Amends Carvana commercial agreement, restructures warrants

Root, Inc. and Carvana Group, LLC have amended their commercial agreement and restructured outstanding warrants, according to the filing. The original agreement, dating back to October 1, 2021, established an integrated automobile insurance solution for Carvana's online platform.

Under the new Warrant Cancellation and Exchange Agreement, Carvana has surrendered all five tranches of its long-term warrants, which were initially issued on October 1, 2021. These long-term warrants previously covered a significant number of shares: Long Term Tranche 1 was for 1,435,820 shares post-split, Tranche 2 for 1,491,907 shares, Tranche 3 for 1,503,428 shares, Tranche 4 for 1,452,587 shares, and Tranche 5 for 1,287,916 shares. In their place, Root has issued Carvana a new Common Stock Purchase Warrant, allowing Carvana to purchase up to 1,525,560 shares of Class A Common Stock.

This new warrant is divided into five tranches, each for 305,112 shares. The exercisability of each tranche is tied to specific conditions, including milestones related to insurance sales achieved through the integrated platform. The terms of the commercial agreement have also been updated, impacting its overall duration, the exclusivity obligations of both parties, and the commission tiers for insurance sales. The filing did not specify the previous commission tiers or exclusivity terms for direct comparison.

Further adjustments were made to the Investment Agreement and the Registration Rights Agreement to align with this warrant restructuring. The previous "short-term warrants" issued on October 1, 2021, have all expired in accordance with their original terms, and thus were not part of this restructuring. The filing notes that if fully exercised for cash, the new warrant would allow Carvana to purchase the 1,525,560 shares.