including any self-regulatory organization), whether federal, state or local, domestic, foreign or multinational, or any national securities exchange on which shares of Common Stock are listed.
“holder” as of a particular time, means any Person that, as of such time, is the holder of record of at least one Share of Series A Preferred Stock.
“Indebtedness” means for any Person (without duplication): (a) all indebtedness of such Person for borrowed money, (b) all obligations under leases which shall have been or must be, in accordance with GAAP, recorded as finance leases and that would be capitalized and reflected as a liability on the balance sheet of such Person; provided that the term “Indebtedness” shall not include (i) trade payables or similar obligations, and accrued expenses, in each case arising in the ordinary course of business, (ii) any earn-out obligation in connection with an acquisition, (iii) prepaid or deferred revenue arising in the ordinary course of business, (iv) any Non-Financing Lease Obligation, (v) any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past practice, (vi) obligations under any license, permit or approval or guarantees thereof incurred prior to the Initial Closing Date or in the ordinary course of business or consistent with past practice, (vii) any obligations in respect of workers’ compensation claims, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes, (viii) any intercompany Indebtedness, (ix) any hedging obligations that are not incurred for speculative purposes, and (x) any take or pay or similar obligation to the extent such obligation is not shown as a liability on the balance sheet of such Person in accordance with GAAP. The amount of Indebtedness of any Person at any time in the case of a revolving credit or similar facility shall be the total amount of funds borrowed and then outstanding.
“Initial Closing Date” has the meaning given to such term in the Securities Purchase Agreement.
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“Insolvency Event” means:
(a) any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or any of its Material Subsidiaries;
(b) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Corporation or any of its Material Subsidiaries, or of a substantial part of the property or assets of the Corporation or any of its Material Subsidiaries, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Corporation or any of its Material Subsidiaries or for a substantial part of the property or assets of the Corporation or any of its Material Subsidiaries or (iii) the winding-up or liquidation of the Corporation or any of its Material Subsidiaries, and in the case of each of clauses (i) through (iii), such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or
(c) the Corporation or any of its Material Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (b) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Corporation or any of its Material Subsidiaries or for a substantial part of the property or assets of the Corporation or any of its Material Subsidiaries, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors.
“Investor” means Bubble Holdings, LLC and other transferees to whom Shares of Series A Preferred Stock are transferred in accordance with the terms of the Securities Purchase Agreement.
“Investor Redemption” has the meaning set forth in Section 7.2.
“Investor Redemption Date” has the meaning set forth in Section 7.4(b).
“Investor Redemption Notice” has the meaning set forth in Section 7.2.
“Investor Redemption Price” means, as of any date of redemption, an amount of cash per Share equal to the greater of (i) the Accreted Value and (ii) an amount equal to 1.5 multiplied by the Original Issuance Price, less (a) any cash Dividends paid per Share in accordance with Section 4.2 and (b) any cash dividends or distributions paid per Share in accordance with Section 4.4, plus any unpaid Excess Deferred Dividend Amount.
“IRS” means the United States Internal Revenue Service.
“Issue Date” means (i) with respect to any Shares issued on the Initial Closing Date, the Initial Closing Date and (ii) with respect to any Shares issued on the Deferred Closing Date, the Deferred Closing Date.
“Junior Securities” means, collectively, the Common Stock and each other class or series of capital stock of the Corporation now existing or hereafter authorized, classified or reclassified, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
“Last Reported Sale Price” of the Class A Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Class A Common Stock is traded. If the Class A Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price per share for the Class A Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Class A Common Stock is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices per share for the Class A Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose.
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“Law” means all state or federal laws, common law, statutes, ordinances, codes, rules or regulations, orders, executive orders, judgments, injunctions, governmental guidelines or interpretations having the force of law, Permits, decrees, or other similar requirements enacted, adopted, promulgated, or applied by any Governmental Authority.
“Liquidation” has the meaning set forth in Section 5.1.
“Mandatory Conversion” has the meaning set forth in Section 8.2.
“Mandatory Conversion Date” has the meaning set forth in Section 8.2(a).
“Mandatory Conversion Right” has the meaning set forth in Section 8.2.
“Material Subsidiary” shall mean any Subsidiary other than any Subsidiary of the Corporation that did not, as of the last day of the fiscal quarter of the Corporation most recently ended, have assets with a value in excess of 10.00% of the consolidated total assets or revenues and income from continuing operations before taxes representing in excess of 10.00% of total revenues and income from continuing operations before taxes, respectively, of the Corporation and its Subsidiaries on a consolidated basis as of such date and after giving pro forma effect to any acquisitions or dispositions which occur after such balance sheet date.
“Net Debt” means, as at any date of determination, (i) the aggregate principal amount of Indebtedness of the Corporation and its Subsidiaries outstanding as of such date, minus (ii) the aggregate amount of all cash and cash equivalents of the Corporation or any of its Subsidiaries as of such date that would not appear as “restricted” on a consolidated balance sheet of the Corporation and its Subsidiaries, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP.
“Non-Financing Lease Obligation” means a lease obligation that is not required to be accounted for as a financing or capital lease on both the balance sheet and the income statement for financial reporting purposes in accordance with GAAP. For the avoidance of doubt, a straight-line or operating lease (including any lease that would not have been a capital lease under GAAP as of December 31, 2017) shall be considered a Non-Financing Lease Obligation.
“Notice of Conversion” has the meaning set forth in Section 8.3(b).
“Notice of Mandatory Conversion” has the meaning set forth in Section 8.2(a).
“Optional Conversion” has the meaning set forth in Section 8.1.
“Optional Conversion Date” has the meaning set forth in Section 8.3(b).
“Original Issuance Price” means, with respect to any Share on any given date, $1,000.00.
“Parity Securities” means any class or series of capital stock, the terms of which expressly provide that such class ranks pari passu with the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
“Permits” means all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities.
“Person” means an individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other entity, including a Governmental Authority.
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“Preferred Stock” has the meaning set forth in the Recitals.
“Redemption Date” and “Redemption Dates” have the meanings set forth in Section 7.4(b).
“Redemption Note” has the meaning set forth in Section 7.5(b).
“Reorganization Event” has the meaning set forth in Section 8.7(f).
“Restricted Stock Legend” means the legend set forth in Exhibit A hereto, which legend is required to be placed on all Series A Preferred Stock Certificates.
“Restricted Series A Preferred Stock Certificate” means a Series A Preferred Stock Certificate bearing the Restricted Stock Legend.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Purchase Agreement” means that certain Securities Purchase Agreement, dated as of October 22, 2026, by and between the Corporation and the Investor.
“Senior Securities” means any class or series of capital stock, the terms of which expressly provide that such class ranks senior to, or has preference or priority over, the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
“Series A Preferred Stock” has the meaning set forth in Section 1.
“Series A Preferred Stock Certificate” means one or more certificates representing Series A Preferred Stock registered in the name of the holder thereof, except that any such Series A Preferred Stock Certificate shall not have a schedule of increases or decreases.
“Shares” has the meaning set forth in Section 1.
“Spin-Off” has the meaning set forth in Section 8.7(d).
“Spin-Off Valuation Period” has the meaning set forth in Section 8.7(d).
“Subsidiary” when used with respect to any Person, means any corporation, limited liability company, partnership, association, trust or other entity of which (x) securities or other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (y) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Surplus Amount” has the meaning set forth in Section 4.4.
“Tax” and “Taxes” means any and all United States federal, state, local or non-United States taxes, fees, levies, duties, tariffs, imposts, and other similar charges (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes; license, registration and documentation fees; and customs duties, tariffs and similar charges, together with any interest, or penalties and additions to tax imposed by any Governmental Authority.
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“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section 8.7(e).
“Total Net Leverage Ratio” means, as of any date of determination, the ratio of (i) Net Debt as of the last day of the most recently ended period of four (4) consecutive fiscal quarters for which financial statements are available to (ii) EBITDA (as defined in the Credit Agreement) as of the last day of the most recently ended period of four (4) consecutive fiscal quarters for which financial statements are available.
“TRA” means the Tax Receivable Agreement, dated as of July 21, 2021, as amended from time to time, by and among the Corporation, Zevia LLC, the TRA Holders (as defined therein) and the TRA Representative (as defined therein).
“Trading Day” means a Business Day on which The New York Stock Exchange (or any other national securities exchange on which the Class A Common Stock is listed at such time) is open for business.
“Transfer Agent” means the transfer agent with respect to the Series A Preferred Stock, which, on and as of the Issue Date occurring on the Initial Closing Date, shall be Equiniti Trust Company, LLC, and any successor transfer agent of national reputation appointed by the Corporation and notified to the holders.
“Wholly-owned Subsidiary” means, at any time, any Subsidiary of which all of the issued and outstanding Equity Securities (other than directors’ qualifying shares and shares held by a resident of the jurisdiction, in each case, as required by law) are owned by any one (1) or more of the Corporation and the Corporation’s other Wholly-owned Subsidiaries at such time.
3. Rank. With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, all Shares of the Series A Preferred Stock shall rank (a) senior to all Junior Securities, (b) pari passu with any Parity Securities in issue from time to time, and (c) junior to all Senior Securities.
4. | Dividends. |
4.1 Accrual of Dividends. From and after the Dividend Commencement Date, cumulative dividends (“Dividends”) on each Share shall accrue daily in arrears at the applicable Dividend Rate on the Accreted Value of such Share as of the beginning of the applicable quarterly period, whether or not there are funds legally available for the payment of dividends. Unless paid in cash in accordance with Section 4.2, each Dividend shall be added to the Accreted Value as a payment-in-kind dividend on the applicable Dividend Payment Date.
4.2 Payment of Dividends.
(a) On the last day of March, June, September and December of each calendar year (each such date, a “Dividend Payment Date”), the Corporation may elect to pay in cash some or all of the Dividend accrued for the applicable quarterly period. If the Corporation makes that election, it shall pay the cash Dividend pro rata on all Shares. If the Corporation does not make that election, the Dividend for that period shall be added to the Accreted Value as a payment-in-kind dividend on that Dividend Payment Date and shall thereafter bear Dividends at the applicable Dividend Rate. The record date for payment of dividends on the Series A Preferred Stock will be the fifteenth (15th) day of the calendar month of the applicable Dividend Payment Date, whether or not such date is a Business Day, and dividends shall only be payable to registered holders of record of the Series A Preferred Stock as such holders appear on the stock register of the Corporation at the close of business on the related record date. If any Dividend Payment Date is not a Business Day, the applicable payment shall be due on the next succeeding Business Day and no additional dividend amount for such period shall be payable during such period as a result of such delay, but shall be paid on the next succeeding Dividend Payment Date.
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(b) Notwithstanding anything to the contrary herein, to the extent that upon any Dividend Payment Date, the election to not pay a Dividend in cash would result in the number of shares of Class A Common Stock issued and/or into which the outstanding Series A Preferred Stock could be converted, individually or in the aggregate, to exceed 14,428,844 shares of Class A Common Stock (as adjusted for any event set forth in Section 8.7) (the “Conversion Cap”), then the Corporation must declare and make each dividend payment on the Series A Preferred Stock on each such Dividend Payment Date in cash (the aggregate amount of such dividend payments required to be paid in cash on such Dividend Payment Date, the “Excess Dividend Amount”), unless, and solely to the extent, the Corporation elects to defer the cash payment of any Excess Dividend Amount because the Corporation is prohibited by applicable Law (including the DGCL) to make such cash payment (the aggregate amount of any Excess Dividend Amount required to be paid in cash on such Dividend Payment Date but so deferred, the “Excess Deferred Dividend Amount”); any Excess Deferred Dividend Amount must be paid in cash upon any conversion of the Series A Preferred Stock in accordance with Section 8 rather than converting into shares of Class A Common Stock.
(c) If the Corporation fails to pay any Excess Deferred Dividend Amount in cash on the applicable Dividend Payment Date as set forth in clause (b) above (including as a result of being prohibited by the DGCL from making such payment), then (i) any such Excess Deferred Dividend Amount shall continue to accrue and accumulate at the Dividend Rate then in effect for the period from and including the applicable Dividend Payment Date upon which the Corporation fails to pay in cash such Excess Deferred Dividend Amount through but not including the day upon which the Corporation pays in cash such Excess Deferred Dividend Amount and (ii) the Corporation shall not, and shall not be required to, add to or otherwise increase the Accreted Value of the Shares of Series A Preferred Stock in respect of such Excess Deferred Dividend Amount.
(d) In addition, unless and until all Excess Deferred Dividend Amounts that are required to be paid in cash have been paid in full in cash, the Corporation shall not declare or pay any dividends or make any distributions, whether in cash, securities or other property, on any Junior Securities (other than dividends, payments or distributions payable solely in Junior Securities or in options, warrants or other rights to purchase such Junior Securities), nor shall the Corporation directly or indirectly redeem, purchase or otherwise acquire for consideration any Junior Securities; provided, that the foregoing shall not restrict (i) any repurchase of unvested shares of Junior Securities following termination of an employee, advisor or consultant of the Corporation or its Subsidiaries, (ii) the forfeiture or withholding of taxes payable in connection with, and repurchases or withholdings of Junior Securities deemed to occur with respect to the exercise or vesting of any stock or other equity options or warrants, stock units or other incentive interests or the vesting of equity awards if such Junior Securities represents a portion of the exercise price thereof or the withholding of a portion of such Junior Securities to pay taxes payable on account of such exercise, (iii) net settlement of derivatives or convertible, exchangeable or similar securities, (iv) repurchase or redemption of Junior Securities made in exchange for, or in amount equal to or less than the proceeds of a substantially concurrent sale or issuance of Junior Securities to the extent contributed to the Corporation, (v) repurchase or redemption of Junior Securities deemed to occur in connection with paying cash in lieu of fractional shares of such Junior Securities in connection with a share dividend, distribution, share split, reverse share split, merger, consolidation, amalgamation or other business combination of the Corporation and (vi) repurchase or redemption of Junior Securities in accordance with provisions similar to those described in Section 7.1 hereof (provided that, for the purposes of this clause (vi), all Shares of Series A Preferred Stock tendered by holders in connection with such Fundamental Change Redemption have been repurchased or redeemed).
4.3 Dividend Calculations. Dividends on the Series A Preferred Stock shall accrue, whether or not earned or declared and whether or not there are specific profits, surplus or other funds of the Corporation legally available for the payment of dividends, based on actual days elapsed over a 365-day year, commencing on the Dividend Commencement Date, and, unless paid in cash, shall compound quarterly by adding unpaid payment-in-kind Dividends to the Accreted Value on each Dividend Payment Date.
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4.4 Dividends on the Class A Common Stock. If the Corporation declares a dividend or makes a distribution of cash (or any other distribution treated as a dividend under Section 301 of the Code) on its Class A Common Stock, each holder of Shares of Series A Preferred Stock shall be entitled to participate in such dividend or distribution in an amount equal to the largest number of whole shares of Class A Common Stock into which all Shares of Series A Preferred Stock (including any accrued but unpaid dividends up to, but excluding, the applicable record date, but not with respect to any Excess Deferred Dividend Amount, and in any event subject to the limitations set forth in Section 4 and Section 8.3(e)) held of record by such holder is convertible pursuant to Section 8 herein as of the record date for such dividend or distribution or, if there is no specified record date, as of the date of such dividend or distribution; provided that any such cash dividend or distribution received by the holders of Shares of Series A Preferred Stock shall reduce, on a dollar-for-dollar basis, the Dividends payable as provided in Section 4.2 on the immediately succeeding Dividend Payment Date and, if applicable, subsequent Dividend Payment Dates in respect of such Shares of Series A Preferred Stock as of the time such cash dividend or distribution is made. For the avoidance of doubt, if any such cash dividend or distribution received by the holders of Shares of Series A Preferred Stock pursuant to this Section 4.4 is greater than the Dividends payable as provided in Section 4.2 for the immediately succeeding Dividend Payment Date (the “Surplus Amount”), the Dividends payable as provided in Section 4.2 for succeeding Dividend Payment Dates shall be reduced on a dollar-for-dollar basis until the Surplus Amount is zero.
4.5 Conversion Prior to or Following a Record Date. If the Conversion Date for any Shares is prior to the close of business on the record date for a dividend as provided in Section 4.2, holders of such Shares shall not be entitled to any dividend in respect of such record date. If the Conversion Date for any Shares is after the close of business on the record date for a dividend as provided in Section 4.2 but prior to the corresponding Dividend Payment Date, holders of such Shares as of the applicable record date shall be entitled to receive such dividend, notwithstanding the conversion of such Shares prior to the applicable Dividend Payment Date.
5. | Liquidation. |
5.1 Liquidation. In the event of any Insolvency Event of the Corporation (a “Liquidation”), the holders of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, pari passu with any payment to the holders of any Parity Securities and subject to the rights of Senior Securities and the Corporation’s creditors, but before any distribution or payment out of the assets of the Corporation shall be made to the holders of Junior Securities by reason of their ownership thereof, an amount in cash equal to the Fundamental Change Redemption Price.
5.2 Insufficient Assets. If upon any Liquidation the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of the Shares of Series A Preferred Stock the Fundamental Change Redemption Price to which they are entitled under Section 5.1, (a) the holders of the Shares shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective full amounts which would otherwise be payable in respect of the Series A Preferred Stock and any Parity Securities in the aggregate upon such Liquidation if all amounts payable on or with respect to such Shares were paid in full, taking into account the Fundamental Change Redemption Price payable in respect of such Series A Preferred Stock, and (b) the Corporation shall not make or agree to make, or set aside for the benefit of the holders of Junior Securities, any payments to the holders of Junior Securities.
5.3 Notice Requirement. In the event of any Liquidation, the Corporation shall, within ten (10) days of the date the Board approves such action, or no later than twenty (20) days of any stockholders’ meeting called to approve such action, or within twenty (20) days of the commencement of any involuntary proceeding, whichever is earlier, give each holder of Shares of Series A Preferred Stock written notice of the proposed action. Such written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of Shares upon consummation of the proposed action and the date of delivery thereof. If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give written notice to each holder of Shares of such material change.
6. | Voting. |
6.1 As-Converted Voting. Each holder of outstanding Shares of Series A Preferred Stock shall be entitled to vote with holders of outstanding shares of Common Stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration (whether at a meeting of stockholders of the Corporation, by written action of stockholders in lieu of a meeting or otherwise), except as provided by law. In any such vote, each holder of Shares of Series A Preferred Stock shall be entitled to a number of votes equal to the largest number of whole shares of Class A Common Stock into which all Shares of Series A Preferred Stock (including any accrued but unpaid dividends up to, but excluding, the applicable record date, but not with respect to any Excess Deferred Dividend Amount, and in any event subject to the limitations set forth in Section 4 and Section 8.3(e)) held of record by such holder is convertible pursuant to Section 8 herein as of the record date for such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent. Each holder of outstanding Shares of Series A Preferred Stock shall be entitled to notice of all stockholder meetings (or requests for written consent) in accordance with the Amended and Restated Bylaws of the Corporation (the “Bylaws”).
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6.2 Series A Consent Rights. For so long as the Investor beneficially owns a number of shares of Series A Preferred Stock representing at least fifty percent (50%) of the aggregate Shares issued on each Issue Date (or at least eight percent (8%) of the Common Stock (including the Series A Preferred Stock on an as-converted basis)) then issued and outstanding, without (A) the prior written approval of the holders of at least 50% of the then outstanding shares of Series A Preferred Stock, voting separately as a class, or (B) if the matter is subject to approval by the Board but not the stockholders of the Corporation, the affirmative vote (and not merely the participation, presence or vote being counted for quorum purposes) of the Purchaser Designee (as defined in the Securities Purchase Agreement), the Corporation shall not, and shall not permit any Subsidiary to:
(i) amend, modify or waive any provision of this Certificate of Designations or the Certificate of Incorporation or the Bylaws in a manner that adversely alters or changes the rights, powers, preferences or privileges of the holders of the Series A Preferred Stock, including any amendment to Article III of the Certificate of Incorporation or any change in the Corporation’s status as a public benefit corporation or its election under Subchapter XV of the DGCL;
(ii) create (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges senior to or on parity with the Series A Preferred Stock, or increase or decrease the authorized number of Shares of Series A Preferred Stock, or issue any additional Shares of Series A Preferred Stock; provided, however, that the foregoing shall not restrict any such action taken solely in connection with a financing, the net proceeds of which are used to fund a redemption of all of the then-outstanding Shares of Series A Preferred Stock;
(iii) purchase or redeem (or permit any Subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of Junior Securities of the Corporation other than (A) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized in this Certificate of Designations, (B) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock, (C) repurchases of capital stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof and (D) dividends or distributions on shares of Junior Securities, the aggregate amount of which, when taken together with all other dividends and distributions made pursuant to this clause (D) during the applicable fiscal year of the Corporation, does not exceed an amount equal to 1.00 times “Free Cash Flow” of the Corporation for the trailing twelve (12)-month period ending on the last day of the most recently completed fiscal quarter; provided, however, that the exception in clause (D) shall not apply if any Investor Redemption or Fundamental Change Redemption remains unsatisfied; and provided, further, that “Free Cash Flow” means, for any period, consolidated cash flow from “operating activities” (defined in ASC 230-10-20) less capital expenditures actually paid in cash during such period, in each case determined in accordance with GAAP and excluding cash proceeds from financings and asset dispositions;
(iv) acquire (whether by merger, consolidation, amalgamation, asset purchase, purchase of equity securities, joint venture or otherwise) any business, Person or division thereof, or effect any divestiture (whether by merger, asset sale, sale of equity securities or otherwise) of any business, Person or division thereof (including any Subsidiary), in each case, for consideration in excess of $25.0 million;
(v) change the Corporation’s independent registered public accounting firm or make or permit any material change to its accounting policies, in each case other than in the ordinary course of business or as required by a change in U.S. GAAP or applicable Law;
(vi) commence, or permit any Subsidiary to commence, any voluntary liquidation, dissolution, winding up or bankruptcy proceeding; or
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(vii) exercise its right to terminate the rights under the TRA with respect to all or a portion of the Units (as defined in the TRA) pursuant to and in accordance with Section 3.01(a) of the TRA.
7. | Redemption. |
7.1 Fundamental Change Redemption. Subject to the provisions of this Section 7, upon the occurrence of a Fundamental Change, each holder of Series A Preferred Stock shall have the right to require the Corporation to redeem, and the Corporation shall redeem, out of funds legally available therefor, all of the then-outstanding Shares of Series A Preferred Stock held by such holder requested by such holder to be redeemed (a “Fundamental Change Redemption”) for a price per Share equal to the Fundamental Change Redemption Price. In connection with a Fundamental Change, the Corporation shall provide to the holders of Series A Preferred Stock written notice of the proposed Fundamental Change (the “Fundamental Change Redemption Notice”) at least twenty (20) calendar days prior to the date on which the Corporation anticipates consummating a Fundamental Change (or if later and subject to this Section 7.1, promptly after the Corporation discovers that a Fundamental Change may occur). Any such Fundamental Change Redemption shall occur on the date of consummation of the Fundamental Change and in accordance with the Fundamental Change Redemption Notice, if such notice is received by the holders of Series A Preferred Stock at least five (5) Business Days prior to the consummation of such Fundamental Change (solely in the case of the Corporation discovering a Fundamental Change may occur following the twenty (20) calendar day period above and within five (5) Business Days after the consummation of such Fundamental Change if the Corporation shall discover the occurrence of such Fundamental Change at a later date). In exchange for the cancellation of Shares of Series A Preferred Stock in accordance with Section 7.6 below, the Fundamental Change Redemption Price for the Shares being redeemed shall be payable in cash by the Corporation in immediately available funds to the respective holders of the Series A Preferred Stock, except to the extent prohibited by applicable law, including the DGCL.
7.2 Investor’s Redemption. Subject to the provisions of this Section 7.2, at any time and from time to time, following the earliest to occur of (i) the fourth (4th) anniversary of the Initial Closing Date, (ii) the incurrence by the Corporation or any of its Subsidiaries of any new Indebtedness without the prior approval of the Investor (other than (x) draws under the existing revolving commitments available under the Credit Agreement incurred in the ordinary course of business, or (y) Indebtedness incurred to finance a redemption of Shares of Series A Preferred Stock pursuant to this Section 7, but only if all of the then-outstanding Shares of Series A Preferred Stock are redeemed from the net proceeds of such Indebtedness), such that, immediately following such incurrence, on a pro forma basis, the consolidated Net Debt of the Corporation and its Subsidiaries exceeds the greater of (A) $20.0 million and (B) an amount such that the Total Net Leverage Ratio would be greater than 3.00 to 1.00, calculated after giving effect to the incurrence of such Indebtedness, and (iii) the Corporation or any of its Subsidiaries entering into a definitive agreement providing for the sale or other disposition of assets for consideration in excess of $10.0 million (other than sales, transfers or other dispositions of (A) inventory, finished goods or products in the ordinary course of business, (B) assets that are obsolete, worn-out, damaged, no longer used or useful in the conduct of business, or otherwise surplus to the Corporation’s or its Subsidiaries’ operating requirements, or (C) assets transferred (x) by the Corporation to any direct or indirect Subsidiary of the Corporation, or (y) by any direct or indirect Subsidiary of the Corporation to the Corporation or another direct or indirect Subsidiary of the Corporation), the Investor shall have the right, by written election delivered to the Corporation, to require the Corporation to redeem all or any portion of the Investor’s outstanding Shares of Series A Preferred Stock at a price per Share equal to the Investor Redemption Price (an “Investor Redemption”). Any such Investor Redemption shall occur not less than sixty (60) days following receipt by the Corporation of a written election notice (the “Investor Redemption Notice”) from the Investor. Following the notice period required by the Investor Redemption Notice, the Corporation shall redeem all, or in the case of an election to redeem less than all of the Shares of Series A Preferred Stock, the same pro rata portion of each such holder’s Shares pursuant to this Section 7.2. In exchange for the surrender to the Corporation by the respective holders of Shares of Series A Preferred Stock of their certificate or certificates, if any, representing such Shares on or after the applicable Investor Redemption Date in accordance with Section 7.6 below, the Investor Redemption Price for the Shares being redeemed shall be payable in cash by the Corporation in immediately available funds to the respective holders of the Series A Preferred Stock, except to the extent prohibited by applicable law, including the DGCL.
7.3 Fundamental Change Redemption Notice. Each Fundamental Change Redemption Notice shall state:
(a) the Fundamental Change Redemption Price;
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(b) the date of the closing of the redemption, which pursuant to Section 7.1 shall be the date of consummation of the Fundamental Change (the applicable date, the “Fundamental Change Redemption Date”), provided that the Fundamental Change Redemption Date shall in no event be later than the date on which the Corporation is required to make any payment pursuant to the TRA as a result of such Fundamental Change;
(c) the current Conversion Price of the Series A Preferred Stock;
(d) a description of the information needed from the holder to elect to participate in such redemption, including a form of any notice required to be delivered by a holder to participate in such redemption;
(e) a description of the payments and other actions required to be made or taken in order to satisfy all of the Corporation’s obligations under any outstanding indebtedness; and
(f) the manner and place designated for surrender by the holder to the Corporation of his, her or its certificate or certificates, if any, representing the Shares of Series A Preferred Stock to be redeemed.
7.4 Investor Redemption Notice. Each Investor Redemption Notice shall state:
(a) the number of Shares of Series A Preferred Stock held by the holder that the holder proposes the Corporation to redeem on the Investor Redemption Date specified in the Investor Redemption Notice;
(b) the date of the closing of the redemption, which shall be no earlier than sixty (60) days following delivery to the Corporation of the Investor Redemption Notice (each an “Investor Redemption Date” and, together with the Fundamental Change Redemption Date, the “Redemption Dates” and each, a “Redemption Date”), and the Investor Redemption Price; and
(c) the manner and place designated for surrender by the holder to the Corporation of his, her or its certificate or certificates, if any, representing the Shares of Series A Preferred Stock to be redeemed.
7.5 Insufficient Funds; Remedies For Nonpayment.
(a) Insufficient Funds. If on any Redemption Date the assets of the Corporation legally available are insufficient to pay the full Fundamental Change Redemption Price or Investor Redemption Price for the total number of Shares to be redeemed, the Corporation shall (i) take all commercially reasonable actions required and permitted under applicable law to maximize the assets legally available for paying the Fundamental Change Redemption Price or Investor Redemption Price, as applicable, (ii) redeem out of all such assets legally available therefor on the applicable Redemption Date the maximum possible number of Shares that it can redeem on such date, pro rata among the holders of such Shares to be redeemed in proportion to the aggregate number of Shares to be redeemed by each such holder on the applicable Redemption Date, and (iii) following the applicable Redemption Date, at any time and from time to time when additional assets of the Corporation become legally available to redeem the remaining Shares, the Corporation shall use such assets to pay the remaining balance of the aggregate applicable Fundamental Change Redemption Price or Investor Redemption Price.
(b) Remedies For Nonpayment. If on any Redemption Date all of the Shares elected to be redeemed pursuant to such redemption are not redeemed in full by the Corporation by paying the entire applicable redemption price in cash, a note attached as Exhibit C to the Securities Purchase Agreement (a “Redemption Note”) will be deemed to be issued automatically by the Corporation to the holder exercising its redemption right pursuant to Section 7.1 or Section 7.2, as applicable, in the amount of the Fundamental Change Redemption Price or Investor Redemption Price, as applicable (less any amounts paid by the Corporation in cash) in full satisfaction of the Corporation’s obligations under this Section 7. From and after the date on which a Redemption Note is deemed issued pursuant to this Section 7.5(b), dividends shall cease to accrue on the Shares redeemed in exchange for such Redemption Note, and all accrued and unpaid dividends on such Shares through such date shall be included in the principal amount of such Redemption.
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7.6 Surrender of Certificates. On or before the applicable Redemption Date, each holder of Shares of Series A Preferred Stock being redeemed shall surrender the certificate or certificates, if any, representing such Shares to the Corporation in the manner and place designated in the Fundamental Change Redemption Notice or Investor Redemption Notice, as applicable, or to the Corporation’s corporate secretary at the Corporation’s headquarters, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto). Each surrendered certificate shall be canceled and retired and the Corporation shall thereafter make payment of the Fundamental Change Redemption Price or Investor Redemption Price, as applicable, by certified check or wire transfer to the holder of record of such certificate; provided, that if less than all the Shares represented by a surrendered certificate are redeemed, then a new stock certificate representing the unredeemed Shares shall be issued in the name of the applicable holder of record of the canceled stock certificate.
7.7 Rights Subsequent to Redemption.
(a) If on the applicable Redemption Date, the applicable redemption price is paid in full in cash for any of the Shares to be redeemed on such Redemption Date, then on such date all rights of the holder in the Shares so redeemed and paid or tendered, including any rights to dividends on such Shares, shall cease, and such Shares shall no longer be deemed issued and outstanding.
(b) Notwithstanding Section 7.7(a), if on the applicable Redemption Date the applicable redemption price is not paid in full in cash and a Redemption Note is deemed issued pursuant to Section 7.5, and so long as any amounts remain outstanding under the Redemption Note, (A) the Corporation shall not without the written approval of the Payee (as defined in the Redemption Note) (i) incur any Indebtedness that ranks senior to the Corporation’s obligations under the Redemption Note (except for any Indebtedness incurred to finance a redemption of Shares of Series A Preferred Stock pursuant to this Section 7, but only if all of the then-outstanding Shares of Series A Preferred Stock are redeemed from the net proceeds of such Indebtedness), (ii) pay any Indebtedness that ranks junior to the Corporation’s obligations under the Redemption Note, or (iii) pay any Indebtedness that ranks pari passu with the Corporation’s obligations under the Redemption Note without paying such obligation on a pro rata basis, (B) the consent rights set forth in Section 6.2(iii) and Section 6.2(iv) shall apply to the Payee, and (C) the Payee shall have the information rights set forth in Section 5.5 of the Securities Purchase Agreement.
8. | Conversion. |
8.1 Holders’ Optional Right to Convert. Subject to the provisions of this Section 8 and the Conversion Cap, at any time and from time to time, the holders of Series A Preferred Stock shall have the right by written election to the Corporation to convert all or any portion of the outstanding Shares of Series A Preferred Stock (including any fraction of a Share), (each, an “Optional Conversion”), into an aggregate number of shares of Class A Common Stock as is determined by (i) multiplying (A) the number of Shares (including any fraction of a Share) to be converted by (B) the Accreted Value and then (ii) dividing the result by the Conversion Price in effect immediately prior to such conversion; in addition thereto the holder shall receive cash in lieu of any fractional shares as set out in Section 8.3(c).
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8.2 Mandatory Conversion. Subject to the provisions of this Section 8, at any time on or after the third (3rd) anniversary of the Initial Closing Date, if (i) the Daily VWAP per share of Class A Common Stock is at least 150% of the Conversion Price on at least twenty (20) Trading Days in any period of thirty (30) consecutive Trading Days, (ii) there is then in effect an effective registration statement covering the resale of all shares of Class A Common Stock issuable upon conversion of Shares of Series A Preferred Stock, (iii) the Class A Common Stock remains listed on The New York Stock Exchange or its successor, and (iv) no redemption obligation with respect to the Series A Preferred Stock is then outstanding and unsatisfied, the Corporation may elect to convert all or any portion of the outstanding Shares of Series A Preferred Stock (including any fraction of a Share) (the “Mandatory Conversion Right” and each conversion pursuant to this Section 8.2, a “Mandatory Conversion”) at the Conversion Price in effect immediately prior to such conversion (with the aggregate number of shares of Class A Common Stock to be delivered by the Corporation determined pursuant to the formula set forth in Section 8.1), and in addition thereto the holder shall receive cash in lieu of any fractional shares as set out in Section 8.3(c); provided, that in the case of an election to convert less than all of the outstanding Shares of Series A Preferred Stock, the Corporation shall convert the same pro rata portion of each holder’s Shares converted pursuant to this Section 8.2.
(a) Notwithstanding anything to the contrary in this Section 8.2, the Corporation’s exercise of its Mandatory Conversion Right, and any related Notice of Mandatory Conversion, will not apply to any Share of Series A Preferred Stock as to which a Fundamental Change Redemption Notice has been duly delivered and not withdrawn. The date (the “Mandatory Conversion Date”) for any Mandatory Conversion will be a Business Day of the Corporation’s choosing that is no more than twenty (20), nor less than ten (10), Business Days after the Notice of Mandatory Conversion for such Mandatory Conversion. To exercise its Mandatory Conversion Right with respect to any Shares of Series A Preferred Stock, the Corporation must send to each holder of such Shares a written notice of such exercise (a “Notice of Mandatory Conversion”). Such Notice of Mandatory Conversion must state: (i) that the Corporation has exercised its Mandatory Conversion Right to cause the Mandatory Conversion of such Shares, briefly describing the Corporation’s Mandatory Conversion Right under this Certificate of Designations; (ii) the Mandatory Conversion Date for such Mandatory Conversion (which shall be the date scheduled for the settlement of such Mandatory Conversion); (iii) that Shares of Series A Preferred Stock subject to Mandatory Conversion may be converted earlier at the option of each holder thereof pursuant to an Optional Conversion at any time before the close of business on the Business Day immediately before the Mandatory Conversion Date; (iv) the Conversion Price in effect on the date of the Notice of Mandatory Conversion for such Mandatory Conversion; and (v) the CUSIP and ISIN numbers, if any, of the Series A Preferred Stock. If less than all Shares of Series A Preferred Stock then outstanding are subject to Mandatory Conversion, then the Shares of Series A Preferred Stock to be subject to such Mandatory Conversion will be selected by the Corporation pro rata.
8.3 Procedures for Conversion; Effect of Conversion.
(a) Procedures for Mandatory Conversion. If the Corporation duly exercises, in accordance with Section 8.2, its Mandatory Conversion Right with respect to any Share of Series A Preferred Stock, then (1) the Mandatory Conversion of such Share will occur automatically and without the need for any action on the part of each holder(s) thereof; and (2) the shares of Class A Common Stock due upon such Mandatory Conversion will be registered in the name of the holder(s) of such Shares of Series A Preferred Stock as of the close of business on the related Mandatory Conversion Date.
(b) Procedures for Holder Conversion. In order to effectuate a conversion of Shares of Series A Preferred Stock pursuant to Section 8.1, a holder shall submit a written election to the Corporation that such holder elects to convert Shares specifying the number of Shares elected to be converted (a “Notice of Conversion”). The holder shall surrender, along with a Notice of Conversion, if applicable, to the Corporation the certificate or certificates, if any, representing the Shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto). The conversion of such Shares hereunder shall be deemed effective as of the date of submission of the Notice of Conversion and surrender of such Series A Preferred Stock certificate or certificates, if any (such date, the “Optional Conversion Date” and, together with the Mandatory Conversion Date, each a “Conversion Date” and collectively the “Conversion Dates”). Upon the receipt by the Corporation of a Notice of Conversion and the surrender of such certificate(s) and accompanying materials (if any), the Corporation shall as promptly as practicable (but in any event within three (3) Trading Days thereafter) deliver to the relevant holder or holders, as applicable (A) the number of shares of Class A Common Stock (subject to Section 8.3(c)) to which such holder or holders shall be entitled upon conversion of the applicable Shares as calculated pursuant to Section 8.1, as applicable, and, if applicable, (B) the number of Shares of Series A Preferred Stock delivered to the Corporation for conversion but otherwise not elected to be converted pursuant to the written election, in each case in book-entry form on the Corporation’s share ledger. All shares of capital stock issued hereunder by the Corporation shall be duly and validly issued, fully paid and non-assessable, free and clear of all Taxes, liens, charges and encumbrances with respect to the issuance thereof. Notwithstanding anything to the contrary in this Section 8.3(b), if any Shares of Series A Preferred Stock are held in book-entry form through DTC, holders must convert their Shares in accordance with the applicable procedures of DTC.
(c) Fractional Shares. The Corporation shall not issue any fractional shares of Class A Common Stock upon conversion of Series A Preferred Stock. Instead, the Corporation shall pay a cash adjustment to the holder of Series A Preferred Stock being converted based upon the Current Market Price on the Trading Day prior to the Conversion Date.
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(d) Effect of Conversion. All Shares of Series A Preferred Stock converted as provided in Section 8.1 or Section 8.2, as applicable, shall no longer be deemed outstanding as of the applicable Conversion Date and all rights with respect to such Shares shall immediately cease and terminate as of such time (including, without limitation, any right of redemption pursuant to Section 7), other than the right of the holder to receive shares of Class A Common Stock and payment in lieu of any fraction of a Share in exchange therefor.
(e) Limitation on Conversions. Notwithstanding anything to the contrary herein, the Corporation shall not be obligated to issue any shares of Class A Common Stock pursuant to the terms of this Certificate of Designations, and the holders of Series A Preferred Stock shall not have the right to receive any shares of Class A Common Stock pursuant to the terms of this Certificate of Designations, to the extent the issuance of such shares of Class A Common Stock would cause the Conversion Cap to be exceeded. No holder of Series A Preferred Stock shall be issued in the aggregate, pursuant to the terms of this Certificate of Designations, shares of Class A Common Stock in an amount greater than such holder’s pro rata allocation of shares of Class A Common Stock issuable in an amount not to cause the Conversion Cap to be exceeded based on a fraction, the numerator of which is the aggregate number of Shares of Series A Preferred Stock issued to such initial holder pursuant to the Securities Purchase Agreement on each Issue Date and the denominator of which is the aggregate number of all Shares of Series A Preferred Stock issued to the initial holders pursuant to the Securities Purchase Agreement on each Issue Date (with respect to each such holder, the “Cap Allocation”). In the event that any initial holder (or a transferee of an initial holder) shall sell or otherwise transfer any of such holder’s Series A Preferred Stock, the transferee shall be allocated a pro rata portion of such holder’s Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Cap Allocation allocated to such transferee. In the event that any holder shall have converted all of such holder’s Series A Preferred Stock into a number of shares of Class A Common Stock which, in the aggregate, is less than such holder’s Cap Allocation, then the difference between such holder’s Cap Allocation and the number of shares of Class A Common Stock actually issued to such holder shall be allocated to the respective Cap Allocations of the remaining holders on a pro rata basis in proportion to the shares of Class A Common Stock underlying the Series A Preferred Stock then held by each such holder. Upon any conversion of Series A Preferred Stock into shares of Class A Common Stock, the Corporation shall also pay in cash to the converting holder, concurrently with the issuance of such shares of Class A Common Stock, all Excess Deferred Dividend Amounts with respect to the Shares of Series A Preferred Stock so converted. In the event that the Corporation is prohibited from issuing any shares of Class A Common Stock in connection with a conversion of Series A Preferred Stock pursuant to Section 8.1 or Section 8.2 (the “Cap Shares”), the Corporation shall, to the fullest extent permitted by law and out of funds lawfully available therefor, pay cash on or prior to the applicable share delivery date to such holder in exchange for the redemption of such number of Shares of Series A Preferred Stock held by the holder that are not convertible into such Cap Shares at a price equal to the product of (x) such number of Cap Shares and (y) the Current Market Price of the share of Class A Common Stock on the applicable Conversion Date or Mandatory Conversion Date.
8.4 Reservation of Stock. The Corporation shall at all times when any Shares of Series A Preferred Stock are outstanding reserve and keep available out of its authorized but unissued shares of capital stock, solely for the purpose of issuance upon the conversion of the Series A Preferred Stock, such number of shares of Class A Common Stock issuable upon the conversion of all outstanding Series A Preferred Stock pursuant to this Section 8, taking into account any adjustment to such number of shares so issuable in accordance with Section 8.7 hereof. The Corporation shall take all such actions as may be necessary to assure that all such shares of Class A Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Class A Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not close its books against the transfer of any of its capital stock in any manner which would prevent the timely conversion of the Shares of Series A Preferred Stock.
8.5 No Charge or Payment. The issuance of certificates for shares of Class A Common Stock upon conversion of Shares of Series A Preferred Stock pursuant to Section 8.1 or Section 8.2, as applicable, shall be made without payment of additional consideration by, or other charge, cost or Tax to, the holder in respect thereof.
8.6 Termination of Conversion Right in Connection with Redemption. Notwithstanding anything to the contrary set forth in this Certificate of Designations, in no event may Shares of Series A Preferred Stock be converted as provided in Section 8.1 or Section 8.2, as applicable, on and following the date that is two (2) Business Days prior to the applicable Redemption Date in respect of such Shares, provided that, for the avoidance of doubt, this Section 8.6 shall no longer apply in respect of Shares of Series A Preferred Stock to be redeemed in accordance with Section 7 if the closing of the redemption of such Shares does not occur on the applicable Redemption Date and so long as such Shares are not otherwise redeemed.
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8.7 Adjustment to Conversion Price and Number of Conversion Shares. The Conversion Price and the number of Conversion Shares issuable on conversion of the Shares of Series A Preferred Stock shall be subject to adjustment, without duplication, from time to time as provided in this Section 8.7, except that the Corporation shall not make any adjustment to the Conversion Price if each holder of the Series A Preferred Stock participates, at the same time and upon the same terms as all holders of Class A Common Stock and solely as a result of holding Series A Preferred Stock, in any transaction described in this Section 8.7, without having to convert its Series A Preferred Stock, as if each such holder held a number of shares of Class A Common Stock that would be issuable upon conversion of such Series A Preferred Stock in accordance with Section 8.1. For the avoidance of doubt, upon receipt by holders of any cash dividend or distribution in accordance with Section 4.4, each holder of the Series A Preferred Stock shall be deemed to have participated, at the same time and upon the same terms as all holders of Class A Common Stock and solely as a result of holding Series A Preferred Stock, in such cash dividend or distribution.
(a) Subdivisions and Combinations. In case the outstanding shares of Class A Common Stock shall be subdivided (whether by stock split, recapitalization or otherwise) into a greater number of shares of Class A Common Stock or combined (whether by consolidation, reverse stock split or otherwise) into a lesser number of shares of Class A Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision or combination becomes effective shall be adjusted to equal the product of the Conversion Price in effect on such date and a fraction the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately prior to such subdivision or combination, and the denominator of which shall be the number of shares of Class A Common Stock outstanding immediately after such subdivision or combination. Such adjustment shall become effective retroactively to the close of business on the day upon which such subdivision or combination becomes effective.
(b) Stock Dividends or Distributions. If the Corporation shall issue shares of Class A Common Stock as a dividend or distribution on all or substantially all shares of Class A Common Stock or if the Corporation effects a stock split or combination of the Class A Common Stock (other than as set forth in Section 8.7(a)), the Conversion Price shall be adjusted based on the following formula:
where,
CP1 | = | the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution or the effective date of such share split or share combination, as the case may be; |
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CP0 | = | the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution or the effective date of such share split or share combination, as the case may be; |
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OS0 | = | the number of shares of Class A Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution or the effective date of such share split or share combination, as the case may be; and |
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OS1 | = | the number of shares of Class A Common Stock that would be outstanding immediately after giving effect to such dividend, distribution, share split or share combination, as the case may be. |
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Any adjustment made under this clause (b) shall become effective immediately after the open of business on such Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this clause (b) is declared but not so paid or made, the Conversion Price shall be immediately readjusted, effective as of the date the Board determines not to pay such dividend or distribution, to the Conversion Price that would then be in effect if such dividend or distribution had not been declared or announced.
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(c) Distributions of Rights, Options or Warrants. If the Corporation shall distribute to all or substantially all holders of its Class A Common Stock any rights, options or warrants (other than rights, options or warrants distributed in connection with a stockholders’ rights plan, in which case the provisions of Section 8.7(g) shall apply) entitling them to purchase, for a period of not more than 45 calendar days from the announcement date for such distribution, shares of the Class A Common Stock at a price per share less than the average of the Last Reported Sale Prices of the Class A Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the announcement date for such distribution, the Conversion Price shall be decreased based on the following formula:
where
CP1 | = | the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution; |
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CP0 | = | the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; |
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OS0 | = | the number of shares of the Class A Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such distribution; |
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X | = | the number of shares of the Class A Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the announcement date of such distribution; and |
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Y | = | the total number of shares of the Class A Common Stock issuable pursuant to such rights, options or warrants. |
Any decrease made under this clause (c) shall be made successively whenever any such rights, options or warrants are distributed and shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. To the extent that shares of the Class A Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Price shall be increased to the Conversion Price that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of the Class A Common Stock actually delivered. If such rights, options or warrants are not so distributed, the Conversion Price shall be increased to the Conversion Price that would then be in effect if such record date for such distribution had not occurred.
For purposes of this clause (c), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Class A Common Stock at a price per share less than such average of the Last Reported Sale Prices of the Class A Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the announcement date for such distribution, and in determining the aggregate offering price of such shares of the Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants and any amount payable upon exercise or conversion thereof, the value of such consideration, if other than cash, as reasonably determined by the Corporation in good faith.
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(d) Distributions of Equity Securities, Indebtedness, other Securities, Assets or Property. If the Corporation distributes shares of its Equity Securities, evidences of its Indebtedness, other assets or property of the Corporation or rights, options or warrants to acquire its Equity Securities or other securities to all or substantially all holders of Class A Common Stock, excluding:
(i) dividends or distributions as to which adjustment is required to be effected pursuant to clause (b) or (c) above;
(ii) rights issued to all holders of the Class A Common Stock pursuant to a rights plan, where such rights are not presently exercisable, trade with the Class A Common Stock and the plan provides that the holders of Shares of Series A Preferred Stock will receive such rights;
(iii) dividends or distributions in which Series A Preferred Stock participates on an as-converted basis pursuant to Section 4.4; and
(iv) Spin-Offs described below in this clause (d),
then the Conversion Price shall be decreased based on the following formula:
where
CP1 | = | the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution; |
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CP0 | = | the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; |
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SP0 | = | the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and |
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FMV | = | the fair market value (as determined by the Board in good faith) of the shares of Equity Securities, evidences of Indebtedness, securities, assets or property distributed with respect to each outstanding share of the Class A Common Stock immediately prior to the open of business on the Ex-Dividend Date for such distribution. |
Any decrease made under the portion of this clause (d) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the Conversion Price shall be increased to be the Conversion Price that would then be in effect if such distribution had not been declared.
Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing decrease, each holder of Shares of Series A Preferred Stock may elect to receive at the same time and upon the same terms as holders of shares of Class A Common Stock without having to convert its Series A Preferred Stock, the amount and kind of the Equity Securities, evidences of the Corporation’s Indebtedness, other assets or property of the Corporation or rights, options or warrants to acquire its Equity Securities or other securities of the Corporation that such holder would have received as if such holder owned a number of shares of Class A Common Stock into which the Share of Series A Preferred Stock was convertible at the Conversion Price in effect on the Ex-Dividend Date for the distribution. If the Board determines the “FMV” (as defined above) of any distribution for purposes of this clause (d) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.
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With respect to an adjustment pursuant to this clause (d) where there has been a payment of a dividend or other distribution on the Class A Common Stock in shares of Equity Securities of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Corporation that will be, upon distribution, listed on a U.S. national or regional securities exchange (a “Spin-Off”), the Conversion Price shall be decreased based on the following formula:
where
CP1 | = | Conversion Price in effect immediately after the end of the Spin-Off Valuation Period; |
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CP0 | = | the Conversion Price in effect immediately prior to the end of the Spin-Off Valuation Period; |
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FMV | = | the average of the Last Reported Sale Prices of the Equity Securities or similar equity interest distributed to holders of the Class A Common Stock applicable to one share of the Class A Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 2 as if references therein to Class A Common Stock were to such Equity Securities or similar equity interest) over the first ten (10) consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Spin-Off Valuation Period”); and |
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MP0 | = | the average of the Last Reported Sale Prices of the Class A Common Stock over the Spin-Off Valuation Period. |
Any adjustment to the Conversion Price under the preceding paragraph of this clause (d) shall be made immediately after the close of business on the last Trading Day of the Spin-Off Valuation Period. If the Conversion Date for any Share of Series A Preferred Stock to be converted occurs on or during the Spin-Off Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designations, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Spin-Off Valuation Period.
Notwithstanding the foregoing, if the “FMV” (as defined above) is equal to or greater than the Daily VWAP of the Class A Common Stock over the Spin-Off Valuation Period, in lieu of the foregoing decrease, each holder of Shares of Series A Preferred Stock may elect to receive at the same time and upon the same terms as holders of shares of Class A Common Stock without having to convert its Shares of Series A Preferred Stock, the amount and kind of Equity Securities or similar equity interest that such holder would have received as if such holder owned a number of shares of Class A Common Stock into which the Series A Preferred Stock was convertible at the Conversion Price in effect on the Ex-Dividend Date for the distribution.
(e) Tender Offer, Exchange Offer. If the Corporation or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for the Class A Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Class A Common Stock exceeds the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date (the “Expiration Date”) on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended), the Conversion Price shall be decreased based on the following formula:
where
CP1 | = | the Conversion Price in effect immediately after the close of business on the tenth (10th) Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date; |
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CP0 | = | the Conversion Price in effect immediately prior to the close of business on the tenth (10th) Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date; |
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AC | = | the aggregate value of all cash and any other consideration (as determined by the Board in good faith) paid or payable for shares purchased or exchanged in such tender or exchange offer; |
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SP1 | = | the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period beginning on, and including, the Trading Day next succeeding the Expiration Date (the “Tender/Exchange Offer Valuation Period”); |
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OS1 | = | the number of shares of the Class A Common Stock outstanding immediately after the close of business on the Expiration Date (adjusted to give effect to the purchase or exchange of all shares accepted for purchase in such tender offer or exchange offer); and |
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OS0 | = | the number of shares of the Class A Common Stock outstanding immediately prior to the Expiration Date (prior to giving effect to such tender offer or exchange offer); |
provided, however, that the Conversion Price will in no event be adjusted up pursuant to this Section 8.7(e), except to the extent provided in the immediately following paragraph. The adjustment to the Conversion Price pursuant to this Section 8.7(e) will be calculated as of the close of business on the tenth (10th) Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date. If the Conversion Date for any Share of Series A Preferred Stock to be converted occurs on the Expiration Date or during the Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designations, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Tender/Exchange Offer Valuation Period.
(f) Adjustment for Reorganization Events. If there shall occur any reclassification, statutory share exchange, reorganization, recapitalization, consolidation or merger involving the Corporation with or into another Person in which the Class A Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property (excluding a merger solely for the purpose of changing the Corporation’s jurisdiction of incorporation) including a Fundamental Change (without limiting the rights of holders of Series A Preferred Stock or the Corporation with respect to any Fundamental Change) (a “Reorganization Event”), then, subject to Section 5, following any such Reorganization Event, each Share of Series A Preferred Stock shall remain outstanding and be convertible into the number, kind and amount of securities, cash or other property which a holder of such Share of Series A Preferred Stock would have received in such Reorganization Event had such holder converted its Shares of Series A Preferred Stock into the applicable number of shares of Class A Common Stock immediately prior to the effective date of the Reorganization Event using the Conversion Price applicable immediately prior to the effective date of the Reorganization Event; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 8.7 set forth with respect to the rights and interest thereafter of the holders of Series A Preferred Stock, to the end that the provisions set forth in this Section 8.7 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably practicable, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series A Preferred Stock. Without limiting the Corporation’s obligations with respect to a Fundamental Change, the Corporation (or any successor) shall, no less than twenty (20) calendar days prior to the occurrence of any Reorganization Event, provide written notice to the holders of Series A Preferred Stock of the expected occurrence of such event and of the kind and amount of the cash, securities or other property that each Share of Series A Preferred Stock is expected to be convertible into under this Section 8.7(f). Failure to deliver such notice shall not affect the operation of this Section 8.7(f). The Corporation shall not enter into any agreement for a transaction constituting a Reorganization Event unless, to the extent that the Corporation is not the surviving corporation in such Reorganization Event, or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Series A Preferred Stock into stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.
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(g) Stockholders’ Rights Plan. To the extent that any stockholders’ rights plan adopted by the Corporation is in effect upon conversion of the Shares of Series A Preferred Stock, the holder of Shares of Series A Preferred Stock will receive, in addition to any Class A Common Stock due upon conversion, the appropriate number of rights, if any, under the applicable rights agreement (as the same may be amended from time to time). However, if, prior to any conversion, the rights have separated from the shares of the Class A Common Stock in accordance with the provisions of the applicable stockholders’ rights plan, the Conversion Price will be adjusted at the time of separation as if the Corporation distributed to all holders of the Class A Common Stock, shares of Equity Securities, evidences of Indebtedness, securities, assets or property as described in clause (d) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.
(h) Other Issuances. Except as stated in this Section 8.7, the Corporation shall not adjust the Conversion Price for the issuances of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or rights to purchase shares of Common Stock or such convertible or exchangeable securities.
(i) Adjustment at the Discretion of the Board. The Corporation shall be permitted to decrease the Conversion Price by any amount for a period of at least twenty (20) Business Days if the Board determines in good faith that such decrease would be in the best interest of the Corporation. In addition, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Corporation’s securities are then listed, the Corporation also may (but is not required to) decrease the Conversion Price to avoid or diminish income tax to holders of Class A Common Stock or rights to purchase shares of Class A Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Conversion Price is decreased pursuant to either of the preceding two sentences, the Corporation shall deliver to the holders of the Series A Preferred Stock a notice of the decrease at least fifteen (15) days prior to the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period during which it will be in effect.
(j) Rounding; Par Value; De-minimis Adjustments. All calculations under Section 8.7 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th of a share, as the case may be. No adjustment in the Conversion Price shall reduce the Conversion Price below the then par value of the Class A Common Stock. If an adjustment to the Conversion Price otherwise required by this Section 8.7 would result in a change of less than 1% to the Conversion Price, then, notwithstanding anything to the contrary in this Section 8.7, the Corporation may, at its election, defer and carry forward such adjustment, except that all such deferred adjustments must be given effect (i) when all such deferred adjustments would result in an aggregate change to the Conversion Price of at least 1%, (ii) on the Conversion Date of any Share of Series A Preferred Stock, (iii) on the effective date of any Fundamental Change and (iv) in connection with Dividends paid on the Class A Common Stock pursuant to Section 4.4 hereof.
(k) Treatment of Pre-Record Date Adjustments. Notwithstanding this Section 8.7 or any other provision of this Certificate of Designations, if a Conversion Price adjustment becomes effective on any Ex-Dividend Date, and a holder that has converted its Series A Preferred Stock on or after such Ex-Dividend Date and on or prior to the related record date would be treated as the record holder of the shares of Class A Common Stock as of the related Conversion Date based on an adjusted Conversion Price for such Ex-Dividend Date, then, notwithstanding the Conversion Price adjustment provisions in this Section 8.7, the Conversion Price adjustment relating to such Ex-Dividend Date shall not be made for such converting holder. Instead, such holder shall be treated as if such holder were the record owner of the shares of Class A Common Stock on an unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.
(l) Notwithstanding anything to the contrary in this Section 8.7, the Conversion Price shall not be adjusted:
(i) upon the issuance of any shares of Class A Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Class A Common Stock under any plan;
(ii) upon the issuance of any shares of Class A Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of the Corporation’s Subsidiaries;
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(iii) upon the issuance of any shares of the Class A Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the Issue Date occurring on the Initial Closing Date;
(iv) upon the repurchase of any shares of Class A Common Stock pursuant to an open market share repurchase program or other buy back transaction, including structured or derivative transactions, that is not a tender or exchange offer of the kind described in Section 8.7(e);
(v) solely for a change in the par value of the Common Stock; or
(vi) for accrued and unpaid Dividends, if any.
| (m) | Certificate as to Adjustment. |
(i) As promptly as reasonably practicable following any adjustment of the Conversion Price, but in any event not later than thirty (30) days thereafter, the Corporation shall furnish to each holder of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder) 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 Corporation of a written request by such holder of Series A Preferred Stock, but in any event not later than thirty (30) days thereafter, the Corporation shall furnish to such holder a certificate of an executive officer certifying the Conversion Price then in effect and the number of Conversion Shares or the amount, if any, of other shares of stock, securities or assets then issuable to such holder upon conversion of the Shares of Series A Preferred Stock held by such holder.
| (n) | Notices. In the event: |
(i) that the Corporation shall take a record of the holders of its Class A Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or
(ii) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, any consolidation or merger of the Corporation with or into another Person, or sale of all or substantially all of the Corporation’s assets to another Person; or
(iii) of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation;
then, and in each such case, unless the Corporation has previously publicly announced such information (including through filing or furnishing such information with the SEC), the Corporation shall send or cause to be sent to each holder of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder) at least ten (10) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, 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 Corporation shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock and the Conversion Shares.
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9. Reissuance of Series A Preferred Stock. Shares of Series A Preferred Stock that have been issued and reacquired by the Corporation in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of Preferred Stock of the Corporation undesignated as to series and may be designated or re-designated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, provided that any issuance of such shares as Series A Preferred Stock must be in compliance with the terms hereof.
10. Notices. Except as otherwise provided herein, all notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent (a) to the Corporation, at its principal executive offices and (b) to any stockholder, at such holder’s address as it appears in the stock records of the Corporation (or at such other address for a stockholder as shall be specified in a notice given in accordance with this Section 10).
11. Amendments and Waiver. No provision of this Certificate of Designations may be amended, modified or waived, whether by merger, consolidation or otherwise, except by an instrument in writing executed by the Corporation and holders of at least 50% of the then outstanding Shares of Series A Preferred Stock, and any such written amendment, modification or waiver will be binding upon the Corporation and each holder of Series A Preferred Stock; provided, that any amendment, whether by merger, consolidation or otherwise, to (A)(i) decrease the Original Issuance Price, Investor Redemption Price, Conversion Price, Excess Deferred Dividend Amounts or Dividend Rate of any Share of Series A Preferred Stock or otherwise amend or modify in any manner adverse to the Investor the Corporation’s obligations to pay, or the circumstances under which the Corporation is obligated to offer or pay, the Investor Redemption Price or the Conversion Price, or increase the Conversion Price (or any amendment, modification or waiver, whether by merger or otherwise, which would in its application increase the Conversion Price) (subject to such modifications as are required under this Certificate of Designations) or (ii) otherwise amend any other terms of the Series A Preferred Stock in a manner that would have a disproportionate adverse effect on any holder of the Series A Preferred Stock as compared to other holders of the Series A Preferred Stock, requires the consent of holders of each Share of Series A Preferred Stock and to (B) without limiting the foregoing, amend or modify the provisions of Section 8.7 requires the consent of each holder of Series A Preferred Stock affected thereby. The holders of Series A Preferred Stock shall have all remedies available at law or in equity for a breach of this Certificate of Designations, including the right to seek specific performance. Unless the context specifically requires otherwise, this Certificate of Designations shall cease to apply upon the first day on which no share of Series A Preferred Stock is outstanding.
12. Withholding. Each holder of Series A Preferred Stock shall provide the Corporation with a valid IRS Form W-9. The Corporation and its paying agent shall be entitled to withhold (and a holder of Series A Preferred Stock shall be responsible for) all Taxes on all payments on the Series A Preferred Stock or Class A Common Stock or other securities issued upon conversion of the Series A Preferred Stock in each case to the extent required by applicable Law, and any such amounts shall be deemed paid to the holder in respect of such amounts were withheld.
13. Transfer Agent and Legends.
| 13.1 | Restricted Stock Legend. |
(a) Each Restricted Series A Preferred Stock Certificate will bear the Restricted Stock Legend; and
(b) if any Shares are issued in exchange for, or in substitution of, any other Shares, or to effect a partial conversion, then the certificate for such new Shares will bear the Restricted Stock Legend if the certificate representing such old Shares bore the Restricted Stock Legend at the time of such exchange or substitution, or on the related Conversion Date with respect to such conversion, as applicable; provided, however, that the certificate representing such new Shares need not bear the Restricted Stock Legend if such new Shares are freely transferable subject to this Certificate of Designations and the applicable provisions of the Securities Purchase Agreement immediately after such exchange or substitution, or as of such Conversion Date, as applicable.
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13.2 Other Legends. The certificate representing any Series A Preferred Stock may bear any other legend or text, not inconsistent with this Certificate of Designations, as may be required by applicable law or any securities exchange or automated quotation system on which such Series A Preferred Stock is traded or quoted or as may be otherwise reasonably determined by the Corporation to be appropriate.
13.3 Transfer Agent. The duly appointed Transfer Agent for the Series A Preferred Stock on the Issue Date occurring on the Initial Closing Date shall be Equiniti Trust Company, LLC. The Corporation may, in its sole discretion, remove the Transfer Agent in accordance with the agreement between the Corporation and the Transfer Agent; provided that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal.
13.4 Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Series A Preferred Stock shall be made without charge to any holder for any documentary, issue, transfer, stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the holder and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for processing of any Notice of Conversion.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations, Preferences and Rights to be executed this 22nd day of October, 2026.
ZEVIA PBC
By: | /s/ Alexandre Ruberti |
| Name: Alexandre Ruberti |
| Title: Chief Executive Officer |
[Signature Page to Certificate of Designations, Preferences and Rights of Series A Senior Convertible Preferred Stock of Zevia PBC]
EXHIBIT A
RESTRICTIVE LEGEND TO THE SERIES A PREFERRED STOCK CERTIFICATE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND RESTRICTIONS ON TRANSFER SET FORTH IN, A SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 22, 2026, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION, AND SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into effective as of October 22, 2026 (the “Effective Date”), by and between Zevia PBC, a Delaware public benefit corporation (the “Company”), and Bubble Holdings, LLC, a Delaware limited liability company and Affiliate of GP Investments, Ltd. (the “Purchaser”). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 8 hereof.
RECITALS
WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, 20,000 shares of preferred stock, $0.001 par value per share designated as “Series A Senior Convertible Preferred Stock” (the “Series A Preferred Stock”), having the rights, preferences and privileges set forth in the Certificate of Designations, Preferences and Rights of Series A Senior Convertible Preferred Stock of Zevia PBC attached hereto as Exhibit A (the “Series A Certificate”), subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto hereby agree as follows:
Section 1. Sale and Purchase of the Shares. Upon the terms and subject to the conditions herein contained, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, a total of 20,000 shares of Series A Preferred Stock, at a price per share of $1,000, for an aggregate purchase price of $20,000,000 (the “Purchase Price”), as follows:
1.1 At the Initial Closing, 15,000 shares of Series A Preferred Stock (the “Initial Shares”) for an aggregate purchase price of $15,000,000 (the “Initial Purchase Price”); and
1.2 At the Deferred Closing, 5,000 shares of Series A Preferred Stock (the “Deferred Shares”) for an aggregate purchase price of $5,000,000 (the “Deferred Purchase Price”).
1.3 For the avoidance of doubt, the Initial Shares and, from and after their issuance, the Deferred Shares, shall be referred to as the “Shares.”
Section 2. Closings.
2.1 The closing of the purchase and sale of the Initial Shares (the “Initial Closing”) shall take place contemporaneously with the execution and delivery of this Agreement via electronic exchange of the required documents pursuant to this Section 2 (the date of the Initial Closing, the “Initial Closing Date”). The closing of the purchase and sale of the Deferred Shares (the “Deferred Closing” and, together with the Initial Closing, each a “Closing”) shall take place in accordance with Section 2.4 (the date of the Deferred Closing, the “Deferred Closing Date” and, together with the Initial Closing Date, each a “Closing Date”). Unless otherwise specified, references in this Agreement to “the Closing” or “the Closing Date” shall refer to the Initial Closing or the Initial Closing Date, respectively.
2.2 At the Initial Closing, the Company shall deliver or, as applicable, cause to be delivered, to the Purchaser:
(a) the Initial Shares, free and clear of all Liens (except restrictions imposed by any applicable federal and state securities Laws and the transfer restrictions set forth herein or in any Transaction Document);
(b) evidence that the Series A Certificate has been filed with the Secretary of State of the State of Delaware and is in full force and effect;
(c) a registration rights agreement, in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), duly executed by the Company;
(d) a properly executed IRS Form W-9; and
(e) a copy of the Fourteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC, duly executed by the Company and Zevia LLC (the “Amended LLCA”).
2.3 At the Initial Closing, the Purchaser shall deliver to the Company (a) the Initial Purchase Price, by wire transfer in immediately available U.S. federal funds, to the account designated by the Company in writing, (b) the Registration Rights Agreement, duly executed by the Purchaser and (c) a properly executed IRS Form W-9.
2.4 Deferred Closing. On the Annual Report Filing Date, the Company shall deliver to the Purchaser a written notice, signed by an executive officer of the Company, setting forth the (a) Net Sales and (b) Adjusted EBITDA (together with a reasonably detailed reconciliation of Adjusted EBITDA to net income (loss)) and stating whether the Tranche 2 Conditions have been satisfied (the “Tranche 2 Notice”). Subject to the satisfaction (or written waiver by the Purchaser) of the conditions set forth in Section 2.5, the Deferred Closing shall take place via electronic exchange of the required documents on the date specified by the Company in the Tranche 2 Notice, which shall be no later than five (5) Business Days following the Annual Report Filing Date, or on such other date as the Company and the Purchaser may agree in writing. At the Deferred Closing, (i) the Company shall deliver or cause to be delivered to the Purchaser (A) the Deferred Shares, free and clear of all Liens (except restrictions imposed by any applicable federal and state securities Laws and the transfer restrictions set forth herein or in any Transaction Document), and (B) an officer’s certificate, signed by an executive officer of the Company, certifying as to the satisfaction of the conditions set forth in Section 2.5(a)(iii); and (ii) the Purchaser shall deliver to the Company (A) the Deferred Purchase Price, by wire transfer in immediately available U.S. federal funds, to the account designated by the Company in writing, and (B) a certificate, signed by an authorized officer of the Purchaser, certifying that the representations and warranties set forth in Section 3 are true and correct as of the Deferred Closing Date in all material respects.
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2.5 Conditions to the Deferred Closing.
(a) The obligation of the Purchaser to consummate the Deferred Closing shall be subject solely to the satisfaction (or written waiver by the Purchaser) of the following conditions:
(i) Net Sales shall be at least $172,500,000, determined as of the Annual Report Filing Date pursuant to the 2026 Annual Report;
(ii) Adjusted EBITDA shall be no less than negative $3,000,000 (the conditions set forth in clauses (i) and (ii), collectively, the “Tranche 2 Conditions”), determined as of the Annual Report Filing Date pursuant to the 2026 Annual Report;
(iii) the representations and warranties of the Company set forth in Sections 4.1, 4.2, 4.3, 4.4, 4.5(b), 4.11, and 4.12 shall be (A) true and correct in all material respects, or (B) in the event the respective representation and warranty contemplates a Material Adverse Effect qualifier, shall be true and correct except where the failure to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, as applicable (in each case disregarding any materiality or Material Adverse Effect qualifiers therein) as of the Deferred Closing Date; and
(iv) no Governmental Entity of competent jurisdiction shall have enacted, issued or entered any Law or order then in effect that enjoins or prohibits the consummation of the Deferred Closing.
(b) The obligation of the Company to consummate the Deferred Closing shall be subject to the conditions that (i) the representations and warranties of the Purchaser set forth in Section 3 shall be true and correct in all material respects as of the Deferred Closing Date and (ii) no Governmental Entity of competent jurisdiction shall have enacted, issued or entered any Law or order then in effect that enjoins or prohibits the consummation of the Deferred Closing.
2.6 Purchaser Early Funding Election. Notwithstanding Sections 2.4 and 2.5, the Purchaser may, at its sole election and at any time prior to the Annual Report Filing Date, elect to consummate the Deferred Closing by delivering an irrevocable written notice to the Company (an “Early Funding Notice”) specifying a Deferred Closing Date that is no fewer than three (3) Business Days following delivery of such notice. Upon delivery of an Early Funding Notice, the conditions set forth in Section 2.5(a) clauses (i) and (ii) shall be deemed irrevocably waived, and the Deferred Closing shall take place on the date specified in such notice, with (a) the Company to deliver or cause to be delivered to the Purchaser the Deferred Shares, and (b) the Purchaser to deliver to the Company the Deferred Purchase Price and the certificate, in each case pursuant to Section 2.4(ii), subject only to the conditions (x) to the Purchaser’s obligations set forth in Section 2.5(a) clauses (iii) and (iv) as evidenced by an officer’s certificate, signed by an executive officer of the Company certifying as to the satisfaction of such conditions, and (y) to the Company’s obligations set forth in Section 2.5(b).
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2.7 Failure of Tranche 2 Conditions. If the Tranche 2 Notice states that any Tranche 2 Condition has not been satisfied, the Purchaser may, by written notice delivered to the Company within ten (10) Business Days following receipt of the Tranche 2 Notice, waive such unsatisfied condition(s) and require that the Deferred Closing occur within five (5) Business Days following delivery of such notice. If the Purchaser does not deliver such notice within such period, then the obligations of the Company and the Purchaser with respect to the Deferred Closing shall automatically terminate, the Purchase Price shall be deemed to equal the Initial Purchase Price, and no party shall have any further liability with respect to the Deferred Closing; provided that no such termination shall relieve any party from liability for any breach of this Agreement prior to such termination. If all conditions set forth in Section 2.5 have been satisfied (or waived) and the Purchaser fails to deliver the Deferred Purchase Price when required, the Company shall be entitled to specific performance of the Purchaser’s obligation to fund the Deferred Purchase Price in accordance with Section 9.9, in addition to any other remedy available to it.
Section 3. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as of the Effective Date and as of the Deferred Closing Date as follows:
3.1 Organization and Good Standing; Corporate Power and Authority; Validity. The Purchaser is a duly organized and validly existing Delaware limited liability company, has all requisite corporate power and authority to own its properties and conduct its business as presently conducted, and is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the legality, validity or enforceability of any Transaction Document. The Purchaser has all requisite corporate power and authority and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Purchaser of this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions. This Agreement has been duly executed and delivered by the Purchaser, and the other Transaction Documents to which it is a party will be duly executed and delivered by the Purchaser, and each such agreement constitutes or will constitute a legal, valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any 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.
3.2 No Conflicts. The execution, delivery and performance by the Purchaser or its relevant Affiliate(s) of the Transaction Documents and the consummation by each such party of the Transactions to which it is a party do not and will not (a) conflict with or violate any provision of the Purchaser’s Organizational Documents, (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Purchaser pursuant to, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, indenture or other instrument to which the Purchaser or its relevant Affiliate or any of their respective Subsidiaries is a party or by which any property or asset of such party is bound or affected, or (c) conflict with or result in a violation of any Law or other restriction of any Governmental Entity to which the Purchaser or its relevant Affiliate(s) or any of their respective Subsidiaries is subject (including federal and state securities Laws and regulations), or by which any property or asset of the Purchaser or its relevant Affiliate or any of their respective Subsidiaries is bound or affected, except in the case of each of clauses (a), (b) and (c), such as could not have or reasonably be expected to result in a material adverse effect on the legality, validity or enforceability of any Transaction Document.
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3.3 Filings, Consents and Approvals. Assuming the accuracy of the representations set forth in Section 4.3, the Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any Governmental Entity in connection with the execution, delivery and performance by the Purchaser of the Transaction Documents to which it is a party and the consummation of the Transactions, other than such filings and registrations as are required to be made under applicable federal and state securities Laws.
3.4 Brokers. There is no broker, investment banker, financial advisor, finder or other Person which has been retained by or is authorized to act on behalf of the Purchaser who might be entitled to any fee or commission for which the Company will be liable in connection with the execution of the Transaction Documents or the consummation of the Transactions.
3.5 Investment Representations and Warranties. The Purchaser understands and agrees that the offering and sale of the Shares has not been registered under the Securities Act or any applicable state securities Laws and is being made in reliance upon federal and state exemptions for transactions not involving a Public Offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations, warranties, agreements, acknowledgements and understandings as expressed herein.
3.6 Acquisition for Own Account; No Control Intent. The Purchaser is acquiring the Shares for its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act or any applicable state securities Laws and was not formed for the primary purpose of making this investment; provided, however, that this representation shall not be breached solely because the Purchaser is an investment vehicle formed, sponsored or managed by GP Investments, Ltd. or any of its Affiliates or admits co-investors in the ordinary course of its investment activities, so long as each beneficial owner that is required to be an accredited investor is an accredited investor within the meaning of Rule 501(a) under the Securities Act, determined on a look-through basis to the extent applicable, and the Purchaser is not acquiring the Shares with a view toward distribution in violation of the Securities Act. The Purchaser is not party to any agreement providing for or contemplating the distribution of any of the Shares.
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3.7 Ability to Protect Its Own Interests and Bear Economic Risks. The Purchaser, by reason of the business and financial experience of its management, has the capacity to protect its own interests in connection with the Transactions and is capable of evaluating the merits and risks of the investment in the Shares. The Purchaser is able to bear the economic risk of an investment in the Shares and is able to sustain a loss of all of its investment in the Shares without economic hardship, if such a loss should occur.
3.8 Accredited Investor; No Bad Actor. The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) under the Securities Act. The Purchaser has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.
3.9 No Governmental Review. The Purchaser understands that no United States federal or state agency or any Governmental Entity has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.
3.10 Access to Information. The Purchaser has been provided with certain Company documents, records and other information, and has been given an opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents, accountants and representatives concerning the Company’s business, operations, financial condition, assets, liabilities and other matters relevant to its investment in the Shares. The Purchaser understands that an investment in the Shares bears significant risk and represents that it has reviewed the SEC Reports (as defined below), which serve to qualify certain of the Company’s representations set forth below.
3.11 Restricted Shares.
(a) The Purchaser understands that the Shares, as well as the Class A Common Stock of the Company, par value $0.001 per share (“Class A Common Stock”), issuable upon conversion of the Shares, will be characterized as “restricted securities” under the federal securities Laws inasmuch as they are being acquired from the Company pursuant to the exemption from registration provided by Regulation D of the Securities Act and that under such Laws and applicable regulations such Shares may be resold without registration under the Securities Act only in certain limited circumstances.
(b) The Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act and under applicable state securities Laws or an exemption from such registration is available. The Purchaser understands that the Company is under no obligation to register the Shares, except as provided in this Agreement or the Registration Rights Agreement.
(c) The Purchaser is aware of the provisions of Rule 144 under the Securities Act, which permit limited resale of securities purchased in a private placement.
3.12 Sufficient Funds. The Purchaser has as of the Initial Closing Date, and as of the Deferred Closing Date will have, sufficient funds available to deliver the Initial Purchase Price and the Deferred Purchase Price, as applicable, in full and to consummate the Transactions in accordance with the terms hereof and of the other Transaction Documents.
3.13 No Public Market. The Purchaser understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.
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3.14 Tax Advisors. The Purchaser has had the opportunity to review with the Purchaser’s own tax advisors the federal, state and local tax consequences of this investment, where applicable, and the Transactions. The Purchaser is relying solely on the Purchaser’s own determination as to tax consequences or the advice of such tax advisors and not on any statements or representations of the Company or any of its agents and understands that the Purchaser (and not the Company) shall be responsible for the Purchaser’s own tax liability that may arise as a result of this investment or the Transactions.
3.15 Limitation. Except as expressly set forth in Section 4 or in any other Transaction Document, the Purchaser acknowledges and agrees that none of the Company, its Subsidiaries or any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by the Company, including, without limitation, any implied representation or warranty as to condition, merchantability, suitability or fitness for a particular purpose. Without limiting the generality of the foregoing, the Purchaser hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to the Company, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Section 4 or in any other Transaction Document. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for actual and intentional fraud in the making of the representations and warranties expressly set forth in Section 4 or in any other Transaction Document.
3.16 No Other Representations and Warranties. The representations and warranties set forth in this Section 3 and in any other Transaction Document are the only representations and warranties made by the Purchaser or any of its Affiliates with respect to the acquisition of the Shares or any other matter relating to the Transactions. Except as specifically set forth in this Agreement or in any other Transaction Document, (a) the Purchaser makes no warranty, express or implied, as to any matter relating to the acquisition of the Shares or any other matter relating to the Transactions, and (b) none of the Purchaser, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to the Company or any other Person resulting from the distribution or delivery to the Company or its Affiliates or representatives of, or the Company’s use of, any information relating to the Purchaser or any of its Affiliates, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to the Company or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of the Company or in any other form in expectation of the Transactions. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Company and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by the Company or any of its Affiliates for actual and intentional fraud in the making of the representations, warranties, covenants and agreements expressly set forth in this Agreement.
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Section 4. Representations and Warranties by the Company. Except as set forth in the SEC Reports filed with or furnished to the Commission after January 1, 2026 and at least four (4) Business Days prior to the date of this Agreement, excluding any disclosure set forth in any risk factor section, any disclosure in any section relating to forward-looking statements and any other disclosure included in any such form, report, schedule, statement or other document to the extent such disclosure is predictive or forward-looking in nature or constitutes a “forward-looking statement” within the meaning of the Securities Act or the Exchange Act, the Company represents and warrants to the Purchaser as of the Effective Date (and, solely with respect to Sections 4.1, 4.2, 4.3, 4.4, 4.5(b), 4.11, and 4.12 as of the Deferred Closing Date) that:
4.1 Organization and Good Standing. The Company is a duly organized and validly existing Delaware public benefit corporation, has all requisite corporate power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. True and accurate copies of the Company’s Organizational Documents are publicly available in the SEC Reports.
4.2 Corporate Power and Authority; Valid Issuance of Shares.
(a) The Company has all requisite corporate power and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation of the Transactions. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions have been duly authorized by the Company’s board of directors (the “Board”) or a duly authorized committee thereof and no further consent or authorization of the Company, its Board or its stockholders is required. This Agreement has been duly executed and delivered by the Company, and the other Transaction Documents to which it is a party will be duly executed and delivered by the Company, and each such agreement constitutes or will constitute a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any 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.
(b) The Shares and the Class A Common Stock issuable upon conversion of the Shares (the “Conversion Shares”) have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, the Shares and Conversion Shares (collectively, the “Securities”) will be validly issued, fully paid and non-assessable, and shall be free and clear of all Liens (other than restrictions on transfer under the Transaction Documents or arising under applicable federal and state securities Laws), and will not be subject to preemptive rights or other similar rights of stockholders of the Company, and will effectively vest in the Purchaser good title to all such Securities, free and clear of all Liens (other than restrictions on transfer under the Transaction Documents or arising under applicable federal and state securities Laws). The respective rights, preferences, privileges and restrictions of the Series A Preferred Stock and the Common Stock are as stated in the Company’s certificate of incorporation or, in respect of the Series A Preferred Stock, in the Series A Certificate. As of each Closing, the shares of Class A Common Stock to be issued upon any conversion or redemption of the Shares issued at or prior to such Closing shall have been duly reserved for such issuance.
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(c) Assuming the accuracy of the Purchaser’s representations in Section 3, the offer and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations thereunder. Without limiting the foregoing, neither the Company nor, to the knowledge of the Company, any other person authorized by the Company to act on its behalf, has engaged in a general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) of investors with respect to offers or sales of the Shares and neither the Company nor, to the knowledge of the Company, any person acting on its behalf, has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of the Shares under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in Regulation D under the Securities Act or any other applicable exemption from registration under the Securities Act not being available, nor will the Company take any action or steps that would cause the offering or issuance of the Shares under this Agreement to be integrated with other offerings.
4.3 Consents. Assuming the accuracy of the representations set forth in Section 3.3, neither the execution, delivery or performance of this Agreement by the Company, nor the consummation by it of the obligations and Transactions (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares and the provision to the Purchaser of the rights contemplated by the Transaction Documents) requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than filings required under applicable federal and state securities Laws.
4.4 No Conflicts. The execution, delivery and performance of this Agreement and the consummation of the Transactions (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares and the provision to the Purchaser of the rights contemplated by the Transaction Documents) will not (a) result in a violation of the Company’s Organizational Documents or require the approval of the Company’s stockholders, (b) violate, conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any material contract to which the Company is a party, (c) result in any material respect in a violation of any Law, rule, regulation, order, judgment or decree (including, without limitation, federal and state securities Laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or by which any material property or asset of the Company is bound or affected, (d) result in a violation of or require stockholder approval under any rule or regulation of NYSE, or (e) result in the creation of any encumbrance upon any of the Company’s assets, except in the case of clauses (b), (c), (d) or (e), for matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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4.5 Capitalization.
(a) The authorized capital stock of the Company consists of 550,000,000 shares of Class A Common Stock and 250,000,000 shares of Class B Common Stock, par value $0.001 per share (“Class B Common Stock”, and collectively with the Class A Common Stock, the “Common Stock”), and 10,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”). As of October 21, 2026, there are (i) 72,180,311 shares of Class A Common Stock issued and outstanding; (ii) 5,208,885 shares of Class B Common Stock issued and outstanding; (iii) no shares of Preferred Stock issued and outstanding; (iv) 2,222,243 shares of Class A Common Stock reserved for issuance upon the exercise of stock options outstanding (“Options”); (v) 7,723,462 shares of Class A Common Stock issuable (and such number are reserved for issuance) upon service-based vesting of restricted stock units and performance stock units (the “RSUs” and “PSUs” respectively) outstanding; (vi) 5,208,885 shares of Class A Common Stock reserved for issuance upon the exchange of Class B Units of Zevia LLC (together with a corresponding number of shares of Class B Common Stock) pursuant to the Amended LLCA; and (vii) approximately 1,958,712 shares of Class A Common Stock reserved for future grant and/or issuance under the Zevia PBC 2021 Equity Incentive Plan. The Company does not hold any shares in treasury. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.
(b) No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which the stockholders of the Company may vote (“Voting Debt”) are issued and outstanding. Except (i) pursuant to any cashless exercise provisions of any Options or pursuant to the surrender of shares to the Company or the withholding of shares by the Company to cover tax withholding obligations under Options, RSUs or PSUs, and (ii) except as set forth in the SEC Reports filed with or furnished to the Commission, there are no outstanding equity securities of the Company, the Company does not have and is not bound by any outstanding options, preemptive rights, rights of first offer, warrants, phantom rights, calls, or other similar rights or written commitments or agreements calling for the purchase, redemption or issuance of, or securities or rights convertible into, or exchangeable for, any shares of Common Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any equity securities of the Company (including any stockholder rights plan or agreement) (collectively, “Company Securities”), or any obligations of the Company or its Subsidiaries to make any payments based on the price or value of any Company Securities. Neither the Company nor any of its Subsidiaries is party to any stockholders’ agreement, voting trust agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. Except as contemplated by the Registration Rights Agreement, the Company has not granted or agreed to grant, and is not under any obligation to provide, any right to register under the Securities Act any of the Company Securities. The Company is not party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan.
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4.6 Exchange Act; NYSE.
(a) The Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action intended to, or which, to the knowledge of the Company, is reasonably likely to, have the effect of terminating the registration of the Class A Common Stock under the Exchange Act, nor has the Company received as of the date of this Agreement any written notification that the Commission is contemplating terminating such registration.
(b) The Class A Common Stock is listed on NYSE. The Company is in compliance in all material respects with the requirements of NYSE for continued listing of the Class A Common Stock thereon and any other NYSE listing and maintenance requirements, and the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions (including the issuance of the Shares) will not result in any noncompliance by the Company with any such requirements.
4.7 SEC Reports; Financial Statements.
(a) The Company has, since January 1, 2026, filed with or furnished to the Commission, on a timely basis (giving effect to extensions under Rule 12b-25, if any), all required reports, proxy statements, schedules, forms and other documents required to be filed or furnished by the Company with the Commission pursuant to the Securities Act or the Exchange Act since January 1, 2026 (the foregoing, together with all exhibits thereto, collectively, the “SEC Reports”). Each of the SEC Reports, as of its respective filing date, complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the Commission thereunder applicable to such SEC Reports, and, except to the extent that information contained in any SEC Reports has been revised, amended or superseded by a later filed SEC Report filed and publicly available prior to any date as to which this representation speaks, none of the SEC Reports as of such respective dates of filing or furnishing (or, if revised, amended or superseded by a later filed SEC Report, as of the date of the filing or furnishing of such revision or amendment) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company and its Subsidiaries are made known to the individuals responsible for the preparation of the Company’s filings with the Commission, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board (A) any significant deficiency or material weakness in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that is reasonably likely to adversely affect the Company’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 Company’s internal controls over financial reporting.
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(c) The financial statements of the Company and its Subsidiaries included in the SEC Reports (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, in each case as of the date such SEC Report was filed (or, if any such SEC Report was revised, amended or superseded by a later filed SEC Report, as of the date of the filing or furnishing of such revision or amendment), and (ii) have been prepared in all material respects in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows of the Company and its Subsidiaries for the periods then ended (subject, in the case of unaudited quarterly statements, to the absence of footnote disclosures and normal year-end audit adjustments).
4.8 Brokers. Except for Piper Sandler & Co., the fees and expenses of which shall be the obligation of the Company, there is no investment banker, broker, finder, financial advisor, placement agent or other Person that has been retained by or is authorized to act on behalf of the Company who might be entitled to any fee or commission in connection with the execution of the Transaction Documents or the consummation of the Transactions.
4.9 Limitation. Except as expressly set forth in Section 3 or in any other Transaction Document, the Company acknowledges and agrees that neither the Purchaser nor any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by the Purchaser. Without limiting the generality of the foregoing, the Company hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to the Purchaser, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Section 3 or in any other Transaction Document. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Company and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document, nor will anything in this Agreement operate to limit any claim by the Company or any of its Affiliates for actual and intentional fraud in the making of the representations and warranties expressly set forth in Section 3 or in any other Transaction Document.
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4.10 No Other Representations and Warranties. The representations and warranties set forth in this Section 4 and in any other Transaction Document are the only representations and warranties made by the Company or any of its Affiliates with respect to the Shares or any other matter relating to the Transactions. Except as specifically set forth in this Agreement or in any other Transaction Document, (a) the Company makes no warranty, express or implied, as to any matter relating to the Shares or any other matter relating to the Transactions, including as to (i) the operation of the business of the Company and its Subsidiaries, after the Closing in any manner or (ii) the probable success or profitability of the business of the Company and its Subsidiaries, after the Closing, and (b) none of the Company, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to the Purchaser or any other Person resulting from the distribution or delivery to the Purchaser or its Affiliates or representatives of, or the Purchaser’s use of, any information relating to the Company or any of its Affiliates, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to the Purchaser or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of the Purchaser or in any other form in expectation of the Transactions. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for actual and intentional fraud in the making of the representations, warranties, covenants and agreements expressly set forth in this Agreement.
4.11 Litigation and Regulatory Matters.
There is (i) no material action, suit, claim, arbitration, investigation, proceeding or other dispute pending or threatened in writing involving the Company or any of its Subsidiaries, and (ii) neither the Company nor any of its Subsidiaries, have received any notice of violation, governmental or private enforcement demand, demand letter, subpoena or similar communication, in each case whether or not required to be publicly disclosed, that would reasonably be expected to have a material impact on the Company and its Subsidiaries, taken as a whole.
4.12 Intellectual Property.
The Company and its Subsidiaries, own or have valid rights to use all intellectual property material to and necessary for the conduct of their businesses as presently conducted. Except for the Liens securing the Credit Agreement, the Company’s material owned intellectual property is free and clear of Liens. No written claim, opposition, cancellation, infringement allegation, license dispute or other proceeding (except for ordinary course proceedings) relating to the Company’s material owned intellectual property currently exists that has had, or would reasonably be expected to result in, a material impact on the Company and its Subsidiaries, taken as a whole.
4.13 Tax Receivable Agreement.
The Tax Receivable Agreement is in full force and effect, and the Company has delivered materially complete and materially accurate copies of the Tax Receivable Agreement and all amendments, material notices and schedules. The Company has disclosed to the Purchaser all current outstanding and projected payment obligations under the Tax Receivable Agreement, including the scenario under which, as of June 30, 2026, approximately $59.2 million is payable through 2038. No voluntary termination, automatic acceleration, early termination event, change of control or material uncured breach (in each case, as defined in the Tax Receivable Agreement) has occurred or is continuing. The issuance of the Shares and the conversion of the Shares will not, by themselves, constitute a change of control (as defined in the Tax Receivable Agreement) under the Tax Receivable Agreement.
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Section 5. Covenants.
5.1 Authorized Common Stock. At any time that any Shares are issued and outstanding, the Company shall from time to time take all lawful action within its control to cause the authorized capital stock of the Company to include a sufficient number of authorized but unissued shares of Class A Common Stock to satisfy the conversion requirements of all shares of Series A Preferred Stock then issued and outstanding. All shares of Class A Common Stock delivered upon conversion of the Series A Preferred Stock shall be newly issued shares or shares held in treasury by the Company, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and free and clear of any Liens (other than Liens incurred by the Purchaser, restrictions arising under applicable securities Laws and the transfer restrictions expressly set forth in this Agreement or any other Transaction Document).
5.2 Expenses. Each of the Company and the Purchaser shall be liable for, and will pay, its own expenses incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, including, without limitation, attorneys’ and consultants’ fees and expenses.
5.3 Election of Directors.
(a) Effective as of the Closing, the Purchaser shall have the right to designate one designee (the “Purchaser Designee”) to be nominated, recommended and supported by the Company and the Board for election to the Board, provided, that the obligations of the Board under this Section 5.3(a) to recommend and support shall be subject to the Board’s fiduciary duties under applicable Law. Within ten (10) Business Days after receiving the Purchaser’s written designation, the Company shall take all action permitted under applicable Law and its Organizational Documents to appoint the Purchaser Designee to fill a vacancy or other lawful appointment process (including by increasing the size of the Board) and include the Purchaser Designee in the slate of nominees for the applicable class, in each case subject only to the Purchaser Designee’s satisfaction of all applicable requirements regarding service as a director of the Company under applicable Law and NYSE rules (or the rules of the principal market on which the Class A Common Stock is then listed) regarding service as a director and such other criteria and qualifications for service as a director applicable to all directors of the Company as in effect on the date thereof. The Purchaser and the Company agree that each such Purchaser Designee must be qualified to serve as a member of the Board under (i) all applicable and bona fide corporate governance policies and guidelines of the Company and the Board, and (ii) all applicable legal, regulatory, NYSE and bona fide qualification requirements (including meeting any and all applicable Independence Requirements) applicable to all directors. The Company shall use commercially reasonable efforts to cause the Purchaser Designee to be elected or appointed and shall recommend that stockholders vote in favor of the Purchaser Designee, provided, that the obligations of the Board under this Section 5.3(a) shall be subject to the Board’s fiduciary duties under applicable Law. In the event of the death, disability, resignation or removal of any Purchaser Designee as a member of the Board, the Purchaser shall be entitled to designate a replacement and, subject to this Section 5.3(a), the Company’s Organizational Documents and applicable provisions of the Delaware General Corporation Law (“DGCL”), the Company shall cause such replacement to fill the resulting vacancy or be nominated and recommended for election through the same process.
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(b) Notwithstanding the foregoing, upon the Purchaser (together with its Affiliates) ceasing to beneficially own at least 10,000 Shares (or at least collectively eight percent (8%) of the Common Stock (including the Series A Preferred Stock on an as-converted basis)) then issued and outstanding (determined on an as-converted basis, and as appropriately adjusted for any applicable stock split or other recapitalization or reclassification pursuant to and in accordance with the terms of the Series A Certificate) (the beneficial ownership of such minimum number of shares, the “Beneficial Ownership Requirement”), the Purchaser’s right to designate any designee for nomination or appointment pursuant to Section 5.3(a) shall terminate in full. At such time, at the written request of the Board, the Purchaser shall cause the Purchaser Designee to resign from the Board promptly following the first date on which the Beneficial Ownership Requirement ceases to be satisfied.
(c) If the Board is classified at the time of such initial election or appointment, the initial Purchaser Designee shall be assigned to the class of directors whose term expires at the latest annual meeting following the Closing Date, to the extent consistent with applicable Law and the Company’s Organizational Documents. If the Board is not classified at the time of such initial election or appointment (or upon declassification of the Board), the Purchaser Designee shall serve until the next annual meeting of stockholders and until such Purchaser Designee’s successor is duly elected and qualified, or until such Purchaser Designee’s earlier death, disability, resignation or removal.
(d) For so long as the Beneficial Ownership Requirement is satisfied, the Company shall not decrease the size of the Board if such decrease would require the resignation of any Purchaser Designee without the consent of the Purchaser.
(e) The Company shall indemnify the Purchaser Designee and provide the Purchaser Designee with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company’s Organizational Documents, the DGCL or otherwise.
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5.4 Voting. Notwithstanding anything to the contrary, for so long as the Purchaser or one of its Affiliates beneficially owns a number of shares of Common Stock representing at least five percent (5%) of outstanding shares of Common Stock (including the Series A Preferred Stock on an as-converted basis) then-issued and outstanding, the Purchaser or its applicable Affiliate: (i) shall be permitted to vote or tender, as applicable, at its discretion the shares of Common Stock (including the Series A Preferred Stock on an as-converted basis) beneficially owned by the Purchaser and its Affiliates up to a limit of twenty percent (20%) of all the then-issued and outstanding shares of Common Stock (the “Voting Limitation”); provided, however, the foregoing Voting Limitation shall automatically cease to apply if any other Person or “group” (as defined for purposes of Section 13(d)(3) of the Exchange Act) (other than CDP Investissements Inc. and its Affiliates) acquires or otherwise obtains beneficial ownership of twenty percent (20%) or more of the then-issued and outstanding shares of Common Stock (including the Series A Preferred Stock on an as-converted basis) without being subject to comparable restrictions on its voting rights contemplated in this Section 5.4 (such Person or group, a “Triggering Holder”), provided, further, if such Triggering Holder subsequently ceases to beneficially own at least twenty percent (20%) of the then-issued and outstanding shares of Common Stock (including the Series A Preferred Stock on an as-converted basis), the Company may deliver written notice thereof to the Purchaser reinstating such Voting Limitation effective as of the thirtieth (30th) day following the Purchaser’s receipt of such notice; (ii) if, and only to the extent that, the Purchaser elects to vote or tender any Common Stock (including the Series A Preferred Stock on an as-converted basis) pursuant to clause (i), shall vote or tender, as applicable, any Common Stock (including the Series A Preferred Stock on an as-converted basis) it beneficially owns in excess of the amount contemplated by the foregoing clause (i) pro rata in accordance with the vote or tender, as applicable, of all other issued and outstanding Common Stock entitled to vote or tender on such matter in the same proportion as the votes cast by all other holders of Common Stock (excluding shares held by the Purchaser and its Affiliates); and (iii) for so long as the Purchaser has the right to designate a director to the Board in accordance with Section 5.3, the Purchaser shall vote (or cause to be voted) all shares of Common Stock (including the Series A Preferred Stock on an as-converted basis) it beneficially owns in the same proportion as the votes cast by all other holders of Common Stock (excluding shares held by the Purchaser and its Affiliates) on the election or removal of any director, other than the election or removal of the Purchaser Designee submitted to a vote of the holders of Common Stock. Notwithstanding anything to the contrary in this Section 5.4, the Purchaser shall, and shall cause its applicable Affiliates to, take all necessary or desirable actions within its control, including attending and voting at meetings of the stockholders of the Company in person or by proxy, for purposes of obtaining a quorum, to effectuate the provisions of this Agreement.
5.5 Information Rights. Following the Closing, for so long as the Beneficial Ownership Requirement is satisfied, the Company agrees to provide the Purchaser with the following:
(a) within sixty (60) days after the end of each fiscal year of the Company, (A) an audited, consolidated balance sheet of the Company and its Subsidiaries, as of the end of such fiscal year, (B) an audited, consolidated income statement of the Company and its Subsidiaries, for such fiscal year and (C) an audited, consolidated statement of cash flows of the Company and its Subsidiaries, for such fiscal year; provided that this requirement shall be deemed to have been satisfied if the Company files its annual report on Form 10-K for the applicable fiscal year with the Commission on or prior to the date such report is due under the Exchange Act and applicable Commission regulations (including any extensions granted pursuant to Rule 12b-25);
(b) within forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company, (A) an unaudited, consolidated balance sheet of the Company and its Subsidiaries, as of the end of such fiscal quarter, (B) an unaudited, consolidated income statement of the Company and its Subsidiaries, for such fiscal quarter and (C) an unaudited, consolidated statement of cash flows of the Company and its Subsidiaries, for such fiscal quarter; provided that this requirement shall be deemed to have been satisfied if the Company files its quarterly report on Form 10-Q for the applicable fiscal quarter with the Commission on or prior to the date such report is due under the Exchange Act and applicable Commission regulations (including any extensions granted pursuant to Rule 12b-25, if any); and
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(c) reasonable access, to the extent reasonably requested by the Purchaser to certain of the Company’s and its Subsidiaries’, books and records, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at a reasonable time; provided that any investigation pursuant to this Section 5.5(c) shall be conducted in a manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries, and without requiring the Company to incur any cost not reimbursed by the Purchaser;
provided that the Company shall not be obligated to provide such access or materials if the Company determines, in its reasonable judgment, that doing so would reasonably be expected to (i) result in the disclosure of trade secrets or competitively sensitive information, (ii) violate applicable Law, an applicable order or a contract or obligation of confidentiality owing to a third party, or (iii) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege.
5.6 Cooperation. In the event the issuance of the Shares hereunder or the Transactions are subject to regulatory review by a Governmental Entity, the Company and the Purchaser shall reasonably cooperate as necessary with respect to such review.
5.7 Confidentiality. The Purchaser shall comply with, and shall instruct its Affiliates or representatives to comply with, all of its obligations under the Confidentiality Agreement, dated as of May 4, 2026, between the Company and GP Investments, Ltd. (the “Confidentiality Agreement”). Notwithstanding any provision therein to the contrary, the term of the Confidentiality Agreement shall be extended indefinitely and shall remain in full force and effect until terminated by mutual written agreement of the parties thereto.
5.8 Standstill Restrictions.
(a) Notwithstanding anything herein to the contrary, for so long as the Purchaser beneficially owns at least five percent (5%) of then-issued and outstanding shares of Common Stock (including the Series A Preferred Stock on an as-converted basis), the Purchaser covenants and agrees that, without the prior written consent of the Company or its Board, the Purchaser will not, and will not cause or permit any of its Subsidiaries or controlled Affiliates to, directly or indirectly:
(i) except as provided in Section 5.9, (x) acquire, offer to acquire or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities (or beneficial ownership thereof) (it being understood that, for purposes of this Agreement, “voting securities” shall include any derivative instrument related to or referencing shares of Common Stock, whether settled through cash or physical delivery (“Derivative Securities”)) or direct or indirect rights to acquire any voting securities of the Company or its Subsidiaries, or of any successor to or person in control of the Company, (y) acquire, offer to acquire or agree to acquire, directly or indirectly, by purchase or otherwise, any assets of the Company or its Subsidiaries or any division thereof or of any such successor or controlling person, or (z) offer or propose (whether publicly or otherwise) to effect, or participate in, any merger or other business combination involving the Company; provided, however, notwithstanding the foregoing, the Purchaser may purchase Class A Common Stock from CDP Investissements Inc. or Caisse de dépôt et placement du Québec, in each case only to the extent such shares were held by CDP Investissements Inc. as of the date hereof, but excluding any shares of Class A Common Stock acquired by CDP Investissements Inc. following the date hereof;
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(ii) make, or in any way participate in, directly or indirectly, any (x) “solicitation” of “proxies” (as each of those terms is defined in Commission Rule 14a-1) to vote, or seek to advise or influence any person or entity with respect to the voting of (including, without limitation, through written consent), any voting securities of the Company or (y) tender or exchange offer or solicitation of tender or exchange of the Company’s voting securities;
(iii) make any public announcement or proposal with respect to any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company or its securities (including, without limitation, voting securities) or assets other than pursuant to a transaction expressly invited or approved by the Company;
(iv) form, join or in any way participate in a “group” (as defined for purposes of Section 13(d)(3) of the Exchange Act);
(v) except as set forth in Section 5.3, take any action to remove any director from the Board or change the size or composition of the Board, or amend the Company’s Organizational Documents;
(vi) except as set forth in Section 5.3, otherwise take action, alone or with any other Person, to seek or propose to control the management, the Board or any policies or affairs of the Company or its Subsidiaries;
(vii) submit any proposal for a transaction involving the Company or its equity securities other than pursuant to a transaction expressly invited or approved by the Company;
(viii) take any action that would reasonably be expected to require the Company to make a public announcement regarding any of the foregoing; or
(ix) knowingly advise, assist, encourage or direct any other Person to do any of the foregoing.
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5.9 Preemptive Rights.
(a) From the Closing and for so long as the Beneficial Ownership Requirement is satisfied, if the Company proposes to issue any additional Preferred Stock or Equity-Based Securities (“New Securities”), other than in an Excluded Issuance, then the Company shall:
(i) give written notice to the Purchaser (no less than twenty (20) Business Days prior to the closing of such issuance) of the Company’s bona fide intention to offer such New Securities, setting forth in reasonable detail (A) the designation and all of the terms and provisions of the New Securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof; (B) the price and other terms of the proposed sale of such securities; and (C) the amount of such securities proposed to be issued; provided that following the delivery of such notice, the Company shall deliver to the Purchaser any such information the Purchaser may reasonably request in order to evaluate the proposed issuance; and
(ii) offer to issue and sell to the Purchaser, on such terms as the Proposed Securities are issued and upon full payment by the Purchaser, a portion of the Proposed Securities equal to a percentage determined by dividing (A) the number of shares of Class A Common Stock the Purchaser beneficially owns (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable) by (B) the total number of shares of Common Stock then outstanding (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable) (such percentage, the Purchaser’s “Participation Portion”).
(b) The Purchaser will have the option, exercisable by written notice to the Company, to accept the Company’s offer and commit to purchase any or all of its Participation Portion of the Proposed Securities offered to be sold by the Company to the Purchaser, which notice must be given within ten (10) Business Days after receipt of such notice from the Company. The closing of the exercise of such preemptive right shall take place simultaneously with the closing of the sale of the Proposed Securities giving rise to such preemptive right. Upon the expiration of the offering period described above, the Company will be free to sell such Proposed Securities that the Purchaser has not elected to purchase during the ninety (90) days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to the Purchaser in the notice delivered in accordance with Section 5.9(a). Any Proposed Securities offered or sold by the Company after such ninety (90)-day period must be reoffered to issue or sell to the Purchaser pursuant to this Section 5.9.
(c) The election by the Purchaser not to exercise its preemptive rights under this Section 5.9 in any one instance shall not affect its rights as to any subsequent proposed issuance.
(d) In the case of an issuance subject to this Section 5.9 for consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the Fair Market Value thereof.
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(e) Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Section 5.9, the Company may elect to give notice to the Purchaser within thirty (30) days after the issuance of New Securities. The Purchaser shall have twenty (20) Business Days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by the Purchaser, maintain the Purchaser’s percentage-ownership position, calculated as set forth in Section 5.9(a)(ii) before giving effect to the issuance of such New Securities. For the avoidance of doubt, the purchase price per security for such New Securities shall be equal to the price per security offered to the other participants in such issuance, on the same terms and conditions.
5.10 Intended Tax Treatment. Each of the Purchaser and the Company agrees, for U.S. federal and other applicable U.S. state and local income tax purposes, it is intended that the Shares constitute common stock within the meaning of Section 305 of the Code and the Treasury regulations thereunder (the “Intended Tax Treatment”). The Purchaser and the Company agree to file all Tax Returns and take other actions in a manner consistent with, and not to take any action in a manner that is inconsistent with, the Intended Tax Treatment unless otherwise required by a “determination” within the meaning of Section 1313 of the Code.
5.11 Disclosure; Press Releases. All press releases or other public communications or marketing materials relating to the transactions contemplated hereby between the Company and the Purchaser, and the method of the release for publication thereof, shall be subject to the prior approval of (a) the Company and (b) to the extent such press release or public communication references the Purchaser or its Affiliates by name, the Purchaser in writing; provided that neither the Company nor the Purchaser shall be required to obtain consent pursuant to this Section 5.11 to the extent required to comply with its respective obligations contained in this Agreement or to the extent any proposed release or statement is substantially similar to the information that has previously been made public without breach of the obligation under this Section 5.11. The restriction in this Section 5.11 shall not apply to the extent the public announcement is required by applicable securities Laws, any Governmental Entity or stock exchange rule; provided that in such an event, the applicable party shall use its commercially reasonable efforts to consult with the other party in advance as to its form, content and timing.
5.12 Termination. Except as specifically otherwise provided herein, the provisions of this Agreement (other than Sections 5.7 (Confidentiality), 9.8 (Governing Law; Jurisdiction) and 9.10 (Waiver of Jury Trial)) not previously expired in accordance with their terms shall terminate upon the earlier to occur of the following: (a) a Change of Control, provided that in connection with such Change of Control, all outstanding shares of Series A Preferred Stock have been redeemed or otherwise ceased to be outstanding; or (b) the date on which none of the Purchaser nor any of its Affiliates owns any Shares or shares of Class A Common Stock, provided that no such termination shall excuse any prior breach.
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5.13 Section 382 and NOL Cooperation.
The Company and the Purchaser shall jointly monitor ownership shifts and potential limitations under Section 382 of the Code affecting the Company’s net operating losses. Each party shall provide, upon written request, the other with information reasonably available to it that is relevant to that monitoring and shall use commercially reasonable efforts to avoid an ownership change under Section 382. The Purchaser shall reasonably cooperate, taking into account its investment objectives and liquidity needs, with the Company’s reasonable requests regarding the timing and manner of any conversion or Transfer; provided that this Section 5.13 shall not prohibit or impose an open-ended restriction on the Purchaser’s exercise of its conversion rights, and no material limitation on the timing or manner of conversion shall apply without the Purchaser’s prior written consent.
5.14 Redemption Note. If on any Redemption Date (as defined in the Series A Certificate), all of the Shares elected to be redeemed pursuant to such redemption are not redeemed in full by the Company by paying the entire applicable redemption price in cash, a note attached as Exhibit C hereto (a “Redemption Note”) will be deemed to be issued automatically by the Company to the holder exercising its redemption right pursuant to Section 7.1 or Section 7.2 of the Series A Certificate, as applicable, in the amount of the Fundamental Change Redemption Price (as defined in the Series A Certificate) or Investor Redemption Price (as defined in the Series A Certificate), as applicable (less any amounts paid by the Company in cash) in full satisfaction of the Company’s obligations under Section 7 of the Series A Certificate.
Section 6. Transfer Restrictions; Restrictive Legend.
6.1 Transfer Restrictions. The Purchaser understands that it may not, directly or indirectly, sell, offer to sell, assign, pledge, mortgage, hypothecate, encumber, dispose of or otherwise transfer (or enter into an obligation regarding the future sale, assignment, pledge or transfer of) (a “Transfer”) any of the Shares (including any shares of Class A Common Stock that are issued or issuable upon conversion of the Series A Preferred Stock) prior to the date that is twelve (12) months following the Deferred Closing Date (such period, the “Lock-Up Period”); provided, however, that if the Deferred Closing does not occur as a result of the failure of any Tranche 2 Condition to be satisfied (and such failure is not waived by the Purchaser in accordance with Section 2.7), the Lock-Up Period shall instead end on the date that is twelve (12) months following the date that is the earlier of (x) five (5) Business Days after the Annual Report Filing Date, and (y) April 15, 2027; provided, further, that the foregoing restriction shall not apply to any Permitted Transfer. The Purchaser shall not be permitted to Transfer the Shares unless the transferee provides the Company with a valid IRS Form W-9, except that failure to provide such form shall not invalidate an otherwise permitted Affiliate Transfer if the transferee promptly provides the form. The Purchaser covenants and agrees not to enter into any transaction involving the Purchaser or its Affiliates to avoid or circumvent the Transfer restrictions in this Agreement. Any Transfer or purported Transfer that is made or effected with the intent to circumvent the restrictions on Transfer set forth in this Section 6.1 shall be void. The Purchaser and its Affiliates shall use commercially reasonable efforts to effectuate any Transfer or series of related Transfers in a manner that would not result in a material adverse effect on the publicly traded price of the Class A Common Stock, including not effecting any block trades at a price that is a greater than 20% discount to the market price of the Class A Common Stock on the date prior to the closing of such block trade. In addition, the Purchaser understands the Company may, as a condition to the Transfer of any of the Securities, require that the request for Transfer be accompanied by an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed Transfer does not result in a violation of the Securities Act, unless such Transfer is covered by an effective registration statement or by Rule 144 or Rule 144A under the Securities Act. It is understood that the certificates evidencing the Shares may bear substantially the following legend:
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND RESTRICTIONS ON TRANSFER SET FORTH IN, A SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTBER 22, 2026, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION, AND SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.”
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6.2 Right of First Offer.
(a) Grant. Except with respect to any Affiliate Transfer, the Purchaser hereby unconditionally and irrevocably grants to the Company the Right of First Offer to purchase all or any portion of Transfer Shares that the Purchaser may propose to Transfer. Prior to making any Transfer of Transfer Shares that is not an Affiliate Transfer, the Purchaser shall first offer such Transfer Shares to the Company in accordance with this Section 6.2.
(b) Offer Notice. The Purchaser proposing to make a Transfer of Transfer Shares that is subject to this Section 6.2 must first deliver an Offer Notice to the Company setting forth (i) the number of Transfer Shares the Purchaser proposes to Transfer, (ii) the price per share and form of consideration at which the Purchaser is willing to Transfer such Transfer Shares, and (iii) any other material terms and conditions of the proposed Transfer. The Company shall have fifteen (15) Business Days following receipt of the Offer Notice (the “ROFO Exercise Period”) to deliver a Company Notice to the Purchaser indicating whether the Company elects to purchase all or any portion of the Transfer Shares on the terms set forth in the Offer Notice.
(c) Third-Party Sale. If the Company does not deliver a Company Notice within the ROFO Exercise Period electing to purchase all or any portion of the Transfer Shares set forth in the Offer Notice, or if the Company delivers written notice declining to purchase all or any portion of such Transfer Shares, then the Purchaser shall be free, for a period of ninety (90) days following the expiration of the ROFO Exercise Period or, if earlier, delivery of the Company Notice (the “Sale Period”), to sell or Transfer any or all of the Transfer Shares to any prospective transferee at a price not less than the price set forth in the Offer Notice and on other terms and conditions no more favorable to the prospective transferee than those set forth in the Offer Notice. If the Company elects to purchase less than all of the Transfer Shares, the Purchaser may sell or Transfer the remaining Transfer Shares during the Sale Period without further compliance with this Section 6.2. Any Transfer shall remain subject to the other terms and restrictions of this Agreement, including Section 6.1, and any Transfer not consummated within the Sale Period shall again become subject to the Right of First Offer.
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(d) Consideration; Closing. If the consideration set forth in the Offer Notice is in property, services or other non-cash consideration, the fair market value of the consideration shall be as determined in good faith by the Board. If the Company elects to purchase the Transfer Shares but for any reason cannot or does not wish to pay in the same form of non-cash consideration, the Company may pay the cash value equivalent thereof, as determined in good faith by the Board. The closing of the purchase of Transfer Shares by the Company shall take place within thirty (30) days following delivery of the Company Notice electing to purchase such Transfer Shares.
6.3 Control Transfers. Subject to Section 6.1 and Section 6.2, the rights of the Purchaser hereunder may be assigned (but only with all related obligations as set forth herein) in connection with a Transfer of Transfer Shares in any Permitted Transfer; provided, however, that notwithstanding the foregoing, any Transfer (or series of related Transfers) of Transfer Shares that would result in the transferee (together with its Affiliates) acquiring (i) a majority of the Transfer Shares then held by the Purchaser (and its Affiliates) or (ii) the right to direct or cause the direction of the exercise of any rights of the Transfer Shares under this Agreement that were previously exercised or exercisable by the Purchaser (and its Affiliates) (each, a “Control Transfer”) shall require the prior written consent of the Company, such consent not to be unreasonably withheld, conditioned, or delayed. For the avoidance of doubt, an Affiliate Transfer shall not result in a Control Transfer. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 6.3 will be effective unless the transferee, has delivered to the Company a customary written joinder acknowledging and agreeing to be bound by, and to be a party to, this Agreement. Any transferee to whom rights are transferred pursuant to this Section 6.3 may assign those rights onward on the same terms in connection with any subsequent Permitted Transfer (including, for the avoidance of doubt, the consent requirement applicable to any Control Transfer), subject in each case to delivery of a customary joinder.
6.4 Unlegended Certificates. Following the expiration of the Lock-Up Period, upon (a) the request of the Purchaser (or any transferee of the Purchaser), and (b) receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state securities Laws, the Company shall promptly cause the legend to be removed from, or no longer applied to, any certificate for, or record representing, any Share to be transferred in accordance with Section 6.1.
Section 7. Registration, Transfer and Substitution of Certificates for Shares.
7.1 Stock Register; Ownership of Shares. The Company will keep at its principal office, or will cause its transfer agent to keep, a register in which the Company will provide for the registration of transfers of the Shares. The Company may treat the Person in whose name any of the Shares are registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary. All references in this Agreement to a “holder” of any Shares shall mean the Person in whose name such Shares are at the time registered on such register.
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7.2 Replacement of Certificates. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing any of the Shares, and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement and surety bond reasonably satisfactory to the Company or, in the case of any such mutilation, upon surrender of such certificate for cancellation at the office of the Company maintained pursuant to Section 7.1 hereof, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing such Shares, of like tenor.
Section 8. Definitions. Unless the context otherwise requires, the terms defined in this Section 8 shall have the meanings specified for all purposes of this Agreement. All accounting terms used in this Agreement, whether or not defined in this Section 8, shall be construed in accordance with U.S. GAAP.
“Adjusted EBITDA” means the “Adjusted EBITDA” of the Company and its Subsidiaries for the fiscal year ending December 31, 2026, as calculated and reported by the Company in its 2026 Annual Report (or corresponding earnings release issued in connection with the Company’s 2026 Annual Report).
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person, including any investment fund, vehicle or account sponsored or managed by such Person or any other Person that controls, is controlled by, or is under common control with such Person (for clarity, an investment fund, vehicle or account shall be deemed to be an “Affiliate” of all other investment funds, vehicles and accounts under common management, directly or indirectly, with such Person); provided, however, that in no event shall any portfolio company managed by an Affiliate of the Purchaser be considered to be an Affiliate of the Purchaser, as applicable. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
“Affiliate Transfer” means any Transfer of Shares by the Purchaser to an Affiliate of the Purchaser.
“Annual Report Filing Date” means the date on which the Company files the 2026 Annual Report with the Commission.
Any Person shall be deemed to “beneficially own,” to have “beneficial ownership” of, or to be “beneficially owning” any securities that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable immediately (including assuming conversion of all Preferred Stock, if any, owned by such Person to Common Stock).
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“Business Day” means any day other than Saturday, Sunday or other day on which the Commission or commercial banks in The City of New York or Los Angeles, California are authorized or required by Law to remain closed.
“Change of Control” means: (i) a sale or transfer, directly or indirectly, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, in any transaction or series of related transactions (other than sales in the ordinary course of business); (ii) any merger, consolidation or reorganization of the Company with or into any other entity or entities as a result of which the holders of the Company’s outstanding capital stock (on a fully-diluted basis) immediately prior to the merger, consolidation or reorganization no longer represent at least a majority of the voting power of the surviving or resulting corporation or other entity; or (iii) any sale or series of sales, directly or indirectly, beneficially or of record, of shares of the Company’s capital stock by the holders thereof which results in any Person or group of Affiliated Persons owning capital stock holding more than 50% of the voting power of the Company.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Commission” means the United States Securities and Exchange Commission.
“Company Notice” means written notice from the Company notifying the Purchaser that the Company intends to exercise its Right of First Offer as to some or all of the Transfer Shares set forth in an Offer Notice.
“Credit Agreement” means that certain Loan and Security Agreement, dated as of February 22, 2022, by and among Zevia LLC, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, as amended, restated, amended and restated, supplemented or otherwise modified or replaced from time to time.
“Equity-Based Security” means any class or series of shares (including a new class of common shares of the Company other than Common Stock), any Preferred Stock or other preference shares, or any other equity-like or hybrid securities (including debt securities with equity components), including options, warrants, convertibles, exchangeable or exercisable securities.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Issuance” means the issuance of any Class A Common Stock or New Securities (i) pursuant to an employment contract, equity compensation plan, employee stock option plan, management incentive plan, restricted stock plan, stock purchase plan or stock ownership plan or similar benefit plan, program or agreement as approved by the Board, (ii) in connection with any “business combination” (as defined in the rules and regulations promulgated by the Commission) or otherwise in connection with bona fide acquisitions of securities or substantially all of the assets of another Person, business unit, division or business, (iii) pursuant to the conversion, exercise or exchange of Series A Preferred Stock issued to the Purchaser, (iv) the issuance of New Securities in a share split, stock dividend, recapitalization or similar transactions (except to the extent that new capital is raised in connection therewith), (v) upon the exercise or conversion of any Equity-Based Security, (vi) New Securities issued as “kickers” to banks or other financial institutions pursuant to transactions the primary purpose of which is a debt financing transaction approved by the Board, (vii) New Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board, (viii) New Securities issued in connection with a joint venture, collaboration, license, marketing or other strategic transaction or partnership approved by the Board and (ix) in connection with a Public Offering.
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“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by a majority of the Board, or an authorized committee thereof, after consultation with an Independent Financial Advisor.
“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority, self-regulatory organization or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
“Independence Requirements” means the requirements for director independence prescribed by each of NYSE, The NASDAQ Global Select Market or The NASDAQ Global Market and the Commission.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is (i) not an Affiliate of the Company and (ii) so long as the Purchaser meets the Beneficial Ownership Requirement, reasonably acceptable to the Purchaser.
“knowledge” means, with respect to the Company, the actual knowledge of the executive officers of the Company after reasonable inquiry.
“Laws” means all statutes, rules, codes, regulations, ordinances, orders, decrees, judgments, injunctions, writs, awards and decrees of, or issued by, any Governmental Entity.
“Liens” means any mortgage, pledge, security interest, encumbrance, lien, charge or other restriction of any kind, whether based on common law, statute or contract.
“Material Adverse Effect” means any material adverse effect on the condition (financial or otherwise), prospects, properties, assets, liabilities, business or operations of the Company and its Subsidiaries, taken as a whole.
“Net Sales” means the consolidated net sales of the Company and its Subsidiaries for the fiscal year ending December 31, 2026, as reported in the audited consolidated financial statements included in the 2026 Annual Report.
“NYSE” means The New York Stock Exchange.
“Offer Notice” means written notice from the Purchaser to the Company setting forth the terms and conditions on which the Purchaser proposes to Transfer Transfer Shares, as required by Section 6.2(b).
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“Organizational Documents” means the certificate of incorporation, bylaws, certificate of formation, operating agreement, partnership agreement, and all other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation, governance or organization of a Person, including any amendment thereto, as applicable.
“Permitted Transfer” means (i) any Affiliate Transfer, (ii) any Transfer to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of law, directly or indirectly, or (iii) any Transfer to an acquiror in connection with a Change of Control approved by the Board.
“Person” means any individual, partnership, corporation, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
“Public Offering” means, in accordance with Treasury Regulations Section 1.355-7(h)(11), an acquisition where the terms of the acquisition are established by the Company or the transferor with the involvement of one or more investment bankers and the potential transferees have no opportunity to negotiate the terms of the acquisition.
“Right of First Offer” means the right, but not an obligation, of the Company, or its permitted transferees or assigns, to purchase some or all of the Transfer Shares proposed to be Transferred by the Purchaser, on the terms and conditions specified in the Offer Notice, prior to any sale or Transfer of such Transfer Shares to a third party.
“Securities Act” means the Securities Act of 1933, as amended.
“Subsidiary” means, when used with respect to any Person, any corporation, limited liability company, partnership, association, trust or other entity of which (i) securities or other ownership interests representing 50% or greater of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (ii) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of July 21, 2021, by and among the Company, Zevia LLC and each of the other parties thereto.
“Tax Return” means any return, declaration, report, statement or other document filed or required to be filed in respect of Taxes (including any attachments thereto), including any information return, claim for refund, amended return and declaration of estimated Tax.
“Taxes” means all United States federal, state, local or foreign taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real and personal property, profits, estimated, severance, occupation, production, capital gains, capital stock, goods and services, environmental, employment, withholding, stamp, value added, alternative or add-on minimum, sales, transfer, use, license, payroll and franchise taxes or any other tax of any kind whatsoever, and such term shall include any interest, penalties, fines, or additions to tax attributable to such taxes, charges, fees, levies or other assessments.
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“Transactions” means the transactions contemplated by this Agreement or any other Transaction Document.
“Transaction Documents” means this Agreement, the Registration Rights Agreement, the Amended LLCA and all exhibits and schedules hereto and thereto, and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer Shares” means shares of Series A Preferred Stock owned by the Purchaser, but does not include any shares of Class A Common Stock that are issued or issuable upon conversion of the Series A Preferred Stock.
“2026 Annual Report” means the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
Section 9. Miscellaneous.
9.1 Survival. None of the representations or warranties contained in this Agreement shall survive the Closing at which such representations or warranties are made, and all rights, claims and causes of action (whether in contract or in tort or otherwise, or whether at Law or in equity) with respect thereto shall terminate at such Closing, and thereafter there will be no liability in respect thereof, other than claims for actual and intentional fraud in the making of the representations and warranties expressly set forth in this Agreement, which claims shall survive indefinitely.
9.2 Waivers and Amendments. This Agreement may be amended, modified and supplemented only by a written instrument authorized and executed by the Company and the Purchaser; provided that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions.
9.3 Construction. Any reference in this Agreement to a “Section,” “Exhibit” or “Schedule” refers to the corresponding Section, Exhibit or Schedule of or to this Agreement, unless the context indicates otherwise. The headings of Sections are provided for convenience only and are not intended to affect the construction or interpretation of this Agreement. The words “including,” “includes” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance. Where this Agreement states that a party “shall,” “will” or “must” perform in some manner or otherwise act or omit to act, it means that the party is legally obligated to do so in accordance with this Agreement. Any reference to a statute is deemed also to refer to any amendments or successor legislation as in effect at the relevant time. Any reference to a contract or other document as of a given date means the contract or other document as amended, supplemented and modified from time to time through such date. Any words (including capitalized terms defined herein) in the singular will be held to include the plural and vice versa and words (including capitalized terms defined herein) of one gender will be held to include the other gender as the context requires. The terms “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. All references to any period of days will be deemed to be to the relevant number of calendar days unless otherwise specified. All references herein to “$” or dollars will refer to United States dollars, unless otherwise specified. All accounting terms not otherwise defined herein have the meanings given to them in accordance with U.S. GAAP. Reference herein to any document or other information being “delivered,” “made available,” “distributed” or “provided” to the Purchaser shall mean that such document or information was included in the virtual data room of the Company hosted by Datasite.com, or otherwise delivered to the Purchaser or its representatives (including via e-mail), prior to execution of this Agreement.
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9.4 Notices. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed delivered: (a) when delivered, if delivered personally, (b) four (4) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) one (1) Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next Business Day delivery, or (d) when received, in the case of email, in each case to the intended recipient as set forth below; provided that, in the case of both (b) and (c), a copy shall also be sent by e-mail.
If to the Company:
Zevia PBC
15821 Ventura Blvd., Suite 145
Encino, CA 91436
Attention: Steven Staes
Email: [***]
with copies to (which shall not constitute notice):
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Attention: Suni Sreepada
Email: Suni.Sreepada@ropesgray.com
If to the Purchaser:
Bubble Holdings, LLC
4001 Kennett Pike
Wilmington, DE 19807
Attention: Rodrigo Boscolo
Email: [***]; [***]
with copies to (which shall not constitute notice):
Skadden, Arps, Slate Meagher & Flom LLP
Av. Brigadeiro Faria Lima, 3311, 7th Floor
04.538-133 São Paulo, SP – Brazil
Attention: J. Mathias von Bernuth / Carlo von Hanstein
Email: mathias.vonbernuth@Skadden.com / carlo.vonhanstein@skadden.com
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or at such other address as the Company or the Purchaser may specify by written notice to the other parties hereto in accordance with this Section 9.4.
9.5 Cumulative Remedies. None of the rights, powers or remedies conferred upon the Purchaser on the one hand or the Company on the other hand shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred by this Agreement or now or hereafter available at Law, in equity, by statute or otherwise.
9.6 Successors and Assigns. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of the Purchaser and the successors of the Company, whether so expressed or not. None of the parties hereto may assign its rights or obligations hereof without the prior written consent of the other party, except that the Purchaser may assign its rights to purchase the Shares hereunder to any of its Affiliates; provided, however, that (a) the Company is promptly furnished with written notice of the name and address of each such transferee (provided that failure to provide such notice shall not impact the validity of such assignment); and (b) each such Affiliate agrees to be bound by and subject to the terms and conditions of this Agreement and makes the same representations and warranties set forth in Section 3 hereof. This Agreement shall not inure to the benefit of or be enforceable by any other Person.
9.7 Headings. The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.
9.8 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to its conflict of law principles. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions may be brought in any federal or state court located in the County of New Castle in the State of Delaware, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.
9.9 Specific Enforcement. The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. The parties acknowledge and agree that (a) the parties shall be entitled to seek an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 9.8 without proof of damages or otherwise (in each case, subject to the terms and conditions of this Section 9.9), this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the Transactions and without that right, the Company and the Purchaser would not have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Laws or inequitable for any reason, and agree not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 9.9 shall not be required to provide any bond or other security in connection with any such order or injunction.
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9.10 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, EACH PARTY KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY.
9.11 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts (including counterparts delivered by facsimile, DocuSign.com or other electronic format) shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.
9.12 Entire Agreement. This Agreement (together with the other Transaction Documents) contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.
9.13 Severability. If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum extent allowable by Law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.
| THE COMPANY: |
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| ZEVIA PBC |
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| By: | /s/ Alexandre Ruberti |
| Name: Alexandre Ruberti |
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| Title: Chief Executive Officer |
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| THE PURCHASER: |
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| BUBBLE HOLDINGS, LLC |
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| By: | /s/ Antonio Bonchristiano |
| Name: Antonio Bonchristiano |
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| Title: Director |
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| By: | /s/ Rodrigo Boscolo |
| Name: Rodrigo Boscolo |
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| Title: Director |
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[Signature Page to Securities Purchase Agreement]
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RIGHTS
OF
SERIES A SENIOR CONVERTIBLE PREFERRED STOCK
(Attached.)
A-1
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
(Attached.)
B-1
EXHIBIT C
REDEMPTION NOTE
(Attached.)
C-1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT. A HOLDER MAY OBTAIN THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY BY CONTACTING ZEVIA PBC, GENERAL COUNSEL, 15821 VENTURA BLVD., SUITE 145, ENCINO, CA 91436, [***].
SENIOR PROMISSORY NOTE
WHEREAS, Promisor and Payee (each as defined below) are parties to that certain Securities Purchase Agreement, dated as of October 22, 2026 (the "Purchase Agreement"), pursuant to which, among other things, Payee acquired shares of Series A Preferred Stock of Promisor, the powers, preferences and rights of which are set forth in the Certificate of Designations referred to therein (the "Certificate"); and
WHEREAS, as contemplated by the Purchase Agreement, in the event that any redemption of the Shares (as defined in the Certificate) required in respect of a Fundamental Change Redemption or an Investor Redemption pursuant to the terms of the Certificate does not occur in full on the applicable date in accordance with the terms of the Certificate, this Note shall be deemed issued by Promisor to Payee in respect of the Redemption Claim Amount, as provided herein.
NOW, THEREFORE, for value received, the undersigned Zevia PBC, a corporation organized and existing under the laws of the State of Delaware ("Promisor"), promises to pay to Bubble Holdings, LLC or its registered assigns ("Payee"), in lawful money of the United States of America, a principal sum equal to the Redemption Claim Amount (as defined below), or such lesser amount as may be outstanding from time to time, in accordance with the terms and provisions of this Promissory Note (this "Note") with effect from its deemed issuance pursuant to Section 1.
| 1. | Deemed Issuance; Condition to Effectiveness. Notwithstanding anything to the contrary herein, this Note shall not become effective, and Promisor shall have no obligation hereunder, unless and until the occurrence of the events set forth in Section 5.14 of the Purchase Agreement. Subject to the foregoing, this Note shall be deemed issued by Promisor automatically, with no action required by any person, upon the date required for redemption of the Shares (as defined in the Certificate) (if any) in respect of a Fundamental Change Redemption or an Investor Redemption pursuant to Section 7.1 or 7.2 of the Certificate, solely in the event such redemption does not occur in full pursuant to and in accordance with the terms of the Certificate on the applicable date. |
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| 2. | Redemption Claim. The initial aggregate principal amount of this Note (the "Redemption Claim Amount") shall be determined upon its issuance as set forth below: |
| a) | If a Fundamental Change (as defined in the Certificate) has occured, this Note shall be deemed issued in an aggregate principal amount equal to the Fundamental Change Redemption Price (as defined in the Certificate) for the Shares (as defined in the Certificate) being redeemed as contemplated by the Certificate, less any amounts paid by the Promisor in cash. |
| b) | If an Investor Redemption (as defined in the Certificate) has occurred, this Note shall be deemed issued in an aggregate principal amount equal to the Investor Redemption Price (as defined in the Certificate) for the Shares (as defined in the Certificate) being redeemed as contemplated by the Certificate, less any amounts paid by the Promisor in cash. |
| 3. | Repayment; Interest. The entire outstanding principal balance outstanding under this Note, together with all accrued and unpaid interest thereon, is due and payable on demand after issuance of this Note. The outstanding principal balance of this Note shall bear interest from the date of deemed issuance of this Note until paid in full at a rate of 15.00% per annum, computed on the basis of a 365-day year and the actual number of days elapsed. Accrued interest shall be payable quarterly in arrears on the last day of each March, June, September and December (each, an “Interest Payment Date”), commencing on the first such date to occur after the date of deemed issuance of this Note, and shall be paid in kind by being automatically added to, and thereafter constituting part of, the outstanding principal balance of this Note on each Interest Payment Date, without any action by any person, and such capitalized amounts shall thereafter bear interest as provided herein. Upon payment in full of the outstanding principal balance of this Note (including all interest capitalized pursuant to this Section 3) and all accrued and unpaid interest thereon, Promisor shall have satisfied and discharged its related redemption obligation under the Certificate. |
| 4. | Payments Generally. All payments shall be made by wire transfer of immediately available funds to such lawful place as may be designated by Payee in writing from time to time. All payments by Promisor hereunder shall be applied to any principal owing under this Note. Promisor shall pay all amounts due under this Note without setoff, counterclaim or any other deduction whatsoever. A prepayment of less than all of the unpaid principal amount of this Note shall not relieve Promisor of its obligation to make payment on this Note when due. |
| 5. | Events of Default. This Note shall become due immediately, without demand or notice, if pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law or law of any other applicable jurisdiction (each, a "Bankruptcy Law") relating to insolvency or relief of debtors, any of the following events occurs: (i) the filing of voluntary bankruptcy proceedings involving Promisor as a debtor; (ii) the application for appointment of a receiver for Promisor; (iii) the making of a general assignment for the benefit of Promisor's creditors; (iv) the admission of Promisor in writing of its inability to pay its debts as they become due, or (v) the entry against Promisor by a court of competent jurisdiction under any Bankruptcy Law of an order or decree for relief in an involuntary case. |
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| 6. | Remedies. Payee may exercise any and all rights and remedies available to it under applicable law, including, without limitation, the right to collect from Promisor all sums due under this Note. |
| 7. | Set Off. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, Promisor hereby authorizes Payee, at any time and from time to time, without presentment, demand, protest or other notice of any kind to Promisor, any such notice being hereby expressly waived, to set off any other indebted‐ness or other obligation at any time held or owing by Payee to or for the credit or the ac‐count of Promisor against any or all obligations of Promisor now or hereafter existing under this Note, irrespective of whether such obligations may be unmatured and regardless of the adequacy of any collateral. |
| 8. | Severability. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. |
| 9. | Notices. Any notice required or permitted to be given to Payee hereunder shall be given to it at such place as Payee shall designate to Promisor in writing. Any notice or demand required or permitted to be given to Promisor hereunder shall be given to it at the address below its signature below, or at such other place as Promisor shall designate to Payee in writing. |
| 10. | Waiver. The rights and remedies of Payee under this Note shall be cumulative and not alternative. No waiver by Payee of any right or remedy under this Note shall be effective unless in a writing signed by Payee. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege and no single or partial exercise of any such right, power or privilege by Payee will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. Promisor hereby waives presentment for payment, protest, and notice of protest and nonpayment of this Note. |
| 11. | Captions. The captions herein are for convenience and reference only and in no way define or limit the scope or content of this Note or in any way affect its provisions. |
| 12. | Successors and Assigns. The provisions of this Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that (x) Promisor may not assign or transfer any of its rights or obligations under this Note without the prior written consent of Payee and (y) Payee may not assign or transfer any of its rights or obligations under this Note without the prior written consent of Promisor, except in the event such transfer constitutes a Permitted Transfer (as defined in the Purchase Agreement) and the transferee delivers to the Promisor a validly completed IRS Form W-9, IRS Form W-8 or other documentation, in each case, reasonably satisfactory to the Promisor that the transferee is exempt from any withholding taxes in respect of payments, in which case no such consent shall be required. |
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| 13. | Amendments. No amendment, modification, forbearance or waiver of any provision of this Note, and no consent with respect to any departure by Promisor therefrom, shall be effective unless the same shall be in writing and signed by Promisor and Payee. |
| 14. | Electronic Signatures. Delivery of an executed counterpart of a signature page of this Note by facsimile or other electronic transmission shall be effective as delivery of an original executed counterpart of such signature page to this Note. The words "execution," "signed," "signature," "delivery," and words of like import in or relating to this Note shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. "Electronic Signatures" means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record. |
| 15. | Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS NOTE IS TO BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PARTY AT ITS RESPECTIVE ADDRESSES SET FORTH IN THIS NOTE AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO REPRESENTS AND WARRANTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS. |
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| 16. | Register. The Promisor shall maintain a register on which it enters the name and address of each holder of this Note and the principal amounts (and stated interest) of each holder’s interest in this Note or other obligations under this Note. This Note shall be construed so that the Note is at all times maintained in “registered form” under Section 5f.103-1(c) of the United States Treasury Regulations and within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code. |
| 17. | Automatic Voidance. Notwithstanding anything to the contrary herein, if at any time prior to the deemed issuance of this Note pursuant to Section 1, no Shares (as defined in the Certificate) are outstanding, this Note shall automatically, without any action required by any person, become null and void and of no further force or effect, and neither Promisor nor Payee shall have any further rights or obligations hereunder; provided that, following such deemed issuance, this Note shall become null and void only upon payment in full of all principal (including all interest capitalized pursuant to Section 3) and all accrued and unpaid interest hereunder. |
[Remainder of page intentionally blank]
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SIGNED THIS 22nd DAY OF OCTOBER, 2026
Zevia PBC, as Promisor
By: | /s/ Alexandre Ruberti |
Name: | Alexandre Ruberti |
Title: | Chief Executive Officer |
Address for Notices:
Zevia PBC
15821 Ventura Blvd.
Suite 145
Encino, CA 91436
with copies to (which shall not constitute notice):
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Attention: Suni Sreepada
Email: Suni.Sreepada@ropesgray.com
ACKNOWLEDGED AND ACCEPTED:
Bubble Holdings, LLC, as Payee
By: | /s/ Antonio Bonchristiano |
Name: | Antonio Bonchristiano |
Title: | Director |
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By: | /s/ Rodrigo Boscolo |
Name: | Rodrigo Boscolo |
Title: | Director |
1
Exhibit 10.2
ZEVIA PBC
REGISTRATION RIGHTS AGREEMENT
October 22, 2026
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS | 1 | |
1.1. | Certain Definitions | 1 |
SECTION 2 REGISTRATION RIGHTS | 5 | |
2.1. | Requested Registration | 5 |
2.2. | Company Registration | 8 |
2.3. | Registration on Form S-3 | 11 |
2.4. | Expenses of Registration | 12 |
2.5. | Registration Procedures | 12 |
2.6. | Indemnification | 15 |
2.7. | Information by Holder | 17 |
2.8. | Permitted Transferees | 17 |
2.9. | Rule 144 Reporting | 17 |
2.10. | Lock-Up Agreements | 18 |
2.11. | Delay of Registration | 19 |
2.12. | Company Information Requests | 19 |
2.13. | Termination of Registration Rights | 19 |
SECTION 3 MISCELLANEOUS | 20 | |
3.1. | Amendment | 20 |
3.2. | Notices | 20 |
3.3. | Governing Law | 21 |
3.4. | Successors and Assigns | 21 |
3.5. | Entire Agreement | 21 |
3.6. | Delays or Omissions | 21 |
3.7. | Severability | 22 |
3.8. | Titles and Subtitles | 22 |
3.9. | Counterparts | 22 |
3.10. | Telecopy Execution and Delivery | 22 |
3.11. | Jurisdiction; Venue | 22 |
3.12. | WAIVER OF JURY TRIAL | 23 |
3.13. | Further Assurances | 23 |
3.14. | Conflict | 23 |
3.15. | Attorneys’ Fees | 23 |
3.16. | Aggregation of Securities | 24 |
3.17. | Certain Interpretive Matters | 24 |
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ZEVIA PBC
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is dated as of October 22, 2026, and is by and between Zevia PBC, a Delaware public benefit corporation (the “Company”), and Bubble Holdings, LLC, a Delaware limited liability company and Affiliate of GP Investments, Ltd. (“GP” or the “Original Holder”).
RECITALS
A. The Company and GP are parties to a Securities Purchase Agreement, dated as of October 22, 2026 (as amended from time to time, the “Purchase Agreement”), pursuant to which the Company is selling to GP, and GP is purchasing from the Company, an aggregate of 20,000 shares of the Series A Senior Convertible Preferred Stock of the Company (the “Series A Preferred Stock”).
B. The parties believe that it is in each of their best interests to execute and deliver this Agreement setting forth their agreements regarding registration rights concurrently with the execution of the Purchase Agreement.
The parties therefore agree as follows:
SECTION 1
DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
(a) “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person, including any investment fund, vehicle or account sponsored or managed by such Person or any other Person that controls, is controlled by, or is under common control with such Person (for clarity, an investment fund, vehicle or account shall be deemed to be an “Affiliate” of all other investment funds, vehicles and accounts under common management, directly or indirectly, with such Person); provided, however, that in no event shall any portfolio company managed by an Affiliate of GP be considered to be an Affiliate of GP, as applicable. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
(b) “Agreement” has the meaning set forth in the Preamble.
(c) “ATM” has the meaning set forth in Section 2.2(f).
(d) “automatic shelf registration statement” has the meaning set forth in Section 2.5(b).
(e) “Beneficial Ownership” has the same meaning given to it in Section 13(d) under the Exchange Act and the rules thereunder, except that, for purposes of this Agreement, no Person shall Beneficially Own any shares of Class A Common Stock to be issued upon the exercise of options, warrants, restricted stock units or similar rights granted pursuant to the Company’s equity compensation plans, unless and until such shares are actually issued. The term “Beneficially Own” has a correlative meaning.
(f) “Board” means the board of directors of the Company.
(g) “Business Day” means any calendar day other than a Saturday, Sunday or other day on which the Commission or commercial banks in New York, New York or Los Angeles, California are authorized or required by law to close.
(h) “Class A Common Stock” means the Class A common stock, par value $0.001 per share, of the Company.
(i) “Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
(j) “Company” has the meaning set forth in the Preamble.
(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(l) “Filing Deadline” has the meaning set forth in Section 2.3(f).
(m) “GP” has the meaning set forth in the Preamble.
(n) “Holder” or “Holders” means the Original Holder and any other Person to whom Registrable Securities are transferred in accordance with the Purchase Agreement and this Agreement, including any Affiliate or qualified institutional buyer transferee.
(o) “Indemnified Party” has the meaning set forth in Section 2.6(c).
(p) “Indemnifying Party” has the meaning set forth in Section 2.6(c).
(q) “Initiating Holders” means any Holder or Holders Beneficially Owning in the aggregate not less than twenty percent (20%) of the Registrable Securities then outstanding (as such number may be adjusted in respect of any stock dividend, stock split, combination of shares, recapitalization, merger, consolidation or other reorganization).
(r) “Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.
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(s) “Original Holder” has the meaning set forth in the Preamble.
(t) “Other Selling Equity Holders” mean persons other than Holders who, by virtue of agreements with the Company, are entitled to include their Other Shares in certain registrations hereunder.
(u) “Other Shares” mean equity interests in the Company, including, any and all equity interests of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution for such equity interests, by reason of any distribution, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise, other than Registrable Securities (as defined below), with respect to which registration rights have been granted.
(v) “Person” or “person” means any individual, organization, general partnership, limited partnership, corporation, limited liability company, joint venture, trust, business trust, estate, association, governmental entity or other legal entity or organization.
(w) “Prospectus” means (i) the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments and supplements, and all other material incorporated by reference in such prospectus, and (ii) any Issuer Free Writing Prospectus.
(x) “Public Offering” means the offer and sale of Registrable Securities for cash pursuant to an effective Registration Statement under the Securities Act (other than a Registration Statement on Form S-4 or Form S-8 or any successor form).
(y) “Purchase Agreement” has the meaning set forth in the Recitals.
(z) “Registrable Securities” mean (i) all shares of Class A Common Stock issued or issuable upon conversion of the Series A Preferred Stock issued pursuant to the Purchase Agreement (including in respect of accrued and accreted payment-in-kind dividends) and (ii) all shares of Class A Common Stock directly or indirectly issued or then issuable with respect to such securities by way of unit or stock dividend or unit or stock split, or in connection with a combination of units or shares, recapitalization, merger, consolidation or other reorganization of any shares of Series A Preferred Stock issued pursuant to the Purchase Agreement. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (w) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (x) such securities shall have been transferred pursuant to Rule 144, (y) such securities are actually available for immediate sale by the applicable Holder under Rule 144 without any volume, manner-of-sale or current-public-information restriction thereunder, or (z) such securities shall have ceased to be outstanding.
(aa) The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.
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(bb) “Registration Expenses” mean all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification, and filing fees, FINRA filing fees, listing fees, printing expenses, escrow fees, roadshow and marketing expenses, fees and disbursements of counsel for the Company and one special counsel for the Holders (the fees for such special counsel not to exceed $75,000 per registration or takedown), blue sky fees and expenses, expenses of any regular or special audits incident to or required by any such registration, and the Company’s transfer agent fees, but shall not include Selling Expenses, fees and disbursements of other counsel for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.
(cc) “Registration Statement” means any registration statement of the Company filed with, or to be filed with, the Commission under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement (including pre- and post-effective amendments) and all exhibits and material incorporated by reference in such registration statement, other than a registration statement (and related Prospectus) filed on Form S-4 or Form S-8 or any successor forms thereto.
(dd) “Restricted Securities” mean any Registrable Securities that are required to bear a restrictive legend under the Securities Act or that are subject to restrictions notated in the records of the Company or in instructions to the Company’s transfer agent.
(ee) “Rule 144” means Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.
(ff) “Rule 145” means Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.
(gg) “Securities Act” means the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(hh) “Selling Expenses” mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of one special counsel to the Holders included in Registration Expenses).
(ii) “Series A Preferred Stock” has the meaning set forth in the Recitals.
(jj) “Transfer” means, with respect to any Registrable Security, any interest therein, or any other securities or equity interests relating thereto, a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition thereof, including the grant of an option or other right, whether directly or indirectly, whether voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. “Transferred” shall have a correlative meaning.
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(kk) “Valid Business Reason” has the meaning set forth in Section 2.1(c)(i).
(ll) “WKSI” has the meaning set forth in Section 2.5(b).
SECTION 2
REGISTRATION RIGHTS
2.1. Requested Registration.
(a) Request for Registration. Subject to the conditions set forth in this Section 2.1, if the Company shall receive from Initiating Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to all or a part of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of by such Initiating Holders), the Company will:
(i) promptly give written notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, file and use its reasonable best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within ten (10) Business Days after such written notice from the Company is mailed or delivered.
(b) Limitations on Requested Registration. The Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2.1:
(i) During any period in which such Holder is subject to a lock-up agreement entered into pursuant to Section 2.10(a);
(ii) At any time when a registration statement covering all Registrable Securities held by the Initiating Holders remains effective; provided that this Section 2.1(b)(ii) shall not otherwise affect the Company’s obligation to effect an underwritten shelf take-down of any of the Registrable Securities registered on such shelf pursuant to a request made pursuant to this Section 2.1;
(iii) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(iv) After the Initiating Holders have initiated two (2) demand registrations pursuant to this Section 2.1; provided that, for purposes of this clause (iv), a demand registration shall not be counted against such limit if such registration was withdrawn (A) at the Company’s request or direction, (B) as a result of a Valid Business Reason deferral under Section 2.1(c), or (C) because of material adverse information relating to the Company that was not known or reasonably available to the requesting Holders at the time of their request;
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(v) During the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration; provided that (A) the Company has delivered written notice of such Company-initiated registration to the Holders prior to its receipt of the applicable request pursuant to Section 2.1(a), (B) the Company is actively employing in good faith reasonable best efforts to cause such Registration Statement to become effective and, following effectiveness, to consummate the offering contemplated thereby, and (C) the Company may not invoke this Section 2.1(b)(v) (together with Section 2.1(b)(vii)) more than once in any twelve (12)-month period;
(vi) If the Initiating Holders propose to dispose of shares of Registrable Securities that may be registered on Form S-3 pursuant to a request made under Section 2.3;
(vii) During the ninety (90)-day period following the Company’s filing of a Registration Statement (other than Form S-8 or Form S-4 or any successor thereto), initiated by the Company for its own account that has not yet become effective; provided that any period under this Section 2.1(b)(vii) shall run concurrently with, and shall count toward the limitation set forth in, Section 2.1(b)(v).
(c) Deferral.
(i) If any registration of Registrable Securities would require disclosure of information not otherwise then required by law to be publicly disclosed and, in the good faith judgment of the Board, such disclosure is reasonably likely to adversely affect any material financing, acquisition, corporate reorganization or merger or other material transaction or event involving the Company or otherwise have a material adverse effect on the Company (a “Valid Business Reason”), the Company may postpone or withdraw a filing of a Registration Statement (or prospectus supplement) or direct that Holders discontinue sales thereunder for the shortest period of time determined in good faith by the Company to be necessary and in any event only until such Valid Business Reason no longer exists, but in no event shall the Company avail itself of such right for more than one hundred twenty (120) days in the aggregate in any period of three hundred sixty-five (365) consecutive days or more than ninety (90) consecutive days in any one suspension, and the Company shall not avail itself of such right more than three (3) times in any twelve (12)-month period. Any such suspension shall apply equally to all Holders and to the Company. The Company shall give notice to the participating Holder(s) promptly after the occurrence of the suspension or withdrawal and promptly after the Valid Business Reason no longer exists.
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(ii) If the Company shall give any notice of postponement or withdrawal of any Registration Statement or any instruction to discontinue selling pursuant to Section 2.1(c)(i) above, the Company shall not register the resale of any equity security of the Company during the period of postponement or withdrawal. Each Holder agrees that, upon receipt of any notice from the Company that the Company has determined to withdraw any registration statement or instruct a discontinuance of sales pursuant to Section 2.1(c)(i) above, such Holder will discontinue its disposition of Registrable Securities pursuant to such Registration Statement. If the Company shall have withdrawn or prematurely terminated a Registration Statement filed under Section 2.1(a), the Company shall not be considered to have effected an effective registration for the purposes of this Agreement until the Company shall have filed a new Registration Statement (or prospectus supplement) covering the Registrable Securities covered by the withdrawn Registration Statement and such Registration Statement shall have been declared effective and shall not have been withdrawn or a new prospectus supplement covering the Registrable Securities shall have been filed and shall be available for the disposition of the relevant Registrable Securities in accordance with the plan of distribution set forth therein. If the Company shall give any notice of withdrawal or postponement of a registration statement (or prospectus supplement) or suspension of selling pursuant to clause Section 2.1(c)(i) above, at such time as the Valid Business Reason that caused such withdrawal or postponement no longer exists, the Company shall use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Securities covered by the withdrawn or postponed Registration Statement in accordance with this Section 2.1, and in no event later than sixty (60) days after the date of the withdrawal or postponement.
(d) Other Shares. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2.1(e), include Other Shares, and may include securities of the Company being sold for the account of the Company.
(e) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.1 and the Company shall include such information in the written notice given pursuant to Section 2.1(a)(i). In such event, the right of any Holder to include all or any portion of its Registrable Securities in such registration pursuant to this Section 2.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities to the extent provided herein. If the Company shall request inclusion in any registration pursuant to Section 2.1 of securities being sold for its own account, or if other persons shall request inclusion in any registration pursuant to Section 2.1, the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and such offer shall be conditioned upon the participation of the Company or such other persons in such underwriting and the inclusion of the Company’s and such person’s other securities of the Company and their acceptance of the further applicable provisions of this Section 2 (including Section 2.10). The Company shall (together with all Holders and other persons proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders, subject to the Company’s consent, not to be unreasonably withheld, conditioned or delayed.
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Notwithstanding any other provision of this Section 2.1, if the underwriters advise the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the number of Registrable Securities and Other Shares that may be included shall be allocated as follows: (i) first, to holders of Other Shares who are entitled to first-priority cutback treatment under the terms of a registration rights agreement with the Company in effect as of the date hereof (and solely to the extent required by such agreement); (ii) second, to the Holders requesting inclusion, up to the full number of Registrable Securities requested to be included by such Holders (and, if the number of shares that may be underwritten is less than the aggregate number so requested by such Holders, among such Holders pro rata based on the number of Registrable Securities requested by each); (iii) third, to the remaining Other Selling Equity Holders (other than those described in clause (i)) requesting inclusion, pro rata based on the number of Other Shares requested by each; and (iv) fourth, to the Company, which the Company may allocate, at its discretion, for its own account or for the account of other holders or employees of the Company. In no event shall the number of Registrable Securities or Other Shares underwritten in such registration be limited unless and until all shares held by persons other than Holders or Other Selling Equity Holders, including the Company, are completely excluded from such offering. Notwithstanding the foregoing, if, as a result of any limitation on the number of shares to be underwritten pursuant to this Section 2.1(e), the Holders are unable to include in such offering at least eighty percent (80%) of the Registrable Securities that the Holders requested to be included therein, then, at the election of the Initiating Holders (to be given in writing to the Company within five (5) Business Days of the underwriters’ advice regarding such limitation), such offering shall not be counted as a demand registration initiated for purposes of Section 2.1(b)(iv).
If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall be excluded therefrom by written notice from the Company, the underwriter or the Initiating Holders. The securities so excluded shall also be withdrawn from registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall also be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares to be included in such registration was previously reduced as a result of marketing factors pursuant to this Section 2.1(e), then the Company shall then offer to all Holders and Other Selling Equity Holders who have retained rights to include securities in the registration the right to include additional Registrable Securities or Other Shares in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders and Other Selling Equity Holders requesting additional inclusion, as set forth above.
(f) Conditions to Participation. No Person may participate in any underwritten offering hereunder unless that Person agrees to sell the Registrable Securities it desires to have covered by the applicable Registration Statement on the basis provided in any underwriting arrangements in customary form and completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of the underwriting arrangements. Further, registrations pursuant to this Section 2.1 shall be on the appropriate registration form of the Commission for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof, which form shall be selected by the Company and shall be reasonably acceptable to the Original Holder.
2.2. Company Registration.
(a) Company Registration. If the Company shall determine to register any of its securities either for its own account or the account of a security holder or holders, other than a registration pursuant to Sections 2.1 or 2.3, a registration on Form S-4 or Form S-8 or any successor form to such forms, a registration relating solely to employee benefit plans, a registration solely for the registration of securities issuable upon the conversion, exchange or exercise of any then outstanding security of the Company, a registration relating to a dividend reinvestment plan, a registration relating to the offer and sale of debt securities, a registration relating to a corporate reorganization or other Rule 145 transaction, or a registration on any registration form that does not permit secondary sales, the Company will:
(i) promptly give written notice of the proposed registration to all Holders; and
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(ii) use its reasonable best efforts to include in such registration (and any related qualification under blue sky laws or other compliance) or Public Offering, except as set forth in Section 2.2(c) below, and in any underwriting involved therein, all of such Registrable Securities as are specified in a written request or requests made by any Holder or Holders received by the Company within ten (10) Business Days after such written notice from the Company is mailed or delivered. Such written request may specify all or a part of a Holder’s Registrable Securities.
(b) Limitations on Company Registration. The Company shall not be required to provide a written notice pursuant to Section 2.2(a) to Holders with respect to any Registrable Securities that are already registered pursuant to an effective Registration Statement.
(c) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.2(a)(i). In such event, the right of any Holder to include their Registrable Securities in such registration pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the Other Selling Equity Holders and other holders of securities of the Company with registration rights to participate therein distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 2.2, if the underwriters advise the Company in writing that marketing factors require a limitation on the number of shares to be underwritten, the underwriters may limit the number of securities to be included in the registration and underwriting. The Company shall so advise all holders of securities requesting registration, and the number of securities entitled to be included shall be allocated as follows: (i) first, to the Company for securities being sold for its own account in a primary offering only; (ii) second, to holders of Other Shares who are entitled to priority cutback treatment under the terms of a registration rights agreement with the Company in effect as of the date hereof (and solely to the extent required by such agreement); (iii) third, to the Holders and the remaining Other Selling Equity Holders (other than those described in clause (ii)) as a single class, pro rata based on the number of securities requested to be included by each such Holder and Other Selling Equity Holder.
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If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall also be excluded therefrom by written notice from the Company or the underwriter. The Registrable Securities or other securities so excluded shall also be withdrawn from such registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares of Registrable Securities to be included in such registration was previously reduced as a result of marketing factors pursuant to this Section 2.2(c), the Company shall then offer to all persons who have retained the right to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among the persons requesting additional inclusion, in the manner set forth above.
(d) Conditions to Participation. No Person may participate in any underwritten offering hereunder unless that Person agrees to sell the Registrable Securities it desires to have covered by the applicable Registration Statement on the basis provided in any underwriting arrangements in customary form and completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of the underwriting arrangements.
(e) Right to Terminate Registration.
(i) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.
(ii) Any Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement (or prospectus supplement) pursuant to this Section 2.2 by giving written notice to the Company of its request to withdraw. Such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration. Such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Registrable Securities in the registration as to which such withdrawal was made.
(f) ATM Program. Notwithstanding anything in this Section 2.2 to the contrary, no Holder shall have any right to include Registrable Securities in any offering by the Company of Class A Common Stock executed pursuant to any “at the market” program (“ATM”) that the Company may have in effect from time to time on or after the date of this Agreement; provided that the Company shall not conduct ATM sales during any such period while GP’s Registrable Securities are subject to any (i) lock-up; provided, however, for the avoidance of doubt, the transfer restrictions set forth in Section 6.1 of the Purchase Agreement shall not apply to, limit or otherwise restrict the prohibition on the Company’s use of ATM as set forth in this Section 2.2(f)), (ii) the Company’s holdback pursuant to Section 2.10, (iii) during any Valid Business Reason suspension, or (iv) during any period in which the Company is actively effecting any registration, shelf takedown or registered block trade pursuant to Section 2.1, Section 2.3(f), or Section 2.3(g).
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2.3. Registration on Form S-3.
(a) Request for Form S-3 Registration. The Company shall use its reasonable best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3, in addition to the rights contained in the foregoing provisions of this Section 2 and subject to the conditions set forth in this Section 2.3, if the Company shall receive from a Holder or Holders of Registrable Securities a written request that the Company effect any registration on Form S-3 or any similar short-form registration statement with respect to all or part of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Holder or Holders), the Company will take all such action with respect to such Registrable Securities as required by Sections 2.1(a)(i) and 2.1(a)(ii).
(b) Limitations on Form S-3 Registration. The Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2.3 in the circumstances described in Section 2.1(b)(i), Section 2.1(b)(ii) or Section 2.1(b)(iii).
(c) Deferral. The provisions of Section 2.1(c) shall apply to any registration pursuant to this Section 2.3.
(d) Underwriting. If the Holders of Registrable Securities requesting registration under this Section 2.3 intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of Section 2.1(e) shall apply to such registration. Notwithstanding anything contained herein to the contrary, registrations effected pursuant to this Section 2.3 shall not be counted as requests for registration or registrations effected pursuant to Section 2.1.
(e) Conditions to Participation. No Person may participate in any underwritten offering hereunder unless that Person agrees to sell the Registrable Securities it desires to have covered by the applicable Registration Statement on the basis provided in any underwriting arrangements in customary form and completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of the underwriting arrangements.
(f) Resale Shelf Registration. Notwithstanding anything to the contrary herein, the Company shall not be obligated to comply with this Section 2.3(f) until the date that is three (3) months prior to the expiration of the period in which transfers are restricted under Section 6.1 of the Purchase Agreement (such date, the “Registration Commencement Date”). The Company shall (i) no later than the Registration Commencement Date (as used in the context, the “Filing Deadline”), file with the Commission a resale shelf Registration Statement on Form S-3 (or, if the Company is not then eligible to use Form S-3, Form S-1 or another available form) covering the resale of all Registrable Securities; (ii) use reasonable best efforts to cause such Registration Statement to be declared effective no later than sixty (60) days after the Filing Deadline (or ninety (90) days after the Filing Deadline if such Registration Statement is subject to review by the Commission); (iii) keep such Registration Statement continuously effective until the earlier of the date on which all Registrable Securities covered thereby have been sold and the date on which no Registrable Securities remain outstanding, including by filing successor shelf Registration Statements as necessary; and (iv) subject to Section 2.3(g), permit underwritten and non-underwritten shelf takedowns and registered block trades. In connection with each such shelf takedown or registered block trade, the Company shall use reasonable best efforts to cooperate in customary marketing, due diligence, management availability, comfort letter and legal opinion processes.
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(g) Shelf Takedowns and Registered Block Trades. At the written request of GP or any other Holder, the Company shall use reasonable best efforts to effect an underwritten shelf takedown or registered block trade with no minimum offering size; provided that GP or any other Holder shall not be entitled to request (i) more than one (1) underwritten shelf takedown during any calendar quarter or (ii) more than two (2) registered block trades during any twelve (12)-month period, it being understood that registered block trades shall not count against the limitation set forth in the foregoing clause (i); provided, further, that, solely during the Lock-Up Period (as defined in the Purchase Agreement), registered block trades shall be subject to Section 6.1 of the Purchase Agreement. The Company shall use reasonable best efforts to file any required prospectus supplement within three (3) Business Days after receiving the information reasonably required for that filing.
2.4. Expenses of Registration.
All Registration Expenses incurred in connection with registrations pursuant to Sections 2.1, 2.2 and 2.3 shall be borne by the Company regardless of whether the applicable registration becomes effective or is withdrawn; provided that all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the holders of securities included in such registration pro rata among each other on the basis of the number of Registrable Securities so registered.
2.5. Registration Procedures.
In the case of each registration effected by the Company pursuant to this Section 2, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its reasonable best efforts to:
(a) Except as otherwise provided in Section 2.3(f), keep such registration effective for a period ending on the earlier of the date which is one hundred eighty (180) days from the effective date of the Registration Statement or such time as the Holder or Holders have completed the distribution described in the Registration Statement relating thereto; provided, however, that (i) such one hundred eighty (180) day period shall be extended for a period of time equal to the period the Holder(s) refrain from selling any securities included in such registration at the request of an underwriter of Class A Common Stock of the Company and (ii) in the case of any shelf Registration Statement covering Registrable Securities intended to be offered on a continuous or delayed basis, the Company shall keep the Registration Statement effective until the earlier of (A) the date all such Registrable Securities have been sold and (B) the date no Registrable Securities remain outstanding, including by filing successor shelf Registration Statements as necessary;
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(b) To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a “WKSI”) at the time any request for registration is submitted to the Company in accordance with Section 2.3, (i) if so requested, file an automatic shelf Registration Statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”) to effect such registration, and (ii) remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) for a period during which such automatic shelf registration statement is required to remain effective in accordance with this Agreement.
(c) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in Section 2.5(a) above;
(d) Furnish such number of prospectuses, including any preliminary prospectuses, and other documents incident thereto, including any amendment or supplement to the prospectus, as a Holder from time to time may reasonably request;
(e) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdiction as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;
(f) Notify each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing, and following such notification promptly prepare and furnish to such seller a reasonable number of copies of a supplement or an amendment to such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing;
(g) If at any time when the Company is required to re-evaluate its WKSI status for purposes of an automatic shelf registration statement used to effect a request for registration in accordance with Section 2.3 (i) the Company determines that it is not a WKSI, (ii) the registration statement is required to be kept effective in accordance with this Agreement, and (iii) the registration rights of the applicable Holders have not terminated, promptly amend the registration statement onto a form the Company is then eligible to use or file a new registration statement on such form, and keep such registration statement effective in accordance with the requirements otherwise applicable under this Agreement;
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(h) If (i) a registration made pursuant to a shelf registration statement is required to be kept effective in accordance with this Agreement after the third anniversary of the initial effective date of the shelf registration statement and (ii) the registration rights of the applicable Holders have not terminated, file a new registration statement with respect to any unsold Registrable Securities subject to the original request for registration prior to the end of the three-year period after the initial effective date of the shelf registration statement, and keep such registration statement effective in accordance with the requirements otherwise applicable under this Agreement;
(i) Use its reasonable best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and reasonably satisfactory to such underwriters and (ii) a “comfort” letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters;
(j) Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement not later than the effective date of such registration;
(k) Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act;
(l) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; and
(m) In connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 2.1, enter into an underwriting agreement, provided such underwriting agreement contains reasonable and customary provisions, and provided, further, that each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(n) Provide GP and its counsel a reasonable opportunity to review and comment on any Registration Statement, Prospectus or Issuer Free Writing Prospectus that names GP or includes information regarding GP before filing, and not name GP as an underwriter or make any disclosure regarding GP without GP’s prior written consent, except to the extent required by applicable law after reasonable consultation with GP;
(o) Promptly notify GP of any stop order, suspension or Commission comment affecting GP’s Registrable Securities and use reasonable best efforts to obtain withdrawal of any such stop order or suspension and resolve any such comment; and
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(p) Cooperate in the timely removal of restrictive legends and delivery of Registrable Securities in book-entry form, free of restrictive legends, upon sale under a Registration Statement or pursuant to Rule 144, in each case when legally permitted;
2.6. Indemnification.
(a) The Company will indemnify and hold harmless each Holder, each of its officers, directors, members, and partners, legal counsel and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Section 2, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses, claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation (or alleged violation) by the Company of the Securities Act, the Exchange Act, any state securities laws, any rule or regulation thereunder or any rule of any securities exchange applicable to the Company and relating to action or inaction required of the Company in connection with any offering covered by such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers, directors, members, partners, legal counsel and accountants and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action; provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or action arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder, any of such Holder’s officers, directors, members, partners, legal counsel or accountants, any person controlling such Holder, such underwriter or any person who controls any such underwriter, and stated to be specifically for use therein; and provided, further, that the indemnity agreement contained in this Section 2.6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).
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(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, severally and not jointly indemnify and hold harmless the Company, each of its directors, officers, partners, legal counsel and accountants and each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, and each of their officers, directors, members and partners, and each person controlling each other such Holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holders, directors, officers, members, partners, legal counsel, accountants, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under this Section 2.6 exceed the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section 2.6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom; provided that the Indemnifying Party may select counsel to conduct the defense, and the Indemnified Party may retain separate counsel at the Indemnifying Party’s expense if the Indemnified Party reasonably determines that an actual or potential conflict of interest exists or if the Indemnifying Party fails to assume the defense promptly; and provided, further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.6, to the extent such failure is not prejudicial. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 2.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. No person or entity will be required under this Section 2.6(d) to contribute any amount in excess of the net proceeds from the offering received by such person or entity, except in the case of fraud or willful misconduct by such person or entity. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.
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(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions as they relate to underwriters and their controlling persons, the provisions in the underwriting agreement shall control.
2.7. Information by Holder.
Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Section 2.
2.8. Permitted Transferees.
Subject to Section 6.1 and Section 6.2 of the Purchase Agreement, the rights of a Holder hereunder may be assigned (but only with all related obligations as set forth below) in connection with a Transfer of Registrable Securities in any Permitted Transfer (as defined in the Purchase Agreement), including a Transfer to an Affiliate or qualified institutional buyer. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 2.8 will be effective unless the transferee, if not already a Holder, has delivered to the Company a customary written joinder acknowledging and agreeing to be bound by, and to be a party to, this Agreement. Any transferee to whom rights are transferred pursuant to this Section 2.8 may assign those rights onward on the same terms in connection with any subsequent Permitted Transfer, subject in each case to delivery of a customary joinder.
2.9. Rule 144 Reporting.
With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to use its reasonable best efforts to:
(a) Make and keep adequate current public information with respect to the Company available in accordance with Rule 144 under the Securities Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and
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(c) So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.
(d) Following the date on which any Registrable Securities become eligible for sale without registration under Rule 144 and the Holder is not, and has not been during the preceding three (3) months, an “affiliate” of the Company (as defined in Rule 144), as reasonably supported by a customary written representation of the Holder or, at the Holder's election, an opinion of counsel to the Holder, upon the request of any Holder, the Company shall, at its expense, as soon as practicable, and in any event within five (5) Business Days, deliver or cause to be delivered all legal opinions, instruction letters, authorizations, certificates and other documents required by the Company’s transfer agent to (i) remove any restrictive legend from, and (ii) withdraw any stop-transfer instruction with respect to, such Registrable Securities, and shall cause such Registrable Securities to be delivered in book-entry form free of any restrictive legend and, if requested by the Holder, eligible for settlement through the facilities of The Depository Trust Company. The Company shall not condition the removal of any restrictive legend (or, in the case of certificated shares, the issuance of a replacement certificate without such legend or the conversion to book-entry form) on the delivery of any opinion of counsel to the Holder, the surrender or return of the original stock certificate (except to the extent required by the Company’s transfer agent for processing), or any representation or covenant beyond a customary seller representation as to compliance with Rule 144.
2.10. Lock-Up Agreements.
(a) Each Holder agrees, to the extent requested in writing by the managing underwriters, if any, not to sell, Transfer, pledge, contract to sell, grant any option to purchase, enter into any swap or arrangement that Transfers to another any of the economic consequences of ownership of such securities or otherwise dispose of, indirectly or directly, including any sale pursuant to Rule 144, any Class A Common Stock or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company other than as part of such underwritten Public Offering, during a period not to exceed ninety (90) days. No Holder shall be subject to more than one such lock-up in any twelve (12)-month period. The foregoing shall not restrict transfers to Affiliates, transfers of Series A Preferred Stock, pledges, or any Transfer permitted under the Purchase Agreement. No Holder shall be subject to a lock-up unless all directors, executive officers and holders of five percent (5%) or more of the Class A Common Stock are subject to substantially identical restrictions. Any waiver or early release granted to any other person shall automatically apply pro rata to the applicable Holder, and any waiver or early release granted to any other person shall be deemed to apply to such Holder to the same extent and at the same time.
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(b) The Company agrees, to the extent requested in writing by the managing underwriters, that, in connection with any underwritten offering in which GP participates, including any underwritten shelf takedown or registered block trade, it shall not sell, transfer, pledge, contract to sell, grant any option to purchase, or otherwise dispose of any Class A Common Stock, or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company, other than as part of such underwritten Public Offering, a registration on Form S-4 or Form S-8 or any successor or similar form which is then in effect, or upon the conversion, exchange or exercise of any then outstanding securities of the Company, including the Series A Preferred Stock, until a period of ninety (90) days shall have elapsed from the pricing date of such underwritten offering. This Company holdback shall apply whether or not a request for registration has previously been made pursuant to Section 2.1 and shall not include any exception for sales pursuant to an ATM .
2.11. Delay of Registration.
No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2; provided, however, that this limitation shall not restrict any Holder’s right to seek specific performance or injunctive relief to enforce the Company’s obligations under this Agreement or to prevent the inclusion of disclosure regarding such Holder to which such Holder has not consented.
2.12. Company Information Requests.
Without limiting Section 2.7, the Company may require each seller of Registrable Securities as to which any registration or sale is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing, and the Company may exclude from such registration or sale the Registrable Securities of any such Holder who unreasonably fails to furnish the requested information within a reasonable time after receiving such request. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.
2.13. Termination of Registration Rights.
This Agreement shall terminate upon the date on which no Holder (including any permitted transferee under Section 2.8) holds any Registrable Securities, except for the provisions of Sections 2.4, 2.6, 2.9 and 2.11, which shall survive any such termination. No termination under this Agreement shall relieve any Person of liability for breach or Registration Expenses incurred prior to termination. In the event this Agreement is terminated, each Person entitled to indemnification rights pursuant to Section 2.6 hereof shall retain such indemnification rights with respect to any matter that (i) may be an indemnified liability thereunder and (ii) occurred prior to such termination.
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SECTION 3
MISCELLANEOUS
3.1. Amendment.
This Agreement may not be orally amended, modified, extended or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and the Holders of a majority of the Registrable Securities under this Agreement; provided, however, that any amendment, modification, extension or termination that disproportionately and adversely affects any Holder shall require the prior written consent of such Holder. Each such amendment, modification, extension or termination shall be binding upon each party hereto. In addition, each party hereto may waive any right hereunder by an instrument in writing signed by such party.
3.2. Notices.
All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
(a) if to any Holder, to such address, facsimile number or electronic mail address as shown in the Company’s records, or, until any such Holder so furnishes an address, facsimile number or electronic mail address to the Company, then to the address of the last holder of such shares for which the Company has contact information in its records; or
(b) if to the Company, to the attention of the Chief Executive Officer or Chief Financial Officer of the Company at 15821 Ventura Boulevard, Los Angeles, CA 91436, or at such other current address as the Company shall have furnished to the Holders, with a copy (which shall not constitute notice) to Ropes & Gray LLP, 1211 Avenue of the Americas, New York, NY 10036, Attention: Suni Sreepada.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one Business Day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next Business Day.
Subject to the limitations set forth in Delaware General Corporation Law § 232(e), each Holder consents to the delivery of any notice to Holders given by the Company under the Delaware General Corporation Law, the Delaware Limited Liability Company Act, the Company’s certificate of incorporation or bylaws by (i) facsimile telecommunication to the facsimile number for the Holder in the Company’s records, (ii) electronic mail to the electronic mail address for the Holder in the Company’s records, (iii) posting on an electronic network together with separate notice to the Holder of such specific posting or (iv) any other form of electronic transmission (as Delaware General Corporation Law permits) directed to the Holder. This consent may be revoked by a Holder by written notice to the Company and may be deemed revoked in the circumstances specified in Delaware General Corporation Law § 232.
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3.3. Governing Law.
This Agreement shall be governed in all respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.
3.4. Successors and Assigns.
Except as otherwise provided herein and subject to Section 2.8, this Agreement, and any and all rights, duties and obligations hereunder, may be assigned, transferred, delegated or sublicensed by a Holder without the prior written consent of the Company . Any assignment, transfer, delegation or sublicense made in accordance with Section 2.8 shall be valid and effective and shall not be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
3.5. Entire Agreement.
This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof. No party hereto shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein.
3.6. Delays or Omissions.
Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not alternative.
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3.7. Severability.
If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.
3.8. Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections and paragraphs shall, unless otherwise provided, refer to sections and paragraphs hereof.
3.9. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties that execute such counterparts, and all of which together shall constitute one instrument.
3.10. Telecopy Execution and Delivery.
A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes.
3.11. Jurisdiction; Venue.
Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware and the County of New Castle for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof or thereof other than before one of the above-named courts or to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 3.2 hereof is reasonably calculated to give actual notice.
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3.12. WAIVER OF JURY TRIAL.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 3.12 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 3.12 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
3.13. Further Assurances.
Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts as may be necessary to more fully effectuate this Agreement.
3.14. Conflict.
In the event of any conflict between the terms of this Agreement and the Purchase Agreement, the terms of this Agreement will control with respect to registration rights, registration procedures, transfers of Registrable Securities and remedies relating thereto, and the Purchase Agreement will control with respect to all other matters.
3.15. Attorneys’ Fees.
In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
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3.16. Aggregation of Securities.
All securities held or acquired by a Person and its Affiliates shall be aggregated together for purposes of determining the availability of any rights under this Agreement.
3.17. Certain Interpretive Matters.
(a) Unless the context of this Agreement otherwise requires:
(i) words of any gender include each other gender;
(ii) words using the singular or plural number also include the plural or singular number, respectively;
(iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement;
(iv) except as otherwise indicated, all references herein to “Sections” are Sections of this Agreement;
(v) the term “or” has, except as otherwise indicated, the inclusive meaning represented by the phrase “and/or”; and
(vi) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”
(b) The Table of Contents, headings and other titles contained herein are inserted only as a matter of convenience and in no way define, limit, extend or interpret the scope of this Agreement or any particular Section hereof.
(signature pages follow)
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The parties are signing this Registration Rights Agreement as of the date stated in the introductory clause.
| ZEVIA PBC, |
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| a Delaware public benefit corporation |
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| By: | /s/ Alexandre Ruberti |
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| Name: Alexandre Ruberti |
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| Title: Chief Executive Officer |
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| BUBBLE HOLDINGS, LLC |
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| By: | /s/ Antonio Bonchristiano |
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| Name: Antonio Bonchristiano |
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| Title: Director |
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| By: | /s/ Rodrigo Boscolo |
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| Name: Rodrigo Boscolo |
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| Title: Director |
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[Signature Page – Registration Rights Agreement]
Exhibit 10.3
FOURTEENTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ZEVIA LLC
a Delaware limited liability company
dated as of October 22, 2026
TABLE OF CONTENTS
Page
ARTICLE I GENERAL PROVISIONS | 2 |
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Section 1.1 | Formation and Continuation | 2 |
Section 1.2 | Name | 2 |
Section 1.3 | Principal Place of Business; Other Places of Business | 2 |
Section 1.4 | Designated Agent for Service of Process | 2 |
Section 1.5 | Term | 2 |
Section 1.6 | No State Law Partnership | 2 |
Section 1.7 | Business Purpose | 2 |
Section 1.8 | Powers | 2 |
Section 1.9 | Certificates; Filings | 3 |
Section 1.10 | Representations and Warranties by the Members | 3 |
ARTICLE II UNITS; CAPITAL CONTRIBUTIONS | 4 |
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Section 2.1 | Units | 4 |
Section 2.2 | Capital Contributions of the Members; No Deficit Restoration Obligation | 4 |
Section 2.3 | No Interest; No Return | 4 |
Section 2.4 | Issuances of Additional Units | 5 |
Section 2.5 | Additional Funds and Additional Capital Contributions | 5 |
Section 2.6 | Lock-Up Period | 7 |
ARTICLE III DISTRIBUTIONS | 9 |
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Section 3.1 | General Distributions | 9 |
Section 3.2 | Tax Distributions | 9 |
Section 3.3 | No Tax Distributions on Liquidation | 10 |
Section 3.4 | Distributions in Kind | 10 |
Section 3.5 | Withholding | 10 |
Section 3.6 | Distributions to Reflect Additional Units | 10 |
Section 3.7 | Other Distribution Rules | 10 |
ARTICLE IV MANAGEMENT AND OPERATIONS | 11 |
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Section 4.1 | Management | 11 |
Section 4.2 | Tax Actions | 13 |
Section 4.3 | Compensation and Reimbursement of Managing Member | 13 |
Section 4.4 | Outside Activities | 14 |
Section 4.5 | Transactions with Affiliates | 14 |
Section 4.6 | Limitation on Liability | 15 |
Section 4.7 | Indemnification | 15 |
ARTICLE V BOOKS AND RECORDS | 16 |
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Section 5.1 | Books and Records | 16 |
Section 5.2 | Financial Accounts | 16 |
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Section 5.3 | Inspection; Confidentiality | 16 |
Section 5.4 | Information to be Provided by Managing Member to Members | 16 |
ARTICLE VI ALLOCATIONS | 16 |
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Section 6.1 | Allocations | 16 |
Section 6.2 | Priority Allocations | 17 |
Section 6.3 | Other Allocation Rules | 17 |
ARTICLE VII TAX MATTERS | 18 |
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Section 7.1 | Provision of Information | 18 |
Section 7.2 | Member Tax Returns | 19 |
Section 7.3 | Tax Elections | 19 |
Section 7.4 | Company Tax Returns | 19 |
Section 7.5 | Tax Representative | 19 |
Section 7.6 | Tax Audits | 20 |
Section 7.7 | No Independent Actions or Inconsistent Positions | 20 |
Section 7.8 | United States Person | 21 |
Section 7.9 | State, Local, and Non-U.S Tax Law | 21 |
Section 7.10 | Former Members; Survival; Amendment | 21 |
Section 7.11 | Tax Classification | 21 |
Section 7.12 | Accounting and Fiscal Year | 21 |
Section 7.13 | Capital Accounts | 21 |
ARTICLE VIII UNIT TRANSFERS AND MEMBER WITHDRAWALS | 21 |
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Section 8.1 | Transfer Generally Prohibited | 21 |
Section 8.2 | Conditions Generally Applicable to All Transfers | 22 |
Section 8.3 | Drag-Along Rights | 23 |
Section 8.4 | Substituted Members | 23 |
Section 8.5 | Company Right to Call Membership Interests | 24 |
Section 8.6 | Withdrawal | 24 |
Section 8.7 | Restrictions on Termination Transactions | 24 |
Section 8.8 | Incapacity | 25 |
Section 8.9 | Withholding With Respect to a Transfer of Units | 25 |
ARTICLE IX ADMISSION OF MEMBERS | 25 |
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Section 9.1 | Members; Admission of Additional Members | 25 |
Section 9.2 | Limit on Number of Members | 26 |
ARTICLE X DISSOLUTION, LIQUIDATION AND TERMINATION | 26 |
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Section 10.1 | Dissolution Generally | 26 |
Section 10.2 | Events Causing Dissolution | 26 |
Section 10.3 | Distribution upon Dissolution | 27 |
Section 10.4 | Rights of Members | 28 |
Section 10.5 | Termination | 28 |
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ARTICLE XI PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; AMENDMENTS; MEETINGS | 28 |
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Section 11.1 | Actions and Consents of Members | 28 |
Section 11.2 | Amendments | 28 |
Section 11.3 | Procedures for Meetings and Actions of the Members | 28 |
ARTICLE XII EXCHANGE RIGHTS | 29 |
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Section 12.1 | Elective and Mandatory Exchanges | 29 |
Section 12.2 | Additional Terms Applying to Exchanges | 30 |
Section 12.3 | Exchange Consideration | 32 |
Section 12.4 | Adjustment | 32 |
Section 12.5 | Class A Common Stock to be Issued | 33 |
Section 12.6 | Withholding | 33 |
Section 12.7 | Tax Treatment | 34 |
Section 12.8 | Contribution of the Managing Member | 34 |
Section 12.9 | Apportionment of Distributions | 34 |
ARTICLE XIII MISCELLANEOUS | 34 |
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Section 13.1 | Conclusive Nature of Determinations | 34 |
Section 13.2 | Company Counsel | 35 |
Section 13.3 | Appointment of Managing Member as Attorney-in-Fact | 35 |
Section 13.4 | Entire Agreement | 36 |
Section 13.5 | Further Assurances | 36 |
Section 13.6 | Notices | 36 |
Section 13.7 | Governing Law | 36 |
Section 13.8 | Jurisdiction and Venue | 36 |
Section 13.9 | Equitable Remedies | 36 |
Section 13.10 | Construction | 37 |
Section 13.11 | Counterparts | 37 |
Section 13.12 | Third-Party Beneficiaries | 37 |
Section 13.13 | Binding Effect | 37 |
Section 13.14 | Severability | 37 |
Section 13.15 | Survival | 37 |
ARTICLE XIV DEFINED TERMS | 37 |
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Section 14.1 | Definitions | 37 |
Section 14.2 | Interpretation | 47 |
ANNEX A: INITIAL COMMON UNITS | A-1 |
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ANNEX B: CERTIFICATE OF DESIGNATIONS OF SERIES A SENIOR CONVERTIBLE PREFERRED UNITS | B-1 |
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THIS FOURTEENTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of ZEVIA LLC, a Delaware limited liability company (the “Company”), dated as of October 22, 2026, is adopted by Zevia PBC, a Delaware public benefit corporation (the “Managing Member”), pursuant to Section 4.1(f) and Section 11.2 of the Prior Agreement, and is binding upon the Managing Member and each of the persons admitted as a Member as of the date hereof as listed on Annex A (the “Initial Members”).
WHEREAS, the Company was formed pursuant to a Certificate of Formation (the “Certificate of Formation”) filed with the Secretary of State of the State of Delaware on September 17, 2010 (“Formation Date”), pursuant to Section 18-201 of the Delaware Limited Liability Company Act (as it may be amended from time to time, and any successor to such statute, the “Act”);
WHEREAS, since July 21, 2021, the Company was governed by the Thirteenth Amended and Restated Limited Liability Company Agreement (the “Prior Agreement”);
WHEREAS, pursuant to Section 2.4(a) of the Prior Agreement, the Company may issue additional Units, for any Company purpose, at any time or from time to time, to the Members (including the Managing Member) or to any other Person, and such additional Units may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers, restrictions, rights to distributions, qualifications and terms and conditions of redemption (including rights that may be senior or otherwise entitled to preference over existing Units) as shall be determined by the Company and set forth in a written document attached to and made an exhibit to the Prior Agreement, which exhibit shall be an amendment to the Prior Agreement and shall be incorporated therein by reference;
WHEREAS, pursuant to Section 2.5(e)(i) of the Prior Agreement, the Managing Member (i) shall not issue any additional Capital Stock or New Securities unless the Managing Member contributes the net proceeds, if any, received from the issuance of such additional Capital Stock or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Stock or New Securities to the Company in exchange for, in the case of an issuance of Preferred Stock, Equivalent Units, and (ii) if at any time any shares of Preferred Stock are issued that are convertible into or exercisable for Class A Common Stock or another security of the Managing Member, then upon any such conversion or exercise, the corresponding Equivalent Unit shall be similarly exercised or otherwise converted, as applicable, for an equivalent number of Class A Common Units or other Equivalent Units;
WHEREAS, pursuant to Section 2.5(e)(ii) of the Prior Agreement, if the Managing Member issues any additional Capital Stock or New Securities and contributes the net proceeds, if any, received from such issuance to the Company, the Company is authorized to issue a number of Common Units or Equivalent Units to the Managing Member equal to the number of shares of Capital Stock or New Securities so issued, without any further act, approval or vote of any Member or any other Person;
WHEREAS, pursuant to Section 4.1(f) and Section 11.2 of the Prior Agreement, the Managing Member shall have the power, without the Consent of a Majority-in-Interest of the Members or the consent or approval of any Member, to amend the Prior Agreement as may be required to facilitate and implement the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional Units issued pursuant to Article II; and
WHEREAS, in connection with the issuance by the Managing Member of its Series A Senior Convertible Preferred Stock, the Company has established a series of Preferred Units designated as “Series A Senior Convertible Preferred Units” having the powers, preferences, rights, qualifications, limitations and restrictions set forth in the Series A Senior Convertible Preferred Units Certificate of Designations attached hereto as Annex B, which forms a part of this Agreement; and
WHEREAS, the Managing Member has duly authorized and adopted the amendment and restatement of the Prior Agreement in its entirety as set forth herein;
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NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as follows:
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Formation and Continuation. The Company is a limited liability company previously formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. Except as expressly provided in this Agreement to the contrary, the rights and obligations of the Members and the administration and termination of the Company shall be governed by the Act. The Certificate of Formation and all actions taken or to be taken by any person who executed and filed or who executes and files, after the date of this Agreement, the Certificate of Formation are hereby adopted and ratified, or authorized, as the case may be.
Section 1.2 Name. The name of the Company is “Zevia LLC.” The Company may also conduct business at the same time under one or more fictitious names if the Managing Member determines that such is in the best interests of the Company. The Company may change its name, from time to time, in accordance with Law.
Section 1.3 Principal Place of Business; Other Places of Business. The principal business office of the Company is located at 15821 Ventura Blvd., Suite 145, Encino, CA 91436, or such other place within or outside the State of Delaware as the Managing Member may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Managing Member deems advisable.
Section 1.4 Designated Agent for Service of Process. So long as required by the Act, the Company shall continuously maintain a registered office and a designated and duly qualified agent for service of process on the Company in the State of Delaware. The address of the registered office of the Company in the State of Delaware shall be as set forth in the Certificate of Formation. The Company’s registered agent for service of process at such address shall also be as set forth in the Certificate of Formation.
Section 1.5 Term. The term of the Company commenced on the Formation Date and shall continue until the Company is dissolved in accordance with the Act or this Agreement. Notwithstanding the dissolution of the Company, the existence of the Company shall continue until its termination pursuant to this Agreement or as otherwise provided in the Act.
Section 1.6 No State Law Partnership. The Members intend that the Company shall not be a partnership (including a limited partnership) or joint venture, and that no Member shall be an agent, partner or joint venturer of any other Member, for any purposes other than for U.S. federal, state, and local tax purposes, and this Agreement shall not be construed to suggest otherwise. Each Member hereby acknowledges and agrees that, except as expressly provided herein, in performing its obligations or exercising its rights under this Agreement, it is acting independently and is not acting in concert with, on behalf of, as agent for, or as joint venturer of, any other Member. Other than in respect of the Company, nothing contained in this Agreement shall be construed as creating a corporation, association, joint stock company, business trust, or organized group of Persons, whether incorporated or not, among or involving any Member or its Affiliates, and nothing in this Agreement shall be construed as creating or requiring any continuing relationship or commitment as between such parties other than as specifically set forth in this Agreement.
Section 1.7 Business Purpose. The Company may carry on any Lawful business, purpose or activity in which a limited liability company may be engaged under Law.
Section 1.8 Powers. Subject to the limitations set forth in this Agreement, the Company will possess and may exercise all of the powers and privileges granted to it by the Act, by any other Law, or by this Agreement, together with all powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purposes of the Company set forth in Section 1.7.
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Section 1.9 Certificates; Filings. The Certificate of Formation was previously filed on behalf of the Company in the office of the Secretary of State of the State of Delaware as required by the Act. The Managing Member may execute and file any duly authorized amendments to the Certificate of Formation from time to time in a form prescribed by the Act. The Managing Member shall also cause to be made, on behalf of the Company, such additional filings and recordings as the Managing Member shall deem necessary or advisable. If requested by the Managing Member, the Members shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the Managing Member to accomplish all filing, recording, publishing, and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of a limited liability company under the Laws of the State of Delaware, (b) if the Managing Member deems it advisable, the operation of the Company as a limited liability company, in all jurisdictions in which the Company proposes to operate, and (c) all other filings required (or determined by the Managing Member to be necessary or appropriate) to be made by the Company.
Section 1.10 Representations and Warranties by the Members.
(a) No Conflict. Each Member that is an individual (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and the consummation of the transactions contemplated by this Agreement to be performed by such Member will not result in a breach or violation of, or a default under, any material agreement by which such Member or any of such Member’s property is bound, or any statute, regulation, order or other Law to which such Member is subject and (ii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms.
(b) Organization and Qualification; Authority. Each Member that is not an individual (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including that of its general partner(s), managing member(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the execution of this Agreement and consummation of such transactions will not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be), any material agreement by which such Member or any of such Member’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other Law to which such Member or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, and (iii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms.
(c) Survival of Representations and Warranties. The representations and warranties contained in Sections 1.10(a) and 1.10(b) shall survive the execution and delivery of this Agreement by each Member (and, in the case of an Additional Member or a Substituted Member, the admission of such Additional Member or Substituted Member as a Member in the Company), and the dissolution, liquidation, and termination of the Company.
(d) No Representations as to Performance. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Company or the Managing Member have been made by any Member or any employee or representative or Affiliate of any Member, and that projections and any other information, including financial and descriptive information and documentation, that may have been in any manner submitted to such Member shall not constitute any representation or warranty of any kind or nature, express or implied.
(e) Modification of Representations and Warranties. The Managing Member may permit the modification of any of the representations and warranties contained in Sections 1.10(a) and 1.10(b), as applicable, to any Member (including any Additional Member or Substituted Member or any transferee of either) provided, that such representations and warranties, as modified, shall be set forth in either (i) a Unit Designation applicable to the Units held by such Member or (ii) a separate writing addressed to the Company.
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ARTICLE II
CAPITAL CONTRIBUTIONS
Section 2.1 Units.
(a) Generally. The interests of the Members in the Company are divided into, and represented by, the Units, each having the rights and obligations specified in this Agreement.
(b) Classes. The Units are divided into:
(i) “Class A Common Units,” which are issuable to the Managing Member and such other persons as the Managing Member shall determine;
(ii) “Class B Common Units,” which are issuable to the Members (other than the Managing Member) in the IPO Reorganization and as otherwise provided in this Agreement. Each Class B Common Unit shall be associated with a share of Class B Common Stock issued to the holder of the Class B Common Unit.
(iii) “Series A Preferred Units,” which are issuable to the Managing Member and such other Persons as the Managing Member shall determine, having the powers, preferences, rights, qualifications, limitations and restrictions set forth in the Series A Senior Convertible Preferred Units Certificate of Designations; and
(iv) Other Classes of Units. The Company may issue additional Units or create additional classes, series, sub-classes, or sub-series of Units in accordance with this Agreement.
Section 2.2 Capital Contributions of the Members; No Deficit Restoration Obligation.
(a) Capital Contributions. The Members made, shall be treated as having made, or have agreed to make, Capital Contributions to the Company and were issued the Units indicated on Annex A. Except as provided by Law or in this Agreement, the Members shall have no obligation or, except as otherwise provided in this Agreement or with the prior written consent of the Managing Member, right to make any other Capital Contributions or any loans to the Company.
(b) No Deficit Restoration Obligation. No Member shall have an obligation to make any contribution to the capital of the Company as the result of a deficit balance in its Capital Account, and any such deficit shall not be considered a Debt owed to the Company or to any other Person for any purpose whatsoever.
Section 2.3 No Interest; No Return. No Member shall be entitled to interest on its Capital Contribution or on such Member’s Capital Account balance. Except as provided by this Agreement, any Unit Designation, or by Law, no Member shall have any right to demand or receive a withdrawal or the return of its Capital Contribution from the Company. Except to the extent provided in this Agreement or in any Unit Designation, no Member shall have priority over any other Member as to distributions, the return of Capital Contributions, or the allocation of Net Profits and Net Losses.
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Section 2.4 Issuances of Additional Units. Subject to the rights of any Member set forth in a Unit Designation:
(a) General. The Company may issue additional Units, for any Company purpose, at any time or from time to time, to the Members (including the Managing Member) or to any other Person, and may admit any such Person as an Additional Member for such consideration and on such terms and conditions as shall be established by the Company. Any additional Units may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers, restrictions, rights to distributions, qualifications and terms and conditions of redemption (including rights that may be senior or otherwise entitled to preference over existing Units) as shall be determined by the Company and set forth in a written document attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated into this Agreement by reference (each, a “Unit Designation”). Upon the issuance of any additional Unit, the Managing Member shall amend the Register and the books and records of the Company as appropriate to reflect such issuance. Except to the extent specifically set forth in any Unit Designation, a Unit of any class or series other than a Common Unit shall not entitle the holder thereof to vote on, or consent to, any matter.
(b) Issuances to the Managing Member. No additional Units shall be issued to the Managing Member unless:
(i) The additional Units are issued to all Members holding Common Units in proportion to their respective Percentage Interests in the Common Units;
(ii) The additional Units are (x) Class A Common Units issued in connection with an issuance of Class A Common Stock or issued with appropriate adjustments to the Exchange Rate in accordance with Section 12.4, (y) Class B Common Units issued in connection with an issuance of Class B Common Stock, or (z) Equivalent Units (other than Common Units) issued in connection with an issuance of Preferred Stock, New Securities, or other interests in the Managing Member (other than Common Stock), and, in each case, the Managing Member contributes to the Company the net proceeds received in connection with the issuance of such Common Stock, Preferred Stock, New Securities, or other interests in the Managing Member;
(iii) There is a recapitalization of the stock of the Managing Member;
(iv) The additional Units are issued upon the conversion, redemption or exchange of Debt, Units or other securities issued by the Company; or
(v) The additional Units are issued in accordance with the express terms of the other provisions of this Article II.
(c) Issuances of Class B Common Units. No additional Class B Common Units shall be issued except (i) in the event of a recapitalization of the Capital Stock, including any stock split, stock dividend, reclassification or similar transaction, or (ii) if a corresponding number of shares of Class B Common Stock is also issued by the Managing Member to the holder of such Class B Common Units.
(d) No Preemptive Rights. Except as expressly provided in this Agreement or in any Unit Designation, no Person shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Membership Interest.
Section 2.5 Additional Funds and Additional Capital Contributions
(a) General. The Company may, at any time and from time to time, determine that it requires additional funds (“Additional Funds”) for the acquisition or development of additional Assets, for the redemption of Units, or for such other purposes as the Company may determine. Additional Funds may be obtained by the Company in any manner provided in, and in accordance with, the terms of this Section 2.5 without the approval of any Member or any other Person.
(b) Additional Capital Contributions. The Company may obtain any Additional Funds by accepting Capital Contributions from any Members or other Persons. In connection with any such Capital Contribution, the Company is hereby authorized from time to time to issue additional Units (as set forth in Section 2.4 above) in consideration for such Capital Contribution, and, if appropriate, the Percentage Interests shall be adjusted to reflect the issuance of such additional Units.
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(c) Loans by Third Parties. The Company may obtain any Additional Funds by incurring Debt payable to any Person (other than, except as contemplated in Section 2.5(d), the Managing Member) upon such terms as the Company determines appropriate, including making such Debt convertible, redeemable, or exchangeable for Units; provided, however, that the Company shall not incur any such Debt if any Member would be personally liable for the repayment of all or any portion of such Debt (unless that Member agrees otherwise).
(d) Loans by Managing Member. The Managing Member, on behalf of the Company, may obtain any Additional Funds by causing the Company to incur Debt payable to the Managing Member if (i) the Debt is, to the extent permitted by Law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as any Debt incurred by or on behalf of the Managing Member for the purpose of providing funds to the Company, the net proceeds of which are lent to the Company to provide such Additional Funds, or (ii) the Debt is on terms and conditions no less favorable to the Company than would be available to the Company from any third party.
(e) Issuance of Securities by the Managing Member.
(i) Unless otherwise agreed to by the Members, after the completion of the IPO and the initial issuance of the Class B Common Stock by the Managing Member, except in the case of a Liquidity Offering for purposes of a Cash Settlement, the Managing Member shall not issue any additional Capital Stock or New Securities unless the Managing Member contributes the net proceeds, if any, received from the issuance of such additional Capital Stock or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Stock or New Securities to the Company in exchange for (i) in the case of an issuance of Class A Common Stock, Class A Common Units, (ii) in the case of an issuance of Class B Common Stock, Class B Common Units, or (iii) in the case of an issuance of Preferred Stock or New Securities, Equivalent Units. If at any time any Preferred Stock or New Securities are issued that are convertible into or exercisable for Class A Common Stock or another security of the Managing Member, then upon any such conversion or exercise, the corresponding Equivalent Unit shall be similarly exercised or otherwise converted, as applicable, for an equivalent number of Class A Common Units or other Equivalent Units. It is the intent of the parties that the Managing Member or its wholly-owned Subsidiaries will always own Units equivalent to its outstanding Capital Stock, except as provided pursuant to Section 12.4, and the parties hereby acknowledge that the Managing Member and the Company may each make reasonable adjustments to its own capitalization, subject to applicable Law and the terms of any such outstanding Capital Stock, in order to effect such parity (including by issuing Class A Common Units to the Managing Member in connection with any issuances of shares of Class A Common Stock in settlement of equity awards outstanding or that may be granted under any equity incentive plan or program of the Company or the Managing Member).
(ii) If the Managing Member issues any additional Capital Stock or New Securities and contributes the net proceeds, if any, received from such issuance to the Company, the Company is authorized to issue a number of Common Units or Equivalent Units to the Managing Member equal to the number of shares of Capital Stock or New Securities so issued, in accordance with this Section 2.5(e) without any further act, approval or vote of any Member or any other Person. For the avoidance of doubt, New Securities that are derivative securities issued under any Incentive Compensation Plan of the Managing Member shall not require issuance of Equivalent Units by the Company until such time as such derivative securities are exercised and subsequently issued.
(f) Reimbursement of Issuance Expenses. If the Managing Member issues additional Capital Stock or New Securities and subsequently contributes the net proceeds received from such issuance to the Company, then the Company shall bear the Managing Member’s expenses associated with such issuance, and the Managing Member shall be deemed to have contributed the gross proceeds to the Company.
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(g) Repurchase or Redemption of Capital Stock. If, at any time, any shares of Capital Stock or New Securities are repurchased, redeemed or otherwise retired (whether by exercise of a put or call, automatically or by means of another arrangement) by the Managing Member, then the Managing Member shall cause the Company, immediately prior to such repurchase, redemption or retirement of such Capital Stock or New Securities, to redeem, repurchase or otherwise retire a corresponding number of Class A Common Units, Class B Common Units, Series A Preferred Units or other Equivalent Units held by the Managing Member, upon the same terms and for the same consideration as the Capital Stock or New Securities to be repurchased, redeemed or retired. Notwithstanding any provision to the contrary in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable Law.
Section 2.6 Lock-Up Period. No Member may, without the prior written consent of the Managing Member, from the date of this Agreement and including the date 180 days after the date set forth on the final prospectus used to sell the shares of Class A common stock of the Managing Member in the IPO (the “Lock-Up Period”), (i) offer, sell, contract to sell, pledge, grant any option to purchase, lend or otherwise dispose of any shares of common stock of the Managing Member or units of the Company or any options or warrants to purchase any shares of common stock of the Managing Member or units of the Company, or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock of the Managing Member or units of the Company (such options, warrants or other securities, collectively, “Derivative Instruments”), including without limitation any such shares or Derivative Instruments now owned or hereafter acquired by a Member (collectively, the “Restricted Securities”), (ii) engage in any hedging or other transaction or arrangement (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) which is designed to or which reasonably could be expected to lead to or result in a sale, loan, pledge or other disposition (whether by the Member or someone other than the Member), or transfer of any of the economic consequences of ownership, in whole or in part, directly or indirectly, of any common stock of the Managing Member or units of the Company or Derivative Instruments, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of common stock of Managing Member or units of the Company or other securities, in cash or otherwise (any such sale, loan, pledge or other disposition, or transfer of economic consequences, a “Lockup Transfer”) or (iii) otherwise publicly announce any intention to engage in or cause any action or activity described in clause (i) above or transaction or arrangement described in clause (ii) above. In addition, no Member, without the prior written consent of the Managing Member, during the Lock-Up Period, may make any demand for or exercise any right with respect to, the registration of any shares of common stock of the Managing Member or units of the Company or any security convertible into or exercisable or exchangeable for common stock of the Managing Member or units of the company. For the avoidance of doubt, the Member agrees that the foregoing provisions shall be equally applicable to any issuer-directed or other shares of the Managing Member a Member may purchase in the IPO.
Notwithstanding the foregoing, the Member may transfer Lockup Transfer Restricted Securities without the prior written consent of the Managing Member:
(i) as a bona fide gift or gifts or charitable contribution;
(ii) to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the Member or the immediate family of the Member or to a member of the Member’s immediate family (for purposes of this Section 2.6, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin) or in the case of a trust, to any beneficiaries of the trust or to the estate of such trust;
(iii) as a distribution to limited partners, partners, members, stockholders, or other equityholders of the Member;
(iv) to the Member’s affiliates or to any investment fund or other entity controlled or managed by the Member;
(v) in an exchange of any units of the Company (or securities convertible into, exchangeable for or that represent the right to receive units of the Company) and a corresponding number of shares of Class B Common Stock of the Managing Member into or for shares of Class A Common Stock of the Managing Member (or securities convertible into, exchangeable for or that represent the right to receive shares of Class A Common Stock of the Managing Member) pursuant to the this Agreement or other agreements described in the final prospectus for the IPO;
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(vi) in a transfer, conversion, reclassification, redemption or exchange of any securities pursuant to the reorganization transactions described in the final prospectus for the IPO;
(vii) by will, other testamentary document or intestate succession upon the death of the Member or for bona fide estate planning purposes;
(viii) by operation of law, such as pursuant to an order of a court or regulatory agency (for purposes of this Section 2.6, a “court or regulatory agency” means any domestic or foreign, federal, state or local government, including any political subdivision thereof, any governmental or quasi-governmental authority, department, agency or official, any court or administrative body or any national securities exchange or similar self-regulatory body or organization, in each case of competent jurisdiction) or pursuant to a domestic order or in connection with a divorce settlement;
(ix) to the Managing Member or its subsidiaries upon exercise of any right in respect of any equity award granted under any incentive plan of the Managing Member or the Company or other arrangement described in the final prospectus relating to the IPO or in the exercise of outstanding options, warrants, restricted stock units or other equity interests, including the surrender of shares of common stock of the Managing Member to the Managing Member in a “net” or “cashless” exercise of any equity award to satisfy any exercise price of tax withholding obligations;
(x) to a bona fide third party pursuant to a merger, consolidation, tender offer or other similar transaction made to all holders of common stock of the Managing Member and involving a change of control of the Managing Member and approved by the Managing Member’s board of directors, provided, that (i) in the event that such change of control is not completed, the Member’s Restricted Securities shall remain subject to the restrictions contained herein, and (ii) any shares of common stock of the Managing Member not transferred in such merger, consolidation, tender offer or similar transaction shall remain subject to the restrictions contained herein. “Change of control” shall mean the transfer (whether by tender offer, merger, consolation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter pursuant to the offering), of the Managing Member’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than 50% of the outstanding voting securities of the Managing Member (or the surviving entity);
(xi) acquired in open market transactions after the completion of the public offering if (a) such transfers are not required to be reported with the Securities and Exchange Commission on Form 4 in accordance with Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (b) the Member does not otherwise voluntarily effect any public filing or report regarding such transfers; or
(xii) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (iv), (vii) or (viii) above; provided that, in the case of any transfer, donation or distribution pursuant to clauses (i), (ii), (iii) and (vii), any such transfer shall not involve a disposition for value, and except in the case of clause (x) and (xi), (1) such securities or any securities received in connection with any of the transactions described above remain subject to the terms of this Section 2.6 or each donee, trustee, distributee or transferee, as the case may be, agrees in writing to be bound by the same terms described in this Section 2.6 to the extent and for the duration that such terms remain in effect at the time of the transfer, (2) such transfers are not required to be reported with the Securities and Exchange Commission on Form 4 in accordance with Section 16 of the Exchange Act, except in the case of clauses (v) – (ix) in which case any such filing shall clearly indicate in the footnote thereto the circumstances of the particular transfer and (3) the Member does not otherwise voluntarily effect any public filing or report regarding such transfers.
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To the extent any Member is a party to an agreement to the effect of this Section 2.6 with the representatives of the underwriters in the IPO, such agreement will control in the event of any conflict between such agreement and this Section 2.6.
ARTICLE III
DISTRIBUTIONS
Section 3.1 General Distributions. Subject to the terms of any Unit Designation, including the Series A Senior Convertible Preferred Units Certificate of Designations, the Company shall distribute an amount of Available Cash when, as, and if determined by the Managing Member to the Members pro rata in accordance with their Common Units at such times and in such amounts as the Managing Member, in its sole discretion, shall determine.
Section 3.2 Tax Distributions.
(a) Generally. If the amount distributed to a Member pursuant to Section 3.1 (including, for this purpose, the amount, if any, paid as a guaranteed payment within the meaning of Code section 707(c) to that Member) in respect of a Fiscal Year is less than that Member’s Assumed Tax Liability (as defined below), the Company shall distribute an amount of Available Cash to the Members such that each Member receives distributions of Available Cash in respect of the Fiscal Year in an amount at least equal to the Member’s Assumed Tax Liability (each such distribution, a “Tax Distribution”). Any Tax Distribution paid to a Member under this Section 3.2(a) shall for all purposes of this Agreement be treated as an advance having been made and shall reduce future amounts otherwise distributable to such Member under Section 3.1. Except as provided in Section 3.2(d), all Tax Distributions shall be made pro rata in accordance with ownership of Common Units calculated with respect to ownership of Common Units.
(b) Assumed Tax Liability. For purposes of calculating the amount of each Member’s Tax Distributions under Section 3.2(a), a Member’s “Assumed Tax Liability” means an amount equal to the product of:
(i) the sum of (x) the net taxable income and gain allocated to that Member in the Fiscal Year and (y) to the extent (A) determined by the Company in its sole discretion and (B) attributable to the Company, the amount the Member is required to include in income by reason of Code sections 707(c) (but not including guaranteed payments for services within the meaning of Code section 707(c)), 951(a), and 951A(a); multiplied by
(ii) the highest combined effective U.S. federal, state, and local marginal rate of tax applicable to an individual resident in New York, New York (unless otherwise determined by the Company) for the Fiscal Year (such tax rate, the “Assumed Tax Rate”). The Company shall use the same Assumed Tax Rate for all Members.
The calculation required by this Section 3.2(b) shall be made (i) taking into account (w) the character of the income or gain and (x) any limitations on, or the availability of, deductions and net operating losses, and (ii) disregarding (y) the effect of any special basis adjustments under Code section 743(b) and (z) the effect of the allocations required under Code section 704(c)(1)(A) (and the principles thereof).
(c) Timing of Tax Distributions. If reasonably practicable, and as the Company deems appropriate, the Company will make distributions of the estimated Tax Distributions for a Fiscal Year on a quarterly basis to facilitate the payment of quarterly estimated income taxes, taking into account amounts previously distributed under this Section 3.2. Not later than one hundred (100) Business Days after the end of the Fiscal Year, the Company shall make a final Tax Distribution in an amount sufficient to fulfill the Company’s obligations under Section 3.2(a).
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(d) Impact of Insufficient Available Cash. If the amount of Tax Distributions to be made exceeds the amount of the Available Cash, the Tax Distribution to which each Member is entitled shall be reduced in accordance with the provisions of this Section 3.2(d) (each Member’s share of that reduction, the “Tax Distribution Shortfall Amount”). Cash available for distribution as a Tax Distribution shall first be distributed to the Managing Member in an amount equal to the full amount of its Tax Distribution (calculated by substituting the words “a corporation doing business” for “an individual resident” in the definition of “Assumed Tax Rate”). The balance, if any, of cash available for distribution as a Tax Distribution shall be distributed:
(i) First, to the Members (other than the Managing Member) pro rata in accordance with their Units in an amount such that each such Member has received distributions pursuant to this Section 3.2(d) not less than their Assumed Tax Liability (calculated by substituting the words “a corporation doing business” for “an individual resident” in the definition of “Assumed Tax Rate”); and
(ii) Thereafter, the balance, if any, to the Members (including the Managing Member) pro rata in accordance with their Units until each Member has received the full amount of its Tax Distribution calculated in accordance with Section 3.2(b).
Any Tax Distribution Shortfall Amounts will be carried forward to subsequent Fiscal Years and will be distributed when and to the extent that the Company has sufficient Available Cash.
Section 3.3 No Tax Distributions on Liquidation. No Tax Distributions shall be made in connection with the liquidation of the Company or a Member’s interest in the Company.
Section 3.4 Distributions in Kind. No Member may demand to receive property other than cash as provided in this Agreement. The Company may make a distribution in kind of Assets to the Members, and if a distribution is made both in cash and in kind, such distribution shall be made so that, to the fullest extent practical, the percentage of the cash and any other Assets distributed to each Member entitled to such distribution is identical.
Section 3.5 Withholding. Each Member acknowledges and agrees that the Company may be required by Law to deduct and withhold taxes or to fulfill other similar obligations of such Member on any amount paid, distributed, disbursed, or allocated by the Company to that Member, including upon liquidation, and any assignee or transferee of a Member’s interest or Substituted Member shall, by reason of such Transfer, assignment or substitution, acknowledge, and agree to any such withholding by the Company, including withholding to discharge obligations of the Company with respect to prior distributions, allocations, or an Imputed Underpayment Share (to the extent not otherwise borne by the Member pursuant to Section 7.6). Taxes withheld by third parties from payments to the Company in respect of the Company shall be treated as an expense of the Company, unless such withholding is attributable to a specific Member, in which case, amounts so withheld shall be allocated to such Member and the Company may deduct and withhold such amounts from the Member. All amounts withheld pursuant to this Section 3.5, shall, except as otherwise determined by the Company pursuant to Section 7.6(c)(ii), be treated as amounts distributed to such Person pursuant to the provision of this Agreement that would have applied if such amount had actually been distributed.
Section 3.6 Distributions to Reflect Additional Units. If the Company issues additional Units pursuant to the provisions of Article II, subject to the provisions of any Unit Designation, the Managing Member is authorized to make such revisions to this Article III and to Article VI as it determines are reasonably necessary or desirable to reflect the issuance of such additional Units, including making preferential distributions to certain classes of Units.
Section 3.7 Other Distribution Rules.
(a) Transfers. From and after the Transfer, distributions (including Tax Distributions) made to the transferor Member, along with any withholding or deduction in respect of any such distribution, shall be treated as having been made to the transferee unless otherwise determined by the Company.
(b) Record Date for Distributions. The Company may designate a Record Date for purposes of calculating and giving effect to distributions. All distributions shall be made to the holders of record as of the applicable Record Date.
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(c) Over-Distributions. If the Company distributes to a Member more than the amount to which the Member in entitled (e.g., by reason of an accounting error), the Member shall, upon written notice of the over-distribution delivered to the Member within one year of the over-distribution, promptly return the over-distribution to the Company. For the avoidance of doubt, this Section 3.7(c) applies to any distribution made under this Agreement.
(d) Reimbursements of Preformation Capital Expenditures. To the extent a distribution (or deemed distribution resulting from a reduction in a Member’s share of Company liabilities for federal tax purposes) would otherwise be treated as proceeds in a sale under Code section 707(a)(2)(B), the Members intend such actual or deemed distribution to reimburse preformation capital expenditures under Treas. Reg. § 1.707-4(d) to the maximum extent permitted by Law.
(e) Limitation on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Company nor the Managing Member on behalf of the Company shall make a distribution to any Member if such distribution would violate the Act or other Law, or to the extent such distribution would result in the Company or any of its Subsidiaries being in default under any material agreement.
ARTICLE IV
MANAGEMENT AND OPERATIONS
Section 4.1 Management.
(a) Authority of Managing Member. Except as otherwise provided in this Agreement, the Managing Member shall have full, exclusive, and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to do or cause to be done any and all acts, at the expense of the Company, as the Managing Member deems necessary or appropriate to accomplish the purposes and direct the affairs of the Company. The Managing Member shall have the exclusive power and authority to bind the Company, except and to the extent that such power is expressly delegated in writing to any other Person by the Managing Member, and such delegation shall not cause the Managing Member to cease to be a Member or the Managing Member of the Company. The Managing Member shall be an agent of the Company’s business, and the actions of the Managing Member taken in such capacity and in accordance with this Agreement shall bind the Company. The Managing Member shall at all times be a Member of the Company. The Managing Member may not be removed by the Members, with or without cause, except with the consent of the Managing Member. Any determinations to be made by the Company pursuant to this Agreement shall be made by the Managing Member, subject to the rights of any Member set forth in Section 4.1(g).
(b) Determinations to be Made by Managing Member. The determination as to any of the following matters, made by or at the direction of the Managing Member consistent with the Act and this Agreement, shall be final and conclusive and shall be binding upon the Company and every Member:
(i) the Assets available for distribution or the redemption of Units at any time;
(ii) the amount and timing of any distribution;
(iii) the amount, purpose, time of creation, increase or decrease, alteration, or cancellation of any reserves or charges and the propriety thereof;
(iv) the Fair Market Value, or any sale, bid or asked price to be applied in determining the Fair Market Value, of any Asset;
(v) any matter relating to the acquisition, holding, and disposition of any Asset; or
(vi) any other matter relating to the business and affairs of the Company as required or permitted by Law, this Agreement, or otherwise to be determined by the Managing Member.
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(c) Appointment of Officers. The Managing Member may, from time to time, appoint such officers and establish such management and/or advisory boards or committees of the Company as the Managing Member deems necessary or advisable, each of which shall have such powers, authority, and responsibilities as are delegated in writing by the Managing Member from time to time. Each such officer and/or board or committee member shall serve at the pleasure of the Managing Member.
(d) Major Transactions. Except as otherwise expressly provided in this Agreement or required by any non-waivable provision of the Act or other Law, no Member (acting in such capacity) other than the Managing Member shall (x) have any right to vote on or consent to any other matter, act, decision or document involving the Company or its business or any other matter, or (y) take part in the day-to-day management, or the operation or control, of the business and affairs of the Company. Without limiting the generality of the foregoing, the Managing Member may cause the Company, without the consent or approval of any other Member, to enter into any of the following in one or a series of related transactions: (i) any merger, (ii) any acquisition, (iii) any consolidation, (iv) any sale, lease or other transfer or conveyance of Assets, (v) any recapitalization or reorganization of outstanding securities, (vi) any merger, sale, lease, spin-off, exchange, transfer or other disposition of a Subsidiary, division or other business, (vii) any issuance of Debt or equity securities (subject to any limitations expressly provided for herein) or (viii) any incurrence of Debt. Except to the extent expressly delegated in writing by the Managing Member, no Member or Person other than the Managing Member shall be an agent for the Company or have any right, power or authority to transact any business in the name of the Company or to act for or on behalf of or to bind the Company.
(e) Bankruptcy. Only the Managing Member may commence a voluntary case on behalf of, or an involuntary case against, the Company under a chapter of Title 11 U.S.C. by the filing of a “petition” (as defined in 11 U.S.C. 101(42)) with the United States Bankruptcy Court. Any such petition filed by any other Member, to the fullest extent permitted by Law, shall be deemed an unauthorized and bad faith filing and all parties to this Agreement shall use their best efforts to cause such petition to be dismissed.
(f) Amendment of Agreement. Subject to the rights of any Member set forth in a Unit Designation and Section 4.1(g), the Managing Member shall have the power, without the Consent of a Majority-in-Interest of the Members or the consent or approval of any Member, to amend this Agreement as may be required to facilitate or implement any of the following purposes:
(i) To add to the obligations of the Managing Member or surrender any right or power granted to the Managing Member or any Affiliate of the Managing Member for the benefit of the Members;
(ii) To reflect a change that is of an inconsequential nature or does not adversely affect the Members in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with Law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with Law or with the provisions of this Agreement;
(iii) To satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state Law;
(iv) To reflect the admission, substitution, or withdrawal of Members, the Transfer of any Membership Interest, this issuance of additional Units, or the termination of the Company in accordance with this Agreement, and to amend the Register in connection with such admission, substitution, withdrawal, or Transfer;
(v) To set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional Units issued pursuant to Article II;
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(vi) If the Company is the Surviving Company in any Termination Transaction, to modify Section 12.1 or any related definitions to provide the holders of interests in such Surviving Company rights that are consistent with Section 8.7(b)(iii); and
(vii) To reflect any other modification to this Agreement as is reasonably necessary or appropriate for the business or operations of the Company or the Managing Member and that does not violate Section 4.1(g).
(g) Certain Actions Requiring Member Consent. Notwithstanding anything in Article XI to the contrary, this Agreement shall not be amended, and no action may be taken by the Managing Member, without the consent of each Member adversely affected thereby, if any, if such amendment or action would:
(i) Modify the limited liability of a Member or increase the obligation of a Member to make a Capital Contribution;
(ii) Adversely alter the rights of any Member to receive the distributions to which such Member is entitled pursuant to Article III or Section 10.3(a)(iii);
(iii) Convert the Company into a corporation or would cause the Company to be classified as a corporation for federal income tax purposes (other than in connection with a Termination Transaction); or
(iv) Amend this Section 4.1(g);
provided, however, that, with respect to clauses (ii), (iii), and (iv), the consent of any Member adversely affected shall not be required for any amendment or action that affects all Members holding the same class or series of Units on a uniform or pro rata basis, if approved by a Majority-in-Interest of the Members of such class or series. If some, but not all, of the Members consent to an action or amendment, the Company may, in its discretion, make such amendment or action effective only as to the Members that consented to it, to the extent it is practicable to do so.
Section 4.2 Tax Actions. All Tax Actions not expressly reserved for the Members shall be made, taken, or determined by the Managing Member.
Section 4.3 Compensation and Reimbursement of Managing Member.
(a) General. The Managing Member shall not receive any fees from the Company for its services in administering the Company, except as otherwise provided in this Agreement.
(b) Reimbursement of Managing Member. The Company shall be liable for, and shall reimburse the Managing Member on an after-tax basis at such intervals as the Managing Member may determine, for all
(i) overhead, administrative expenses, insurance and reasonable legal, accounting and other professional fees and expenses of the Managing Member;
(ii) expenses of the Managing Member incidental to being a public reporting company;
(iii) reasonable fees and expenses related to the IPO or any subsequent public offering of equity securities of the Managing Member (without duplicating any provisions of Section 2.5(f)) or private placement of equity securities of the Managing Member, whether or not consummated;
(iv) franchise and similar taxes of the Managing Member and other fees and expenses in connection with the maintenance of the existence of the Managing Member;
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(v) customary compensation and benefits payable by the Managing Member, and indemnities provided by the Managing Member on behalf of, the officers, directors, and employees of the Managing Member; and
(vi) reasonable expenses paid by Managing Member on behalf of the Company; provided, however, that the amount of any reimbursement shall be reduced by any interest earned by the Managing Member with respect to bank accounts or other instruments or accounts held by it on behalf of the Company as permitted pursuant to Section 4.4. Such reimbursements shall be in addition to any reimbursement of the Managing Member as a result of indemnification pursuant to Section 4.7.
Section 4.4 Outside Activities.
(a) Limitation on Outside Activities of Managing Member. Without the consent of a Majority-in-Interest of the Members, the Managing Member shall not directly or indirectly enter into or conduct any business, other than in connection with, (i) the ownership, acquisition and disposition of Membership Interests, (ii) the management of the business of the Company and its Subsidiaries, (iii) its operation as a reporting company with a class (or classes) of securities registered under the Exchange Act, (iv) the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (v) financing or refinancing of any type related to the Company or its Assets or activities, and (vi) such activities as are incidental thereto. Without the consent of a Majority-in-Interest of the Members, the Managing Member is not permitted to own any assets other than (x) Units (directly or indirectly through one or more wholly-owned Subsidiaries of the Managing Member) (ii) assets necessary to its activities referred to in the preceding sentence or (iii) cash and cash equivalents and other assets that are incidental to its operations as a holding company and compliance with applicable law, rules and regulation. Nothing contained in this Section 4.4 shall be construed to prohibit the Managing Member from executing guarantees or other credit support of Company Debt. For the avoidance of doubt, the provisions of this Section 4.4 shall restrict only the Managing Member and its Subsidiaries (other than the Company and its Subsidiaries) and shall not restrict the other Members or any Affiliate of the other Members (other than the Managing Member). The Managing Member and any direct or indirect-wholly owned Subsidiaries of the Managing Member may acquire Membership Interests and shall be entitled to exercise all rights of a Member relating to such Membership Interests.
(b) Outside Activities of Members. Subject to any agreements entered into pursuant to Section 4.5 and any other agreements entered into by a Member or any of its Affiliates with the Managing Member, the Company or a Subsidiary (including any employment agreement), any Member, or any officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Member, shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities that are in direct or indirect competition with the Company or that are enhanced by the activities of the Company. None of the Members, the Company or any Person shall have any rights by virtue of this Agreement or the relationship established hereby in any business ventures of any other Member or Person, and such Person shall have no obligation pursuant to this Agreement, subject to Section 4.5 and any other agreements entered into by a Member or its Affiliates with the Managing Member, the Company or a Subsidiary, to offer any interest in any such business ventures to the Company, any Member, or any such other Person.
Section 4.5 Transactions with Affiliates.
(a) Lending and Borrowing. The Company may lend funds to the Managing Member, or to Subsidiaries of the Company or other Persons in which the Company has an equity investment, and such Persons may borrow funds from the Company, on terms and conditions determined by the Managing Member.
(b) Company Transfers to Affiliated Entities. Subject to the provisions of Section 4.4, the Company may transfer Assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and Law.
(c) Transfers from the Managing Member to the Company. The Managing Member and its Affiliates may sell, transfer or convey any property to the Company, directly or indirectly, on terms and conditions no less favorable to the Company in the aggregate than would be available from unaffiliated third parties as determined by the Managing Member.
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(d) Employee Benefit Plans. The Managing Member may propose and adopt on behalf of the Employee’s benefit plans funded by the Company for the benefit of employees of the Managing Member, the Company, Subsidiaries of the Company or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Managing Member, the Company or any of the Company’s Subsidiaries.
Section 4.6 Limitation on Liability.
(a) General. To the fullest extent permitted by Law, no Indemnitee, in such capacity, shall be liable to the Company, any Member or any of their respective Affiliates, for any losses sustained or liabilities incurred as a result of any act or omission of such Person if (i) either (A) the Indemnitee, at the time of such action or inaction, determined in good faith that its, his or her course of conduct was in, or not opposed to, the best interests of the Company or (B) in the case of inaction by the Indemnitee, the Indemnitee did not intend its, his or her inaction to be harmful or opposed to the best interests of the Company and (ii) the action or inaction did not constitute fraud or willful misconduct by the Indemnitee.
(b) Action in Good Faith. An indemnified Person acting under this Agreement shall not be liable to the Company for its, his or her good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand, restrict, or eliminate the duties and liabilities of such Persons otherwise existing at Law or in equity, are agreed by the Members to replace fully and completely such other duties and liabilities of such Persons. Whenever in this Agreement the Managing Member or any officer or director of the Managing Member is permitted or required to make a decision or take an action (i) in its “sole discretion” or “discretion” or under a similar grant of authority or latitude, in making such decisions, such Person shall be entitled to take into account its own interests as well as the interests of the Members as a whole or (ii) in its “good faith” or under another expressed standard, such Person shall act under such express standard and shall not be subject to any other or different standards.
(c) Outside Counsel. The Managing Member may consult with legal counsel, accountants and financial or other advisors, and any act or omission suffered or taken by the Managing Member on behalf of the Company or in furtherance of the interests of the Company in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full justification for any such act or omission, and the Managing Member will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
Section 4.7 Indemnification.
(a) General. The Company shall indemnify and hold harmless each Indemnitee (and such Person’s heirs, successors, assigns, executors or administrators) to the full extent permitted by Law in accordance with the provisions of Article VI of the Amended and Restated Bylaws of the Managing Member as if such provisions were set forth herein, mutatis mutandis.
(b) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section 4.7 shall not be exclusive of any other right which any person may have or hereafter acquire under any law, agreement, vote of stockholders or disinterested directors, provisions of a certificate of incorporation or bylaws, or otherwise.
(c) Nature of Rights. The rights conferred upon Indemnitees in this Section 4.7 shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be the Managing Member, an Affiliate of the Managing Member, the Tax Representative, the Designated Individual or an officer or director of the Managing Member, the Company or their respective Affiliates. Any amendment, alteration or repeal of this Section 4.7 or of Article VI of the Amended and Restated Bylaws of the Managing Member that adversely affects any right of an Indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, alteration or repeal.
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ARTICLE V
BOOKS AND RECORDS
Section 5.1 Books and Records.
(a) General. The Company shall maintain in its principal business office, or any other place as may be determined by the Company, the books and records of the Company.
(b) Specific Records. In particular, the Company shall maintain:
(i) A register containing the name, address, and number and class of Units (including Equivalent Units) of each Member, and such other information as the Managing Member may deem necessary or desirable (as may be amended or updated from time to time, the “Register”). The Register shall not be deemed part of this Agreement. The Managing Member shall from time to time update the Register as necessary to ensure the Register is accurate, including as a result of any sales, exchanges, or other Transfers, or any redemptions, issuances, or similar events involving Units. Except as required by Law, no Member shall be entitled to receive a copy of the information set forth in the Register relating to any Member other than itself.
(ii) A copy of the Certificate of Formation and this Agreement and all amendments thereto.
Section 5.2 Financial Accounts. At all times during the continuance of the Company, the Company shall prepare and maintain separate books of account for the Company for financial reporting purposes, on an accrual basis, in accordance with United States generally accepted accounting principles, consistently applied.
Section 5.3 Inspection; Confidentiality. The Managing Member may keep confidential from the Members (or any of them) for such period of time as the Managing Member determines to be reasonable, any information (a) that the Managing Member believes to be in the nature of trade secrets, (b) the disclosure of which the Managing Member in good faith believes is not in the best interests of the Company or the Managing Member, or (c) that the Company or the Managing Member is required by Law, agreement, or customary commercial practice to keep confidential. Subject to the provisions of the previous sentence, the Members (personally or through an authorized representative) may, for purposes reasonably related to their respective interests in the Company, examine and copy (at their own cost and expense) the books and records of the Company at all reasonable business hours upon reasonable prior notice.
Section 5.4 Information to be Provided by Managing Member to Members. The Company shall deliver (or otherwise make accessible) to each Member a copy of any information mailed or delivered electronically to all of the common stockholders of the Managing Member as soon as practicable after such mailing.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations. Each Fiscal Year, after adjusting each Member’s Capital Account for all contributions and distributions with respect to such Fiscal Year and after giving effect to the allocations under Section 6.2 for the Fiscal Year, Net Profits and Net Losses shall be allocated among the Members in a manner such that, after such allocations have been made, each Member’s Capital Account balance (which may be a positive, negative, or zero balance) will equal (proportionately) (a) the amount that would be distributed to each such Member, determined as if the Company were to (i) sell all of its Assets for their Asset Values, (ii) satisfy all of its liabilities in accordance with their terms with the proceeds from such sale (limited, with respect to Nonrecourse Liabilities, to the Asset Values of the Assets securing such liabilities), and (iii) distribute the remaining proceeds pursuant to the applicable provision of this Agreement, minus (b) the sum of (x) such Member’s share of the Company Minimum Gain and Member Nonrecourse Debt Minimum Gain and (y) the amount, if any (without duplication of any amount included under clause (x)), that such Member is obligated (or is deemed for U.S. tax purposes to be obligated) to contribute, in its capacity as a Member, to the capital of the Company as of the last day of such Fiscal Year.
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Section 6.2 Priority Allocations.
(a) Minimum Gain Chargeback, Qualified Income Offset, and Stop Loss Provisions. Each of (i) the “minimum gain chargeback” provision of Treas. Reg. § 1.704-2(f), (ii) the “chargeback of partner nonrecourse debt minimum gain” provision of Treas. Reg. § 1.704-2(i)(4), (iii) the “qualified income offset” provision in Treas. Reg. § 1.704-1(b)(2)(ii)(d), and (iv) the requirement in Treas. Reg. § 1.704-1(b)(2)(ii)(d)(3) that an allocation “not cause or increase a deficit balance” in a Member’s Capital Account is hereby incorporated by reference as a part of this Agreement. The Company shall make such allocations as are necessary to comply with those provisions and shall make any determinations with respect to such allocations (to the extent consistent with clauses (i) – (iv) of the preceding sentence).
(b) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members as determined by the Company.
(c) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss (within the meaning of Treas. Reg. § 1.752-2) with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treas. Reg. § 1.704-2(i)(l).
(d) Special Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any Company Asset, pursuant to Code section 734(b) or Code section 743(b) is required, pursuant to Treas. Reg. §§ 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) applies.
(e) Ameliorative Allocations. Any allocations made (as well as anticipated reversing or offsetting regulatory allocations to be made) pursuant to Section 6.2(a)-(d) shall be taken into account in computing subsequent allocations pursuant to this Agreement, so that the net amount for any item so allocated and all other items allocated to each Member pursuant to this Agreement shall be equal, to the extent possible, to the net amount that would have been allocated to each Member pursuant to the provisions of this Agreement if those allocations had not occurred.
Section 6.3 Other Allocation Rules.
(a) In General. Except as otherwise provided in this Section 6.3, for income tax purposes under the Code and the Regulations, each Company item of income, gain, loss, deduction, and credit (collectively, “Tax Items”) shall be allocated among the Members in the same manner as its correlative item of income, gain, loss, deduction, and credit (as calculated for purposes of allocating Net Profits or Net Losses, including items allocated under Section 6.2) is allocated pursuant to Section 6.1 and Section 6.2.
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(b) Code Section 704(c) Allocations. Notwithstanding any provision of Section 6.3(a) to the contrary, in accordance with Code section 704(c)(1)(A) (and the principles of those provisions) and Treas. Reg. § 1.704-3, Tax Items with respect to any property contributed to the capital of the Company, or after Company property has been revalued under Treas. Reg. § 1.704-1(b)(2)(iv)(f) or (s), shall, solely for U.S. federal, state and local tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such Company property to the Company for U.S. federal income tax purposes and its value as so determined at the time of the contribution or revaluation of Company property. The Company shall use the “traditional method” with respect to (i) any property contributed to the Company before the IPO and (ii) “reverse section 704(c) allocations” (within the meaning of Treas. Reg. § 1.704-3(a)(6)) arising before or in connection with the IPO. With respected to property contributed or section 704(c) amounts arising from revaluations made after the IPO, the Company may use any method permitted under Treas. Reg. § 1.704-3. Allocations pursuant to Section 6.3(a) and this Section 6.3(b) are solely for U.S. federal, state, and local tax purposes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of profit, loss, or other items, pursuant to any provision of this Agreement.
(c) Allocations in Respect of Varying Interest. If any Member’s interest in the Company varies (within the meaning of Code section 706(d)) within a Fiscal Year, whether by reason of a Transfer, redemption of a Unit by the Company, or otherwise, Net Profits and Net Losses for that Fiscal Year will be allocated so as to take into account such varying interests in accordance with Code section 706(d) using the daily proration method and/or such other permissible method, methods, or conventions selected by the Company.
(d) Timing and Amount of Allocations of Net Profits and Net Loss. Net Profits and Net Loss of the Company shall be determined and allocated with respect to each Fiscal Year as of the end of each such year, or at such other time or times determined by the Company.
(e) Modification of Allocations. The allocations set forth in Section 6.1 and Section 6.2 are intended to comply with certain requirements of the Regulations. The Company shall be authorized to make, in its reasonable discretion, appropriate amendments to the allocations of Net Profits and Net Losses pursuant to this Agreement in order to comply with Code section 704 or applicable Regulations. If the Company reasonably determines an allocation other than the allocations that would otherwise be made pursuant to this Agreement would more appropriately reflect the Members’ interests in the Company, the Company may in its discretion make appropriate adjustments to such allocations.
(f) Allocation of Liabilities Under Code Section 752. Notwithstanding anything in this Agreement to the contrary, no Member will take, or permit any Affiliate to take, any action that would change the allocation of liabilities for purposes of Code section 752 without the consent of the Company.
ARTICLE VII
TAX MATTERS
Section 7.1 Provision of Information.
(a) Information to Be Provided by Company to Members. No later than thirty (30) days after the filing by the Company of the Company’s federal tax return (Federal Form 1065), including extension, the Company shall provide to each Member a copy of Schedule K-1 of Federal Form 1065 reporting that Member’s allocable share of Net Profits, Net Losses and other items of income, gain, loss, deduction, or credit for such Fiscal Year, and, from time to time, such additional information as such Member may reasonably request for tax purposes, as determined by the Company. In accordance with Rev. Proc. 2012-17 (the relevant provisions of which are incorporated by reference), the Member hereby consents to receive each Schedule K-1 in respect of the Member’s Membership Interest in the Company through electronic delivery. This consent applies to each Schedule K-1 required to be furnished to the Member by the Company after this consent is given.
(b) Information to Be Provided by Members to Company.
(i) Notice of Audit or Tax Examination. Each Member shall notify the Company within five (5) days after receipt of any notice regarding an audit or tax examination of the Company and upon any request for material information related to the Company by U.S. federal, state, local, or other tax authorities.
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(ii) Other Relevant Tax Information. Each Member shall provide to the Company upon request tax basis information about Assets contributed by it to the Company and such other tax information as reasonably requested by the Company and necessary for it to prepare its financial reports or any tax returns and such other information as the Company requests.
Section 7.2 Member Tax Returns. Notwithstanding anything to the contrary in this Agreement or any right to information under the Act, with respect to the financial statements or tax returns of a Member or its Affiliates, none of the Company, the other Members, such other Members’ Affiliates or any of their respective representatives, will be entitled to review such financial statements or tax returns for any purpose, including in connection with any proceeding or other dispute (whether involving the Company, between the Members, or involving any other Persons).
Section 7.3 Tax Elections. The Company shall have in effect (and shall cause each Subsidiary that is classified as a partnership for U.S. federal income tax purposes to have in effect) an election pursuant to Code section 754 (and any similar provisions of applicable U.S. state or local law) for the Company for the Fiscal Year that includes the date of the IPO and each Fiscal Year in which a sale or exchange (whether partial or complete) occurs. The Company shall determine whether to make any other available election pursuant to the Code or Regulations that is not otherwise expressly provided for in this Agreement, and the Members hereby consent to all such elections.
Section 7.4 Company Tax Returns. The Company shall use reasonable best efforts to cause to be prepared and timely filed (taking into account available extensions) all federal, state, and local, and non-U.S. tax returns of the Company for each year for which such returns are required to be filed and shall determine the appropriate treatment of each Tax Item of the Company and make all other determinations with respect to such tax returns.
Section 7.5 Tax Representative.
(a) Appointment and Replacement of Tax Representative.
(i) Tax Representative. The Company shall act as the Tax Representative, but the Company may designate another Person to act as the Tax Representative and may remove, replace, or revoke the designation of that Person, or require that Person to resign. For taxable years beginning on or before December 31, 2017, and for any jurisdiction with respect to which the Company cannot serve as the Tax Representative, however, the Managing Member shall act as the Tax Representative, unless otherwise determined by the Company.
(ii) Designated Individual. If the Tax Representative is not an individual, the Company shall appoint a “designated individual” for each taxable year (as described in Treas. Reg. § 301.6223-1(b)(3)(ii)) (a “Designated Individual”).
(iii) Approval by Members. Each Member agrees to execute, certify, acknowledge, deliver, swear to, file, and record at the appropriate public offices such documents as may be deemed necessary or appropriate to evidence the appointments described in Section 7.5(a)(i) and Section 7.5(a)(ii), including statements required to be filed with the tax returns of the Company in order to effect the designation of the Tax Representative or Designated Individual (and any successor).
(b) Authority of the Tax Representative; Delegation of Authority. The Tax Representative shall have all of the rights, duties, powers, and obligations provided for under the Code, Regulations, or other applicable guidance; provided, that, that if a Person other than the Company is the Tax Representative, the Tax Representative shall in all cases act solely at the direction of the Company. The Tax Representative may delegate its authority under this Section 7.5(b) to a Designated Individual who shall in all cases act solely at the direction of the Company.
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(c) Costs and Indemnification of Tax Representative and Designated Individual. Without duplication of the provisions of Section 4.3(b), the Company shall pay, or to the extent the Tax Representative or Designated Individual pays, indemnify and reimburse, to the fullest extent permitted by Law, the Tax Representative or Designated Individual for all costs and expenses, including legal and accounting fees (as such fees are incurred) and any claims incurred in connection with any tax audit or judicial review proceeding with respect to the tax liability of the Company.
Section 7.6 Tax Audits.
(a) Determinations with Respect to Audits and Other Tax Controversies. Except to the extent otherwise required by applicable tax law (including Code section 6241(11)), the Company (acting directly and/or through the Tax Representative or Designated Individual) shall have the sole authority to make all decisions and determinations with respect to, and shall have sole authority with respect to the conduct of, tax audits or other tax controversies with respect to the Company, and any action taken by the Company (acting directly and/or through the Tax Representative or Designated Individual) in connection with any such audits or controversies shall be binding upon the Company and the Members and former Members.
(b) Determinations with Respect to Elections. The Company may make the election “out” under Code section 6221(b) if such an election is available, unless otherwise determined by the Company. If the Company does not make the election described in the preceding sentence, the Company (acting directly and/or through the Tax Representative or Designated Individual) shall have the sole authority to determine whether to cause the Company to make a Push Out Election with respect to any adjustment that could result in an imputed underpayment (within the meaning of Code section 6225) (an “Imputed Underpayment”).
(c) Responsibility for Payment of Tax; Former Members.
(i) Imputed Underpayment Share. To the extent the Company is liable for any Imputed Underpayment, the Company shall determine the liability of the Members for a share of such Imputed Underpayment, taking into account the Members’ Units and the status and actions of the Members (including those described in Code section 6225(c)) (such share, an “Imputed Underpayment Share”).
(ii) Payment of Imputed Underpayment Share. The Company may (A) require a Member who is liable for an Imputed Underpayment Share to pay the amount of its Imputed Underpayment Share to the Company within ten (10) days after the date on which the Company notifies the Member (and in the manner required by the notice) and/or (B) reduce future distributions to the Member, such that the amount determined under clause (A) and (B) equals the Member’s Imputed Underpayment Share. If a Member fails to pay any amount that it is required to pay the Company in respect of an Imputed Underpayment Share within such ten (10) day period, that amount shall be treated as a loan to the Member, bearing interest at ten percent (10%) annually (which interest shall increase the Member’s Imputed Underpayment Share). Such loan shall be repayable upon demand by the Company. If the Member fails to repay the loan upon demand, the full balance of the loan shall be immediately due (including accrued but unpaid interest) and the Company shall have the right to collect the balance in any manner it determines, including by reducing future distributions to that Member provided, however, that no Member may have any Imputed Underpayment Share treated as a loan to the extent it would violate Section 402 of the Sarbanes-Oxley Act of 2002. Any Member not permitted to treat its Imputed Underpayment Share as a loan due to the provisions of the previous sentence shall pay any Imputed Underpayment Share within ten (10) days after the date of the notice referred to in the first sentence of this Section 7.6(c)(ii).
Section 7.7 No Independent Actions or Inconsistent Positions. Except as required by Law or previously authorized in writing by the Company (which authorization may be withheld in the sole discretion of the Company) no Member shall (i) independently act with respect to tax matters (including, but not limited to, audits, litigation and controversies) affecting or arising from the Company, or (ii) 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/or the Schedule K-1 (or other written information statement) provided to such Member. Solely to the extent required by Law, this Section 7.7 shall not apply with respect to any “special enforcement matter” described in Code section 6241(11).
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Section 7.8 United States Person. Each Member represents and covenants that, for U.S. federal income tax purposes, it is and will at all times remain a “United States Person,” within the meaning of Code section 7701, or is a disregarded entity the assets of which are treated as owned by a United States Person under Treas. Reg. §§ 301.7701-1, 301.7701-2, and 301.7701-3.
Section 7.9 State, Local, and Non-U.S Tax Law. The provisions of this Agreement with respect to U.S. federal income tax shall apply, mutatis mutandis, with respect to any similar provisions of state, local, or non-U.S. tax law as determined by the Company.
Section 7.10 Former Members; Survival; Amendment. For purposes of this Article VII, the term “Member” shall include a former Member to the extent determined by the Company. The obligations of each Member and former Member under this Article VII shall survive the Transfer by such Member of its Units (or withdrawal by a Member or redemption of a Member’s Units) and the dissolution of the Company until ninety (90) days after the applicable statute of limitations. Section 7.5, Section 7.6, and this Section 7.10 shall not be amended without the prior written consent of any Member or former Member that would be adversely impacted by such amendment.
Section 7.11 Tax Classification. The parties intend that the Company shall be classified as a partnership for United States federal, state, and local tax purposes. The parties intend that the Subsidiaries of the Company shall be classified either as disregarded entities or as partnerships for United States federal, state, and local tax purposes. No Person shall take any action inconsistent with such classifications.
Section 7.12 Accounting and Fiscal Year. The “Fiscal Year” of the Company for financial and accounting purposes shall mean a fiscal year ending on December 31. To the extent any computation or other provision hereof provides for an action to be taken on a Fiscal Year basis, an appropriate proration or other adjustment shall be made in respect of the first or final Fiscal Year to reflect that such period is less than a full calendar year period.
Section 7.13 Capital Accounts. A separate capital account (“Capital Account”) shall be established and maintained for each Member in accordance with applicable Law, including Treas. Reg. § 1.704-1(b)(2)(iv). The Company may maintain Capital Account sub-accounts for different classes of Units, and any provisions of this Agreement pertaining to Capital Account maintenance shall apply, mutatis mutandis, to those sub-accounts.
ARTICLE VIII
UNIT TRANSFERS AND MEMBER WITHDRAWALS
Section 8.1 Transfer Generally Prohibited. No Units shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article VIII. Any Transfer or purported Transfer of a Unit not made in accordance with this Article VIII shall be null and void ab initio. Membership Interests shall not be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.
Section 8.2 Conditions Generally Applicable to All Transfers. All Transfers are subject to the satisfaction of the following conditions:
(a) Transfers by Members Other than the Managing Member:
(i) Consent of Managing Member. No Member that is not the Managing Member shall Transfer any portion of its Membership Interest to any transferee without the consent of the Managing Member unless such Transfer is pursuant to a Related-Party Transfer.
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(ii) Assumption of Obligations. The transferee shall assume, by operation of Law or express agreement, all of the obligations of the transferor Member under this Agreement with respect to such Transferred Membership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation pursuant to which all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of Law) shall relieve the transferor Member of its obligations under this Agreement without the approval of the Managing Member. Any transferee, whether or not admitted as a Substituted Member, shall take subject to the obligations of the transferor Member under this Agreement. Unless admitted as a Substituted Member, no transferee, whether by a voluntary Transfer, by operation of Law or otherwise, shall have any rights under this Agreement.
(b) Transfers by the Managing Member.
(i) Consent of Members. The Managing Member may not Transfer any of its Units without the consent of a Majority-in-Interest of the Members, except in connection with an Applicable Sale or Termination Transaction approved by the Board of Directors.
(ii) Transfer to Subsidiary. Subject to compliance with the other provisions of this Article VIII, the Managing Member may Transfer all of its Units at any time to any Person that is, at the time of such Transfer, a direct or indirect wholly owned Subsidiary of the Managing Member without the consent of any Member and may designate the transferee to become the new Managing Member for all purposes of this Agreement.
(c) Other Restrictions on Transfer. In addition to any other restrictions on Transfer in this Agreement, no Member may Transfer a Unit (including by way of acquisition of Units by the Managing Member, or any other acquisition of Units by the Company) if the Company determines:
(i) Based on the advice of nationally recognized tax counsel, such Transfer would create a material risk of the Company being classified as an association taxable as a corporation for U.S. federal, state, or local income tax purposes; provided, that a Transfer by a Member or its Affiliates shall not be prohibited under this Section 8.2(c)(i) if the Member (or its Affiliate) obtains a tax opinion from nationally recognized tax counsel that the Transfer will not result in the Company being classified as an association taxable as a corporation for U.S. federal, state, or local income tax purposes;
(ii) That the Transfer would be to any Person or entity who lacks the legal right, power or capacity to own a Membership Interest;
(iii) That the Transfer would be in violation of Law;
(iv) That the Transfer would be of any fractional or component portion of a Unit or Membership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Unit;
(v) That the Transfer would create a material risk that the Company would become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified Person” (as defined in Code section 4975(c));
(vi) Based on the advice of counsel, that the Transfer would create a material risk that any portion of the Assets would constitute assets of any employee benefit plan pursuant to Department of Labor Reg. § 2510.2-101;
(vii) That the Transfer would require the registration of such Membership Interest pursuant to any applicable federal or state securities Laws;
(viii) Based on advice of counsel, that such Transfer would create a material risk that the Company would become a reporting company under the Exchange Act; or
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(ix) Based on the advice of counsel, that the Transfer would subject the Company to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.
Section 8.3 Drag-Along Rights.
(a) General. If at any time the Managing Member and/or its Affiliates (excluding, for purposes of this Section 8.3, the Company and its Subsidiaries) desire to Transfer in one or more transactions a sufficient portion of its and/or their Units (or any beneficial interest therein) to constitute a change of control of the Company in an arm’s-length transaction to a bona fide third party that is not an Affiliate of the Managing Member (an “Applicable Sale”), the Managing Member may require each other Member to sell the same ratable share of its Membership Interests as is being sold by the Managing Member and such Affiliates (based upon the total Membership Interests held by the Managing Member and its Affiliates at such time) on the same terms and conditions (“Drag-Along Right”). The Managing Member may in its sole discretion elect to cause the Managing Member and/or the Company to structure the Applicable Sale as a merger or consolidation or as a sale of the Company’s Assets. No Member shall have any dissenters’ rights, appraisal rights or similar rights in connection with any Applicable Sale, and no Member may object to any subsequent liquidation or other distribution of the proceeds from an Applicable Sale that is a sale of Assets. Each Member agrees to consent to, and raise no objections against, an Applicable Sale. In the event of the exercise by the Managing Member of its Drag-Along Right pursuant to this Section 8.3, each Member shall take all reasonably necessary and desirable actions approved by the Managing Member in connection with the consummation of the Applicable Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to provide customary and reasonable representations, warranties, indemnities, covenants, conditions and other agreements relating to such Applicable Sale and to otherwise effect the transaction; provided, however, that (A) such Members shall not be required to give disproportionately greater or more onerous representations, warranties, indemnities, or covenants than the Managing Member or its Affiliates, (B) such Members shall not be obligated to bear any share of the out-of-pocket expenses, costs, or fees (including attorneys’ fees) incurred by the Company or its Affiliates in connection with such Applicable Sale unless and to the extent that such expenses, costs, and fees were incurred for the benefit of the Company or all of its Members, (C) such Members shall not be obligated or otherwise responsible for more than their proportionate shares of any indemnities or other liabilities incurred by the Company and the Members as sellers in respect of such Applicable Sale, and (D) any indemnities or other liabilities approved by the Managing Member shall be limited, in respect of each Member, to such Member’s share of the proceeds from the Applicable Sale.
(b) Notice. At least five (5) Business Days before consummation of an Applicable Sale, the Managing Member shall (i) provide the Members written notice (the “Applicable Sale Notice”) of the Applicable Sale, which notice shall contain (A) the name and address of the third-party purchaser, (B) the proposed purchase price, terms of payment, and other material terms and conditions of the purchaser’s offer, together with a copy of any binding agreement with respect to the Applicable Sale and (C) notification of whether the Managing Member has elected to exercise its Drag-Along Right and (ii) promptly notify the Members of all proposed changes to the material terms and keep the Members reasonably informed as to all material terms relating to the Applicable Sale, and promptly deliver to the Members copies of all final material agreements relating to the Applicable Sale not already provided in accordance with this Section 8.3(b) or otherwise. The Managing Member shall provide the Members written notice of the termination of an Applicable Sale within five (5) Business Days following such termination, which notice shall state that the Applicable Sale Notice served with respect to such Applicable Sale is rescinded.
Section 8.4 Substituted Members.
(a) Admission as Member. A transferee of Units of a Member may be admitted as a Substituted Member only with the consent of the Company; provided, however, that a Related-Party Transferee shall be admitted as a Substituted Member without the consent of the Company, subject to compliance with Section 8.4(b). The failure or refusal by the Company to permit a transferee of Units to become a Substituted Member shall not give rise to any cause of action against the Company or the Managing Member. A transferee who has been admitted as a Substituted Member in accordance with this Article VIII shall have all the rights and powers and be subject to all the restrictions and liabilities of a Member under this Agreement.
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(b) Documents to be Provided by Transferee. No transferee shall be admitted as a Substituted Member until and unless it furnishes to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such transferee and (iii) such other documents and instruments as the Managing Member may require to effect such transferee’s admission as a Substituted Member.
(c) Amendment of Books and Records. In connection with, and as evidence of, the admission of a Substituted Member, the Managing Member or Company shall amend the Register and the books and records of the Company to reflect the name, address and number of Units of such Substituted Member and to eliminate or adjust, if necessary, the name, address and number of Units of the predecessor of such Substituted Member.
Section 8.5 Company Right to Call Membership Interests. Beginning on the date on which the aggregate Percentage Interests of the Members (other than the Managing Member and its Subsidiaries) are less than ten (10) percent, the Company shall have the right, but not the obligation, from time to time and at any time to redeem all (but not less than all) outstanding Class B Common Units by treating each Member as an Exchangeable Unit Member who has delivered an Elective Exchange Notice pursuant to Section 12.1(b) in respect of all of such Exchangeable Unit Member’s Class B Common Units. The Company shall exercise this right by giving notice to an Exchangeable Unit Member stating that the Company has elected to exercise its rights under this Section 8.5. The notice given by the Company to an Exchangeable Unit Member pursuant to this Section 8.5 shall be treated as if it were an Elective Exchange Notice delivered to the Company by such Exchangeable Unit Member. For purposes of this Section 8.5, the provisions of Article VI shall apply except to the extent otherwise determined by the Company.
Section 8.6 Withdrawal.
(a) Permissible Withdrawals. Subject to any Unit Designation, no Member may withdraw from the Company other than:
(i) As a result of a Permitted Transfer of all of such Member’s Units in accordance with this Article VIII with respect to which the transferee becomes a Substituted Member;
(ii) Pursuant to an acquisition by the Managing Member of all of its Membership Interests; or
(iii) With the consent of the Company.
(b) Consequences of Withdrawal. Any Member who Transfers all of its Units in a Transfer (i) permitted pursuant to this Article VIII where such transferee was admitted as a Substituted Member or (ii) to the Managing Member, whether or not pursuant to Section 12.1, shall cease to be a Member but shall continue to have the obligations of a former Member that are expressly set forth in this Agreement.
Section 8.7 Restrictions on Termination Transactions.
(a) General. Except as provided in Section 8.7(b), neither the Company nor the Managing Member shall engage in, or cause or permit, a Termination Transaction.
(b) Consent. The Company or Managing Member may engage in, cause, or permit a Termination Transaction only if one of the following conditions is satisfied:
(i) A Majority-in-Interest of the Members gives Consent;
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(ii) In connection with any such Termination Transaction, each holder of Common Units (other than the Managing Member and its wholly owned Subsidiaries) will receive, or will have the right to elect to receive, for each Common Unit an amount of cash, securities or other property equal to the greatest amount of cash, securities or other property paid to a holder of one share of Class A Common Stock in consideration of one share of Class A Common Stock pursuant to the terms of such Termination Transaction; provided, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of a majority of the outstanding Class A Common Stock, each holder of Common Units (other than the Managing Member and its wholly owned Subsidiaries) will receive, or will have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Common Units would have received had it exercised its right to Exchange pursuant to Article XII and received Class A Common Stock in exchange for its Common Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Transaction shall have been consummated; or
(iii) All of the following conditions are met: (1) substantially all of the Assets directly or indirectly owned by the Company before the announcement of the Termination Transaction are, immediately after the Termination Transaction, owned directly or indirectly by the Company or another limited partnership or limited liability company that is the survivor of a merger, consolidation or combination of assets with the Company (in each case, the “Surviving Company”); (2) the Surviving Company is classified as a partnership for U.S. federal income tax purposes and each of its Subsidiaries is classified as a partnership or a disregarded entity for U.S. federal income tax purposes; (3) the rights of such Members with respect to the Surviving Company (including pursuant to a Tax Receivable Agreement) are at least as favorable as those of Members holding Common Units immediately before the consummation of such transaction (except to the extent that any such rights are consistent with clause (4) of this Section 8.7(b)(iii)) and as those applicable to any other limited partners or non-managing members of the Surviving Company; and (4) such rights include the right to cause their interests in the Surviving Company to be redeemed at any time or times for cash in an amount equal to the Fair Market Value of such interest at the time of redemption, as determined at least once every calendar quarter by an independent appraisal firm of recognized national standing retained by the Surviving Company.
Section 8.8 Incapacity. If a Member is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Member’s estate shall have the same rights as the Incapacitated Member possessed to Transfer its Units. The Incapacity of a Member, in and of itself, shall not dissolve or terminate the Company.
Section 8.9 Withholding With Respect to a Transfer of Units. A Member making a Transfer permitted by this Agreement shall, unless otherwise determined by the Company, (i) have delivered to the Company an affidavit of non-foreign status with respect to such transferor Member that satisfies the requirements of Code section 1446(f)(2) or other documentation establishing a valid exemption from withholding pursuant to Code section 1446(f) or (ii) ensure that, contemporaneously with the Transfer, the transferee of such interest properly withholds and remits to the IRS the amount of tax required to be withheld upon the Transfer by Code section 1446(f) (and promptly provide evidence to the Company of such withholding and remittance). In connection with any such Transfer, the transferor Member and transferee of such interest shall agree to jointly and severally indemnify and hold harmless the Company against any loss (including taxes, interest, penalties, and any related expenses) arising out of any failure to comply with the provisions of this Section 8.9.
ARTICLE IX
ADMISSION OF MEMBERS
Section 9.1 Members; Admission of Additional Members.
(a) Requirements for Admission. A Person (other than a then-existing Member) who makes a Capital Contribution in exchange for Units and in accordance with this Agreement shall be admitted to the Company as an Additional Member only upon furnishing to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all of the terms and conditions of this Agreement, including the power of attorney granted in Section 13.3, (ii) a counterpart signature page to this Agreement executed by such Person, and (iii) such other documents or instruments as may be required by the Managing Member in order to effect such Person’s admission as an Additional Member. In connection with, and as evidence of, the admission of an Additional Member, the Managing Member shall amend the Register and the books and records of the Company to reflect the name, address, number and type of Units of such Additional Member.
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(b) Consent of Company Required. Notwithstanding anything to the contrary in this Section 9.1, no Person shall be admitted as an Additional Member without the consent of the Company. The admission of any Person as an Additional Member shall become effective on the date determined by the Company (but in no case earlier than the satisfaction of all the conditions set forth in Section 9.1(a)).
Section 9.2 Limit on Number of Members. Unless otherwise permitted by the Managing Member, no Person shall be admitted to the Company as an Additional Member if the effect of such admission would be to cause the Company to have a number of Members (including as Members for this purpose those Persons indirectly owning an interest in the Company through another partnership, a limited liability company, a subchapter S corporation or a grantor trust) that would (i) cause the Company to become a reporting company under the Exchange Act or (ii) result in the Company at any time during its taxable year having more than 100 members, within the meaning of Treas. Reg. § 1.7704-1(h)(1)(ii) (taking into account Treas. Reg. § 1.7704-1(h)(3)).
ARTICLE X
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 10.1 Dissolution Generally.
(a) Dissolution Only in Accordance with this Agreement. The Company shall not be dissolved by the substitution of Members or the admission of Additional Members in accordance with the terms of this Agreement. The Company may be dissolved, liquidated and terminated only pursuant to the provisions of this Article X, and the Members hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Company or a sale or partition of any or all of the Company’s Assets.
(b) Termination of Members. The death, retirement, resignation, expulsion, Bankruptcy, insolvency or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company shall not in and of itself cause dissolution of the Company.
Section 10.2 Events Causing Dissolution.
(a) Actions by Members. No Member shall take any action to dissolve, terminate or liquidate the Company or to require apportionment, appraisal or partition of the Company or any of its Assets, or to file a bill for an accounting, except as specifically provided in this Agreement, and each Member, to the fullest extent permitted by Law, waives any rights to take any such actions under Law, including any right to petition a court for judicial dissolution under Section 18-802 of the Act.
(b) Liquidating Events. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (each, a “Liquidating Event”):
(i) an election to dissolve the Company made by the Managing Member, with the Consent of a Majority-in-Interest of the Members;
(ii) the expiration of forty-five (45) days after the sale or other disposition of all or substantially all Assets; or
(iii) any other event which results in a mandatory dissolution under the Act.
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Section 10.3 Distribution upon Dissolution.
(a) Order of Distributions. Upon the dissolution of the Company pursuant to Section 10.2, the Managing Member (or, in the event that the Managing Member has dissolved, become Bankrupt or ceased to operate, any Person elected by a Majority-in-Interest of the Members (the Managing Member or such other Person, the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Company and shall take full account of the Company’s Assets and liabilities, and the Company’s Assets shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the Managing Member, include shares of stock in the Managing Member) shall be applied and distributed in the following order:
(i) First, to the satisfaction of all of the Company’s Debts and liabilities to creditors, including Members who are creditors (other than with respect to liabilities owed to Members in satisfaction of liabilities for previously declared distributions), whether by payment or the making of reasonable provision for payment thereof;
(ii) Second, to the satisfaction of all of the Company’s liabilities to the Members in satisfaction of liabilities for previously declared distributions, whether by payment or the making of reasonable provision for payment thereof; and
(iii) The balance, if any, to the Members, first in accordance with the order of priority and liquidation preferences set forth in any Unit Designation (including the Series A Senior Convertible Preferred Units Certificate of Designations) and thereafter in the same order of priorities provided for in Article III.
(b) Discretion of Liquidator and Managing Member.
(i) Notwithstanding the provisions of Section 10.3(a) that require liquidation of the Assets, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Company, the Liquidator determines that an immediate sale of part or all of the Company’s Assets would be impractical or would cause undue loss to the Members, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any Assets except those necessary to satisfy liabilities of the Company (including to those Members as creditors) and/or distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 10.3(a), undivided interests in such Company Assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the Fair Market Value of any property distributed in kind using such reasonable method of valuation as it may adopt.
(ii) In the sole and absolute discretion of the Managing Member, a pro rata portion of the distributions that would otherwise be made to the Members pursuant to this Article X may be: A) Distributed to a trust established for the benefit of the Managing Member and the Members for the purpose of liquidating Company Assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Managing Member arising out of or in connection with the Company and/or Company activities. The assets of any such trust shall be distributed to the Members, from time to time, in the reasonable discretion of the Managing Member, in the same proportions and amounts as would otherwise have been distributed to the Members pursuant to this Agreement; or B) Withheld or escrowed to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Company, provided that such withheld or escrowed amounts shall be distributed to the Members in the manner and order of priority set forth in Section 10.3(a) as soon as practicable.
Section 10.4 Rights of Members. Except as otherwise provided in this Agreement and subject to the rights of any Member set forth in a Unit Designation, (a) each Member shall look solely to the Assets for the return of its Capital Contribution, (b) no Member shall have the right or power to demand or receive property other than cash from the Company, and (c) no Member shall have priority over any other Member as to the return of its Capital Contributions, distributions, or allocations.
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Section 10.5 Termination. The Company shall terminate when all of the Assets, after payment of or due provision for all Debts, liabilities, and obligations of the Company, have been distributed to the Members in the manner provided for in this Article X and the Certificate of Formation shall have been cancelled in the manner required by the Act.
ARTICLE XI
PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; AMENDMENTS; MEETINGS
Section 11.1 Actions and Consents of Members. The actions requiring Consent of any Member pursuant to this Agreement or otherwise pursuant to Law are subject to the procedures set forth in this Article XI.
Section 11.2 Amendments. Except as otherwise required or permitted by this Agreement (including Section 4.1(f)) and subject to the terms of any Unit Designation, amendments to this Agreement must be approved by the Managing Member and a Majority-in-Interest of the Members. Upon obtaining any such Consent, or any other Consent required by this Agreement, and without further action or execution by any other Person, including any Member, (i) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the Managing Member, and (ii) the Members shall be deemed a party to and bound by such amendment of this Agreement. The Managing Member shall cause an authorized officer to update Annex A from time to time, as necessary to reflect accurately the information therein as known by the Managing Member, but no such update shall modify Annex A in any manner inconsistent with this Agreement. Any amendment or revision to Annex A made in accordance with this Agreement shall not be deemed an amendment to this Agreement for purposes of this Section 11.2.
Section 11.3 Procedures for Meetings and Actions of the Members.
(a) Time; Quorum; Consent. Meetings of the Members may be called only by the Managing Member and shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than two (2) days nor more than ninety (90) days prior to the date of such meeting. Members may vote in Person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement or any Unit Designation, the affirmative vote of a Majority-in-Interest of the Members shall be sufficient to approve such proposal at a meeting of the Members. Whenever the Consent of any Members is permitted or required under this Agreement, such Consent may be given at a meeting of Members or in accordance with the procedure prescribed in Section 11.3(b).
(b) Written Consents. Any action requiring the Consent of any Member or a group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a Consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such Consent may be in one instrument or in several instruments and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. Such Consent shall be filed with the Managing Member. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the Managing Member may require a response within a reasonable specified time, but not less than two (2) days after receipt of notice, and failure to respond in such time period shall constitute a Consent that is consistent with the Managing Member’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.
(c) Proxy. Each Member entitled to act at a meeting of Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.
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(d) Record Date for Meetings. The Managing Member may set, in advance, a Record Date for the purpose of determining the Members (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Members or (iii) in order to make a determination of Members for any other proper purpose. Any such date shall not be before the close of business on the day the Record Date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than two (2) days, before the date on which the meeting is to be held. If no Record Date is fixed, the Record Date for the determination of Members entitled to notice of or to vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the Record Date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this section, such determination shall apply to any adjournment thereof.
(e) Conduct of Meetings. Each meeting of Members shall be conducted by the Managing Member or such other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate.
(f) Waivers. Any time period for notice with respect to meetings or consents of the Members may be waived by a Member as to such Member.
ARTICLE XII
EXCHANGE RIGHTS
Section 12.1 Elective and Mandatory Exchanges.
(a) Elective Exchanges. An Exchangeable Unit Member shall have the right, from time to time, to surrender Exchangeable Units, along with an equivalent number of shares of Class B Common Stock (in each case, free and clear of all liens, encumbrances, rights of first refusal and similar restrictions, except for those arising under this Agreement) to the Company (or, to the extent the Managing Member exercises its option under Section 12.2(e), the Managing Member) and to thereby cause the Company (or the Managing Member) to deliver to that Exchangeable Unit Member (or its designee) the Exchange Consideration as set forth in Section 12.3 (an “Elective Exchange”). Exchangeable Unit Members shall not have the right to effect an Elective Exchange for less than any Minimum Exchangeable Amount established from time to time by the Managing Member or at times to not permitted by the Policies established from time to time by the Managing Member, in each case without the consent of the Managing Member or as otherwise provided in this Agreement. The Managing Member shall have the authority to set and amend any Minimum Exchangeable Amount and establish and amend Policies in its reasonable discretion taking into account reasonable and appropriate liquidity interests of Exchangeable Unit Members.
(b) Exchange Notice. An Exchangeable Unit Member shall exercise its right to an Elective Exchange by delivering to the Company, with a contemporaneous copy delivered to the Managing Member, in each case during normal business hours at the principal executive offices of the Company and the Managing Member, respectively, a written election of exchange in respect of the Exchangeable Units to be exchanged (an “Elective Exchange Notice”), duly executed by such the Exchangeable Unit Member. An Elective Exchange Notice must be delivered at least one week before the proposed Elective Exchange Date or such other date as may be specified in the Policies then in effect, unless otherwise consented by the Managing Member.
(i) An Exchangeable Unit Member may specify, in an applicable Elective Exchange Notice, that the Elective Exchange is to be contingent (including as to timing) upon the occurrence of any transaction or event, including the consummation of a purchase by another Person (whether in a tender or exchange offer, an underwritten offering, change of control transaction or otherwise) of shares of Class A Common Stock or any merger, consolidation or other business combination. The failure of such contingency to occur shall terminate all of the Exchangeable Unit Member’s, Company’s and Managing Member’s rights and obligations arising from that particular Elective Exchange Notice, and all actions taken to effect the Elective Exchange contemplated by that Elective Exchange Notice shall be deemed rescinded.
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(ii) After the Elective Exchange Notice and corresponding Certificates have been delivered to the Managing Member, and unless such Exchangeable Unit Member timely has delivered a Retraction Notice pursuant to Section 12.1(b)(iii) or the Company or Managing Member, as applicable, has refused to honor the request in full pursuant to Section 12.2(c), the Company or Managing Member, as applicable, will effect the Elective Exchange in accordance with the Policies and inform the Exchangeable Unit Member of the effective date of such Elective Exchange (the “Elective Exchange Date”).
(iii) Notwithstanding any provisions of this Agreement to the contrary, if there is a five percent (5%) or greater drop in the reported closing trading price of a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock trades after the delivery of an Elective Exchange Notice and prior to 5:00 p.m., Pacific time, on the Business Day immediately prior to the applicable Elective Exchange Date (the “Retraction Deadline”), an Exchangeable Unit Member may withdraw or amend its Elective Exchange Notice, in whole or in part, by giving written notice at any time prior to the Retraction Deadline (a “Retraction Notice”) to the Company (with a copy to the Managing Member) specifying (A) the number of withdrawn Exchangeable Units and an equivalent number of shares of Class B Common Stock and (B) the number of Exchangeable Units and an equivalent number of shares of Class B Common Stock as to which the Elective Exchange Notice remains in effect. The timely delivery of a Retraction Notice indicating an entire withdrawal of the Elective Exchange Notice shall terminate all of the Exchangeable Unit Member’s, Company’s and Managing Member’s rights and obligations arising from that particular Elective Exchange Notice, and all actions taken to effect the Elective Exchange contemplated by that Elective Exchange Notice shall be deemed rescinded.
(c) Mandatory Exchange Events. Units are subject to Mandatory Exchange in each of the following circumstances:
(i) pursuant to Section 8.5; or
(ii) in the discretion of the Managing Member, with the consent of Members whose Class B Common Units represent fifty percent (50%) of the Class B Common Units of all Members in the aggregate, all Members may be required to exchange all Class B Common Units then held by the Members.
(d) Mandatory Exchange Mechanics. Upon the occurrence of either of the circumstances set out in Section 12.1(c) the Managing Member may exercise its right to cause a mandatory exchange of a Member’s Exchangeable Units and an equivalent number of shares of Class B Common Stock (a “Mandatory Exchange”) by delivering to each Member a written notice pursuant to the notice provisions in Section 13.6 (a “Mandatory Exchange Notice”) specifying the basis for the Mandatory Exchange, the Exchangeable Units to which the Mandatory Exchange applies, and the effective date of such Mandatory Exchange (the “Mandatory Exchange Date”), which shall be no earlier than ten (10) Business Days after delivery of the Mandatory Exchange Notice. The Member receiving the Mandatory Exchange Notice shall use its best efforts to deliver to the Certificates representing the applicable Exchangeable Units and shares of Class B Common Stock no later than the Mandatory Exchange Date. Upon the Mandatory Exchange Date, the Company will effect the Mandatory Exchange in accordance with the Policies.
Section 12.2 Additional Terms Applying to Exchanges.
(a) Concurrent Exchange of Class B Common Stock. No Exchange of Class B Common Units may be made without a concurrent Exchange of an equivalent number of shares of Class B Common Stock. Any shares of Class B Common Stock surrendered in an Exchange shall automatically be deemed retired without any action on the part of any Person, including the Managing Member. Any such retired shares of Class B Common Stock shall no longer be outstanding, all rights with respect to such shares shall automatically cease and terminate, and such shares shall return to the status of authorized but unissued shares of the Managing Member.
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(b) Authority of Board of Directors to Limit or Deny Exchange. The Board of Directors (or a committee thereof to which the Board of Directors has delegated such authority) may, in its sole discretion, deny or limit, in whole or in part, any Exchange that fails to comply with any requirements therefor or limitations with respect thereto that the Company, the Managing Member, or the Board of Directors may have established, or that, if effected, would adversely affect the Managing Member or the Company as determined by the Board of Directors (or a committee thereof to which the Board of Directors has delegated such authority) in its sole discretion. In particular, an Exchangeable Unit Member shall not be entitled to an Exchange, and the Company and the Managing Member shall have the right to refuse to honor any request for an Exchange, at any time or during any period if the Company or the Managing Member determines, after consultation with counsel, that such Exchange (x) would be prohibited by law or regulation (including, without limitation, the unavailability of a registration of such Exchange under the Securities Act or an exemption from the registration requirements thereof) or (y) would not be permitted under any agreement with the Company, the Managing Member or any of their subsidiaries to which the applicable Exchangeable Unit Member is party or (solely in the case of an Exchange requested by an officer, director or other personnel of the Company, the Managing Member or any of their subsidiaries) any written policies of the Managing Member related to restrictions on trading applicable to its officers, directors or other personnel.
(c) Publicly Traded Partnership. Notwithstanding anything contrary to the advice of counsel, if the Managing Member determines that an Exchange would pose a material risk that the Company would become a “publicly traded partnership” under Code section 7704, the Exchange shall be null and void.
(d) Rights of Exchangeable Unit Member. On an Exchange Date, all rights of the Exchangeable Unit Member as a holder of the Exchangeable Units and shares of Class B Common Stock that are subject to the Exchange shall cease, and, unless the Company or Managing Member, as applicable, has elected Cash Settlement as to all Exchangeable Units tendered, such Exchangeable Unit Member (or its designee) shall be treated for all purposes as having become the record holder of the shares of Class A Common Stock to be received by the Exchangeable Unit Member in respect of such Exchange.
(e) Right of Managing Member to Acquire Exchangeable Units. The Managing Member shall have the right but not the obligation (in lieu of the Company) to have the Managing Member acquire Exchangeable Units and an equivalent number of shares of Class B Common Stock directly from an Exchangeable Unit Member for the elected Exchange Consideration.
(f) Expenses. Except as otherwise agreed by the Company, the Managing Member and an Exchangeable Unit Member, the Company, the Managing Member, and each Exchangeable Unit Member shall bear their own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated, except that the Managing Member shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange; provided, however, that if any shares of Class A Common Stock are to be delivered pursuant to an Elective Exchange in a name other than that of the Member that requested the Exchange (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Member) or the Cash Settlement is to be paid to a Person other than the Exchangeable Unit Member that requested the Exchange, then such Member or the Person in whose name such shares are to be delivered or to whom the Cash Settlement is to be paid shall pay to the Managing Member the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of the Managing Member that such tax has been paid or is not payable.
(g) Limitation. For the avoidance of doubt, in the event that the Company or the Managing Member consolidates, merges, combines or consummates any other transaction in which shares of Class A Common Stock are exchanged for or converted into other stock or securities, or the right to receive cash and/or any other property, no Minimum Exchangeable Amount or Policies or other provisions of this Article XII shall limit the right of any Exchangeable Unit Member to effect an Elective Exchange in order to receive Class A Common Stock in advance of consummation of any such consolidation, merger or other such transaction unless in connection with any such consolidation, merger, combination or other transaction each share of Class B Common Stock and/or Class B Common Unit shall be entitled to be exchanged for or converted into the same kind and amount of stock or securities, cash and/or any other property, as the case may be, into which or for which each share of Class A Common Stock is exchanged or converted; provided, that the consideration for each share of Class B Common Stock and/or Class B Common Unit shall be deemed the same kind and amount into which or for which each share of Class A Common Stock is exchanged or converted, so long as any differences in the kind and amount of stock or securities, cash and/or any other property are intended (as determined by the Board of Directors in good faith) to maintain the relative voting power of each share of Class B Common Stock relative to each share of Class A Common Stock; provided, further, that the foregoing provisions of this Section 12.2(g) shall not apply to any action or transaction (including any consolidation, merger or combination) approved by a Majority-in-Interest of the Members.
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Section 12.3 Exchange Consideration.
(a) Generally. The Managing Member has the right, in its sole discretion, as approved by a majority vote of the disinterested members of the Board of Directors, to elect the form of Exchange Consideration with respect to any Exchange. On an Exchange Date, provided the Exchangeable Unit Member has satisfied its obligations under Section 12.1(b)(i), the Managing Member shall deliver or cause to be delivered the Exchange Consideration, as provided in Section 12.8, to such Exchangeable Unit Member (or its designee), at the address set forth on the applicable Exchange Notice. If the Managing Member elects a Cash Settlement, the Managing Member shall only be obligated to contribute to the Company (or, if the Managing Member elects to purchase directly pursuant to Section 12.2(e), purchase directly for an amount equal to), an amount in respect of such Cash Settlement equal to the net proceeds (after deduction of any underwriters’ discounts and commissions) from the sale by the Managing Member of a number of shares of Class A Common Stock equal to the number of Exchangeable Units being Exchanged for such Cash Settlement. Except as otherwise required by Law, the Managing Member shall, for U.S. federal income tax purposes, be treated as paying an appropriate portion of the selling expenses described in the previous sentence as agent for and on behalf of the Exchangeable Unit Member.
(b) Notice of Intended Exchange Consideration. At least two (2) Business Days before the Exchange Date, the Managing Member shall give written notice (the “Contribution Notice”) to the Company (with a copy to the Exchangeable Unit Member) of its intended Exchange Consideration; provided, that if the Managing Member does not timely deliver a Contribution Notice, the Managing Member shall be deemed to have elected to settle the Exchange with shares of Class A Common Stock.
(c) Settlement Through Depository Trust Company. To the extent the Class A Common Stock is settled through the facilities of The Depository Trust Company, the Managing Member or the Company will, upon the written instruction of an Exchangeable Unit Member, deliver the shares of Class A Common Stock deliverable to such Exchangeable Unit Member through the facilities of The Depository Trust Company to the account of the participant of The Depository Trust Company designated by such Exchangeable Unit Member in the applicable Exchange Notice.
(d) Obligations of Managing Member and Company. Upon any Exchange, the Managing Member or the Company, as applicable, shall take such actions as (A) may be required to ensure that such Member receives the shares of Class A Common Stock and/or the Cash Settlement that such Exchangeable Unit Member is entitled to receive in connection with such Exchange pursuant to Section 12.3(a), and (B) may be reasonably within its control that would cause such Exchange to be treated for purposes of the Tax Receivable Agreement as an “Exchange” (as such term is defined in the Tax Receivable Agreement).
Section 12.4 Adjustment. To the extent that the Managing Member acquires additional Class A Common Units without issuing a corresponding number of additional shares of Class A Common Stock to maintain parity, the Managing Member shall make appropriate adjustments to the Exchange Rate to give effect to such parity. To the extent not reflected in an adjustment to the Exchange Rate, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, then, upon any subsequent Exchange, an Exchangeable Unit Member shall be entitled to receive the amount of such security, securities or other property that such Exchangeable Unit Member would have received if such Exchange had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, this Section 12.4 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.
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Section 12.5 Class A Common Stock to be Issued.
(a) Class A Common Stock Reserve. The Managing Member shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon an Exchange, such number of shares of Class A Common Stock as shall be deliverable under this Agreement upon all such Exchanges; provided, however, that the Managing Member may satisfy its obligations in respect of any such Exchange by delivery of unencumbered purchased shares of Class A Common Stock (which may or may not be held in the treasury of the Managing Member or any subsidiary thereof).
(b) Rule 16(b) Exemption. The Managing Member has taken and will take all such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions or dispositions of equity securities of the Managing Member (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of the Managing Member for such purposes that result from the transactions contemplated by this Agreement, by each director or officer of the Managing Member (including directors-by-deputization) who may reasonably be expected to be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Managing Member upon the registration of any class of equity security of the Managing Member pursuant to Section 12 of the Exchange Act.
(c) Validity of Class A Common Stock. The Managing Member covenants that all shares of Class A Common Stock issued upon an Exchange will, upon issuance, be validly issued, fully paid and non-assessable and not subject to any preemptive right of stockholders of the Managing Member or to any right of first refusal or other right in favor of any Person.
Section 12.6 Withholding.
(a) Withholding of Cash or Class A Common Stock Permitted. If the Company or the Managing Member shall be required to withhold any amounts by reason of any federal, state, local or foreign tax laws or regulations in respect of any Exchange, the Company or the Managing Member, as the case may be, shall be entitled to take such action as it deems appropriate in order to ensure compliance with such withholding requirements, including, at its option, withholding cash from the Cash Settlement or shares of Class A Common Stock with a Fair Market Value equal to the amount of any taxes that the Company or the Managing Member, as the case may be, may be required to withhold with respect to such Exchange. To the extent that amounts are (or property is) so withheld and paid over to the appropriate taxing authority, such withheld amounts (or property) shall be treated for all purposes of this Agreement as having been paid (or delivered) to the applicable Member.
(b) Notice of Withholding. If the Company or the Managing Member determines that any amounts by reason of any federal, state, local or foreign tax laws or regulations are required to be withheld in respect of any Exchange, the Company or the Managing Member, as the case may be, shall use commercially reasonable efforts to promptly notify the Exchangeable Unit Member and shall consider in good faith any positions or alternative arrangements that such Member raises (reasonably in advance of the date on which the Company or the Managing Member believes withholding is required) as to why withholding is not required or that may avoid the need for such withholding, provided, that none of the Company or the Managing Member is required to incur additional costs as a result of such obligation, and this Section 12.6(b) shall not in any manner limit the authority of the Company or the Managing Member to withhold taxes with respect to an Exchangeable Unit Member pursuant to Section 12.6(a).
(c) Reimbursement of Taxes by Exchangeable Unit Member. If, within the two-year period beginning at the start of the date of an Exchange, (i) the Managing Member withholds or otherwise pays any amount on account of taxes in respect of exchanged Units, which amount is attributable to the two-year period ending at the end of the date of such Exchange, and (ii) the Managing Member or any person other than the Exchangeable Unit Member otherwise would bear the economic burden of such withholding or other payment (including by reason of such amount being treated as having been distributed to the Managing Member in respect of the exchanged Units pursuant to Section 3.4), the Exchangeable Unit Member shall, upon notice by the Company and/or the Managing Member, promptly reimburse the Company and/or the Managing Member for such amount; provided, however, that the Exchangeable Unit Member’s reimbursement obligation under this Section 12.6(c) shall not exceed the amount of cash and Fair Market Value (determined as of the date of receipt) of other consideration received by the Exchangeable Unit Member in connection with such Exchange. Unless otherwise required by Law, any amount paid by an Exchangeable Unit Member pursuant to this Section 12.6(c) shall be treated as an adjustment to the proceeds received by the Exchangeable Unit Member in respect of the applicable Exchange. The Company and the Managing Member shall have the right to reduce any amounts due to such Exchangeable Unit Member from the Managing Member or any of its Affiliates by the amount owed by such Exchangeable Unit Member under this Section 12.6(c).
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Section 12.7 Tax Treatment. Unless otherwise required by Law, each Exchange with the Managing Member or the Company shall be treated as a direct exchange between the Managing Member and the Member for U.S. federal and applicable state and local income tax purposes. It is intended that each Exchange be treated as a taxable exchange for U.S. federal and applicable state and local income tax purposes except as otherwise agreed to in writing by the Exchangeable Unit Member and the Managing Member or required by Law.
Section 12.8 Contribution of the Managing Member. In connection with any Exchange between a Member and the Company, the Managing Member shall contribute to the Company the shares of Class A Common Stock and/or Cash Settlement that the Member is entitled to receive in such Exchange. Unless the Member has timely delivered a Retraction Notice as provided in Section 12.1(b)(iii), on the Exchange Date (i) the Managing Member shall make a capital contribution to the Company (in the form of the Exchange Consideration that the Member is entitled to receive in such Exchange) required under this Section 12.8 and (ii) the Company shall issue to the Managing Member a number of Class A Common Units equal to the number of Exchangeable Units surrendered by the Member.
Section 12.9 Apportionment of Distributions. Distributions with a Record Date (as described in Section 3.7) on or before the Exchange Date shall be made to the Exchangeable Unit Member.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Conclusive Nature of Determinations. All determinations, interpretations, calculations, adjustments and other actions of the Managing Member, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority) or a designee of any of the foregoing that are within such Person’s authority under this Agreement shall be binding and conclusive on a Member absent manifest error. In connection with any such determination, interpretation, calculation, adjustment or other action, the Managing Member, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority) or the designee of any of the foregoing shall be entitled to resolve any ambiguity with respect to the manner in which such determination, interpretation, calculation, adjustment or other action is to be made or taken, and shall be entitled to interpret the provisions of this Agreement in such a manner as such Person determines to be fair and equitable, and such resolution or interpretation shall be binding and conclusive on a Member absent manifest error.
Section 13.2 Company Counsel. THE COMPANY, THE MANAGING MEMBER AND AFFILIATED ENTITIES MAY BE REPRESENTED BY THE SAME COUNSEL. THE ATTORNEYS, ACCOUNTANTS AND OTHER EXPERTS WHO PERFORM SERVICES FOR THE COMPANY MAY ALSO PERFORM SERVICES FOR THE MANAGING MEMBER AND AFFILIATES THEREOF. THE MANAGING MEMBER MAY, WITHOUT THE CONSENT OF THE MEMBERS, EXECUTE ON BEHALF OF THE COMPANY ANY CONSENT TO THE REPRESENTATION OF THE COMPANY THAT COUNSEL MAY REQUEST PURSUANT TO THE NEW YORK RULES OF PROFESSIONAL CONDUCT OR SIMILAR RULES IN ANY OTHER JURISDICTION. THE COMPANY HAS SELECTED ROPES & GRAY LLP (“COMPANY COUNSEL”) AS LEGAL COUNSEL TO THE COMPANY. EACH MEMBER ACKNOWLEDGES THAT COMPANY COUNSEL DOES NOT REPRESENT ANY MEMBER IN ITS CAPACITY AS SUCH IN THE ABSENCE OF A CLEAR AND EXPLICIT WRITTEN AGREEMENT TO SUCH EFFECT BETWEEN SUCH MEMBER AND COMPANY COUNSEL (AND THEN ONLY TO THE EXTENT SPECIALLY SET FORTH IN SUCH AGREEMENT), AND THAT IN ABSENCE OF ANY SUCH AGREEMENT COMPANY COUNSEL SHALL OWE NO DUTIES TO ANY MEMBER. EACH MEMBER FURTHER ACKNOWLEDGES THAT, WHETHER OR NOT COMPANY COUNSEL HAS IN THE PAST REPRESENTED OR IS CURRENTLY REPRESENTING SUCH MEMBER WITH RESPECT TO OTHER MATTERS, UNLESS OTHERWISE EXPRESSLY AGREED BY COMPANY COUNSEL, COMPANY COUNSEL HAS NOT REPRESENTED THE INTERESTS OF ANY MEMBER IN THE PREPARATION AND/OR NEGOTIATION OF THIS AGREEMENT.
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Section 13.3 Appointment of Managing Member as Attorney-in-Fact.
(a) Execution of Documents. Each Member, including each Additional Member and Substituted Member that is a Member, irrevocably makes, constitutes and appoints the Managing Member, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and Lawful attorney-in-fact with full power and authority in its name, place and stead to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement, including:
(i) All certificates and other instruments (including counterparts of this Agreement), and all amendments thereto, that the Managing Member deems appropriate to form, qualify, continue or otherwise operate the Company as a limited liability company (or other entity in which the Members will have limited liability comparable to that provided in the Act) in the jurisdictions in which the Company may conduct business or in which such formation, qualification or continuation is, in the opinion of the Managing Member, necessary or desirable to protect the limited liability of the Members.
(ii) All amendments to this Agreement adopted in accordance with the terms of this Agreement, and all instruments that the Managing Member deems appropriate in accordance with the terms of this Agreement.
(iii) All conveyances of Company Assets and other instruments that the Managing Member reasonably deems necessary in order to complete a dissolution and termination of the Company pursuant to this Agreement.
(b) Power and Interest. The appointment by all Members of the Managing Member as attorney-in-fact shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Members under this Agreement will be relying upon the power of the Managing Member to act as contemplated by this Agreement in any filing and other action by it on behalf of the Company, shall survive the Incapacity of any Person hereby giving such power and the Transfer of all or any portion of such Person’s Membership Interest, and shall not be affected by the subsequent Incapacity of the principal.
Section 13.4 Entire Agreement. This Agreement, together with the Registration Rights Agreement and the other documents contemplated hereby and thereby, constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersedes any and all prior or contemporaneous agreements or understandings between the parties hereto pertaining to the subject matter hereof, including the Prior Agreement.
Section 13.5 Further Assurances. Each of the parties hereto does hereby covenant and agree on behalf of itself, its successors, and its assigns, without further consideration, to prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents and statements, and to take such other action as may be required by Law or reasonably necessary to effectively carry out the intent and purposes of this Agreement.
Section 13.6 Notices. Any notice, consent, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be (a) delivered personally to the Person or to an officer of the Person to whom the same is directed, (b) sent by facsimile, overnight mail or registered or certified mail, return receipt requested, postage prepaid, or (c) (except with respect to notice to the Company or the Managing Member) sent by email, with electronic, written or oral confirmation of receipt, in each case addressed as follows:
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(i) if to the Company or the Managing Member:
c/o Zevia PBC
15821 Ventura Blvd., Suite 145
Encino, CA 91436
Phone: [***]
Email: [***]
Attention: Steven Staes
With a copy (which shall not constitute notice) to:
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Email: Suni.Sreepada@ropesgray.com
Attention: Suni Sreepada
or to such other address as the Company may from time to time specify by notice to the Members;
(ii) if to any Member, to: the address, email, or facsimile number of such Member set forth in the records of the Company.
Any such notice shall be deemed to be delivered, given and received for all purposes as of: (A) the date so delivered, if delivered personally, (B) upon receipt, if sent by facsimile or email, or (C) on the date of receipt or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt requested, postage and charges prepaid and properly addressed.
Section 13.7 Governing Law. This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to otherwise governing principles of conflicts of Law.
Section 13.8 Jurisdiction and Venue. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court (the “Selected Courts”), and each of the parties hereby irrevocably consents to the jurisdiction of the Selected Courts (and of the appropriate appellate courts therefrom) in any such suit, Action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any Selected Court. Without limiting the foregoing, each party agrees that service of process on such party in the manner provided for notice in Section 13.6 shall be deemed effective service of process on such party.
Section 13.9 Equitable Remedies. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts, this being in addition to any other remedy to which they are entitled at Law or in equity. Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties hereto. Each party further agrees that, in the event of any Action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at Law would be adequate.
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Section 13.10 Construction. This Agreement shall be construed as if all parties hereto prepared this Agreement.
Section 13.11 Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall for all purposes be deemed an original, and all such counterparts shall together constitute but one and the same agreement.
Section 13.12 Third-Party Beneficiaries. Except as provided in Section 4.7, nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties hereto (or their respective legal representatives, successors, heirs and distributees) any legal or equitable right, remedy or claim under or in respect of any agreement or provision contained herein, it being the intention of the parties hereto that this Agreement is for the sole and exclusive benefit of such parties (or such legal representatives, successors, heirs and distributees) and for the benefit of no other Person.
Section 13.13 Binding Effect. Except as otherwise expressly provided herein, all of the terms and provisions of this Agreement shall be binding on, shall inure to the benefit of and shall be enforceable by the Members, their heirs, executors, administrators, successors and all other Persons hereafter holding, having or receiving an interest in the Company, whether as Substituted Members or otherwise.
Section 13.14 Severability. If any provision of this Agreement as applied to any party or to any circumstance shall be adjudged by a court to be void, unenforceable or inoperative as a matter of Law, then the same shall in no way affect any other provision in this Agreement, the application of such provision in any other circumstance or with respect to any other party, or the validity or enforceability of the Agreement as a whole.
Section 13.15 Survival. The provisions of Section 4.6, Section 4.7, Section 7.10, Section 13.1, Section 13.3, Section 13.4, Section 13.5, Section 13.6, Section 13.7 and Section 13.8 (and this Section 13.15) (and any other provisions of this Agreement necessary for the effectiveness of the enumerated sections) shall survive the termination of the Company and/or the termination of this Agreement.
ARTICLE XIV
DEFINED TERMS
Section 14.1 Definitions. Unless otherwise indicated to the contrary, the following definitions shall be applied to the terms used in this Agreement:
“Act” is defined in the recitals of this Agreement.
“Additional Funds” is defined in Section 2.5(a).
“Additional Member” means a Person who is admitted to the Company as a Member pursuant to the Act and Section 9.1, who is shown as such on the books and records of the Company, and who has not ceased to be a Member pursuant to the Act and this Agreement.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that (i) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of any other Member or its parent company or Affiliates and (ii) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of the Company or any of its Affiliates.
“Agreement” means this Fourteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC, together with the Annexes, Schedules and Exhibits hereto, as now or hereafter amended, restated, modified, supplemented, or replaced.
“Applicable Sale” is defined in Section 8.3(a).
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“Applicable Sale Notice” is defined in Section 8.3(b).
“Asset Value” means, with respect to any Asset, the adjusted basis of such Asset for federal income tax purposes; provided, however, that:
(i) the initial Asset Value of any Asset (other than cash) contributed or deemed contributed by a Member to the Company shall be the gross Fair Market Value of such Asset as determined by the Company;
(ii) the Asset Values of all Assets shall be adjusted to equal their respective gross Fair Market Values as determined by the Company as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member, in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(g); (D) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of becoming a Member; or (E) any other instance in which such adjustment is permitted under Treas. Reg. § 1.704-1(b)(2)(iv); provided, however, that any adjustment pursuant to clauses (A), (B), (D), or (E) above shall be made only if the Company determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;
(iii) the Asset Value of any Asset distributed to any Member shall be the gross Fair Market Value of such Asset on the date of distribution, as determined by the Company; and
(iv) the Asset Values of all 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 Treas. Reg. § 1.704-1(b)(2)(iv)(m); provided, however, that Asset Values shall not be adjusted pursuant to this paragraph (iv) to the extent that the Company determines that an adjustment pursuant to paragraph (ii) of this definition of Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (iv).
If the Asset Value of an Asset has been determined or adjusted to paragraph (i), (ii), or (iv) of this definition of Asset Value, then such Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such Asset for purposes of computing Net Profits and Net Losses.
“Assets” means any assets and property of the Company.
“Assumed Tax Liability” is defined in Section 3.2(b).
“Assumed Tax Rate” is defined in Section 3.2(b)(ii).
“Available Cash” means, after taking into account amounts determined by the Managing Member to be reasonably necessary or advisable to be retained by the Company to meet actual or anticipated, direct or indirect, expenses, capital investments, working capital needs or liabilities (actual, contingent or otherwise) of the Company, including the payment of any Imputed Underpayment or for the operation of the business of the Company, or to create reasonable reserves for any of the foregoing, cash (in United States dollars) of the Company that the Board of Directors determines is available for distribution to the Members.
“Bankruptcy” means, with respect to any Person, the occurrence of any event specified in Section 18-304 of the Act with respect to such Person, and the term “Bankrupt” has a correlative meaning.
“Board of Directors” means the Board of Directors of the Managing Member.
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“Business Day” means any weekday, excluding any legal holiday observed pursuant to United States federal or California State Law or regulation.
“Capital Account” is defined in Section 7.13.
“Capital Contribution” means, with respect to any Member, the aggregate amount of money and the initial Asset Value of property (other than money) in such form as may be permitted by the Act that the Member contributes (or is treated as contributing) to the Company.
“Capital Stock” means a share of any class or series of stock of the Managing Member now or hereafter authorized.
“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Member in an Exchange, multiplied by (y) the price per share, net of underwriting discounts and commissions, at which Class A Common Stock is issued by the Managing Member in an underwritten offering or block trade commenced in anticipation of the applicable Exchange (a “Liquidity Offering”); or (z) if no such Liquidity Offering occurs within sixty (60) days after the receipt of the Exchange Notice, the arithmetic average of the volume weighted average prices for a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by The Wall Street Journal or its successor, for each of the three (3) consecutive full Business Days ending on and including the last full Business Day immediately prior to the Exchange Date, in each case subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then the amount specified in clause (z) shall be determined in good faith by a committee of the Board of Directors composed of a majority of the directors of the Managing Member that do not have an interest in the Exchangeable Units and shares of Class B Common Stock being Exchanged.
“Certificate of Formation” is defined in the recitals of this Agreement.
“Certificates” means (A) any certificates representing Exchangeable Units, (B) if applicable, any stock certificates representing the shares of Class B Common Stock required to be surrendered in connection with an Exchange of Class B Common Units, and (C) such other information, documents or instruments as either the Managing Member or the Company (or the Managing Member’s transfer agent) may reasonably require in connection with an Exchange. If any certificate or other document referenced in the immediately preceding sentence is alleged to be lost, stolen or destroyed, the Exchangeable Unit Member shall cooperate with and respond to the reasonable requests of the Managing Member and the Company (or the Managing Member’s transfer agent), and if required by the Managing Member or the Company furnish an affidavit of loss and/or an indemnity against any claim that may be made against the Managing Member or the Company on account of the alleged loss, theft or destruction of such certificate or other document.
“Certificate of Designations” means with respect to Preferred Units of any series, the applicable certificate of designations setting forth the powers, including voting powers, if any, preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, of the Preferred Units of such series and fixing the number of units constituting any such series, which certificate of designations shall form part of this Agreement and shall constitute a Unit Designation. As of the date of this Agreement, the only Certificate of Designations is the Series A Senior Convertible Preferred Units Certificate of Designations.
“Class A Common Stock” means the Class A common stock of the Managing Member, $0.001 par value per share.
“Class A Common Unit” has the meaning set forth in Section 2.1(b)(i).
“Class B Common Stock” means the Class B Common Stock of the Managing Member, $0.001 par value per share.
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“Class B Common Unit” has the meaning set forth in Section 2.1(b)(ii).
“Code” means the Internal Revenue Code of 1986, as amended. All references in this Agreement to sections of the Code shall include any corresponding provision or provisions of succeeding Law.
“Common Stock” means the Class A Common Stock or the Class B Common Stock (and shall not include any additional series or class of the Managing Member’s common stock created after the date of this Agreement).
“Common Unit” means a Class A Common Unit or Class B Common Unit.
“Company” is defined in the preamble to this Agreement.
“Company Counsel” is defined in Section 13.2.
“Company Minimum Gain” has the meaning set forth as “partnership minimum gain” in Treas. Reg. § 1.704-2(b)(2) and is computed in accordance with Treas. Reg. § 1.704-2(d).
“Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with Article XI.
“Contribution Notice” is defined in Section 12.3(b).
“control” including the terms “controlled by” and “under common control with,” means with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the Board of Directors or similar body governing the affairs of such Person.
“Controlled Entity” means, as to any Person, (i) any corporation of which all the outstanding voting stock of which is owned by such Person or such Person’s Family Members or Controlled Entities, (ii) any trust, whether or not revocable, of which such Person or such Person’s Family Members or Controlled Entities are the sole beneficiaries, (iii) any partnership of which such Person or a Controlled Entity of such Person is the managing partner and in which such Person or such Person’s Family Members or Controlled Entities hold partnership interests representing all of such partnership’s capital and profits and (iv) any limited liability company of which such Person or a Controlled Entity of such Person is the manager or managing member and in which such Person or such Person’s Family Members or Controlled Entities hold Membership Interests representing all of such limited liability company’s capital and profits.
“de minimis” shall mean an amount small enough as to make not accounting for it commercially reasonable or accounting for it administratively impractical, in each case as determined by the Managing Member.
“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; and (iii) obligations of such Person as lessee under capital leases.
“Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or other period; provided, however, that if the Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be determined in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(g)(3) or Treas. Reg. § 1.704-3(d)(2), as appropriate.
“Designated Individual” is defined in Section 7.5(a)(ii).
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“Drag-Along Right” is defined in Section 8.3(a).
“Elective Exchange” is defined in Section 12.1(a).
“Elective Exchange Date” is defined in Section 12.1(b)(ii).
“Elective Exchange Notice” is defined Section 12.1(b).
“Employee” means an employee or other service provider (including a director, adviser or consultant) of the Company or an employee or other service provider (including a director, adviser or consultant) of a Subsidiary of the Company, if any.
“Equivalent Units” means Units with preferences, conversion and other rights (other than voting rights), restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption (the “Terms”) that are (a) relative to the Common Units and the other classes and series of Units that correspond to classes and series of Capital Stock, and (b) substantially the same as (or corresponding to) the Terms that any new Capital Stock or New Securities have relative to the Common Stock and other classes and series of Capital Stock or New Securities. The foregoing shall not apply to matters such as voting for members of the Board of Directors that are not applicable to the Company. In comparing the economic rights of any Preferred Stock with the economic rights of any Units, the effect of taxes may be taken into account.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange” means any Elective Exchange or Mandatory Exchange.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Exchange Consideration” shall mean, in the case of any Exchange, (x) the number of shares of Class A Common Stock that is equal to the product of the number of Exchangeable Units surrendered in the Exchange multiplied by the Exchange Rate (the “Stock Consideration”), (y) the Cash Settlement, plus, in the case of an Exchange of Class B Common Units under either sub-clause (x) or (y), an amount that is equal to $0.001 multiplied by the number of shares of Class B Common Stock included in the Exchange, or (z) a combination of the Stock Consideration and the Cash Settlement.
“Exchange Date” means an Elective Exchange Date or Mandatory Exchange Date.
“Exchange Notice” means either an Elective Exchange Notice or a Mandatory Exchange Notice.
“Exchange Rate” means, in respect of any Exchange, a ratio, expressed as a fraction, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately before the Exchange and the denominator of which shall be the number of Class A Common Units owned by the Managing Member immediately before the Exchange. On the date of this Agreement, the Exchange Rate shall be 1, subject to adjustment pursuant to Section 12.4.
“Exchangeable Unit” means each Class B Common Unit.
“Exchangeable Unit Member” means each Member, other than the Managing Member and any of its wholly owned Subsidiaries, that holds a Class B Common Unit.
“Fair Market Value” of Units or other property, means the cash price that a third party would pay to acquire all of such Units (computed on a fully diluted basis after giving effect to the exercise of any and all outstanding conversion rights, exchange rights, warrants and options) or other property, as the case may be, in an arm’s-length transaction. Unless otherwise determined by the Company, the following assumptions will be made when determining the Fair Market Value of Units:
(b) that the Company was being sold in a manner reasonably designed to solicit all possible participants and permit all interested Persons an opportunity to participate and to achieve the best value reasonably available to the Members at the time; and
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(c) that all existing circumstances are taken into account, including the terms and conditions of all agreements (including this Agreement) to which the Company is then a party or by which it is otherwise benefited or affected, determined.
“Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or by adoption) and inter vivos or testamentary trusts of which only such Person and his spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or adoption) are beneficiaries.
“Fiscal Year” has the meaning set forth in Section 7.12.
“Formation Date” is defined in the recitals of this Agreement.
“Imputed Underpayment” is defined in Section 7.6(b).
“Imputed Underpayment Share” is defined in Section 7.6(c)(i).
“Incapacity” or “Incapacitated” means, (i) as to any Member who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Member incompetent to manage his or her Person or his or her estate; (ii) as to any Member that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Member that is a partnership, the dissolution and commencement of winding up of the partnership; (iv) as to any Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company; (v) as to any trustee of a trust that is a Member, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Member, the Bankruptcy of such Member.
“Incentive Compensation Plan” means any plan, agreement or other arrangement that provides for the grant or issuance of equity or equity-based awards and that is now in effect or is hereafter adopted by the Company or the Managing Member for the benefit of any of their respective employees or other service providers (including directors, advisers and consultants), or the employees or other services providers (including directors, advisers and consultants) of any of their respective Affiliates or Subsidiaries.
“Indemnitee” means the Managing Member, each Affiliate of the Managing Member, the Tax Representative, the Designated Individual and each officer or director of the Managing Member, the Company or their respective Affiliates, in all cases in such capacity.
“Initial Members” is defined in the preamble to this Agreement.
“IPO” means the initial public offering of shares of Class A Common Stock of the Managing Member consummated on July 21, 2021.
“IPO Reorganization” means the transactions engaged in by the Managing Member and the Company in connection with the IPO, as described in the registration statement on Form S-1 filed in connection with the IPO.
“IRS” means the United States Internal Revenue Service, or, if applicable, a state or local taxing agency.
“Law” means any applicable statute, Law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any governmental authority. The term “Lawful” has a correlative meaning.
“Liquidating Event” is defined in Section 10.2(b).
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“Liquidator” is defined in Section 10.3(a).
“Liquidity Offering” is defined in the definition of Cash Settlement.
“Majority-in-Interest of the Members” means Members (excluding the Managing Member) entitled to vote on or consent to any matter holding more than fifty percent (50%) of all outstanding Units held by all Members (excluding the Managing Member) entitled to vote on or consent to such matter.
“Managing Member” is defined in the preamble to this Agreement.
“Mandatory Exchange” is defined in Section 12.1(d).
“Mandatory Exchange Date” is defined in Section 12.1(d).
“Mandatory Exchange Notice” is defined in Section 12.1(d).
“Member” means any Person named as a member of the Company on Annex A to this Agreement (as amended from time to time) and any Person admitted as an Additional Member of the Company or a Substituted Member of the Company, in each case, in such Person’s capacity as a member of the Company, until such time as such Person has ceased to be a Member.
“Member Nonrecourse Debt” has the meaning given to the term “partner nonrecourse debt” in Treas. Reg. § 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum Gain” means, with respect to each Member Nonrecourse Debt, an amount equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treas. Reg. § 1.704-2(i)(3).
“Member Nonrecourse Deductions” has the meaning given to the term “partner nonrecourse deduction” in Treas. Reg. §§ 1.704-2(i)(l) and 1.704-2(i)(2).
“Membership Interest” means, with respect to any Member, such Member’s entire undivided economic interest in the Company, including rights to allocations and distributions of the Company and any right of such Member to the return of Capital Contributions and any interest thereon.
“Minimum Exchangeable Amount” means Exchangeable Units estimated to have a fair value of any minimum amount established by the Managing Member pursuant to Section 12.1, provided that all of the Exchangeable Units held by such Exchangeable Unit Member shall never be deemed to be lower than the Minimum Exchangeable Amount.
“Net Profits” and “Net Losses” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Code section 703(a) and, where appropriate, (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code section 703(a)(1)), with the following adjustments:
(i) any income of the Company exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be added to such taxable income or loss;
(ii) any expenditures of the Company described in Code section 705(a)(2)(B) (or treated as expenditures described in Code section 705(a)(2)(B) pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be subtracted from such taxable income or loss;
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(iii) in the event the Asset Value of any Asset of the Company is adjusted in accordance with paragraph (ii) or paragraph (iii) of the definition of “Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Net Profits or Net Losses;
(iv) gain or loss resulting from any disposition of any Asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Asset Value of the Asset disposed of, notwithstanding that the adjusted tax basis of such Asset differs from its Asset Value;
(v) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year;
(vi) to the extent an adjustment to the adjusted tax basis of any Asset pursuant to Code section 734(b) is required pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases the basis of the Asset) from the disposition of the Asset and shall be taken into account for purposes of computing Net Profits and Net Losses;
(vii) notwithstanding any other provision of this definition of Net Profits and Net Losses, any items that are specially allocated pursuant to Section 6.2 and Section 6.3 shall not be taken into account in computing Net Profits or Net Losses, but shall be determined by applying rules analogous to those set forth in paragraphs (i) through (vi) above; and
(viii) where appropriate, references to Net Profits and Net Losses shall refer to specific items of income, gain, loss, deduction, and credit comprising or otherwise comprising Net Profits or Net Losses.
“New Securities” means any equity security as defined in Rule 3a11-1 under the Securities Exchange Act of 1934, as amended, excluding grants under the Incentive Compensation Plans, including (i) rights, options, warrants, or convertible or exchangeable securities that entitle the holder thereof to subscribe for or purchase, convert such securities into, or exchange such securities for, Common Stock or Preferred Stock and (ii) any Debt issued by the Managing Member that provides any of the rights described in clause (i).
“Nonrecourse Deductions” has the meaning set forth in Treas. Reg. § 1.704-2(b)(1).
“Nonrecourse Liability” has the meaning set forth in Treas. Reg. § 1.752-1(a)(2).
“Percentage Interest” means, with respect to each Member, as to any class or series of relevant Membership Interests, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Units of such class or series held by such Member and the denominator of which is the total number of Units of such class or series held by all Members. If not otherwise specified, “Percentage Interest” shall be deemed to refer to Common Units.
“Permitted Transfer” means any Transfer permitted under Article VIII.
“Permitted Transferees” means any recipient of a Permitted Transfer.
“Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, syndicate, person, trust, association, organization or other entity, including any governmental authority, and including any successor, by merger or otherwise, of any of the foregoing.
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“Policies” means the policies set by the Managing Member from time to time (including policies intended to ensure (a) administrative management matters, (b) orderly liquidity for Exchangeable Unit Members, (c) compliance with Laws restricting the trading in securities while in possession of material nonpublic information), and (d) compliance with tax Laws and Regulations.
“Preferred Stock” means shares of preferred stock of the Managing Member now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Common Stock.
“Preferred Unit” means Units designated as “Preferred Units” in the Company, including the Series A Preferred Units, having the rights and obligations specified in this Agreement and in the applicable Certificate of Designations.
“Prior Agreement” is defined in the recitals of this Agreement.
“Push Out Election” means the election under Code section 6226 (or any similar provision of state or local law) to “push out” an adjustment to the Members or former Members, including filing IRS Form 8988 (Election for Alternative to Payment of the Imputed Underpayment), or any successor or similar form, and taking any other action necessary to give effect to such election.
“Record Date” means the record date established by the Company for the purpose of determining the Members entitled to notice of or to vote at any meeting of Members or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Members for any other proper purpose, which, in the case of a record date fixed for the determination of Members entitled to receive any distribution, shall (unless otherwise determined by the Company) generally be the same as the record date established by the Managing Member for a distribution to the holders of its Capital Stock of some or all of its portion of such distribution.
“Register” is defined in Section 5.1(b)(i).
“Registration Rights Agreement” means the Eleventh Amended and Restated Registration Rights Agreement, dated as of July 21, 2021, among the Managing Member and the other persons party thereto, as the same may be amended, modified, supplemented or restated from time to time.
“Regulations” means the income tax regulations, including temporary regulations and, to the extent taxpayers are permitted to rely on them, proposed regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). References to “Treas. Reg. §” are to the sections of the Regulations.
“Related-Party Transfer” means a Transfer by a Member of all or part of its Membership Interest to any Related-Party Transferee.
“Related-Party Transferee” means, with respect to a Member, any Family Member or Controlled Entity of the Member.
“Retraction Deadline” is defined in Section 12.1(b)(iii).
“Retraction Notice” is defined in Section 12.1(b)(iii).
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Selected Courts” is defined in Section 13.8.
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“Series A Preferred Stock” means the Series A Senior Convertible Preferred Stock of the Managing Member, $0.001 par value per share, having the designations, powers (including voting powers), preferences and relative, participating, optional, special or other rights, and the qualifications, limitations and restrictions, set forth in the Series A Preferred Stock Certificate of Designations.
“Series A Preferred Stock Certificate of Designations” means the certificate of designations of the Managing Member setting forth the terms of the Series A Preferred Stock, as amended from time to time.
“Series A Preferred Units” means the Company’s Series A Senior Convertible Preferred Units having those designations, powers (including voting powers), preferences and relative, participating, optional, special or other rights, and the qualifications, limitations and restrictions, as set forth in the Series A Senior Convertible Preferred Units Certificate of Designations.
“Series A Senior Convertible Preferred Units Certificate of Designations” means the Certificate of Designations of the Company’s Series A Senior Convertible Preferred Units attached hereto as Annex B and which forms a part of this Agreement.
“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
“Substituted Member” means a Person who is admitted as a Member pursuant to Section 8.4.
“Surviving Company” is defined Section 8.7(b)(iii).
“Tax Action” means any tax-related action, decision, or determination (or failure to take an available tax-related action, decision, or determination) by or with respect to the Company or any Subsidiary of the Company, including, without limitation and for the avoidance of doubt, (i) pursuant to discretion granted to the Company or the Company under the terms of this Agreement (or any agreement related to the Company), (ii) by a Tax Representative or Designated Individual, (iii) with respect to the settlement of any tax-related audit or proceeding, (iv) with respect to preparation and filing of any tax return of the Company or any Subsidiary of the Company, (v) any modification to the allocations pursuant to Section 6.2 or Section 6.3, or (vi) any determination made by the Company pursuant to (or other action taken in accordance with) Article IV.
“Tax Distribution” is defined in Section 3.2(a).
“Tax Distribution Shortfall Amount” is defined in Section 3.2(d).
“Tax Items” is defined in Section 6.3(a).
“Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of July 21, 2021, entered into by and among the Managing Member, the Company, each of the parties thereto identified as a “Member” and each of the successors and assigns thereto, and any other similar tax receivable (or comparable) agreements entered after the date of this Agreement.
“Tax Representative” means, as applicable, and including the Designated Individual as context requires, (a) the Member or other Person (including the Company) designated as the “partnership representative” of the Company under Code section 6223, (b) the Member designated as the “tax matters partner” for the Company under Code section 6231(a)(7) (as in effect before 2018 and before amendment by Title XI of the Bipartisan Budget Act of 2015, H.R. 1314, Public Law No. 114-74), and/or (c) the Member or other Person serving in a similar capacity under any similar provisions of state, local or non-U.S. Laws, in each case, acting solely at the direction of the Company to the maximum extent permitted under Law.
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“Termination Transaction” means any direct or indirect Transfer of all or any portion of the Managing Member’s Membership Interest in connection with, or the other occurrence of, (a) merger, consolidation or other combination involving the Managing Member, on the one hand, and any other Person, on the other, (b) a sale, lease, exchange or other transfer of all or substantially all of the assets of the Managing Member not in the ordinary course of its business, whether in a single transaction or a series of related transactions, (c) a reclassification, recapitalization or change of the outstanding Class A Common Stock (other than a change in par value, or from par value to no par value, or as a result of a stock split or reverse stock split, stock dividend or similar subdivision), (d) the adoption of any plan of liquidation or dissolution of the Managing Member, or (e) a Transfer of all or any portion of the Managing Member’s Membership Interest (other than to a wholly owned Affiliate).
“Terms” is defined in the definition of “Equivalent Units.”
“Transfer” means, in respect of any Units, property or other assets, any sale, assignment, hypothecation, lien, encumbrance, transfer, distribution or other disposition thereof or of a participation therein, or other conveyance of legal or beneficial interest therein, including rights to vote and to receive dividends or other income with respect thereto, or any short position in a security or any other action or position otherwise reducing risk related to ownership through hedging or other derivative instruments, whether voluntarily or by operation of Law, or any agreement or commitment to do any of the foregoing.
“Unit” means a fractional share of the Membership Interests in the Company, which may be a Class A Common Unit, a Class B Common Unit or a Preferred Unit (including a Series A Preferred Unit), and shall be deemed to include any equity security received in connection with any recapitalization, merger, consolidation, or other reorganization, or by way of any distribution in respect of Units, in any such case, after the date of this Agreement.
“Unit Designation” is defined in Section 2.4(a).
Section 14.2 Interpretation. In this Agreement and in the exhibits hereto, except to the extent that the context otherwise requires:
(a) the headings are for convenience of reference only and shall not affect the interpretation of this Agreement;
(b) defined terms include the plural as well as the singular and vice versa;
(c) words importing gender include all genders;
(d) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been or may from time to time be amended, extended, re-enacted or consolidated and to all statutory instruments or orders made under it;
(e) any reference to a “day” or a “Business Day” means the whole of such day, being the period of 24 hours running from midnight to midnight;
(f) references to Articles, Sections, subsections, clauses, Annexes and Exhibits are references to Articles, Sections, subsections, clauses, Annexes and Exhibits to, this Agreement;
(g) the words “including” and “include” and other words of similar import shall be deemed to be followed by the phrase “without limitation”; and
(h) unless otherwise specified, references to any party to this Agreement or any other document or agreement shall include its successors and permitted assigns.
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IN WITNESS WHEREOF, the Managing Member has duly adopted and executed this Agreement as of the date first written above.
Zevia PBC, as Managing Member |
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/s/ Alexandre Ruberti |
Name: Alexandre Ruberti |
Title: Chief Executive Officer |
[Signature Page – Fourteenth A&R LLCA of Zevia LLC]
ANNEX A: INITIAL COMMON UNITS
Member | Units |
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Zevia PBC 15821 Ventura Blvd., Suite 145, Encino, CA 91436 | [●] Class A Common Units |
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[Zevia Members] | [●] Class B Common Units |
A-1
ANNEX B: CERTIFICATE OF DESIGNATIONS OF SERIES A SENIOR CONVERTIBLE PREFERRED UNITS
B-1
CERTIFICATE OF DESIGNATIONS OF
SERIES A SENIOR CONVERTIBLE PREFERRED UNITS
OF
ZEVIA LLC
WHEREAS, on or about the effective time of this Certificate of Designations, Zevia PBC (the “Corporation”) has issued to certain investors shares of a new series of its Preferred Stock designated as “Series A Senior Convertible Preferred Stock” (the “Series A Preferred Stock”) with the designations, powers (including voting powers), preferences and relative, participating, optional, special or other rights of the shares of Preferred Stock included in such series, and the qualifications, limitations and restrictions thereof as provided in a certificate of designations relating such shares (the “Series A Preferred Stock Certificate of Designations”); and
WHEREAS, pursuant to the Fourteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC (the “Company”), dated as of October 22, 2026 (as amended from time to time, the “LLC Agreement”; capitalized terms used but not defined herein shall have the respective meanings assigned thereto in the LLC Agreement), the Company may establish and issue from time to time Preferred Units in one or more series with the applicable powers, including voting powers, if any, preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, of the Preferred Units of such series as set forth in the applicable certificate of designations relating to the Preferred Units of such series and forming a part of the LLC Agreement; and
WHEREAS, on or about the effective time of this Certificate of Designation, the Corporation has contributed to the Company the proceeds from the sale of the Series A Preferred Stock in exchange for the issuance by the Company to the Corporation of a number of Series A Preferred Units (as defined below) equal to the number of shares of Series A Preferred Stock issued by the Corporation.
NOW THEREFORE BE IT RESOLVED, that, pursuant to this Certificate of Designations, the Company hereby establishes a series of Preferred Units designated as “Series A Senior Convertible Preferred Units,” which are intended to have economic terms that materially mirror those of the Series A Preferred Stock such that whenever (i) the Corporation shall pay any optional or required dividend on or make any other optional or required cash payment in respect of a share of Series A Preferred Stock, the Company shall make a corresponding cash payment at the same time and in like amount to the Corporation, as holder of the corresponding Series A Preferred Unit; and (ii) the Corporation shall issue and deliver any shares of its Class A Common Stock to a holder of a share of Series A Preferred Stock, the Company shall deliver a corresponding number of Class A Common Units at the same time and in like amount to the Corporation, as holder of the corresponding Series A Preferred Units, and that the economic terms, including with respect to liquidation preferences, dividend rights, optional and mandatory redemption rights and conversion rights of such Series A Preferred Stock shall apply mutatis mutandis to the Series A Preferred Units, all as provided as follows:
SECTION 1. Designation and Number of Units. A series of Preferred Units shall be designated as “Series A Senior Convertible Preferred Units” (the “Series A Preferred Units”). The number of authorized units constituting the Series A Preferred Units shall at all times equal the number of authorized shares of Preferred Stock of the Corporation constituting the Series A Preferred Stock and any increase or decrease in the number of authorized shares of Series A Preferred Stock shall be accompanied by a corresponding increase or decrease in the number of authorized Series A Preferred Units.
SECTION 2. Ranking. The Series A Preferred Units will rank in right of payment, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company:
(a) on a parity basis with each other class or series of Preferred Units of the Company hereafter authorized, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Preferred Units as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company;
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(b) junior to each other class or series of Units of the Company hereafter authorized, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Units as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company; and
(c) senior to the Class A Common Units, Class B Common Units and each other class or series of Units of the Company hereafter authorized, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Units as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such units, “Junior Units”).
SECTION 3. Distributions. The Corporation, in its capacity as holder of Series A Preferred Units, shall be entitled to receive cumulative distributions from the Company at the same rate, and of the same type and in the same amount, as a holder of Series A Preferred Stock is entitled to receive cumulative “Dividends” (as defined in the Series A Preferred Stock Certificate of Designations) pursuant to terms of the Series A Preferred Stock, which terms shall apply to the Series A Preferred Units mutatis mutandis. In addition, whenever the Corporation shall make or be required to make any payment in respect of a share of Series A Preferred Stock pursuant to Section 4 of the Series A Preferred Stock Certificate of Designations, the Company shall make and be required to make a corresponding payment at the same time and in like amount on a corresponding Series A Preferred Unit held by the Corporation.
SECTION 4. Liquidation Rights. Upon the occurrence of any “Liquidation” (as defined in the Series A Preferred Stock Certificate of Designations) and whenever the Corporation is restricted from making or setting aside for the holders of any “Junior Securities” (as defined in the Series A Preferred Stock Certificate of Designations) any distribution or payment out of the assets of the Corporation, the Company shall similarly be restricted and to the same extent, mutatis mutandis, from making or setting aside for holders of Junior Units any distribution or payment out of the assets of the Company. In addition, whenever the Corporation shall make a payment in respect of a share of Series A Preferred Stock pursuant to Section 5 of the Series A Preferred Stock Certificate of Designations, the Company shall make a corresponding payment, at the same time and in like amount, on a corresponding Series A Preferred Unit held by the Corporation. To the same extent that a share of Series A Preferred Stock shall not be entitled to any further payments in the event of any “Liquidation” (as defined in the Series A Preferred Stock Certificate of Designations) pursuant to Section 5 of the Series A Preferred Stock Certificate of Designations, the corresponding Series A Preferred Unit held by the Corporation shall similarly not be entitled to any further payments from the Company.
SECTION 5. Conversion. Whenever any share of Series A Preferred Stock is converted at the option of the holder into shares of Class A Common Stock of the Corporation and cash payments in accordance with Section 8 of the Series A Preferred Stock Certificate of Designations, a corresponding Series A Preferred Unit held by the Corporation shall similarly be converted into a like number of Class A Common Units and a cash payment in the same amount. At any time that the Corporation delivers to a holder of shares of Class A Common Stock and/or cash payments in settlement of the conversion of a share of Series A Preferred Stock, the Company shall at the same time deliver to the Corporation, as holder of the corresponding Series A Preferred Unit, a like number of Class A Common Units and/or a cash payment in the same amount, as applicable.
SECTION 6. Redemption. Whenever the Corporation shall redeem any share of Series A Preferred Stock in the circumstances and on the terms and conditions set forth in Section 7 of the Series A Preferred Stock Certificate of Designations, the Company shall at the same time redeem a corresponding Series A Preferred Unit held by the Corporation at a redemption price equal to the redemption price paid by the Corporation. The settlement of any such redemption of Series A Preferred Units shall occur concurrently with the corresponding redemption of the Series A Preferred Stock.
SECTION 7. Adjustments. The number of Class A Common Units deliverable upon the conversion of a Series A Preferred Unit shall at all times equal the number of shares of Class A Common Stock deliverable upon the conversion of a share of Series A Preferred Stock. Without limiting the foregoing, any adjustment to the “Conversion Price” (as defined in the Series A Preferred Stock Certificate of Designations) whether pursuant to Section 8.7 of the Series A Preferred Stock Certificate of Designations or otherwise shall automatically result in a corresponding adjustment to the conversion rate of the Series A Preferred Units such that the number of Class A Common Units deliverable upon the conversion of a Series A Preferred Unit is equal to the adjusted number of shares of Class A Common Stock deliverable upon the conversion of a share of Series A Preferred Stock.
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SECTION 8. Effect of Recapitalizations, Reclassifications and Changes of the Common Units. The provisions of Section 8.7(a) and Section 8.7(f) of the Series A Preferred Stock Certificate of Designations shall apply to the Series A Preferred Units mutatis mutandis. Without limiting the foregoing, at any time there is a change to the terms of the Series A Preferred Stock pursuant to Section 11 of the Series A Preferred Stock Certificate of Designations or otherwise, such change shall automatically result in a corresponding change to the terms of the Series A Preferred Units such that the Corporation shall at all times be entitled to receive from the Company in respect of any payment, conversion or settlement of a Series A Preferred Unit consideration of the same kind and in the same amount as the Corporation is obligated to deliver upon payment, conversion or settlement of a share of Series A Preferred Stock, mutatis mutandis.
SECTION 9. Remedies for Nonpayment. The provisions of Section 7.5(a) of the Series A Preferred Stock Certificate of Designations shall apply to the Series A Preferred Units mutatis mutandis. Without limiting the foregoing, any change to the “Dividend Rate” and the “Conversion Price” (in each case as defined in the Series A Preferred Stock Certificate of Designations) shall automatically result in corresponding changes to the terms of the Series A Preferred Units mutatis mutandis.
SECTION 10. Term. Except as expressly provided in this Certificate of Designations, the Series A Preferred Units shall not be redeemable or otherwise mature and the term of the Series A Preferred Units shall be perpetual.
SECTION 11. Creation of Additional Units. The Company may, in accordance with Section 2.4 of the LLC Agreement and without the Consent of a Majority-in-Interest of the Members, authorize and issue additional Units of the Company.
SECTION 12. No Sinking Fund. The Series A Preferred Units shall not be subject to or entitled to the operation of a retirement or sinking fund.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed this 22 day of October, 2026.
| ZEVIA LLC By: Zevia PBC, its Managing Member |
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| By: | /s/ Alexandre Ruberti |
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| Name: | Alexandre Ruberti |
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| Title: | Chief Executive Officer |
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[Signature Page to Certificate of Designations of Series A Senior Convertible Preferred Units]
Exhibit 99.1
Zevia Announces $20 Million Growth Equity Investment
Funds Strategic Reset to Drive Long-Term Value Creation
Provides Preliminary Third Quarter 2026 Results Ahead of Previous Guidance
LOS ANGELES – (BUSINESS WIRE) – October 22, 2026 – Zevia PBC (“Zevia” or the “Company”) (NYSE:ZVIA), the Company that provides naturally delicious, zero sugar better-for-you beverages, today announced that it has entered into a definitive agreement with a fund managed by GP Investments Ltd. (collectively, “GP Investments”) to issue convertible preferred stock in exchange for $20 million of growth equity to fund key strategic priorities to drive meaningful long-term value creation for shareholders.
The Company and its Board of Directors engaged Piper Sandler to thoroughly evaluate a broad range of strategic and financing alternatives over the past 12 months with a singular focus on maximizing shareholder value. Following a comprehensive review, Zevia’s management team and its Board of Directors determined that this growth equity investment represented the best path forward to accelerate shareholder value creation. The transaction strengthens Zevia’s balance sheet, enhances financial flexibility, and enables investment behind a stabilized and optimized platform, positioning the business to accelerate growth and drive long-term shareholder value. The new partnership with GP Investments also brings a long-term strategic partner and valuable industry perspective.
“This growth equity investment marks an important milestone in Zevia’s evolution and provides the capital, strategic resources, and operational expertise to accelerate our medium- and long-term growth agenda,” stated Alexandre Ruberti, Zevia’s Chief Executive Officer. “GP Investments brings a proven blueprint for building category-leading consumer businesses. The firm, founded in the early 1990s by the entrepreneurs behind ABInbev and 3G, brings that DNA blending active ownership, operational excellence, and disciplined capital allocation.”
Rodrigo Boscolo, CEO of GP Investments stated, “We are thrilled to partner with Zevia and help support accelerated profitable growth. The team’s execution strengths and clear growth plan give us confidence in Zevia’s potential to become a leading everyday alternative to traditional soda, as consumers increasingly seek healthier options without artificial sweeteners. As a healthier clean label better for you beverage alternative with a loyal consumer base and established retail presence, Zevia has a strong foundation to broaden its reach by expanding single-can availability, extending distribution and developing products for new consumption occasions.”
Highlights of Zevia’s Strategic Reset
Accelerate Product Innovation to Enhance Better-for-You Beverage Positioning
| ● | Build a diversified product portfolio that unlocks new consumption occasions and broadens appeal among Gen Z and Millennial consumers. |
| o | Accelerate consumer-led innovation that aligns with consumer preferences including functionality, enhanced taste, flavor variety, and overall brand relevance. |
| o | Extend the platform into adjacent high-growth better-for-you beverage categories to capture incremental market share and expand the addressable market. |
Scale a Digital-First Ecosystem to Increase Consumer Engagement and Demand
| ● | Deploy a data-driven digital demand-generation strategy designed to accelerate retail and e-commerce growth. |
| o | Shift marketing investment toward lower- and mid-funnel digital channels, including creators and micro-influencers, to improve conversion efficiency and customer acquisition. |
| o | Deepen cultural relevance and expand share of conversation to strengthen brand affinity, elevate engagement, and increase purchase frequency. |
Execute a Hybrid Go-to-Market Strategy to Drive Household Penetration
| ● | Increase brand visibility, distribution reach, and ease of purchase to drive discovery, trial, and repeat purchase. |
| o | Continued execution and investment behind the Company's proven West Coast direct store delivery (DSD) infrastructure. |
| o | Strategic use of third-party merchandising partners in non-DSD markets to improve brand presence. |
| o | Amplified efforts around e-commerce marketplaces to augment retail distribution. |
| o | A targeted singles strategy to drive trial, supported by optimized multi-pack offerings that increase basket size and repeat purchase across retail and digital channels. |
Details of the Strategic Investment
The investment is structured as Series A Senior Convertible Preferred Stock, convertible into Class A Common Stock at an initial conversion price equal to 120% of the volume-weighted average price over the 10 trading days preceding signing, underscoring GP Investments’ conviction in Zevia’s long-term value creation plan. The convertible preferred stock carries a 6% dividend, which will be payable in kind. GP Investments will designate a director to Zevia’s Board of Directors. Additional terms of the strategic investment by GP Investments are available in the Company’s filings with the U.S. Securities and Exchange Commission.
Piper Sandler served as financial advisor to Zevia. Ropes & Gray LLP served as legal counsel to Zevia, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to GP Investments.
“Following a transformational two-year period focused on streamlining and strengthening the business, we now have a solid foundation to execute our next phase of growth,” said Girish Satya, Chief Financial Officer of Zevia. “This financing represents a pivotal step in that evolution, creating additional balance-sheet capacity, bringing in a seasoned investor with a strong track record of success across a broad range of consumer sectors and providing the flexibility to accelerate and capitalize on the tremendous opportunity to become the most trusted and chosen better-for-you brand in every category we serve.”
Preliminary Third Quarter 2026 Outlook
The Company now expects third quarter 2026 net sales to be approximately $48 million, above its previous guidance range of $44 million to $46 million. Adjusted EBITDA is expected to be between negative $900 thousand and negative $1.0 million, above its prior guidance range of negative $3.0 million to negative $3.5 million. Zevia plans to report its third quarter 2026 financial results on November 4, 2026, after market close.
About Zevia
Zevia PBC is a Delaware public benefit corporation and Certified B Corporation offering a portfolio of naturally sweetened, better-for-you beverages made with simple, plant-based ingredients. Zevia® products are Non-GMO Project Verified, gluten-free, and vegan, and are distributed in more than 41,000 retail locations in the U.S. and Canada through a diverse network of major retailers in the grocery, drug, warehouse club, mass, natural, convenience and ecommerce channels. For more information, visit www.zevia.com.
About GP Investments
GP Investments is a global investment platform with permanent capital and deep operating expertise. Established in 1993, the firm has deployed more than $5 billion and helped build and transform over 100 companies across sectors and geographies. GP partners with public and private companies, combining active ownership, operational expertise and disciplined capital allocation to create long-term value.
GP’s consumer investment experience spans food and beverage, health and wellness, and specialty retail. Investments include Fogo de Chão, the Brazilian steakhouse brand that GP helped expand across the United States; Hypera Pharma, a leading Brazilian consumer health company; and Grupo SBF, the Brazilian sporting goods retail group that owns Centauro and is Nike’s exclusive distributor in Brazil. GP was also a founding investor in The Craftory, a $550 million permanent-capital platform whose portfolio has included Hippeas, Seed Health, Needed and Edgard & Cooper.
With offices in New York, São Paulo and Bermuda, GP works alongside management teams to strengthen operations, build brands, expand distribution and pursue strategic partnerships. Its permanent capital provides flexibility and long-term perspective to support sustainable, profitable growth. More information is available at www.gp-investments.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “anticipate,” “believe,” “consider,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “look ahead,” “may,” “on track,” “outlook,” “plan,” “potential,” “predict,” “preliminary,” “project,” “pursue,” “see,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other similar words, terms or expressions with similar meanings. Forward-looking statements should not be read as a guarantee of future performance, results or outcomes and will not necessarily be accurate indications of the times at, or by, which such performance, results or outcomes will be achieved. Forward-looking statements contained in this press release relate to, among other things, statements regarding the strategic investment by GP Investments, including the anticipated use of proceeds and the expected benefits of the investment, and of the Company’s partnership with GP Investments, preliminary third quarter 2026 results, financial guidance or outlook, long-term growth and profitability plans and opportunities, future results of operations or financial condition, strategic direction, plans and objectives of management for future operations, including branding and marketing, digital demand generation, distribution expansion, go-to-market strategy and product innovation, and expected benefits of cost efficiencies. Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, our ability to deploy the proceeds of the strategic investment effectively and to realize its anticipated benefits, the dilutive effect on our stockholders upon the conversion of the convertible preferred stock instrument and our preferred dividend obligations, the influence of GP Investments on our business and governance, including through its Board of Director’s nominee, the risk that our final third quarter 2026 results differ from our preliminary results, which are subject to the completion of our quarter-end closing and review procedures, our ability to mitigate the impact of tariffs, the ability to develop and maintain our brand, our ability to successfully execute on our strategic priorities, including product innovation, digital marketing and hybrid go-to-market initiatives, rebranding strategy, cost reduction initiatives, and to compete effectively, our ability to maintain supply chain service levels, any disruption of our supply chain or product demand, changes in the retail landscape or in sales to any key customer, changes in consumer preferences and/or behaviors, pricing factors, our ability to manage changes in our workforce, future cyber incidents and other disruptions to our information systems, failure to comply with personal data protection and privacy laws, the impact of inflation on our sales growth and cost structure such as increased commodity, packaging, transportation and freight, warehouse, labor and other input costs and other economic conditions, our reliance on contract manufacturers and service providers, competitive and governmental factors outside of our control, adverse global macroeconomic conditions, including relatively high interest rates and a recessionary environment, changes in trade policies or tariffs and other tariff-related developments, geopolitical events or conflicts, including the military conflicts in the Middle East and trade tensions between the U.S. and China, public health emergencies, our ability to maintain our listing on the New York Stock Exchange, failure to adequately protect our intellectual property rights or infringement on intellectual property rights of others, potential liabilities, and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations that may cause our business, strategy or actual results to differ materially from those expressed in the forward-looking statements. We do not intend and undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. Investors are referred to our filings with the U.S. Securities and Exchange Commission for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.
Investor Contact
Jean Fontana
Addo Investor Relations
zevia@addo.com
Source: Zevia PBC