UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
___________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) December 9, 2021
Alpine 4 Holdings, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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Delaware |
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000-55205 |
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46-5482689 |
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |
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(COMMISSION FILE NO.) |
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(IRS EMPLOYEE IDENTIFICATION NO.) |
2525 E Arizona Biltmore Circle, Suite 237
Phoenix, AZ
85016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
480-702-2431
(ISSUER TELEPHONE NUMBER)
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Class A Common Stock |
ALPP |
The Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01Entry into a Material Definitive Agreement.
Item 2.01Completion of Acquisition or Disposition of Assets.
Item 3.02 Unregistered Sales of Equity Securities.
Item 8.01 Other Information.
Acquisition of DTI Services Limited Liability Company (doing business as RCA Commercial Electronics)
On December 9, 2021, Alpine 4 Holdings, Inc., a Delaware corporation (the “Parent”), and A4 Technologies, Inc., a Delaware corporation (the “Buyer”) and wholly owned subsidiary of the Parent, entered into a Membership Interest Purchase Agreement (the “MIPA”) with DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), an Indiana limited liability company (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), an Indiana limited liability company (“Direct Tech”), PMI Group, LLC, an Indiana limited liability company (“PMI”), Continu.Us, LLC, an Indiana limited liability company (“Continu.Us”), Solas Ray, LLC, an Indiana limited liability company (“Solas”), Kirby Goedde, an individual (“Goedde”), and Andrew Spence, an individual (“Spence” and with Goedde, each a “Seller” and collectively, the “Sellers”). DTI, Direct Tech, PMI, Continu.Us, and Solas are each a “Company” and collectively, the “Companies,” and also referred to in the MIPA collectively as “RCA.” Pursuant to the MIPA, the Buyer acquired all of the outstanding membership interests of the Companies from the Sellers, which is referred to herein as the “Transaction.”
Prior to the Transaction, the Sellers owned all of the issued and outstanding membership interests in the Companies (collectively, the “Acquired Interests”). Pursuant to the Transaction, the Buyer acquired all of the Acquired Interests and became the sole owner of the Companies.
The parties to the Transaction met all of the required conditions to closing on December 13, 2021, and the Transaction closed on that day.
The purchase price for the Acquired Interests (the “Purchase Price”) consisted of a cash payment (the “Cash Payment”); the issuance of promissory notes (the “Notes”); shares of the Parent’s Class A Common Stock (the “Stock Payment”); and warrants to purchase additional shares of the Parent’s Class A Common Stock (the “Warrants”), on the following terms:
-Cash Payment – The Buyer paid an aggregate of fourteen million dollars ($14,000,000) to the two sellers.
-Notes – The Buyer made and issued to the Sellers two promissory notes, one in the amount of $1,800,000 to Mr. Goedde, and the second in the amount of $200,000 to Mr. Spence. Each of the Notes accrues interest at a rate of 3.75%, with a 10-year amortization, and with a three-year balloon payment of the remaining principal. The Notes are secured by the Parent’s corporate guaranty (the “Guaranty”).
-The Stock Payment – The Parent issued to the Sellers 1,587,301 shares of the Parent’s restricted Class A Common Stock (the “Transaction Shares”) equal to $4,000,000, valued per share at the Variable Weighted Average Price averaged over the three Trading Days prior to the Closing Date (“VWAP”). The Transaction Shares were issued to the Sellers as follows: Kirby Goedde 1,428,571 Transaction Shares, equal to 90% of the total number of shares of Common Stock; and Andrew Spence 158,730 Transaction Shares, equal to 10% of the total number of shares of Common Stock. The Transaction Shares are restricted stock subject to a Rule 144 restriction against sale for 6 months, and sales of the Transaction Shares by each Seller after the 6 months restriction will be limited to 25% of the number of Transaction Shares every 90 days.
-Warrants – The Parent also issued to the Sellers time-restricted Warrants to purchase up to 396,825 additional shares of the Parent’s Class A Common Stock equal to $1,000,000 in shares (“Warrant Payment”) valued per share at the VWAP as defined above. The Warrants were issued to the Sellers as follows: Kirby Goedde: 357,143 Warrants, representing 90% of the total Warrant Payment, and Andrew Spence: 39,682 Warrants, representing 10% of the total Warrant Payment. The exercise price of the warrants is $2.52, which was the VWAP.
The Transaction Shares and the Warrants were issued in connection with the Transaction described above without registration under the 1933 Act in reliance on Section 4(a)(2) of the 1933 Act and the rules and regulations promulgated thereunder.
Business of RCA Commercial Electronics
RCA Commercial Electronics is the continuance of the US-based legacy conglomerate RCA Corporation which dominated the electronics industry in the 20th century. DTI acquired the rights to the RCA brand in 2006 to design and build products for the Hospital, Lodging, Education, and Institutional markets. In 2018, DTI acquired the entire lighting division of LG including all IP for smart lighting products, also now sold under the RCA banner.
The RCA Corporation, an American electronics company, was founded as the Radio Corporation of America in 1919 and headquartered in Indiana. It was initially a patent trust owned by General Electric (GE), Westinghouse, AT&T Corporation, and United Fruit Company. As a company whose beginnings derived from patents, it quickly became the gold standard of innovation around the world. As the dominant electronics and communications firm in the United States for over five decades, RCA was at the forefront of the rapidly growing radio industry in the early 1920s as a major manufacturer of radio receivers and the exclusive manufacturer of the first superheterodyne sets. Additionally, RCA created the first nationwide American radio network, the National Broadcasting Company (NBC). The company was also a pioneer in the introduction and development of television, both black and white and especially color. RCA became the leader in consumer satellite technology and is the legacy system that is now known as DirectTV.
In the 1970s, RCA diversified into a multinational conglomerate, and in December 1985, it was announced that GE would reacquire its former subsidiary for $6.28 billion in cash, or $66.50 per share of stock. The sale was completed the next year, and despite initial assurances that RCA would continue to operate as a mostly autonomous unit, it was revealed that GE's main motivation in purchasing RCA was to acquire the NBC Television Network which RCA owned; GE proceeded to sell off most of the other RCA assets. In 2004, the RCA brand was sold off to Technicolor SA, a French conglomerate. One of the largest TV distributors of RCA's former TV division, and one of RCA's lead engineers approached Technicolor to license the name from Technicolor to continue on the RCA brand as RCA Commercial.
Employment Agreements
Pursuant to the MIPA and in connection with the Transaction, the Parent and the Buyer entered into employment agreements with Mr. Goedde, Mr. Spence, and Mr. Kingston.
Goedde Employment Agreement
Pursuant to the employment agreement with Mr. Goedde (the “Goedde Employment Agreement”), Mr. Goedde was engaged to serve as the Senior Vice President of Technology of DTI Services Limited Liability Company, Direct Tech Sales LLC, PMI Group, LLC, Continu.us LLC, and Solas Ray, LLC (collectively, the “Subsidiaries”). Mr. Goedde will report to the COO and CEO of the Parent, and Mr. Goedde’s duties are further outlined in the Goedde Employment Agreement. The term of the Goedde Employment Agreement runs from the closing of the Transaction for an initial term of three years, and shall be automatically extended for additional one-year terms unless either Mr. Goedde or the Buyer gives notice no less than 60 days prior to the expiration of the then-current term that the Goedde Employment Agreement will not be extended. Mr. Goedde will receive an annual salary of $200,000, and may receive bonuses for the development of new products or new markets. Mr. Goedde will also receive time off, paid holidays, and other employment benefits as outlined in the Goedde Employment Agreement.
Spence Employment Agreement
Pursuant to the employment agreement with Mr. Spence (the “Spence Employment Agreement”), Mr. Spence was engaged to serve as the Senior Vice President of Sales of the Subsidiaries. Mr. Spence will report to the COO and CEO of the Parent, and Mr. Spence’s duties are further outlined in the Spence Employment Agreement. The term of the Spence Employment Agreement runs from the closing of the Transaction for an initial term of three years, and
shall be automatically extended for additional one-year terms unless either Mr. Spence or the Buyer gives notice no less than 60 days prior to the expiration of the then-current term that the Spence Employment Agreement will not be extended. Mr. Spence will receive an annual salary of $200,000, and may receive bonuses for the development of new products or new markets. Mr. Spence will also receive time off, paid holidays, and other employment benefits as outlined in the Spence Employment Agreement.
Kingston Employment Agreement
Pursuant to the employment agreement with Mr. Kingston (the “Kingston Employment Agreement”), Mr. Kingston was engaged to serve as the President of the Subsidiaries. Mr. Kingston will report to the COO and CEO of the Parent, and Mr. Kingston’s duties are further outlined in the Kingston Employment Agreement. The term of the Kingston Employment Agreement runs from the closing of the Transaction for an initial term of three years, and shall be automatically extended for additional one-year terms unless either Mr. Kingston or the Buyer gives notice no less than 60 days prior to the expiration of the then-current term that the Kingston Employment Agreement will not be extended. Mr. Kingston will receive an annual salary of $300,000, and may receive bonuses for the development of new products or new markets. Mr. Kingston will also receive time off, paid holidays, and other employment benefits as outlined in the Kingston Employment Agreement.
Promissory Notes
As discussed above, the Buyer issued promissory Notes to Mr. Goedde and Mr. Spence in the amounts of $1,800,000 and $200,000, respectively. The Parent agreed to guarantee the payment of the notes pursuant to a Corporate Guaranty which is included as an exhibit to each of the Notes. Each of the Notes accrues interest at a rate of 3.75%, with a 10-year amortization, and with a three-year balloon payment of the remaining principal. The Buyer has the right to prepay either or both Notes in full or in part without payment of any penalty or fee or premium any time before the maturity date.
The foregoing summaries of the terms of the MIPA, the Employment Agreements, and the Notes are subject to, and qualified in their entirety by the forms of the MIPA, the Employment Agreements, and the Notes, which are incorporated herein by reference.
Press Release
On December 13, 2021, the Company announced the Transaction and the agreements disclosed above in a press release. The press release is included as Exhibit 99 to this Current Report.
Item 9.01 Financial Statement and Exhibits.
(d)Exhibits.
Exhibit Number |
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Description |
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10.1 |
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10.2 |
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10.3 |
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10.4 |
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10.5 |
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10.6 |
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10.7 |
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10.8 |
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99 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
Alpine 4 Holdings, Inc.
By: /s/ Kent B. Wilson
Kent B. Wilson
Chief Executive Officer, President
(Principal Executive Officer)
Date: December 14, 2021
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
A4 Technologies, Inc.,
Alpine 4 Holdings, Inc.,
DTI Services Limited Liability Company
(doing business as RCA Commercial Electronics),
Direct Tech Sales LLC
(Also with an assumed name of RCA Commercial Electronics),
PMI Group, LLC,
Continu.Us, LLC,
Solas Ray, LLC,
and
Andrew Spence
Dated as of December 9, 2021
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TABLE OF CONTENTS
Section 1.06 Intentionally Deleted.6
Disclosure Schedule
Exhibits
A.Promissory Notes and Corporate Guarantee
B.Warrants
C.Combined Balance Sheet of Companies as of October 31st, 2021
D.Employment Agreement
a.Kirby Goedde
b.Andrew Spence
E.1. Certificate of Formation
i.DTI
ii.Direct Tech
iii.PMI
iv.Continu.Us
v.Solas
2. Operating Agreements
i.DTI
ii.Direct Tech
iii.PMI
iv.Continu.Us
v.Solas
F.Assignment and Assumption Agreements
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (this “Agreement”) is entered into as of December 9, 2021 (the “Effective Date”) by and among A4 Technologies, Inc., a Delaware corporation (the “Buyer”) and wholly owned subsidiary of Alpine 4 Holdings, Inc., a Delaware corporation (“Parent”), DTI Services Limited Liability Company (doing business as RCA Commercial Electronics), an Indiana limited liability company (“DTI”), Direct Tech Sales LLC, (also having an assumed business name of RCA Commercial Electronics), an Indiana limited liability company (“Direct Tech”), PMI Group, LLC, an Indiana limited liability company (“PMI”), Continu.Us, LLC, an Indiana limited liability company (“Continu.Us”), Solas Ray, LLC, an Indiana limited liability company (“Solas”), Kirby Goedde, an individual (“Goedde”), and Andrew Spence, an individual (“Spence” and with Goedde, each a “Seller” and collectively, the “Sellers”). DTI, Direct Tech, PMI, Continu.Us, and Solas are each a “Company” and collectively, the “Companies”, and also herein referred to collectively as “RCA”. The Buyer, Parent, the Company, DTI, Direct Tech, Continu.Us, Solas, and each of the Sellers may each be referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.Sellers collectively own 100% of the outstanding membership interests (collectively, the "Membership Interests") in DTI, Direct Tech, PMI, Continu.Us, and Solas, in the percentages set forth below.
B.Sellers wish to sell to Buyer, and Buyer wishes to purchase from Sellers, the Membership Interest, subject to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
PURCHASE AND SALE
Section 1.01Ownership; Purchase and Sale.
(a)The Sellers own the following percentages of the membership interests of DTI, Direct Tech, PMI, Continu.Us, and Solas:
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Goedde |
Spence |
DTI |
90% |
10% |
Direct Tech |
90% |
10% |
PMI |
90% |
10% |
Continu.Us |
90% |
10% |
Solas |
90% |
10% |
(b)Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 1.03), Sellers shall sell to Buyer, and Buyer shall purchase from Sellers, all of Sellers’ right, title, and interest in and to the Membership Interests, free and clear of any mortgage,
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pledge, lien, charge, security interest, claim, or other encumbrance ("Encumbrance"), for the consideration specified in Section 1.02. For purposes of this Agreement, all of the Sellers’ right, title, and interest in and to the Membership Interest shall include, but is not limited to: (a) each Seller's capital account in each of DTI, Direct Tech, PMI, Continu.Us, and Solas; (b) each Seller's right to share in the profits and losses of each of DTI, Direct Tech, PMI, Continu.Us, and Solas; (c) each Seller's right to receive distributions from each of DTI, Direct Tech, PMI, Continu.Us, and Solas; and (d) the exercise of all member rights, including the voting rights attributable to the Membership Interests.
Section 1.02Purchase Price. The aggregate purchase price (the "Purchase Price") for the Membership Interests shall consist of the following:
(a)Cash Payment. The Buyer shall pay Fourteen Million Dollars ($14,000,000) as the “Cash Payment” to the Sellers in cash, by wire transfer of immediately available funds in accordance with the wire transfer instructions set forth in Section 1.02 of the Disclosure Schedules as follows: Kirby Goedde - $12,600,000; and Andrew Spence - $1,400,000. The term "Disclosure Schedules" means the Disclosure Schedules delivered by Seller and Company concurrently with the execution, closing, and delivery of this Agreement.
(b)Note Payment. In addition to the Cash Payment, the Buyer will make and issue to the Sellers promissory notes (the “Notes”) in the principal amount of $1,800,000 for Kirby Goedde and $200,000 for Andrew Spence, with interest accruing at 3.75%, with a 10-year amortization and each with a three year balloon payment of remaining principal. The Notes shall be secured by Parent’s corporate guaranty (the “Guaranty”). The Notes and Guaranty shall be materially similar to that in Exhibit A.
(c)Stock Payment. In addition to the Cash Payment and the Note, the Parent will issue to the Sellers, as the “Stock Payment,” shares of the Parent’s Class A common stock, par value $0.0001 per share (the “Common Stock”) equal to $4,000,000, to be valued per share at the Variable Weighted Average Price averaged over the three Trading Days prior to the Closing Date. (“Trading Days” shall mean any day on which the Common Stock is traded on the Nasdaq exchange.) The shares of Common Stock will be issued to the Sellers as follows: Kirby Goedde - 90% of the total number of shares of Common Stock; and Andrew Spence - 10% of the total number of shares of Common Stock. The Common Stock will be restricted stock subject to a rule 144 restriction against sale for 6 months, and sales of the shares of Common Stock by each Seller after the 6 months restriction will be limited to 25% of the number of shares of Common Stock every 90 days.
(d)Warrant Payment. In addition to the Cash Payment, the Notes, and the Stock Payment, the Parent will issue to the Sellers time-restricted warrants (“Warrants”) entitling the Sellers to purchase from Parent its Common Stock equal to $1,000,000 in shares (“Warrant Payment”) to be valued per share at the Variable Weighted Average Price averaged over the three Trading Days prior to the Closing Date. The Warrant Payment will be issued to the Sellers as follows: Kirby Goedde: 90% of the total Warrant Payment, and Andrew Spence: 10% of the total Warrant Payment. The Warrants shall be materially similar to that in Exhibit B.
Section 1.03Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place simultaneously with the execution of this Agreement on the date of this Agreement (the "Closing Date") at the offices of Kirton McConkie, PC, 50 East South Temple Street, Suite 400, Salt Lake City, UT 84111, or such other place or manner as the parties may mutually agree upon. The
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consummation of the transactions contemplated by this Agreement shall be deemed to occur at 12:01 a.m. Eastern Daylight Time on the Closing Date.
Section 1.04Transfer Taxes. All sales, use, excise, value added, goods and services, transfer, recording, documentary, registration, conveyancing and other similar Taxes that may be imposed on the sale and transfer of the Membership Interests (including any stamp, duty or other Tax chargeable in respect of any instrument transferring property and any recording fees or expenses payable in connection with the sale and transfer of any property) (together with any and all penalties, interest and additions to Tax with respect thereto, “Transfer Taxes”) shall be borne by Seller. Sellers shall pay, and shall reimburse Buyer for, any sales, use, or Transfer Taxes, documentary charges, recording fees, or similar taxes, charges, fees, or expenses, if any, that become due and payable as a result of the transactions contemplated by this Agreement.
Section 1.05Additional Agreements. The Parties agree to the following additional terms:
(a)Working Capital and No Material Adverse Change. The Parties understand and agree that this Agreement represents a purchase of the Membership Interests in DTI, Direct Tech, PMI, Continu.Us, and Solas by the Buyer, and that all assets of each of DTI, Direct Tech, PMI, Continu.Us, and Solas, including accounts receivables which are not specifically excluded herein, inventory, and work in progress shall be sold in the sale. Additionally, the Parties understand and agree that no other material adverse change to RCA’s working capital (consisting of AR-AP + inventory + WIP -Inventory loan) as of the balance sheet date of October 31, 2021 which is attached hereto as Exhibit C. The Sellers also agree that as of the Closing Date, the Company’s operating bank account shall be transferred to Buyer. It is understood by Buyer that the Company’s bank account sweeps at the end of business each business day to pay the line of credit with BMO. Therefore, the bank account effectively has no funds at close of business each day.
(b)Employment Agreement. Concurrently with the execution of this Agreement, and as a material inducement for the Parties to enter into this Agreement and consummate the purchase of Sellers’ membership interest, Goedde and Spence shall enter into the employment agreements materially similar to those in Exhibits D-1 and D-2 respectively (“Employment Agreements”), which shall become effective as of the Closing Date.
(c)Asset and Liability Identification. The Parties understand and agree that all working capital (consisting of AR – AP + inventory + WIP - Inventory loan) as of October 31, 2021, and that, except as provided herein, all assets of each of DTI, Direct Tech, PMI, Continu.Us, and Solas at closing shall remain with DTI, Direct Tech, PMI, Continu.Us, and Solas, respectively, the ownership of each of which is being acquired by the Buyer pursuant to this Agreement, and that all long-term liabilities which are included in the balance sheet (other than deferred rent) of each of DTI, Direct Tech, PMI, Continu.Us, and Solas will be paid off on or prior to the Closing Date. The Parties acknowledge and agree the inventory loan with BMO Harris shall remain with RCA. The Parties agree that all tangible personal property of Goedde and Spence residing at RCA’s offices shall be retained by them, and that such Sellers will submit to the Buyer in advance of the Closing a list of all such personal property that such Sellers will retain.
(d)Non-Compete. The Parties understand and agree that the purchase of the Membership Interests by the Buyer contemplates and is subject to each of the Sellers agreeing not to compete in the industries served by any of DTI, Direct Tech, PMI, Continu.Us, or Solas for a period of five (5) years after the closing of the purchase of the Membership Interests. The Parties
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further acknowledge and agree that if the Buyer defaults in its obligations under this Agreement and/or any agreement entered into as part of the transaction herein, and such default is not remedied within ninety (90) days from the date of such default, then the Sellers will automatically be released from the non-compete provisions set forth in this section.
(e)Right of offset against Note for unpaid royalties. In addition to Buyer’s rights and protections under the Indemnity provisions of Section 6 below, Sellers acknowledge and agree that in the event that Technicolor, a French société anonyme, duly organized and existing under the laws of France (the "Technicolor") makes a claim of breach, non-payment, under-payment, late payment, or any other default pursuant to the RCA License Agreement (the "RCA License Agreement") by and between Technicolor and DTI (discussed in more detail in Section 2.15 below) relating to periods prior to the Closing Date, then the Buyer shall have the right to reduce the amount of the Note’s remaining principal and interest in an amount equal to the aggregate amounts claimed by Technicolor pursuant to the RCA License Agreement and to pay such amounts to Technicolor toward satisfaction of such claims. This offset is subject to the limitation if indemnification contained in Article VI herein.
(f)Condition to Obligations of Buyer to Close. The obligations of Buyer to consummate the transactions to be performed by it in connection with the Closing is, among other conditions, subject to:
(i) Company’s current CEO Jeff Kingston having entered into an employment agreement with Company that is satisfactory to Buyer, and
(ii)The members representing 100% of the membership interest in each Company have held a meeting pursuant to the terms of Section 5.2 of their Operating Agreement, and with respect to the transfer of membership interests contemplated under the Agreement, have agreed by unanimous consent as follows: (a) that all Conditions of Transfer as defined in Section 6.1.1 of their Operating Agreement have been met, (b) that the Company waives its right to exercise its Purchase Option under Section 6.1.4 of the Operating Agreement (the “Waiver”), and (c) that such Waiver and the unanimous consent of the members meets the conditions of Section 6.2 of the Operating Agreement whereby Buyer shall be admitted as an unrestricted member of Company with all the same rights and privileges accorded to its current members under the Operating Agreement
(g)Claims Against Others. Buyer shall assign at Closing all of the Companies’ claims against Chinese brokers subject to the failed PPE to Kirby and Spence.
Section 1.06Intentionally Deleted.
REPRESENTATIONS AND WARRANTIES OF SELLERS AND COMPANY
Each Seller, individually and collectively, and each of the Companies represents and warrants to Buyer that the statements contained in this ARTICLE II are true and correct as of the date hereof. All exceptions to the representations and warranties below must be disclosed in the Disclosure Schedules. For purposes of this Article II, "Sellers’ knowledge," "knowledge of a Seller," “Companies’ knowledge,”
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“knowledge of a Company” and any similar phrases shall mean the actual knowledge of such Seller or, in the case of Company, actual knowledge of an officer of Company.
Section 2.01Capacity of Seller and Company; Enforceability. Each Seller and Company has full capacity to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by such Seller or Company, and (assuming due authorization, execution, and delivery by Buyer) this Agreement and the documents to be delivered hereunder constitute legal, valid, and binding obligations of such Seller or Company, enforceable against such Seller or Company in accordance with their respective terms.
Section 2.02Organization, Authority, and Qualification of the Company.
(a)DTI is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Indiana. DTI has full limited liability company power and authority to own, operate, or lease the properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted. Section 2.02 of the Disclosure Schedules sets forth each jurisdiction in which DTI is licensed or qualified to do business, and DTI is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.
(b)Direct Tech is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Indiana. Direct Tech has full limited liability company power and authority to own, operate, or lease the properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted. Section 2.02 of the Disclosure Schedules sets forth each jurisdiction in which Direct Tech is licensed or qualified to do business, and Direct Tech is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.
(c)PMI is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Indiana. PMI has full limited liability company power and authority to own, operate, or lease the properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted. Section 2.02 of the Disclosure Schedules sets forth each jurisdiction in which PMI is licensed or qualified to do business, and PMI is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.
(d)Continu.Us is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Indiana. Continu.Us has full limited liability company power and authority to own, operate, or lease the properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted. Section 2.02 of the Disclosure Schedules sets forth each jurisdiction in which Continu.Us is licensed or qualified to do business, and Continu.Us is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.
(e)Solas is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Indiana. Solas has full limited liability company power
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and authority to own, operate, or lease the properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted. Section 2.02 of the Disclosure Schedules sets forth each jurisdiction in which Solas is licensed or qualified to do business, and Solas is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.
Section 2.03No Conflicts; Consents. Except as provided in Disclosure Schedule 2.03, the execution, delivery, and performance by each Seller of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the Governing Documents of any of the Companies; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule, or regulation applicable to such Seller or any of the Companies (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration, or modification of, any obligation or loss of any benefit under any contract or other instrument to which Seller or any of the Companies is a party; (d) result in any violation, conflict with, or constitute a default under the Company's Governing Documents, including the certificate of formation of any of the Companies filed with the Indiana Secretary of State on their respective dates of formation, as amended or restated to date, and the company agreement of any of the Companies (each a "Company Agreement"); or (e) result in the creation or imposition of any Encumbrance on the Membership Interests. No consent, approval, waiver, or authorization is required to be obtained by any Seller or any of the Companies from any Person in connection with the execution, delivery, and performance by such Seller of this Agreement and the consummation of the transactions contemplated hereby. For purposes of this Agreement: (i) the term "Governing Documents" means, with respect to an entity, the entity's articles of incorporation, articles of organization, certificate of incorporation, certificate of formation, charter, bylaws, operating agreement, company agreement, or other certificates, instruments, documents, or agreements adopted to govern the formation or internal affairs of the entity, as applicable, including any and all amendments or restatements to such documents; and (ii) the term "Person" means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association, or other entity.
Section 2.04Legal Proceedings. To the Knowledge of Seller and Company, and except as specifically provided in Schedule 2.04 herein,, there is no claim, action, suit, proceeding, or governmental investigation (collectively, "Action") of any nature pending or, to any Seller's knowledge, threatened: (a) against or by any Seller relating to or affecting the Membership Interests; or (b) against or by any Seller or any of the Companies that challenges or seeks to prevent, enjoin, or otherwise delay the transactions contemplated by this Agreement. To the knowledge of Seller and Company, there is no Action against any current, former member, manager, or employee of any of the Companies with respect to which any of the Companies has, or is reasonably likely to have, an indemnification obligation. To the knowledge of Seller and Company, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
Section 2.05Customers and Suppliers: With respect to each of the three (3) fiscal years most recently completed prior to the date hereof, Schedule 2.05 lists the five largest (by dollar volume) Customers during each such period (showing the dollar volume for each) (the “Major Customers”). Such customers specifically exclude customers which purchased PPE per the Buyer’s request. Except as disclosed in Schedule 2.05, to the Knowledge of Company and Seller, no event has occurred and no condition or circumstance exists that would reasonably be expected to materially and adversely affect the relations of Companies with any Major Customer or any supplier. No Major Customer or supplier has notified Companies of plans to terminate or materially alter its business relations with the Business, either as a result of the transactions contemplated by this Agreement or otherwise, or to enter bankruptcy or liquidate.
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Section 2.06Financial Statements. The Companies’ books and records maintained in the ordinary course of business (including all financial records, business records, customer lists, and records pertaining to products or services delivered to customers) are kept according to GAAP standards, not any other set of accounting standards such as those for public companies (eg, PCAOB). With reference to GAAP standards, Companies’ books and records: (i) are complete and correct in all material respects and all transactions to which it is or has been a party are accurately reflected therein in all material respects on an accrual basis, (ii) reflect all material discounts, returns and allowances granted by it with respect to the periods covered thereby, (iii) have been maintained in accordance with reasonable business practices in its industry, (iv) form the basis for the Financial Statements with respect to the Companies and (v) reflect in all material respects the assets, liabilities, financial position, results of operations and cash flows of it on an accrual basis. To the Sellers’ and Companies’ knowledge, the Companies management information systems are adequate for the preservation of relevant information and the preparation of accurate reports.
Section 2.07Fraud. To the Knowledge of the Companies and the Sellers, there are no events of fraud, whether or not material, that involve management or other employees of the Companies who have a significant role in the Companies’ financial reporting and/or relate to the Business.
Section 2.08Undisclosed Liabilities. To the Knowledge of Seller and Company, none of the Companies has any liabilities, obligations, or commitments of any nature whatsoever, whether asserted, known, absolute, accrued, matured, or otherwise, except: (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date; (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date; and (c) those disclosed herein in Schedule 2.08. The balance sheet of each of the Companies as of October 31st, 2021 is referred to herein as the "Balance Sheet" and the date thereof as the "Balance Sheet Date."
Section 2.09Investment Purpose. Each Seller is acquiring the shares of the Parent’s Common Stock attributable to such Seller solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Each Seller acknowledges that the issuance of the shares of Common Stock are restricted under Rule 144, and have not been registered under the Securities Act of 1933, as amended, or registered under any state securities laws, and that the shares of Common Stock may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable, as well as other restrictions as contained herein.
Section 2.10Ownership of Membership Interest.
(f)Each Seller is the sole legal, beneficial, record, and equitable owner of his or her respective Membership Interests, and agrees to deliver their membership interest to Buyer free and clear of all Encumbrances whatsoever other than the Company’s Operating Agreement, in the amounts set forth in Section 1.01 above.
(g)The Membership Interests were issued in compliance with applicable laws. The Membership Interests were not issued in violation of the Governing Documents of any of the Companies or any other agreement, arrangement, or commitment to which Seller or any of the Companies is a party and are not subject to or in violation of any preemptive or similar rights of any Person.
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(h)Other than the Governing Documents of the Companies, there are no voting trusts, proxies, or other agreements or understandings in effect with respect to the voting or transfer of any part of the Membership Interests.
Section 2.11 Governing Documents. Attached hereto as Exhibits E1 and Exhibits E2 are the Certificates of Existence and the Operating Agreements of each of the Companies, which documents are in full force and effect and are the only documents in effect with respect to the matters described therein.
Section 2.12Brokers. No broker, finder, or investment banker is entitled to any brokerage, finder's, or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of any Buyer.
Section 2.13Non-Foreign Status. No Seller is a foreign person as defined in Treasury Regulation Section 1.1446(f)-1(b)(4) or Section 1.1445-2.
Section 2.14Compliance with Laws; Permits.
(a)To each Seller’s and Company’s knowledge, each Company has complied, and is now complying, with all statutes, laws, ordinances, regulations, rules, codes, treaties, or other requirements of any governmental authority applicable to it or its business, properties, or assets.
(b)To each Seller’s and Company’s knowledge, all permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights obtained, or required to be obtained, from governmental authorities (collectively, “Permits”) that are required for the Companies to conduct its business have been obtained and are valid and in full force and effect. Section 2.14(b) of the Disclosure Schedules list all current Permits issued to the Companies and no event has occurred that would reasonably be expected to result in the revocation or lapse of any such Permit.
Section 2.15 Taxes. To each Seller’s and Company’s knowledge: (a) all tax returns (including information returns) required to be filed on or before the Closing Date by each of the Companies have been timely filed; (b) all such tax returns are true, complete, and correct in all respects; (c) all taxes due and owing by any of the Companies (whether or not shown on any tax return) have been timely paid; (d) all deficiencies asserted, or assessments made, against any of the Companies as a result of any examinations by any taxing authority have been fully paid; and (e) there are no pending or threatened actions by any taxing authority.
Section 2.16 RCA License Agreement.
In addition to the various representations and warranties set forth above, DTI represents and warrants as follows:
(i)DTI is a party to that RCA Trademark License Agreement (the “RCA License Agreement”) by and between Technicolor, a French societe anonyme, duly organized and existing under the laws of France (the “Licensor”) and DTI, with an effective date of January 1, 2020, pursuant to which the Licensor granted to DTI certain rights to use the Trademarks (defined in the RCA License Agreement) in connection with the manufacture of the Licensed Products (defined in the RCA License Agreement) and with the further promotion, distribution, sale, supply, and offer for sale of the Licensed Products in the Territory (defined in the RCA License Agreement).
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(ii)The RCA License Agreement remains in full force and effect as of the Effective Date of this Agreement, and DTI has no knowledge of any intention of either DTI or the Licensor to terminate the RCA License Agreement.
(iii)DTI has received all necessary approvals and authorizations from the Licensor and any other necessary party relating to the change of control resulting from the purchase of the Membership Interests of DTI pursuant to this Agreement to enable the RCA License Agreement to continue in full force and effect following the Closing.
Section 2.17 No Other Representations or Warranties. Except for the representations and warranties contained in this ARTICLE II, neither Seller or Company nor any Person acting on behalf of any Seller or Company has made or makes any other express or implied representation or warranty, either written or oral, on behalf of any Seller or Company
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained in this ARTICLE III are true and correct as of the date hereof. For purposes of this Article III, "Buyer's knowledge," "knowledge of Buyer," and any similar phrases shall mean the actual or constructive knowledge of any director or officer of Buyer, after due inquiry.
Section 3.01Organization and Authority of Buyer; Enforceability. Buyer is a corporation validly existing and in good standing under the laws of the state of Delaware. Buyer has full corporate power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, delivery, and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer and, assuming due authorization, execution, and delivery by Seller, this Agreement and the documents to be delivered hereunder constitute legal, valid, and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.
Section 3.02No Conflicts; Consents. The execution, delivery, and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the certificate of incorporation, bylaws, or other governing documents of Buyer; or (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule, or regulation applicable to Buyer. No consent, approval, waiver, or authorization is required to be obtained by Buyer from any Person in connection with the execution, delivery, and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby.
Section 3.03Investment Purpose. Buyer is acquiring the Membership Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the transfer of the Membership Interests has not been registered under the Securities Act of 1933, as amended, or registered under any state securities laws, and that the Membership Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.
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Section 3.04Brokers. No broker, finder, or investment banker is entitled to any brokerage, finder's, or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.
Section 3.05Legal Proceedings. There is no Action of any nature pending or, to Buyer's knowledge, threatened against or by Buyer that challenges or seeks to prevent, enjoin, or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
CLOSING DELIVERABLES
Section 4.01Seller's Deliverables. At the Closing, each Seller shall deliver to Buyer the following:
(a)For each Company, an assignment and assumption agreement materially similar to that in Exhibit F-1 and F-2 (the "Assignment and Assumption"), executed respectively by each Seller.
(b)Copies of the approval for the change of control for the Technicolor RCA Trademarks License Agreement, and for any other contract to which company is a party which requires counterparty approval of change in control.
Section 4.02Buyer's Deliverables. At the Closing, Buyer shall deliver the following to Sellers:
(a)The Cash Payment as set forth in Section 1.02(a).
(b)The Notes and Guarantee
(c)The Warrants.
(d)Evidence from the Parent’s transfer agent of the issuance (in book form) of the shares of Common Stock constituting the Stock Payment to the Sellers in the amounts as calculated in Section 1.02(c).
(e)The Assignment and Assumptions, executed by Buyer.
(f)Signed Employment Agreement for both Goedde and Spence.
TAX MATTERS
Section 5.01Allocation of Company Income and Loss. Buyer and Seller shall request that the Company allocate all items of Company income, gain, loss, deduction, or credit attributable to the
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Membership Interest for the taxable year of the Closing based on a closing of the Company's books as of the Closing Date.
INDEMNIFICATION
Section 6.01Survival of Representations and Covenants. All representations, warranties, covenants, and agreements contained herein and all related rights to indemnification shall survive the Closing.
Section 6.02Indemnification by Sellers. Subject to the other terms and conditions of this ARTICLE VI, for a period of three (3) years after Closing, each Seller shall defend, indemnify, and hold harmless Buyer, its Affiliates, and their respective shareholders, directors, officers, and employees from and against:
(a)all claims, judgments, damages, liabilities, settlements, losses, costs, and expenses, including reasonable attorneys' fees and disbursements (collectively, a "Loss"), arising from or relating to any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or any document delivered in connection herewith;
(b)any Loss arising from or relating to any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Seller pursuant to this Agreement or any document delivered in connection herewith;
(c)the amount of any imputed underpayment (as described in Section 6225 of the Code) imposed on the Company and allocable to Seller or attributable to the Membership Interest during taxable years, or portions thereof, when Seller owned the Membership Interest (the "Seller Ownership Period"), or any other income tax assessment imposed on the Company under any similar provision of state or local law and allocable to the Seller or attributable to the Membership Interest during the Seller Ownership Period;
(d)any and all liabilities, penalties, fines, obligations, judgements, claims, government action, demands, administrative proceedings, suits and other legal proceedings, together with any fees and expenses associated therewith (including, without limitation, costs of investigation, attorney’s fee, expert’s fess and expenses associated with investigation of claims, testing, assessment and remedial actions (collectively the “Claims”) relating to periods of time prior to the Closing Date and related to the payment, underpayment, or nonpayment of royalties, net profit interests, and any other burdens on or affecting the proper accounting or payment to parties for their interests therein.
(e)Any claim made by any third party against Buyer or Parent or any Company by reason of the actions of any Seller and/or any Company prior to the Closing Date.
For purposes of this Agreement, "Affiliate" of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or
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otherwise. The cap for total indemnification of the Sellers to any party, collectively, is the amount of remaining unpaid principal on the Notes.
Section 6.03Indemnification by Buyer. Subject to the other terms and conditions of this ARTICLE VI, Buyer shall defend, indemnify, and hold harmless each Seller from and against all Losses arising from or relating to:
(a)any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document delivered in connection herewith; or
(b)any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Buyer pursuant to this Agreement or any document delivered in connection herewith.
(c)Any claim made by any third party against Sellers by reason of the actions of Buyer or Parent or any Company on or after the Closing Date.
Section 6.04Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "Indemnified Party") shall promptly provide written notice of such claim to the other party (the "Indemnifying Party"). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a Person who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations hereunder. The Indemnifying Party shall not settle any Action without the Indemnified Party's prior written consent, which consent shall not be unreasonably withheld or delayed.
Section 6.05Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE VI, the Indemnifying Party shall satisfy its obligations within 30 business days of such agreement or final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such 30-business day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to but excluding the date such payment has been made at a rate per annum equal to 5% per annum. Such interest shall be calculated daily on the basis of a 365-day year and the actual number of days elapsed, without compounding.
Section 6.06Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by applicable law.
Section 6.07Effect of Investigation. Except for matters Seller disclosed on the Disclosure Schedules, Buyer's right to indemnification or other remedy based on the representations, warranties, covenants, and agreements of Seller contained herein will not be affected by any investigation conducted by Buyer, or any knowledge acquired by Buyer at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or agreement.
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Section 6.08Cumulative Remedies. The rights and remedies provided in this ARTICLE VI are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.
MISCELLANEOUS
Section 7.01Expenses. Except as otherwise provided in Section 1.04, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
Section 7.02Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
Section 7.03Notices. 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 facsimile or email of a PDF document (with confirmation of transmission) 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/[ORDINAL NUMBER]] day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 7.03):
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Kirby Goedde |
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[GOEDDE ATTORNEY] |
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Andrew Spence |
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with a copy to: |
[SPENCE ATTORNEY] |
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(which shall not constitute notice) |
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Kirton McConkie, PC |
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Email: plloyd@kmclaw.com |
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Attention: C. Parkinson Lloyd |
Section 7.04Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 7.05Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify the Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 7.06Entire Agreement. This Agreement and the documents to be delivered hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the terms and provisions in the body of this Agreement and those in the documents delivered in connection herewith, the Exhibits, and the Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the terms and provisions in the body of this Agreement shall control.
Section 7.07Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
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Section 7.08No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.09Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto.
Section 7.10Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
Section 7.11Governing Law. All matters arising out of or relating to this Agreement and all related documents shall be governed by and construed in accordance with the internal laws of the State of Indiana without giving effect to any choice or conflict of law provision or rule (whether of the State of Indiana or any other jurisdiction).
Section 7.12Submission to Jurisdiction. Any legal suit, action, proceeding, or dispute arising out of or related to this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of Indiana in each case located in the City of Indianapolis and County of Marion, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, proceeding, or dispute.
Section 7.13Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 7.14Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Section 7.15Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the Effective Date.
SELLERS |
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/s/ Kirby Goedde |
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Kirby Goedde |
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/s/ Andrew Spence |
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Andrew Spence |
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COMPANIES |
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DTI Services Limited Liability Company |
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Direct Tech Sales, LLC |
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PMI Group, LLC |
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Continu.Us, LLC |
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Solas Ray, LLC |
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PARENT |
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Alpine 4 Holdings, Inc. |
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BUYER |
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A4 Technologies, Inc. |
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on December 9, 2021 by and between A4 Technologies, Inc, a Delaware corporation (“Company”), and Kirby R. Goedde (“Executive”). Alpine 4 Holdings, Inc., a Delaware corporation (“ALPP”) is a party hereto for certain limited purposes under the Agreement.
WHEREAS, concurrent with the execution of this agreement, the Company, ALPP and other parties thereto are entering into a Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date hereof; and
WHEREAS, following the closing of the transaction contemplated under the Purchase Agreement (the “Closing”), the Company desires to employ the Executive as Senior Vice President of Technology of its Subsidiaries as set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as follows:
1.Definitions.
1.1.“Subsidiaries” means DTI Services Limited Liability Company, Direct Tech Sales LLC, PMI Group, LLC, Continu.us LLC, and Solas Ray, LLC.
1.2.“Cause” means Executive (i) is convicted of a felony or other crime involving dishonesty towards the Company or any of its Subsidiaries or material misuse of property of the Company or any of its Subsidiaries; (ii) engages in willful misconduct or fraud with respect to the Company or any of its Subsidiaries or any of their customers or suppliers or an intentional act of dishonesty or disloyalty in the course of Executive’s employment; (iii) materially breaches any written policy of the Company, including the Company’s policies prohibiting unlawful harassment, discrimination or retaliation, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (iv) refuses to perform Executive’s material obligations under this Agreement (except in connection with a Disability) as reasonably directed by the Board, which failure, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (v) misappropriates one or more of the Company’s or any of its Subsidiaries business opportunities or material assets; or (vi) breaches Sections 4.5, 4.6, 5, or 6 hereof which breach, if capable of being cured, is not cured within 10 days of written notice thereof has been delivered to Executive; or (vii) materially breaches this Agreement, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive. In each such case where notice and cure is required (i.e. pursuant to clauses (iii), (iv), (vi) and (vii)), such notice shall describe the condition giving rise to “Cause” with reasonable specificity. The Company may allow Executive an extension of time to cure a breach if the Board, in its sole discretion, determines that such extension is appropriate under the circumstances.
1.3.“Good Reason” means the occurrence of any of the following events without the written consent of Executive: (i) a material diminution of Executive’s duties or the assignment to Executive of duties that are inconsistent in any substantial respect with the position, authority or responsibilities associated with Executive’s position as set forth pursuant to Section 2.1, other than any such authorities, duties or responsibilities assigned at any time which are by their nature, or which are identified at the time of assignment, as being temporary or short-term; (ii) the Company’s requiring Executive to be based at a location which is fifty (50) or more miles from the Subsidiaries’ corporate headquarters located at 5935 West 84th Street, Indianapolis, IN, 46278; or (iii) a material breach by the Company of its obligations pursuant to this Agreement, the Membership Interest Purchase Agreement entered of even date herewith, and/or the Promissory Note entered of even date herewith, which such breach goes uncured after notice and a fifteen (15) day opportunity to cure.
2.DUTIES; TERM; TERMINATION.
2.1.Duties. Subject to the terms of this Agreement, Company hereby engages Executive to perform, and Executive shall perform, such duties (the “Duties”) as specified in Exhibit A attached hereto, as amended from time to time in writing signed by Company and Executive (the “Scope of Duties”). Executive shall report directly to the Company COO, CEO, or Board of Directors (the “Board”), or its designee, of ALPP.
2.2.Term. Executive’s employment under the terms and conditions of this Agreement shall commence on day of the Closing of the Purchase Agreement (the “Commencement Date”). Such employment shall continue for an initial term of three (3) years following the Commencement Date (the “Initial Term”). The term of Executive’s employment under this Agreement shall be automatically extended on each anniversary of the Commencement Date following the expiration of the Initial Term for an additional one-year term (each, a “Renewal Term”). The Initial Term and any Renewal Terms are collectively referred to as the “Term,” and the Term shall continue as described in the preceding sentence, unless either Executive or the Company has given written notice to the other no less than sixty (60) days prior to the expiration of the Term that the Term shall not be so extended. Notwithstanding the above, the Term shall earlier expire upon the effective date of termination of Executive’s employment pursuant to Section 2.3 hereof.
2.3.Termination of Employment, including special cases of Cause or Good Reason. The Term and Executive’s employment hereunder may be terminated:
(a)by the Company for Cause, effective on the date on which a written notice to such effect (a “Cause Termination Notice”) is delivered to Executive;
(b)by the Company at any time without Cause (which includes an election by the Company not to renew the Term pursuant to Section 2.2 hereof, the written notice of which shall be deemed a notice of termination without Cause of Executive’s employment hereunder), effective sixty (60) days following the date on which a written notice to such effect is delivered to Executive or, at the election of the Company in its sole discretion, such earlier date as is reasonably designated by the Company, provided that the Company shall continue to pay Executive’s Base Compensation for sixty (60) days following such notice of termination.
(c)by Executive for Good Reason provided, however, no event shall be deemed to be “Good Reason” unless the Executive shall have given the Company written notice thereof specifically describing the event giving rise to “Good Reason” and allowing the Company a period of fifteen (15) days from the date of receipt of the notice to remedy such event, and the Company shall have failed to cure such event within such period. Notwithstanding the foregoing, in no case will an event give rise to “Good Reason” hereunder unless within thirty (30) days after the expiration of the period provided in Executive’s notice to the Company to remedy said event, Executive shall have actually terminated his employment with the Company by giving written notice of resignation for failure of the Company to remedy such event.
2.4.Agreement Termination. This Agreement and the Term shall terminate upon the effective date of employment termination pursuant to section 2.3. Notwithstanding the foregoing, the terms of Section 4.5, Section 4.6, Section 5, and Section 6 of this Agreement will survive termination of this Agreement and Executive, ALPP, and the Company shall remain bound thereby, except as otherwise provided herein. Termination of this Agreement will constitute termination of the Executive’s Duties, and will also terminate Company’s obligation to pay the compensation as provided in Section 3.1, except as otherwise provided herein, and that accrued vacation will be paid in accordance with state law and Company's customary procedures.
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3.COMPENSATION; PAYMENTS; EXPENSES; BENEFITS.
3.1.Compensation.
(a)Salary. During the Term, Company will pay Executive at the base annual rate of $200,000 as a salaried-exempt position. Executive shall be paid in accordance with the Company’s normal payroll cycle.
(b)A performance review shall be conducted annually, which might provide a basis for an increase in salary during the remainder of the Term.
3.2.Expenses. Company will reimburse Executive for all “out of pocket” expenses incurred in rendering the Duties.
3.3.Other Benefits and Compensation.
(a)New Product/New Markets Bonus: A bonus may be paid in either Alpine 4 Class A Common Stock or Cash for new product and/or markets development. Executive will participate in the bonus at the level set by the CEO of Alpine 4. The bonus shall be paid annually 60 days after the close of the year.
(b)120 hours of paid time off per year with Executive’s first-year pro-rated at 60 hours. Beginning January 1, 2022, Executive will receive 120 hours with additional vacation as outlined in the employee handbook.
(c)Paid Holidays as outlined in the employee handbook.
(d)Offer to participate in the company sponsored health and welfare and 401(k) plans. Medical, dental and vision premiums are paid 100% by the company for Executive and any legal dependents.
(e)Executive shall also participate in the Company Employee Stock Option Plan (ESOP) at an Executive level with 100,000 shares vested over two years.
4.COVENANTS, REPRESENTATIONS AND WARRANTIES. Executive hereby covenants, represents and warrants to Company that:
4.1.Performance of Duties. The Duties shall be performed in a professional and workmanlike manner and in accordance with industry standards. Any deliverables provided by Executive shall comply with the requirements set forth in the Scope of Duties. Executive shall not subcontract or assign Duties without Company’s prior written consent.
4.2.No Conflicts. Executive’s performance of all the terms of this Agreement and Executive’s work for Company does not and will not breach any invention, assignment or proprietary information agreement with any former employer or other party, or create any conflict of interest with anyone. Executive will not enter into any other agreement with any other person or entity, either written or oral, in conflict with the terms of this Agreement.
4.3.Limitation on Disclosures. Executive will not disclose to Company or use for the benefit of Company any confidential information of a third party or derived from sources other than engagement with Company or association with Company during the Term.
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4.4.No Conflicts of Interest. During the term of this Agreement Executive will not, without the prior written approval of the Company, directly or indirectly participate in or assist any business that is a current or potential supplier, customer or competitor of Company; provided, however, that Executive may invest in such companies to an extent not exceeding one percent (1%) of the total outstanding shares in each of one or more such companies whose shares are listed on a national securities exchange or quoted daily by NASDAQ or NYSE.
4.5.Non-Compete. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges and agrees that during the Term with the Company and its Relationship with the Subsidiaries, Executive shall become familiar with the Subsidiaries’ trade secrets and with other Confidential Information and that Executive’s services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries, and therefore, Executive agrees that, during his or her employment with the Company and for a period of five (5) years after the termination of the Term and this Agreement (the “Non-Compete Period”), Executive shall not directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant or otherwise) own any interest in, operate, invest in, manage, control, participate in, consult with, render services for (alone or in association with any person or entity), in any manner engage in any business activity on behalf of a Competing Business within any geographical area in which the Subsidiaries operates or plan to operate. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation. For purposes of this paragraph, “Competing Business” means a business similar to that of the Subsidiaries, including and type of business which Subsidiaries have plans to engage in, or any business which Subsidiaries has engaged in during Executive’s Relationship with the Subsidiaries. If Company defaults in its obligations under this Agreement, the Purchase Agreement, or the Promissory Note entered of even date herewith, and such default is not remedied within ninety (90) days from the date of such default, then the Executive will automatically be released from the non-compete provisions set forth in this section.
4.6.Non-Solicitation. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, in order to enable Company to maintain a stable work force and to operate its business, Executive shall not, without the prior written consent of the Company, either directly or indirectly solicit, induce, recruit or encourage any of Company’s Executives, employees, contractors, vendors or customers to leave their employment or engagement with Company, either for Executive or for any other person or entity. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, Executive shall not directly or indirectly, solicit, take away, divert or attempt to divert, the business or patronage of any clients or customers, of the Subsidiaries, for the purpose of providing services that materially compete with the services provided by the Subsidiaries at the time of Executive’s termination. For purposes of this Agreement, “services provided by the Subsidiaries” includes not only services which the Subsidiaries then provides and/or markets or sells, but also those which it is in the process of researching and/or developing, at the time of Executive’s termination, and/or as to which, at the time of Executive’s termination, the Subsidiaries have a strategic business plan in place to research, develop and/or market at some time in the future, but only if such strategic business plan is known to Executive The restrictions on soliciting or providing services to customers of the Subsidiary apply to: (i) any customer or customer contact of the Subsidiaries with whom Executive has had any business relations within twelve (12) months of the date of this termination; and (ii) any customer or customer contact who was a customer or customer contact of the Subsidiaries on the date of Executive’s termination from the Company or during the twelve (12) month period prior to such termination, or who was a prospective customer or customer contact of the Subsidiaries with whom the Subsidiaries had actually met with, or had written (including, without limitation, via email) or telephonic communications with, during said period(s).
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5.1.Definitions.
(a)Relationship (“Relationship”) shall mean any employment, consulting, officer, manager, board member, affiliate, collaborative, or founder relationship between the Executive and Company and/or Subsidiaries, whether commenced prior to, upon or after the date of this Agreement.
(b) Confidential information (“Confidential Information”) shall mean all information which Executive may produce, obtain, or otherwise learn of during the Relationship, including but not limited to all information of Company and Subsidiaries that existed before and up to the Closing of the Purchase Agreement, that is either acknowledged as confidential by Company and/or Subsidiaries, or whose confidential nature is reasonably apparent based on the circumstances under which the information was produced, obtained, or otherwise learned of or made available, including without limitation: (a) all matters of a technical nature, such as trade secrets, intellectual property, know-how, formulae, computer programs, source code, object code, machine code, routines, algorithms, software and documentation, secret processes or machines, inventions and research projects; (b) all matters of a business nature, such as information about costs, profits, markets, sales, customers, business contacts, suppliers, and Executives (including salary, evaluation, and other personnel data); (c) all plans for further development; and (d) any other information of a similar nature. Although certain information or technology may be generally known in the relevant industry, the fact that Company and its Subsidiaries use it, and how Company and Subsidiaries use it, may not be so known, and therefore is Confidential Information. Furthermore, the fact that various fragments of information or data may be generally known in the relevant industry does not mean that the manner in which Company and Subsidiaries combines them and the results obtained thereby are so known, and in such instance that fact also is Confidential Information. For the avoidance of doubt, Confidential Information may include proprietary or confidential information of any third party disclosed to Company or its Subsidiaries under condition of confidentiality. Notwithstanding the foregoing, “Confidential Information” does not include information that Executive can demonstrate by documentation: (i) was already known to Executive prior to the Relationship; (ii) was or is independently developed by Executive without reference to or use of any Confidential Information; (iii) was or becomes generally known by the public not as a result of any inaction or action of the Executive.
5.2.Obligations of Confidentiality and Limited Use. Executive shall regard and preserve as confidential, and shall not divulge to unauthorized persons or use, or authorize or encourage persons who are under Executive’s direction or supervision to use, for any unauthorized purposes, either during or after the term of the engagement, any Confidential Information. Executive shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties for any purpose (including, without limitation, any purpose harmful to or competitive with the interests of the Company or its Subsidiaries) without the specific direction or consent of a duly authorized representative of the ALPP. Executive acknowledges and agrees that some of the Confidential Information may be considered “material non-public information” for purposes of the federal securities laws (“Insider Information”) and that the Executive will abide by all securities laws relating to the handling of and acting upon Insider Information.
5.3.Exceptions to Obligations of Non-Disclosure. Notwithstanding the foregoing nondisclosure obligations:
(a)Executive may disclose Confidential Information to the extent required by law or valid order of a court or other governmental authority; provided that Executive first notifies the
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Company and provides Company a copy of said demand, order or subpoena in sufficient time to allow the Company to seek an appropriate protective order; and
(b)Pursuant to 18 U.S.C. Section 1833(b), Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
5.4.Return of Confidential Information. Upon request by Company, Executive agrees to promptly deliver or destroy (as instructed by Company) to Company the original and any copies of Confidential Information, whether physical or digital.
6.1.Ownership of Inventions. Executive will promptly disclose in writing to the Company all inventions (whether or not patentable), ideas, improvements, techniques, know-how, concepts, processes, discoveries, developments, designs, formulae, artwork, content, software programs, other copyrightable works, trade secrets, technology, algorithms, data and any other work product created, conceived or developed by Executive (whether alone or jointly with others) during the Relationship, or which relate to any Confidential Information (collectively, “Inventions”). Executive hereby agrees that all Inventions and all right, title and interest therein, including without limitation patents, patent rights, copyrights, mask work rights, trade secret rights and other intellectual property rights anywhere in the world (collectively “Rights”), are the sole property of Company. Executive agrees to assign and hereby assigns to Company all Inventions and all Rights on a perpetual, worldwide and royalty-free basis. Executive agrees to perform all acts deemed necessary or desirable by Company to permit and assist it in evidencing, perfecting, obtaining, maintaining, defending and enforcing its Rights and/or Executive’s assignment with respect to such Inventions in any and all countries. Such acts may include without limitation the execution of documents and assistance or cooperation in legal proceedings. Executive hereby irrevocably designates and appoints Company and its duly authorized officers and agents as Executive’s agents and attorneys-in-fact to act for and on behalf and instead of Executive to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive.
6.2.Ownership of Confidential Information. As between the parties, Executive hereby agrees that all Confidential Information and rights therein are the sole property of Company. Executive agrees to assign and hereby assigns to Company any rights or interests Executive may have or acquire in Confidential Information and all rights relating to all Confidential Information.
6.3.Moral Rights. Executive hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Executive may have in any Inventions. Executive also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Executive may have in any Inventions, even after termination of Executive’s employment with the Company. For purposes of this Agreement, the term “Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.
6.4.License to Preexisting IP. Executive agrees not to use or incorporate into Inventions any intellectual property developed by any third party, or any intellectual property of Executive that has not been assigned to Company (collectively “Preexisting IP”), without benefit of license to do so. In the event Executive uses or incorporates Executive’s Preexisting IP into Inventions, Executive hereby grants to Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide right,
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with the right to sublicense through multiple levels of sublicensees, to use, reproduce, distribute, create derivative works of, publicly perform and publicly display in any medium or format, whether now known or later developed, such Preexisting IP incorporated or used in Inventions. However, in no event will Executive incorporate into Inventions any software code licensed under the GNU GPL or LGPL or any similar “open source” license, without written permission to do so from ALPP. Executive represents and warrants that Executive has an unqualified right to license to Company all of their Preexisting IP as provided in this Section 6.4.
7.1.Severability; Amendment; Waiver. If the application of any provision or provisions of this Agreement to any particular facts or circumstances is held to be invalid or unenforceable by any court of competent jurisdiction, then the validity and enforceability of such provision or provisions as applied to any other particular facts or circumstances and the validity of other provisions of this Agreement will not in any way be affected or impaired thereby. This Agreement may not be amended or waived except in a written amendment executed by Executive and an officer of Company and ALPP. The waiver of any one default will not waive any other default.
7.2.Governing Law. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of Indiana, without giving effect to any conflicts of laws principles that require the application of the law of a different jurisdiction. The prevailing party will be entitled to reasonable attorneys’ fees and expenses.
7.3.Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth in the signature block below or such other address as either party may specify in writing.
7.4.Assignment. Neither party shall assign this Agreement without the prior written consent of the other party. This Agreement will inure to the benefit of and will be binding upon the successors and permitted assigns of the parties, including without limitation any entity acquiring all or substantially all of the assets or voting stock of Company and any wholly-owned U.S. subsidiary of Company.
7.5.Interpretation. The language of this Agreement will be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. The section headings in this Agreement are solely for convenience and will not be considered in its interpretation.
7.6.Counterparts; Exhibits. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one instrument. The exhibits referred to herein and annexed hereto are hereby incorporated into and made a part of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, for the purpose of binding the parties hereto to this Agreement, the parties or their duly authorized representatives have signed their names on the dates indicated below. Executive understands that, notwithstanding the date of execution or acceptance by Company, this Agreement is effective as of the Effective Date.
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A4 TECHNOLOGIES, INC. |
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ALPINE 4 HOLDINGS, INC.. |
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Executive |
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/s/ Kirby R. Goedde |
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Kirby R. Goedde |
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SIGNATURE PAGE TO EXECUTIVE AGREEMENT
EXHIBIT A
SCOPE OF DUTIES
Duties
Reporting Relationships: This position will report directly to the COO and CEO of ALPP and the Company. ALPP may add new direct reports as needed.
Executive:
1)Use his best endeavors to promote the interests and reputation of the Company giving at all times the full benefit of his knowledge, expertise and skill;
2)Identify and evaluate new technology developments and gauges applicability to business processes and market demand by providing the solution that satisfies business goals and objectives. Advise to the Board and the management committee on technology investments and initiatives;
3)Assess new and emerging technologies to determine application to existing or new products;
4)Advise the management committee on strategic technology research and development plan and lead the technology research and development (“R&D”) activities of the Company, including but not limited to planning the short and long-range technology strategies, formulation of execution strategy, decision of hiring competent R&D staff, provision of guidance to subordinates, supervise R&D laboratory activities and coordination with relevant departments of the Company in formulating and executing R&D strategies.
5)Recommends, develops, integrates, administers, and evaluates policies, procedures, standards, equipment and design needed to provide flexible and cost-effective technologies to the marketplace;
6)Develop technology standards and protocols in line with industry “best practice”;
7)Oversee production efficiency at each stage of production cycle and supervise detailed execution of the production plan;
8)Direct and supervise the daily technology matters;
9)Organize and manage product development, product management, and the technology departments;
10)Other responsibilities as reasonably requested by the Company and its board of directors;
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on December 9, 2021 by and between A4 Technologies, Inc, a Delaware corporation (“Company”), and Andrew Spence (“Executive”). Alpine 4 Holdings, Inc., a Delaware corporation (“ALPP”) is a party hereto for certain limited purposes under the Agreement.
WHEREAS, concurrent with the execution of this agreement, the Company, ALPP and other parties thereto are entering into a Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date hereof; and
WHEREAS, following the closing of the transaction contemplated under the Purchase Agreement (the “Closing”), the Company desires to employ the Executive as Senior Vice President of Sales of its Subsidiaries as set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as follows:
1.Definitions.
1.1.“Subsidiaries” means DTI Services Limited Liability Company, Direct Tech Sales LLC, PMI Group, LLC, Continu.us LLC, and Solas Ray, LLC.
1.2.“Cause” means Executive (i) is convicted of a felony or other crime involving dishonesty towards the Company or any of its Subsidiaries or material misuse of property of the Company or any of its Subsidiaries; (ii) engages in willful misconduct or fraud with respect to the Company or any of its Subsidiaries or any of their customers or suppliers or an intentional act of dishonesty or disloyalty in the course of Executive’s employment; (iii) materially breaches any written policy of the Company, including the Company’s policies prohibiting unlawful harassment, discrimination or retaliation, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (iv) refuses to perform Executive’s material obligations under this Agreement (except in connection with a Disability) as reasonably directed by the Board, which failure, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (v) misappropriates one or more of the Company’s or any of its Subsidiaries business opportunities or material assets; or (vi) breaches Sections 4.5, 4.6, 5, or 6 hereof which breach, if capable of being cured, is not cured within 10 days of written notice thereof has been delivered to Executive; or (vii) materially breaches this Agreement, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive. In each such case where notice and cure is required (i.e. pursuant to clauses (iii), (iv), (vi) and (vii)), such notice shall describe the condition giving rise to “Cause” with reasonable specificity. The Company may allow Executive an extension of time to cure a breach if the Board, in its sole discretion, determines that such extension is appropriate under the circumstances.
1.3.“Good Reason” means the occurrence of any of the following events without the written consent of Executive: (i) a material diminution of Executive’s duties or the assignment to Executive of duties that are inconsistent in any substantial respect with the position, authority or responsibilities associated with Executive’s position as set forth pursuant to Section 2.1, other than any such authorities, duties or responsibilities assigned at any time which are by their nature, or which are identified at the time of assignment, as being temporary or short-term; (ii) the Company’s requiring Executive to be based at a location which is fifty (50) or more miles from the Subsidiaries’ corporate headquarters located at 5935 West 84th Street, Indianapolis, IN, 46278; or (iii) a material breach by the Company of its obligations pursuant to this Agreement, the Membership Interest Purchase Agreement entered of even date herewith, and/or the Promissory Note entered of even date herewith, which such breach goes uncured after notice and a fifteen (15) day opportunity to cure.
Execution Copy
2.DUTIES; TERM; TERMINATION.
2.1.Duties. Subject to the terms of this Agreement, Company hereby engages Executive to perform, and Executive shall perform, such duties (the “Duties”) as specified in Exhibit A attached hereto, as amended from time to time in writing signed by Company and Executive (the “Scope of Duties”). Executive shall report directly to the Company COO, CEO, or Board of Directors (the “Board”), or its designee, of ALPP.
2.2.Term. Executive’s employment under the terms and conditions of this Agreement shall commence on day of the Closing of the Purchase Agreement (the “Commencement Date”). Such employment shall continue for an initial term of three (3) years following the Commencement Date (the “Initial Term”). The term of Executive’s employment under this Agreement shall be automatically extended on each anniversary of the Commencement Date following the expiration of the Initial Term for an additional one-year term (each, a “Renewal Term”). The Initial Term and any Renewal Terms are collectively referred to as the “Term,” and the Term shall continue as described in the preceding sentence, unless either Executive or the Company has given written notice to the other no less than sixty (60) days prior to the expiration of the Term that the Term shall not be so extended. Notwithstanding the above, the Term shall earlier expire upon the effective date of termination of Executive’s employment pursuant to Section 2.3 hereof.
2.3.Termination of Employment, including special cases of Cause or Good Reason. The Term and Executive’s employment hereunder may be terminated:
(a)by the Company for Cause, effective on the date on which a written notice to such effect (a “Cause Termination Notice”) is delivered to Executive;
(b)by the Company at any time without Cause (which includes an election by the Company not to renew the Term pursuant to Section 2.2 hereof, the written notice of which shall be deemed a notice of termination without Cause of Executive’s employment hereunder), effective sixty (60) days following the date on which a written notice to such effect is delivered to Executive or, at the election of the Company in its sole discretion, such earlier date as is reasonably designated by the Company, provided that the Company shall continue to pay Executive’s Base Compensation for sixty (60) days following such notice of termination.
(c)by Executive for Good Reason provided, however, no event shall be deemed to be “Good Reason” unless the Executive shall have given the Company written notice thereof specifically describing the event giving rise to “Good Reason” and allowing the Company a period of fifteen (15) days from the date of receipt of the notice to remedy such event, and the Company shall have failed to cure such event within such period. Notwithstanding the foregoing, in no case will an event give rise to “Good Reason” hereunder unless within thirty (30) days after the expiration of the period provided in Executive’s notice to the Company to remedy said event, Executive shall have actually terminated his employment with the Company by giving written notice of resignation for failure of the Company to remedy such event.
2.4.Agreement Termination. This Agreement and the Term shall terminate upon the effective date of employment termination pursuant to section 2.3. Notwithstanding the foregoing, the terms of Section 4.5, Section 4.6, Section 5, and Section 6 of this Agreement will survive termination of this Agreement and Executive, ALPP, and the Company shall remain bound thereby, except as otherwise provided herein. Termination of this Agreement will constitute termination of the Executive’s Duties, and will also terminate Company’s obligation to pay the compensation as provided in Section 3.1, except as otherwise provided herein, and that accrued vacation will be paid in accordance with state law and Company's customary procedures.
Execution Copy 2
3.COMPENSATION; PAYMENTS; EXPENSES; BENEFITS.
3.1.Compensation.
(a)Salary. During the Term, Company will pay Executive at the base annual rate of $200,000 as a salaried-exempt position. Executive shall be paid in accordance with the Company’s normal payroll cycle.
(b)A performance review shall be conducted annually, which might provide a basis for an increase in salary during the remainder of the Term.
3.2.Expenses. Company will reimburse Executive for all “out of pocket” expenses incurred in rendering the Duties.
3.3.Other Benefits and Compensation.
(a)New Product/New Markets Bonus: A bonus may be paid in either Alpine 4 Class A Common Stock or Cash for new product and/or markets development. Executive will participate in the bonus at the level set by the CEO of Alpine 4. The bonus shall be paid annually 60 days after the close of the year.
(b)120 hours of paid time off per year with Executive’s first-year pro-rated at 60 hours. Beginning January 1, 2022, Executive will receive 120 hours with additional vacation as outlined in the employee handbook.
(c)Paid Holidays as outlined in the employee handbook.
(d)Offer to participate in the company sponsored health and welfare and 401(k) plans. Medical, dental and vision premiums are paid 100% by the company for Executive and any legal dependents.
(e)Executive shall also participate in the Company Employee Stock Option Plan (ESOP) at an Executive level with 100,000 shares vested over two years.
4.COVENANTS, REPRESENTATIONS AND WARRANTIES. Executive hereby covenants, represents and warrants to Company that:
4.1.Performance of Duties. The Duties shall be performed in a professional and workmanlike manner and in accordance with industry standards. Any deliverables provided by Executive shall comply with the requirements set forth in the Scope of Duties. Executive shall not subcontract or assign Duties without Company’s prior written consent.
4.2.No Conflicts. Executive’s performance of all the terms of this Agreement and Executive’s work for Company does not and will not breach any invention, assignment or proprietary information agreement with any former employer or other party, or create any conflict of interest with anyone. Executive will not enter into any other agreement with any other person or entity, either written or oral, in conflict with the terms of this Agreement.
4.3.Limitation on Disclosures. Executive will not disclose to Company or use for the benefit of Company any confidential information of a third party or derived from sources other than engagement with Company or association with Company during the Term.
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4.4.No Conflicts of Interest. During the term of this Agreement Executive will not, without the prior written approval of the Company, directly or indirectly participate in or assist any business that is a current or potential supplier, customer or competitor of Company; provided, however, that Executive may invest in such companies to an extent not exceeding one percent (1%) of the total outstanding shares in each of one or more such companies whose shares are listed on a national securities exchange or quoted daily by NASDAQ or NYSE.
4.5.Non-Compete. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges and agrees that during the Term with the Company and its Relationship with the Subsidiaries, Executive shall become familiar with the Subsidiaries’ trade secrets and with other Confidential Information and that Executive’s services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries, and therefore, Executive agrees that, during his or her employment with the Company and for a period of five (5) years after the termination of the Term and this Agreement (the “Non-Compete Period”), Executive shall not directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant or otherwise) own any interest in, operate, invest in, manage, control, participate in, consult with, render services for (alone or in association with any person or entity), in any manner engage in any business activity on behalf of a Competing Business within any geographical area in which the Subsidiaries operates or plan to operate. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation. For purposes of this paragraph, “Competing Business” means a business similar to that of the Subsidiaries, including and type of business which Subsidiaries have plans to engage in, or any business which Subsidiaries has engaged in during Executive’s Relationship with the Subsidiaries. If Company defaults in its obligations under this Agreement, the Purchase Agreement, or the Promissory Note entered of even date herewith, and such default is not remedied within ninety (90) days from the date of such default, then the Executive will automatically be released from the non-compete provisions set forth in this section.
4.6.Non-Solicitation. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, in order to enable Company to maintain a stable work force and to operate its business, Executive shall not, without the prior written consent of the Company, either directly or indirectly solicit, induce, recruit or encourage any of Company’s Executives, employees, contractors, vendors or customers to leave their employment or engagement with Company, either for Executive or for any other person or entity. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, Executive shall not directly or indirectly, solicit, take away, divert or attempt to divert, the business or patronage of any clients or customers, of the Subsidiaries, for the purpose of providing services that materially compete with the services provided by the Subsidiaries at the time of Executive’s termination. For purposes of this Agreement, “services provided by the Subsidiaries” includes not only services which the Subsidiaries then provides and/or markets or sells, but also those which it is in the process of researching and/or developing, at the time of Executive’s termination, and/or as to which, at the time of Executive’s termination, the Subsidiaries have a strategic business plan in place to research, develop and/or market at some time in the future, but only if such strategic business plan is known to Executive The restrictions on soliciting or providing services to customers of the Subsidiary apply to: (i) any customer or customer contact of the Subsidiaries with whom Executive has had any business relations within twelve (12) months of the date of this termination; and (ii) any customer or customer contact who was a customer or customer contact of the Subsidiaries on the date of Executive’s termination from the Company or during the twelve (12) month period prior to such termination, or who was a prospective customer or customer contact of the Subsidiaries with whom the Subsidiaries had actually met with, or had written (including, without limitation, via email) or telephonic communications with, during said period(s).
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5.1.Definitions.
(a)Relationship (“Relationship”) shall mean any employment, consulting, officer, manager, board member, affiliate, collaborative, or founder relationship between the Executive and Company and/or Subsidiaries, whether commenced prior to, upon or after the date of this Agreement.
(b) Confidential information (“Confidential Information”) shall mean all information which Executive may produce, obtain, or otherwise learn of during the Relationship, including but not limited to all information of Company and Subsidiaries that existed before and up to the Closing of the Purchase Agreement, that is either acknowledged as confidential by Company and/or Subsidiaries, or whose confidential nature is reasonably apparent based on the circumstances under which the information was produced, obtained, or otherwise learned of or made available, including without limitation: (a) all matters of a technical nature, such as trade secrets, intellectual property, know-how, formulae, computer programs, source code, object code, machine code, routines, algorithms, software and documentation, secret processes or machines, inventions and research projects; (b) all matters of a business nature, such as information about costs, profits, markets, sales, customers, business contacts, suppliers, and Executives (including salary, evaluation, and other personnel data); (c) all plans for further development; and (d) any other information of a similar nature. Although certain information or technology may be generally known in the relevant industry, the fact that Company and its Subsidiaries use it, and how Company and Subsidiaries use it, may not be so known, and therefore is Confidential Information. Furthermore, the fact that various fragments of information or data may be generally known in the relevant industry does not mean that the manner in which Company and Subsidiaries combines them and the results obtained thereby are so known, and in such instance that fact also is Confidential Information. For the avoidance of doubt, Confidential Information may include proprietary or confidential information of any third party disclosed to Company or its Subsidiaries under condition of confidentiality. Notwithstanding the foregoing, “Confidential Information” does not include information that Executive can demonstrate by documentation: (i) was already known to Executive prior to the Relationship; (ii) was or is independently developed by Executive without reference to or use of any Confidential Information; (iii) was or becomes generally known by the public not as a result of any inaction or action of the Executive.
5.2.Obligations of Confidentiality and Limited Use. Executive shall regard and preserve as confidential, and shall not divulge to unauthorized persons or use, or authorize or encourage persons who are under Executive’s direction or supervision to use, for any unauthorized purposes, either during or after the term of the engagement, any Confidential Information. Executive shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties for any purpose (including, without limitation, any purpose harmful to or competitive with the interests of the Company or its Subsidiaries) without the specific direction or consent of a duly authorized representative of the ALPP. Executive acknowledges and agrees that some of the Confidential Information may be considered “material non-public information” for purposes of the federal securities laws (“Insider Information”) and that the Executive will abide by all securities laws relating to the handling of and acting upon Insider Information.
5.3.Exceptions to Obligations of Non-Disclosure. Notwithstanding the foregoing nondisclosure obligations:
(a)Executive may disclose Confidential Information to the extent required by law or valid order of a court or other governmental authority; provided that Executive first notifies the
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Company and provides Company a copy of said demand, order or subpoena in sufficient time to allow the Company to seek an appropriate protective order; and
(b)Pursuant to 18 U.S.C. Section 1833(b), Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
5.4.Return of Confidential Information. Upon request by Company, Executive agrees to promptly deliver or destroy (as instructed by Company) to Company the original and any copies of Confidential Information, whether physical or digital.
6.1.Ownership of Inventions. Executive will promptly disclose in writing to the Company all inventions (whether or not patentable), ideas, improvements, techniques, know-how, concepts, processes, discoveries, developments, designs, formulae, artwork, content, software programs, other copyrightable works, trade secrets, technology, algorithms, data and any other work product created, conceived or developed by Executive (whether alone or jointly with others) during the Relationship, or which relate to any Confidential Information (collectively, “Inventions”). Executive hereby agrees that all Inventions and all right, title and interest therein, including without limitation patents, patent rights, copyrights, mask work rights, trade secret rights and other intellectual property rights anywhere in the world (collectively “Rights”), are the sole property of Company. Executive agrees to assign and hereby assigns to Company all Inventions and all Rights on a perpetual, worldwide and royalty-free basis. Executive agrees to perform all acts deemed necessary or desirable by Company to permit and assist it in evidencing, perfecting, obtaining, maintaining, defending and enforcing its Rights and/or Executive’s assignment with respect to such Inventions in any and all countries. Such acts may include without limitation the execution of documents and assistance or cooperation in legal proceedings. Executive hereby irrevocably designates and appoints Company and its duly authorized officers and agents as Executive’s agents and attorneys-in-fact to act for and on behalf and instead of Executive to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive.
6.2.Ownership of Confidential Information. As between the parties, Executive hereby agrees that all Confidential Information and rights therein are the sole property of Company. Executive agrees to assign and hereby assigns to Company any rights or interests Executive may have or acquire in Confidential Information and all rights relating to all Confidential Information.
6.3.Moral Rights. Executive hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Executive may have in any Inventions. Executive also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Executive may have in any Inventions, even after termination of Executive’s employment with the Company. For purposes of this Agreement, the term “Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.
6.4.License to Preexisting IP. Executive agrees not to use or incorporate into Inventions any intellectual property developed by any third party, or any intellectual property of Executive that has not been assigned to Company (collectively “Preexisting IP”), without benefit of license to do so. In the event Executive uses or incorporates Executive’s Preexisting IP into Inventions, Executive hereby grants to Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide right,
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with the right to sublicense through multiple levels of sublicensees, to use, reproduce, distribute, create derivative works of, publicly perform and publicly display in any medium or format, whether now known or later developed, such Preexisting IP incorporated or used in Inventions. However, in no event will Executive incorporate into Inventions any software code licensed under the GNU GPL or LGPL or any similar “open source” license, without written permission to do so from ALPP. Executive represents and warrants that Executive has an unqualified right to license to Company all of their Preexisting IP as provided in this Section 6.4.
7.1.Severability; Amendment; Waiver. If the application of any provision or provisions of this Agreement to any particular facts or circumstances is held to be invalid or unenforceable by any court of competent jurisdiction, then the validity and enforceability of such provision or provisions as applied to any other particular facts or circumstances and the validity of other provisions of this Agreement will not in any way be affected or impaired thereby. This Agreement may not be amended or waived except in a written amendment executed by Executive and an officer of Company and ALPP. The waiver of any one default will not waive any other default.
7.2.Governing Law. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of Indiana, without giving effect to any conflicts of laws principles that require the application of the law of a different jurisdiction. The prevailing party will be entitled to reasonable attorneys’ fees and expenses.
7.3.Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth in the signature block below or such other address as either party may specify in writing.
7.4.Assignment. Neither party shall assign this Agreement without the prior written consent of the other party. This Agreement will inure to the benefit of and will be binding upon the successors and permitted assigns of the parties, including without limitation any entity acquiring all or substantially all of the assets or voting stock of Company and any wholly-owned U.S. subsidiary of Company.
7.5.Interpretation. The language of this Agreement will be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. The section headings in this Agreement are solely for convenience and will not be considered in its interpretation.
7.6.Counterparts; Exhibits. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one instrument. The exhibits referred to herein and annexed hereto are hereby incorporated into and made a part of this Agreement.
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IN WITNESS WHEREOF, for the purpose of binding the parties hereto to this Agreement, the parties or their duly authorized representatives have signed their names on the dates indicated below. Executive understands that, notwithstanding the date of execution or acceptance by Company, this Agreement is effective as of the Effective Date.
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ALPINE 4 HOLDINGS, INC. |
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Executive |
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EXECUTION COPYSIGNATURE PAGE TO EXECUTIVE AGREEMENT
EXHIBIT A
SCOPE OF DUTIES
Duties
Reporting Relationships: This position will report directly to the COO and CEO of ALPP and the Company. ALPP may add new direct reports as needed.
Executive:
Generally:
1)Use his best endeavors to promote the interests and reputation of the Company giving at all times the full benefit of his knowledge, expertise and skill;
2)Promote company products and services
3)Develop plans and strategies
4)Manage sales teams
5)Organize and maintain sales operations
6)Manage sales budget
7)Take charge of recruiting and hiring sales staff
8)Motivate the sales team to achieve workplace goals
9)Develop sales training programs
10)Monitor market and competitor activity
11)Improve customer satisfaction by anticipating consumer needs
12)Identify where improvements can be made and develop success-driven plans
13)Manage detailed sales expectations and plan accordingly
14)Work closely with the marketing department
15)Monitor customer activity
16)Create sales reports
17)Communicate and foster relationships with clients
18)Other responsibilities as reasonably requested by the Company and its board of directors;
Specifically:
19)Work daily with the Top customers i.e. Grainger, Home Depot, Telehealth, Best Buy, Prison Distributors and other Dealers and Distributors.
20)Take the company story-line to our outside employees and keep them apprised of our advancements.
21)Help the outside employees stay focused and on-track of goals.
22)Continue working with our inside order entry and logistics folk
23)Always be looking for new products to plug into existing customers.
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on December 9, 2021 by and between A4 Technologies, Inc, a Delaware corporation (“Company”), and Robert Jeffrey Kingston (“Executive”). Alpine 4 Holdings, Inc., a Delaware corporation (“ALPP”) is a party hereto for certain limited purposes under the Agreement.
WHEREAS, concurrent with the execution of this agreement, the Company, ALPP and other parties thereto are entering into a Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date hereof; and
WHEREAS, following the closing of the transaction contemplated under the Purchase Agreement (the “Closing”), the Company desires to employ the Executive as President of its Subsidiaries as set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as follows:
1.Definitions.
1.1.“Subsidiaries” means the Indiana limited liability companies collectively known as RCA Commercial Electronics, including DTI Services Limited Liability Company, Direct Tech Sales LLC, PMI Group, LLC, Continu.us LLC, and Solas Ray, LLC.
1.2.“Cause” means Executive (i) is convicted of a felony or other crime involving dishonesty towards the Company or any of its Subsidiaries or material misuse of property of the Company or any of its Subsidiaries; (ii) engages in willful misconduct or fraud with respect to the Company or any of its Subsidiaries or any of their customers or suppliers or an intentional act of dishonesty or disloyalty in the course of Executive’s employment; (iii) materially breaches any written policy of the Company, including the Company’s policies prohibiting unlawful harassment, discrimination or retaliation, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (iv) refuses to perform Executive’s material obligations under this Agreement (except in connection with a Disability) as reasonably directed by the Board, which failure, if capable of being cured, is not cured within 15 days after written notice thereof to Executive; (v) misappropriates one or more of the Company’s or any of its Subsidiaries business opportunities or material assets; or (vi) breaches Sections 4.5, 4.6, 5, or 6 hereof which breach, if capable of being cured, is not cured within 10 days of written notice thereof has been delivered to Executive; or (vii) materially breaches this Agreement, which breach, if capable of being cured, is not cured within 15 days after written notice thereof to Executive. In each such case where notice and cure is required (i.e. pursuant to clauses (iii), (iv), (vi) and (vii)), such notice shall describe the condition giving rise to “Cause” with reasonable specificity. The Company may allow Executive an extension of time to cure a breach if the Board, in its sole discretion, determines that such extension is appropriate under the circumstances.
1.3.“Good Reason” means the occurrence of any of the following events without the written consent of Executive: (i) a material diminution of Executive’s duties or the assignment to Executive of duties that are inconsistent in any substantial respect with the position, authority or responsibilities associated with Executive’s position as set forth pursuant to Section 2.1, other than any such authorities, duties or responsibilities assigned at any time which are by their nature, or which are identified at the time of assignment, as being temporary or short-term; (ii) the Company’s requiring Executive to be based at a location which is fifty (50) or more miles from the Subsidiaries’ corporate headquarters; or (iii) a material breach by the Company of its obligations pursuant to this Agreement, which such breach goes uncured after notice and a reasonable opportunity to cure, or (iv) permanent disability of Executive or Executive’s spouse
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where demands for home care are such that Executive can no longer effectively perform the Scope of Duties.
2.DUTIES; TERM; TERMINATION.
2.1.Duties. Subject to the terms of this Agreement, Company hereby engages Executive to perform, and Executive shall perform, such duties (the “Duties”) as specified in Exhibit A attached hereto, as amended from time to time in writing signed by Company and Executive (the “Scope of Duties”). Executive shall report directly to the Company COO, CEO, or Board of Directors (the “Board”), or its designee, of ALPP.
2.2.Term. Executive’s employment under the terms and conditions of this Agreement shall commence on day of the Closing of the Purchase Agreement (the “Commencement Date”). Such employment shall continue for an initial term of three (3) years following the Commencement Date (the “Initial Term”). The term of Executive’s employment under this Agreement shall be automatically extended on each anniversary of the Commencement Date following the expiration of the Initial Term for an additional one-year term (each, a “Renewal Term”). The Initial Term and any Renewal Terms are collectively referred to as the “Term,” and the Term shall continue as described in the preceding sentence, unless either Executive or the Company has given written notice to the other no less than sixty (60) days prior to the expiration of the Term that the Term shall not be so extended. Notwithstanding the above, the Term shall earlier expire upon the effective date of termination of Executive’s employment pursuant to Section 2.3 hereof.
2.3.Termination of Employment, including special cases of Cause or Good Reason. The Term and Executive’s employment hereunder may be terminated:
(a)by the Company for Cause, effective on the date on which a written notice to such effect (a “Cause Termination Notice”) is delivered to Executive;
(b)by the Company at any time without Cause (which includes an election by the Company not to renew the Term pursuant to Section 2.2 hereof, the written notice of which shall be deemed a notice of termination without Cause of Executive’s employment hereunder), effective sixty (60) days following the date on which a written notice to such effect is delivered to Executive or, at the election of the Company in its sole discretion, such earlier date as is reasonably designated by the Company, provided that the Company shall continue to pay Executive’s Base Compensation for sixty (60) days following such notice of termination
(c)by Executive for Good Reason provided, however, no event shall be deemed to be “Good Reason” unless within thirty (30) days after Executive’s knowledge of the initial existence of such event, Executive shall have given the Company written notice thereof specifically describing the event giving rise to “Good Reason” and allowing the Company a period of thirty (30) days from the date of receipt of the notice to remedy such event, and the Company shall have failed to cure such event within such period. Notwithstanding the foregoing, in no case will an event give rise to “Good Reason” hereunder unless within ten (10) days after the expiration of the period provided in Executive’s notice to the Company to remedy said event but in no case later than one hundred and twenty (120) days after the initial existence of said event, Executive shall have actually terminated his employment with the Company by giving written notice of resignation for failure of the Company to remedy such event.
2.4.Agreement Termination. This Agreement and the Term shall terminate upon the effective date of employment termination pursuant to section 2.3. Notwithstanding the foregoing, the terms of Section 4.5 , Section 4.6, Section 5, and Section 6 of this Agreement will survive termination of this Agreement and Executive, ALPP, and the Company shall remain bound thereby. Termination of this
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Agreement will constitute termination of the Executive’s Duties, and will also terminate Company’s obligation to pay the compensation as provided in Section 3.1, except that accrued vacation will be paid in accordance with state law and Company's customary procedures.
3.COMPENSATION; PAYMENTS; EXPENSES; BENEFITS.
3.1.Compensation.
(a)Salary. During the Term, Company will pay Executive at the base annual rate of $300,000 as a salaried-exempt position. Executive shall be paid in accordance with the Company’s normal payroll cycle.
(b)A performance review shall be conducted annually, which might provide a basis for an increase in salary during the remainder of the Term.
3.2.Expenses. Company will reimburse Executive for all “out of pocket” expenses incurred in rendering the Duties.
3.3.Other Benefits and Compensation.
(a)New Product/New Markets Bonus: A bonus may be paid in either Alpine 4 Class A Common Stock or Cash for new product and/or markets development. Executive will participate in the bonus at the level set by the CEO of Alpine 4. The bonus shall be paid annually 60 days after the close of the year.
(b)120 hours of paid time off per year with Executive’s first-year pro-rated at 60 hours. Beginning January 1, 2022, Executive will receive 120 hours with additional vacation as outlined in the employee handbook.
(c)Paid Holidays as outlined in the employee handbook.
(d)Offer to participate in the company sponsored health and welfare and 401(k) plans. Medical, dental and vision premiums are paid 100% by the company for Executive and any legal dependents.
(e)Executive shall also participate in the Company Employee Stock Option Plan (ESOP) at an Executive level with 100,000 shares vested over two years.
4.COVENANTS, REPRESENTATIONS AND WARRANTIES. Executive hereby covenants, represents and warrants to Company that:
4.1.Performance of Duties. The Duties shall be performed in a professional and workmanlike manner and in accordance with industry standards. Any deliverables provided by Executive shall comply with the requirements set forth in the Scope of Duties. Executive shall not subcontract or assign Duties without Company’s prior written consent.
4.2.No Conflicts. Executive’s performance of all the terms of this Agreement and Executive’s work for Company does not and will not breach any invention, assignment or proprietary information agreement with any former employer or other party, or create any conflict of interest with anyone. Executive will not enter into any other agreement with any other person or entity, either written or oral, in conflict with the terms of this Agreement.
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4.3.Limitation on Disclosures. Executive will not disclose to Company or use for the benefit of Company any confidential information of a third party or derived from sources other than engagement with Company or association with Company during the Term.
4.4.No Conflicts of Interest. During the term of this Agreement Executive will not, without the prior written approval of the Company, directly or indirectly participate in or assist any business that is a current or potential supplier, customer or competitor of Company; provided, however, that Executive may invest in such companies to an extent not exceeding one percent (1%) of the total outstanding shares in each of one or more such companies whose shares are listed on a national securities exchange or quoted daily by NASDAQ or NYSE.
4.5.Non-Compete. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges and agrees that during the Term with the Company and its Relationship with the Subsidiaries, Executive shall become familiar with the Subsidiaries’ trade secrets and with other Confidential Information and that Executive’s services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries, and therefore, Executive agrees that, during his or her employment with the Company and for a period of five (5) years after the termination of the Term and this Agreement (the “Non-Compete Period”), Executive shall not directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant or otherwise) own any interest in, operate, invest in, manage, control, participate in, consult with, render services for (alone or in association with any person or entity), in any manner engage in any business activity on behalf of a Competing Business within any geographical area in which the Subsidiaries operates or plan to operate. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation. For purposes of this paragraph, “Competing Business” means a business similar to that of the Subsidiaries, including and type of business which Subsidiaries have plans to engage in, or any business which Subsidiaries has engaged in during Executive’s Relationship with the Subsidiaries. If Company defaults in its obligations under this Agreement and such default is not remedied within ninety (90) days from the date of such default, then the Executive will automatically be released from the non-compete provisions set forth in this section.
4.6.Non-Solicitation. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, in order to enable Company to maintain a stable work force and to operate its business, Executive shall not, without the prior written consent of the Company, either directly or indirectly solicit, induce, recruit or encourage any of Company’s Executives, employees, contractors, vendors or customers to leave their employment or engagement with Company, either for Executive or for any other person or entity. During Executive’s employment with Company and for five (5) years after termination of employment with the Company, Executive shall not directly or indirectly, solicit, take away, divert or attempt to divert, the business or patronage of any clients or customers, of the Subsidiaries, for the purpose of providing services that materially compete with the services provided by the Subsidiaries at the time of Executive’s termination. For purposes of this Agreement, “services provided by the Subsidiaries” includes not only services which the Subsidiaries then provides and/or markets or sells, but also those which it is in the process of researching and/or developing, at the time of Executive’s termination, and/or as to which, at the time of Executive’s termination, the Subsidiaries have a strategic business plan in place to research, develop and/or market at some time in the future. The restrictions on soliciting or providing services to customers of the Subsidiary apply to: (i) any customer or customer contact of the Subsidiaries with whom Executive has had any business relations during his employment (whether before or after the Commencement Date) with the Company or its Subsidiaries; and (ii) any customer or customer contact who was a customer or customer contact of the Subsidiaries on the date of Executive’s termination from the Company or during the twelve (12) month period prior to such termination, or who was a prospective customer or customer contact of the Subsidiaries
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with whom the Subsidiaries had actually met with, or had written (including, without limitation, via email) or telephonic communications with, during said period(s).
5.1.Definitions.
(a)Relationship (“Relationship”) shall mean any employment, consulting, officer, manager, board member, affiliate, collaborative, or founder relationship between the Executive and Company and/or Subsidiaries, whether commenced prior to, upon or after the date of this Agreement.
(b) Confidential information (“Confidential Information”) shall mean all information which Executive may produce, obtain, or otherwise learn of during the Relationship, including but not limited to all information of Company and Subsidiaries that existed before and up to the Closing of the Purchase Agreement, that is either acknowledged as confidential by Company and/or Subsidiaries, or whose confidential nature is reasonably apparent based on the circumstances under which the information was produced, obtained, or otherwise learned of or made available, including without limitation: (a) all matters of a technical nature, such as trade secrets, intellectual property, know-how, formulae, computer programs, source code, object code, machine code, routines, algorithms, software and documentation, secret processes or machines, inventions and research projects; (b) all matters of a business nature, such as information about costs, profits, markets, sales, customers, business contacts, suppliers, and Executives (including salary, evaluation, and other personnel data); (c) all plans for further development; and (d) any other information of a similar nature. Although certain information or technology may be generally known in the relevant industry, the fact that Company and its Subsidiaries use it, and how Company and Subsidiaries use it, may not be so known, and therefore is Confidential Information. Furthermore, the fact that various fragments of information or data may be generally known in the relevant industry does not mean that the manner in which Company and Subsidiaries combines them and the results obtained thereby are so known, and in such instance that fact also is Confidential Information. For the avoidance of doubt, Confidential Information may include proprietary or confidential information of any third party disclosed to Company or its Subsidiaries under condition of confidentiality. Notwithstanding the foregoing, “Confidential Information” does not include information that Executive can demonstrate by documentation: (i) was already known to Executive prior to the Relationship; (ii) was or is independently developed by Executive without reference to or use of any Confidential Information; (iii) was or becomes generally known by the public not as a result of any inaction or action of the Executive.
5.2.Obligations of Confidentiality and Limited Use. Executive shall regard and preserve as confidential, and shall not divulge to unauthorized persons or use, or authorize or encourage persons who are under Executive’s direction or supervision to use, for any unauthorized purposes, either during or after the term of the engagement, any Confidential Information. Executive shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties for any purpose (including, without limitation, any purpose harmful to or competitive with the interests of the Company or its Subsidiaries) without the specific direction or consent of a duly authorized representative of the ALPP. Executive acknowledges and agrees that some of the Confidential Information may be considered “material non-public information” for purposes of the federal securities laws (“Insider Information”) and that the Executive will abide by all securities laws relating to the handling of and acting upon Insider Information.
5.3.Exceptions to Obligations of Non-Disclosure. Notwithstanding the foregoing nondisclosure obligations:
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(a)Executive may disclose Confidential Information to the extent required by law or valid order of a court or other governmental authority; provided that Executive shall first have given notice to Company and shall have made a reasonable effort to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued; and
(b)Pursuant to 18 U.S.C. Section 1833(b), Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
5.4.Return of Confidential Information. Upon request by Company, Executive agrees to promptly deliver or destroy (as instructed by Company) to Company the original and any copies of Confidential Information, whether physical or digital.
6.1.Ownership of Inventions. Executive will promptly disclose in writing to the Company all inventions (whether or not patentable), ideas, improvements, techniques, know-how, concepts, processes, discoveries, developments, designs, formulae, artwork, content, software programs, other copyrightable works, trade secrets, technology, algorithms, data and any other work product created, conceived or developed by Executive (whether alone or jointly with others) during the Relationship, or which relate to any Confidential Information (collectively, “Inventions”). Executive hereby agrees that all Inventions and all right, title and interest therein, including without limitation patents, patent rights, copyrights, mask work rights, trade secret rights and other intellectual property rights anywhere in the world (collectively “Rights”), are the sole property of Company. Executive agrees to assign and hereby assigns to Company all Inventions and all Rights on a perpetual, worldwide and royalty-free basis. Executive agrees to perform all acts deemed necessary or desirable by Company to permit and assist it in evidencing, perfecting, obtaining, maintaining, defending and enforcing its Rights and/or Executive’s assignment with respect to such Inventions in any and all countries. Such acts may include without limitation the execution of documents and assistance or cooperation in legal proceedings. Executive hereby irrevocably designates and appoints Company and its duly authorized officers and agents as Executive’s agents and attorneys-in-fact to act for and on behalf and instead of Executive to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive.
6.2.Ownership of Confidential Information. As between the parties, Executive hereby agrees that all Confidential Information and rights therein are the sole property of Company. Executive agrees to assign and hereby assigns to Company any rights or interests Executive may have or acquire in Confidential Information and all rights relating to all Confidential Information.
6.3.Moral Rights. Executive hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Executive may have in any Inventions. Executive also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Executive may have in any Inventions, even after termination of Executive’s employment with the Company. For purposes of this Agreement, the term “Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.
6.4.License to Preexisting IP. Executive agrees not to use or incorporate into Inventions any intellectual property developed by any third party, or any intellectual property of Executive that has not been assigned to Company (collectively “Preexisting IP”), without benefit of license to do so.
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In the event Executive uses or incorporates Executive’s Preexisting IP into Inventions, Executive hereby grants to Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide right, with the right to sublicense through multiple levels of sublicensees, to use, reproduce, distribute, create derivative works of, publicly perform and publicly display in any medium or format, whether now known or later developed, such Preexisting IP incorporated or used in Inventions. However, in no event will Executive incorporate into Inventions any software code licensed under the GNU GPL or LGPL or any similar “open source” license, without written permission to do so from ALPP. Executive represents and warrants that Executive has an unqualified right to license to Company all of their Preexisting IP as provided in this Section 6.4.
7.1.Severability; Amendment; Waiver. If the application of any provision or provisions of this Agreement to any particular facts or circumstances is held to be invalid or unenforceable by any court of competent jurisdiction, then the validity and enforceability of such provision or provisions as applied to any other particular facts or circumstances and the validity of other provisions of this Agreement will not in any way be affected or impaired thereby. This Agreement may not be amended or waived except in a written amendment executed by Executive and an officer of Company and ALPP. The waiver of any one default will not waive any other default.
7.2.Governing Law. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of Indiana, without giving effect to any conflicts of laws principles that require the application of the law of a different jurisdiction. The prevailing party will be entitled to reasonable attorneys’ fees and expenses.
7.3.Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth in the signature block below or such other address as either party may specify in writing.
7.4.Assignment. Neither party shall assign this Agreement without the prior written consent of the other party. This Agreement will inure to the benefit of and will be binding upon the successors and permitted assigns of the parties, including without limitation any entity acquiring all or substantially all of the assets or voting stock of Company and any wholly-owned U.S. subsidiary of Company.
7.5.Interpretation. The language of this Agreement will be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. The section headings in this Agreement are solely for convenience and will not be considered in its interpretation.
7.6.Counterparts; Exhibits. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one instrument. The exhibits referred to herein and annexed hereto are hereby incorporated into and made a part of this Agreement.
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IN WITNESS WHEREOF, for the purpose of binding the parties hereto to this Agreement, the parties or their duly authorized representatives have signed their names on the dates indicated below. Executive understands that, notwithstanding the date of execution or acceptance by Company, this Agreement is effective as of the Effective Date.
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ALPINE 4 HOLDINGS, INC. |
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Robert Jeffrey Kingston |
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EXECUTION COPYSIGNATURE PAGE TO EXECUTIVE AGREEMENT
EXHIBIT A
SCOPE OF DUTIES
Duties
Reporting Relationships: This position will report directly to the COO and CEO of ALPP and the Company. ALPP may add new direct reports as needed.
Executive:
nDuring the Term, Executive shall serve as President of the Subsidiaries and shall perform the normal duties, responsibilities and functions of a President of a company of a similar size and type and shall have such power and authority as shall reasonably be required to enable Executive to perform Executive’s duties hereunder in a manner consistent with the traditional responsibilities of the office of President, subject to the power and authority of the Company COO, CEO, or Board to expand or limit such duties, responsibilities, functions, power and authority and to overrule actions of officers of Company’s Subsidiaries.
nDuring the Term, Executive shall (i) render such administrative, financial and other executive and managerial services to the Company and its Subsidiaries which are consistent with Executive’s position as President, as the Board may from time to time direct, (ii) report to the Company COO or CEO or Board and devote Executive’s best efforts and Executive’s full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its Subsidiaries and (iii) submit to the Company COO or CEO or Board all business, commercial and investment opportunities presented to Executive or of which Executive becomes aware which relate to the business of the Company and its Subsidiaries. In furtherance of the preceding, Executive shall perform Executive’s duties, responsibilities and functions to the Company and its Subsidiaries hereunder to the best of Executive’s abilities in a diligent, trustworthy and professional manner and shall devote his full business time and efforts to the business and affairs of the Company.
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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME UPON THE EXPIRATION DATE AS DEFINED BELOW.
ALPINE 4 HOLDINGS, INC.
WARRANT TO PURCHASE SHARES OF
CLASS A COMMON STOCK
This Warrant (the “Warrant”) is issued as of December 9, 2021 to Kirby Goedde (the “Warrantholder”) by Alpine 4 Holdings, Inc, a Delaware Corporation (the “Company”) in connection with the Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date herewith, to which Company and Warrantholder are among the contracting parties. Capitalized terms used but not defined herein shall have the meaning set forth in the Purchase Agreement.
FOR VALUE RECEIVED, the Warrantholder is entitled to purchase from Company, subject to the provisions and conditions of this Warrant, at any time before 5:00 P.M. Eastern time on the third year anniversary of the Closing Date as defined in the Purchase Agreement (the “Expiration Date”), an amount of shares (“Warrant Shares”) of the Company’s Class A Common Stock (“Common Stock”) equal to $900,000 divided by the warrant price per share (“Warrant Price”) calculated as the Variable Weighted Average Price of the Common Stock averaged over the three Trading Days prior to the Closing Date. (“Trading Days” shall mean any day on which the Common Stock is traded on the Nasdaq exchange.) The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described under Section 8 herein.
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Section 1.Record Keeping. The Company shall maintain books for the transfer and registration of the Warrant for purposes of the Company’s books and records. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder on the Company’s books and records.
Section 2.Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer, properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.
Section 3.Exercise of Warrant.
(a)Subject to the provisions hereof, the Warrantholder may exercise this Warrant at any time beginning after the issuance date prior to the Expiration Date, upon surrender of the Warrant, together with delivery of a duly executed Warrant exercise form, in the form attached hereto as Appendix A (the “Notice of Exercise”) and payment by cash, certified check or wire transfer of funds equal to the Warrant Price multiplied by that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or the date evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company has been provided to the Company), the Warrant Price shall have been paid and the completed Notice of Exercise shall have been delivered. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder within ten (10) Trading Days after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder, as specified in the Notice of Exercise. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant representing the right to purchase the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, “business day” means a day, other than a Saturday or Sunday, on which banks in New York City, New York are open for the general transaction of business. Notwithstanding the foregoing, to effectuate the exercise of the Warrant hereunder, the Warrantholder shall not be required to physically surrender this Warrant to the Company unless the entire Warrant is exercised. The Warrantholder and the Company shall maintain records showing the amount exercised and the dates of such exercise. The Warrantholder and any assignee, by acceptance of this Warrant, acknowledge and agree that by reason of the provision of the paragraph, following exercise of a portion of the Warrant the
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number of Warrant Shares purchasable under this Warrant may be less than the amount of Warrant Shares purchasable when the Warrant was originally granted.
Section 4.Compliance with the Securities Act of 1933. This Warrant may only be exercised by the Warrantholder if the Warrantholder is an “accredited investor” as defined by Rule 501 of Regulation D. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant, and a similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.
Section 5.Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such tax is due.
Section 6.Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon surrender and cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.
Section 7.Reservation of Common Stock. At any time when this Warrant is exercisable, the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, at least a number of shares of Common Stock equal to 100% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of this Warrant then outstanding. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.
Section 8.Adjustments.
(a)If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then (i) the Warrant Price in effect immediately prior to
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the date on which such change shall become effective shall be adjusted by multiplying such Warrant Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such change and the denominator of which shall be the number of shares of Common Stock outstanding immediately after giving effect to such change and (ii) the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted by multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to the date on which such change shall become effective by a fraction, the numerator of which is shall be the Warrant Price in effect immediately prior to the date on which such change shall become effective and the denominator of which shall be the Warrant Price in effect immediately after giving effect to such change, calculated in accordance with clause (i) above. Such adjustments shall be made successively whenever any event listed above shall occur.
(b)If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.
(c)In case the Company shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Market Price per share of Common Stock immediately prior to such
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payment date, less the fair market value (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date.
(d)An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.
(e)In the event that, as a result of an adjustment made pursuant to this Section 8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.
(f)To the extent permitted by applicable law and the listing requirements of any stock market or exchange on which the Common Stock is then listed, the Company from time to time may decrease the Warrant Price by any amount for any period of time if the period is at least twenty (20) days, the decrease is irrevocable during the period and the Board shall have made a determination that such decrease would be in the best interests of the Company, which determination shall be conclusive provided however, that the Warrant Price may not be decreased below the Market Price on the date of the execution of the Subscription Agreement. Whenever the Warrant Price is decreased pursuant to the preceding sentence, the Company shall provide written notice thereof to the Warrantholder at least five (5) days prior to the date the decreased Warrant Price takes effect, and such notice shall state the decreased Warrant Price and the period during which it will be in effect.
Section 9.Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder or any assignee an amount in cash (rounded to the nearest whole cent) equal to such fractional amount multiplied by the Warrant Price.
Section 10.Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.
Section 11.Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall not later than five (5) Business Days after the occurrence of such event give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the
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Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. In the event that the Company fails to give notice of an event requiring an adjustment of the Warrant Price to the Warrantholder within five Business Days of such event, the Company shall pay to the Warrantholder liquidated damages of Ten Thousand Dollars ($10,000).
Section 12.Identity of Transfer Agent. The Transfer Agent for the Common Stock is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent.
Section 13.Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given and received as hereinafter described (i) if given by personal delivery, then such notice shall be deemed received upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed received upon receipt of confirmation of complete transmittal, (iii) if given by certified mail return receipt requested, then such notice shall be deemed received upon the day such return receipt is signed, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. Copies of such notices shall also be transmitted by email to the email address provided for on the signature page of the Subscription Agreement. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days’ advance written notice to the other:
If to the Warrantholder:
Kirby Goedde
_____________________________
_____________________________
Email: _______________________
With a copy (which shall not constitute notice) to:
_____________________________
_____________________________
_____________________________
Email: _______________________
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If to the Company:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Circle, Suite C237
Phoenix, AZ 85016
Attn: Kent Wilson, CEO
Email: kwilson@alpine4.com
With a copy (which shall not constitute notice) to:
Kirton McConkie, P.C.
50 East South Temple Street, Suite 400
Salt Lake City, UT 84111
ATTN: C. Parkinson Lloyd
Email: plloyd@kmclaw.com
Section 14.Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.
Section 15.Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of Indiana, for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
Section 16.No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant.
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Section 17.Remedies; Other Obligations; Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Warrantholder right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Warrantholder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Warrantholder shall be entitled, in addition to all other available remedies, an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
Section 18.Section Headings. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the date written below.
ALPINE 4 HOLDINGS, INC.
By: /s/ Kent B. Wilson_______________
Name: Kent B. Wilson
Title: Chief Executive Officer
Date: December 9, 2021_______________
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APPENDIX A
ALPINE 4 HOLDINGS, INC.
NOTICE OF EXERCISE FORM
To Alpine 4 Holdings, Inc.:
The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as follows:
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Name |
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Address |
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Federal Tax ID or Social Security No. |
and delivered by certified mail to the above address, or (if the Company’s Common Stock is publicly traded) electronically (provide DWAC Instructions):
_____________________________________
_____________________________________
_____________________________________
or other (specify):
_____________________________________
_____________________________________
_____________________________________
and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.
[Signature page follows.]
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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME UPON THE EXPIRATION DATE AS DEFINED BELOW.
ALPINE 4 HOLDINGS, INC.
WARRANT TO PURCHASE SHARES OF
CLASS A COMMON STOCK
This Warrant (the “Warrant”) is issued as of December 9, 2021 to Andrew Spence (the “Warrantholder”) by Alpine 4 Holdings, Inc, a Delaware Corporation (the “Company”) in connection with the Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date herewith, to which Company and Warrantholder are among the contracting parties. Capitalized terms used but not defined herein shall have the meaning set forth in the Purchase Agreement.
FOR VALUE RECEIVED, the Warrantholder is entitled to purchase from Company, subject to the provisions and conditions of this Warrant, at any time before 5:00 P.M. Eastern time on the third year anniversary of the Closing Date as defined in the Purchase Agreement (the “Expiration Date”), an amount of shares (“Warrant Shares”) of the Company’s Class A Common Stock (“Common Stock”) equal to $100,000 divided by the warrant price per share (“Warrant Price”) calculated as the Variable Weighted Average Price of the Common Stock averaged over the three Trading Days prior to the Closing Date. (“Trading Days” shall mean any day on which the Common Stock is traded on the Nasdaq exchange.) The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described under Section 8 herein.
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Section 1.Record Keeping. The Company shall maintain books for the transfer and registration of the Warrant for purposes of the Company’s books and records. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder on the Company’s books and records.
Section 2.Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer, properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.
Section 3.Exercise of Warrant.
(a)Subject to the provisions hereof, the Warrantholder may exercise this Warrant at any time beginning after the issuance date prior to the Expiration Date, upon surrender of the Warrant, together with delivery of a duly executed Warrant exercise form, in the form attached hereto as Appendix A (the “Notice of Exercise”) and payment by cash, certified check or wire transfer of funds equal to the Warrant Price multiplied by that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or the date evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company has been provided to the Company), the Warrant Price shall have been paid and the completed Notice of Exercise shall have been delivered. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder within ten (10) Trading Days after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder, as specified in the Notice of Exercise. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant representing the right to purchase the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, “business day” means a day, other than a Saturday or Sunday, on which banks in New York City, New York are open for the general transaction of business. Notwithstanding the foregoing, to effectuate the exercise of the Warrant hereunder, the Warrantholder shall not be required to physically surrender this Warrant to the Company unless the entire Warrant is exercised. The Warrantholder and the Company shall maintain records showing the amount exercised and the dates of such exercise. The Warrantholder and any assignee, by acceptance of this Warrant, acknowledge and agree that by reason of the provision of the paragraph, following exercise of a portion of the Warrant the
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number of Warrant Shares purchasable under this Warrant may be less than the amount of Warrant Shares purchasable when the Warrant was originally granted.
Section 4.Compliance with the Securities Act of 1933. This Warrant may only be exercised by the Warrantholder if the Warrantholder is an “accredited investor” as defined by Rule 501 of Regulation D. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant, and a similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.
Section 5.Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such tax is due.
Section 6.Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon surrender and cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.
Section 7.Reservation of Common Stock. At any time when this Warrant is exercisable, the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, at least a number of shares of Common Stock equal to 100% of the number of shares of Common Stock as shall from time to time be necessary to effectuate the exercise of all of this Warrant then outstanding. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.
Section 8.Adjustments.
(a)If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then (i) the Warrant Price in effect immediately prior to
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the date on which such change shall become effective shall be adjusted by multiplying such Warrant Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such change and the denominator of which shall be the number of shares of Common Stock outstanding immediately after giving effect to such change and (ii) the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted by multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to the date on which such change shall become effective by a fraction, the numerator of which is shall be the Warrant Price in effect immediately prior to the date on which such change shall become effective and the denominator of which shall be the Warrant Price in effect immediately after giving effect to such change, calculated in accordance with clause (i) above. Such adjustments shall be made successively whenever any event listed above shall occur.
(b)If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.
(c)In case the Company shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Market Price per share of Common Stock immediately prior to such
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payment date, less the fair market value (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date.
(d)An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.
(e)In the event that, as a result of an adjustment made pursuant to this Section 8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.
(f)To the extent permitted by applicable law and the listing requirements of any stock market or exchange on which the Common Stock is then listed, the Company from time to time may decrease the Warrant Price by any amount for any period of time if the period is at least twenty (20) days, the decrease is irrevocable during the period and the Board shall have made a determination that such decrease would be in the best interests of the Company, which determination shall be conclusive provided however, that the Warrant Price may not be decreased below the Market Price on the date of the execution of the Subscription Agreement. Whenever the Warrant Price is decreased pursuant to the preceding sentence, the Company shall provide written notice thereof to the Warrantholder at least five (5) days prior to the date the decreased Warrant Price takes effect, and such notice shall state the decreased Warrant Price and the period during which it will be in effect.
Section 9.Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder or any assignee an amount in cash (rounded to the nearest whole cent) equal to such fractional amount multiplied by the Warrant Price.
Section 10.Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.
Section 11.Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall not later than five (5) Business Days after the occurrence of such event give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the
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Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. In the event that the Company fails to give notice of an event requiring an adjustment of the Warrant Price to the Warrantholder within five Business Days of such event, the Company shall pay to the Warrantholder liquidated damages of Ten Thousand Dollars ($10,000).
Section 12.Identity of Transfer Agent. The Transfer Agent for the Common Stock is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent.
Section 13.Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given and received as hereinafter described (i) if given by personal delivery, then such notice shall be deemed received upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed received upon receipt of confirmation of complete transmittal, (iii) if given by certified mail return receipt requested, then such notice shall be deemed received upon the day such return receipt is signed, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. Copies of such notices shall also be transmitted by email to the email address provided for on the signature page of the Subscription Agreement. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days’ advance written notice to the other:
If to the Warrantholder:
Andrew Spence
_____________________________
_____________________________
Email: _______________________
With a copy (which shall not constitute notice) to:
_____________________________
_____________________________
_____________________________
Email: _______________________
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If to the Company:
Alpine 4 Holdings, Inc.
2525 E Arizona Biltmore Circle, Suite C237
Phoenix, AZ 85016
Attn: Kent Wilson, CEO
Email: kwilson@alpine4.com
With a copy (which shall not constitute notice) to:
Kirton McConkie, P.C.
50 East South Temple Street, Suite 400
Salt Lake City, UT 84111
ATTN: C. Parkinson Lloyd
Email: plloyd@kmclaw.com
Section 14.Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.
Section 15.Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of Indiana , for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
Section 16.No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant.
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Section 17.Remedies; Other Obligations; Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Warrantholder right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Warrantholder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Warrantholder shall be entitled, in addition to all other available remedies, an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
Section 18.Section Headings. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the date written below.
ALPINE 4 HOLDINGS, INC.
By: /s/ Kent B. Wilson_______________
Name: Kent B. Wilson
Title: Chief Executive Officer
Date: December 9, 2021______________
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APPENDIX A
ALPINE 4 HOLDINGS, INC.
NOTICE OF EXERCISE FORM
To Alpine 4 Holdings, Inc.:
The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as follows:
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Federal Tax ID or Social Security No. |
and delivered by certified mail to the above address, or (if the Company’s Common Stock is publicly traded) electronically (provide DWAC Instructions):
_____________________________________
_____________________________________
_____________________________________
or other (specify):
_____________________________________
_____________________________________
_____________________________________
and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.
[Signature page follows.]
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SECURED PROMISSORY NOTE
U.S. $1,800,00012/9/2021
FOR VALUE RECEIVED, the undersigned, A4 Technologies Inc, a Delaware corporation (“Maker”) promises to pay to the order of Kirby Goedde or to the holder of this Note (the “Holder”) at Holder’s address, or such other place as Holder may designate in writing, in lawful money of the United States of America, the original aggregate principal sum of One Million Eight Hundred Thousand Dollars ($1,800,000.00) together with interest at the rate of three and 3/4 percent (3.75%) per annum, which amounts shall be due in accordance with the following provisions of this Promissory Note (the “Note”).
This Note is the note referred to in, and has been executed and delivered pursuant to and in accordance with the terms and conditions of the Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date herewith to which Maker and Holder are among the contracting parties and is entitled to the benefit and security of the Purchase Agreement, to which reference is made for a statement of all of the terms and conditions thereof. Capitalized terms used in this Note without definition shall have the respective meanings set forth in the Purchase Agreement.
1.Term. The term of this Note shall be amortized over ten (10) years at 3.75% interest.
2.Monthly Payments. Monthly payments (each, a “Monthly Payment”) of interest, principal and penalties, if any, shall be paid monthly, commencing on that date which is thirty (30) days following the execution of the Purchase Agreement, and payable thereafter on the monthly anniversary of the Purchase Agreement.
3.Balloon Maturity. The unpaid principal amount of this Note, and any unpaid interest accrued thereon, shall be immediately due and payable to the Holder as of the date which is three (3) years following the execution of the Purchase Agreement (the “Balloon Maturity Date”).
4.Security Interest. This Note is secured by a corporate guarantee from Maker’s parent holding company, Alpine 4 Holdings Inc (the “Guarantor”), in substantially the form attached hereto in Exhibit A.
5.Prepayment. Maker shall have the right to prepay the indebtedness, in full or in part and without penalty or payment of any fee or premium, at any time prior to the Balloon Maturity Date.
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6.Late Charges; Refusal of Payments. If any Monthly Payment provided for in this Note shall be received by Holder more than fifteen (15) days after the due date thereof, a “Late Charge” of one percent (1.0%) of the amount of such Monthly Payment shall be immediately due to Holder and shall accompany any such Monthly Payment when made. Holder may refuse to accept any Monthly Payment which is not accompanied by the applicable Late Charge. It is agreed that the amount of such Late Charge has been established to compensate Holder for additional costs and expenses which will be incurred by reason of a Monthly Payment not being made on time and which costs and expenses are difficult to predict or quantify. The parties agree that the amount of Late Charges, if any, are reasonable under the circumstances.
7.Default Interest. Upon the occurrence of an Event of Default under this Note, the entire unpaid principal balance hereof, together with accrued but unpaid interest and Late Charges shall, for all purposes, thereafter earn interest at the rate of twelve percent (12.0%) per annum (the “Default Rate”) from the date of such default until the default shall have been cured to the satisfaction of Holder in its sole discretion. In no event shall the Default Rate exceed the highest rate of interest which may be charged upon default against the obligation of Maker evidenced by this Note in accordance with the law applicable thereto.
8.No Right of Setoff. Except as provided in the Purchase Agreement, Maker shall have no right to set off, offset or deduct any amount otherwise due, payable or owing under or pursuant to this Note.
9.Place of Payment. Unless until otherwise revised in writing, all Payments required to be made under this Note shall be made payable to Kirby Goedde, or his heir, beneficiary, or assign, with an address of: ___________________________________________
10.Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:
a.Maker shall fail to pay (whether due on the date provided herein or by acceleration or otherwise), any amounts due and payable under this Note;
b.There shall occur a default under the Purchase Agreement, or Maker shall otherwise fail to perform its obligations under the Purchase Agreement;
c.Maker or Guarantor become insolvent or bankrupt or are generally not paying its debts as such debts become due or if a custodian, trustee, or receiver as defined in the Bankruptcy Code is appointed over all or any portion of Maker’s or Guarantor’s property, or bankruptcy, reorganization or liquidation proceedings are instituted or consented to by Maker or Guarantor or instituted against and not consented to by Maker or Guarantor and not dismissed within thirty (30) days after the institution of such proceedings;
d.A general assignment by the Maker or Guarantor for the benefit of creditors;
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e.The attachment, levy, execution or other judicial seizure of substantially all of the Maker’s or Guarantor’s assets;
f.The Maker or Guarantor shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors, or made or suffered a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall have made any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or shall have suffered or permitted while insolvent, any creditor to obtain a lien upon any of its property through legal proceedings or distraint which is not vacated within thirty (30) days from the date thereof; or
g.the dissolution, termination of existence, or other Change of Control (defined below) of Maker or Guarantor.
11.Acceleration Upon Default. Upon the occurrence of any Event of Default under this Note, then the entire principal balance and accrued interest, irrespective of the Balloon Maturity Date specified herein, shall become immediately due and payable at the option of Holder.
12.Assignment. This Note is non-negotiable and may not be sold, assigned or transferred (by operation of law or otherwise) or pledged by Holder, without the prior written consent of Maker, which shall not be unreasonably withheld.
13.Cumulative Remedies. The rights or remedies of the Holder as provided in this Note shall be cumulative and concurrent, and may be pursued singly, successively, or together against Maker, any guarantor hereof or otherwise at the sole discretion of the Holder. The failure to exercise any such right or remedy shall in no event be construed as a waiver or release of said rights or remedies or a waiver of the right to exercise them at any later time.
14.Waivers and Consents. The Maker and all endorsers, guarantors, sureties, accommodation parties hereof, and all other persons liable or to become liable for all or any part of this indebtedness, jointly and severally waive diligence, presentment, protest and demand, and also notice of protest, of demand, of nonpayment, of dishonor and of maturity and also recourse to suretyship defenses generally; and they also jointly and severally hereby consent to any and all renewals, extensions or modifications of the terms hereof, including time for payment, and further agree that any such renewal, extension or modification of the terms hereof or the release or substitution of any security for the indebtedness evidenced hereby or any other indulgences shall not affect the liability of said parties for the indebtedness evidenced by this Note.
15.Payment of Costs and Liability. The Maker, guarantors, sureties, accommodation parties hereof, and all other persons liable or to become liable on this Note, agree jointly and severally, to pay all costs of collection, including reasonable attorneys’ fees and all costs of suit and appeal (the “Costs”), in the event that (a) there shall occur an Event of Default under this Note; (b) the Holder is made party to any litigation merely because of the existence of this Note; or (c) it becomes necessary by reason of the acts or omissions of Maker for the Holder to seek the
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advice of counsel with respect to this Note. Costs shall be paid whether suit be brought or not, and whether they are incurred through courts of original jurisdiction, or through a bankruptcy court or through other legal proceedings.
16.Amendments. This Note may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought.
17.Joint and Several Liability. This Note shall be the joint and several obligations of all Makers.
18.Severability. If any term or condition of this Note shall be held to be invalid or unenforceable, the rest of the Note shall be enforced without the invalid or the unenforceable provision.
19.References. Whenever used herein, the words “Maker” and “Holder” shall be deemed to include their respective heirs, devisees, personal representatives, successors and assigns.
20.Limitation of Interest. It is the intent of Maker and Holder in the execution of this Note to contract in strict compliance with the usury laws governing this Note. In furtherance thereof, Holder and Maker stipulate and agree that none of the terms and provisions contained in this Note shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by such laws. Maker or any guarantor, endorser or other party now or hereafter becoming liable for the payment of this Note shall never be required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under applicable law, and the provisions of this section shall control over all other provisions of this Note and any other instrument executed in connection herewith which may be in apparent conflict herewith. In the event any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of that permitted to be charged, all such sums deemed to constitute interest in excess of the maximum permissible rate shall be immediately returned to the maker upon such determination.
21.Due on Sale. It is expressly agreed and understood by Maker that this Note is made for the sole and absolute benefit of Maker and that this Note is not assumable by any other person or party. If such an assignment is attempted and/or if more than fifty percent (50%) of the voting power of Maker is disposed of , the Holder or its successors and assigns shall have the right to immediately declare the entire unpaid balance of this Note, including all accrued but unpaid interest and Late Charges, to be immediately due and payable. Nothing in this section shall be construed as relieving any successor in interest to Maker of payment under the terms of this Note.
22.Governing Law. This Note shall be governed in accordance with the laws of the Indiana.
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23.Change of Control. The occurrence of any one or more of the following (each a "Change of Control"):
(a) Maker sells, leases, assigns, transfers, conveys, or otherwise disposes of all or a substantial part of the Maker’s assets (excluding equipment financing or bank financing), or
(b) Maker liquidates, dissolves, or substantially suspends the active business operations, or the equity of Maker is transferred, assigned, or otherwise conveyed to any person or entity, or
(c) The consummation of any consolidation, merger or reorganization of Maker with or into any limited liability company, corporation or other entity, or any other corporate transaction in which Maker shall not be the continuing or surviving entity of such transaction.
The Maker hereby signs this Note as of the date first written above.
Maker: |
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A4 Technologies Inc. |
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a Delaware corporation |
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By: |
/s/ Kent Wilson |
Name: |
Kent Wilson |
Title: |
Chief Executive Officer |
By signing below, Holder hereby confirms and accepts the terms and conditions of this Note.
ACCEPTED BY HOLDER:
/s/ Kirby Goedde |
Date: |
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Mr. Kirby Goedde |
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EXHIBIT A
CORPORATE GUARANTY
GUARANTY
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of Kirby Goedde (“Holder”) having agreed to take a note from A4 Technologies Inc, a Delaware corporation (the “Company”) in connection with the Membership Interest Purchase Agreement (the “Purchase Agreement”) of even or near date herewith, to which Maker and Company are among the contracting parties, in the amount of $1,800,000.00 for the benefit of Company (the “Note”), the undersigned parent company of Company, Alpine 4 Holdings Inc, a Delaware corporation (the “Guarantor”), does hereby unconditionally guarantee to Holder, its successors and assigns, full and prompt payment and performance of all present and future obligations of the Company to Holder under the Note including all renewals and extensions thereof or substitutions therefor (the “Guaranty”). The Guarantor also agrees to pay in addition thereto all costs, expenses and reasonable attorney’s fees at any time paid or incurred by Holder in endeavoring to enforce this Guaranty.
Notice of acceptance of and action taken by Holder from time to time under this Guaranty are hereby waived and this Guaranty shall operate as a continuing, absolute and irrevocable Guaranty covering all obligations of the Company to Holder under the Note, now existing or hereafter arising.
Upon any default by the Company with respect to any of the obligations herein guaranteed, the liability of the Guarantor hereunder shall be deemed to have become immediately due and payable, without demand, presentment, protest or notice of any kind, all of which are hereby waived, and without any suit or action against the Company or the Guarantor and without further steps to be taken or further conditions to be performed by Holder or anyone. Failure of Holder to make any demand or otherwise to proceed against the Guarantor in respect to any default by the Company or the Guarantor, or any delay by Holder in doing so, shall not constitute a waiver of any Holder right to proceed in respect to any or all other defaults by the Company or the Guarantor.
The liability of the Guarantor is primary and shall not be terminated or otherwise affected or impaired by, and the Guarantor waives notice of, any granting time by Holder to the Company (regardless of the number of length of such grant of time) or any other indulgence or indulgences granted by Holder to the Company; Holder heretofore, now or hereafter acquiring, releasing or in any way modifying any guaranty from any other person or persons or any collateral or other security in whatever form for any of the obligations hereby guaranteed, whether or not notice thereof shall have been or be given to the Guarantor; any failure on the part of Holder to take any action with respect to, or to realize upon any security, rights, endorsements or guaranties which Holder may now or hereafter hold with respect to any obligation hereby guaranteed, including without limitation rights against the Company; any alterations, waivers, extensions, renewals or modifications of any such obligation to which Holder may agree from time to time; any invalidity or unenforceability of any of the obligations guaranteed hereby; any change in the
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membership of the Company; any fraud, illegal or improper acts of the Company; any relief of the Company with respect to its obligations to Holder because of any right of set-off, deduction or defense of any kind or otherwise; any other defenses which might constitute a legal or equitable discharge of a surety or guarantor; the failure of Holder to perfect any lien securing any Company obligations or the obligations of other parties, including any other guarantors; voluntary or involuntary bankruptcy (including a reorganization in bankruptcy) of the Company or entry of an order for relief against or with respect to the Company under any applicable bankruptcy or like laws; composition, extension, moratoria or other forms of debtor relief granted to the Company pursuant to law presently in force or hereafter enacted; payment of any or all obligations and indebtedness of the Company in the event such payment is invalidated or avoided by a trustee, custodian or receiver of the Company; the dissolution of the Company; or the reorganization, merger or consolidation of the Company into or with another entity, corporate or otherwise, or the sale or disposition of all or substantially all of the capital stock, business or assets of the Company to any other person or party. The Guarantor further waives all suretyship defenses and defenses in the nature thereof; any right or claim to right to cause a marshalling of the guarantors before enforcing this guaranty; any right of subrogation to any Holder rights against the Company and any right of reimbursement, indemnity, contribution, exoneration and the like now or hereafter accorded by law to indemnitors, guarantors, sureties or accommodation parties, provided that such waiver shall not be effective to the extent that by virtue of such waiver the liability of the Guarantor is rendered invalid, avoidable or unenforceable under any applicable law dealing with the recovery of avoidance of so-called fraudulent conveyances or otherwise.
This Guaranty shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of the Holder and Holder’s successors and permitted assigns.
This Guaranty shall be governed by and construed in accordance with the laws of the state of Indiana (without reference to the conflicts of law provisions thereof). The invalidity or unenforceability of any provision hereof shall not limit the validity or enforceability of any other provision hereof. This Guaranty may not be amended except by an instrument in writing signed by the party to be charged.
The Guarantor hereby signs this Guaranty as of December 9, 2021.
GUARANTOR: |
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Alpine 4 Holdings, Inc. |
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a Delaware corporation |
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By: |
/s/ Kent Wilson |
Name: |
Kent Wilson |
Title: |
Chief Executive Officer |
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SECURED PROMISSORY NOTE
U.S. $200,00012/9/2021
FOR VALUE RECEIVED, the undersigned, A4 Technologies Inc, a Delaware corporation(“Maker”) promises to pay to the order of Andrew Spence or to the holder of this Note (the “Holder”) at Holder’s address, or such other place as Holder may designate in writing, in lawful money of the United States of America, the original aggregate principal sum of One Million Eight Hundred Thousand Dollars ($200,000.00) together with interest at the rate of three and 3/4 percent (3.75%) per annum, which amounts shall be due in accordance with the following provisions of this Promissory Note (the “Note”).
This Note is the note referred to in, and has been executed and delivered pursuant to and in accordance with the terms and conditions of the Membership Interest Purchase Agreement (the “Purchase Agreement”), of even or near date herewith to which Maker and Holder are among the contracting parties and is entitled to the benefit and security of the Purchase Agreement, to which reference is made for a statement of all of the terms and conditions thereof. Capitalized terms used in this Note without definition shall have the respective meanings set forth in the Purchase Agreement.
1.Term. The term of this Note shall be amortized over ten (10) years at 3.75% interest.
2.Monthly Payments. Monthly payments (each, a “Monthly Payment”) of interest, principal and penalties, if any, shall be paid monthly, commencing on that date which is thirty (30) days following the execution of the Purchase Agreement, and payable thereafter on the monthly anniversary of the Purchase Agreement.
3.Balloon Maturity. The unpaid principal amount of this Note, and any unpaid interest accrued thereon, shall be immediately due and payable to the Holder as of the date which is three (3) years following the execution of the Purchase Agreement (the “Balloon Maturity Date”).
4.Security Interest. This Note is secured by a corporate guarantee from Maker’s parent holding company, Alpine 4 Holdings Inc (the “Guarantor”), in substantially the form attached hereto in Exhibit A.
5.Prepayment. Maker shall have the right to prepay the indebtedness, in full or in part and without penalty or payment of any fee or premium, at any time prior to the Balloon Maturity Date.
6.Late Charges; Refusal of Payments. If any Monthly Payment provided for in this Note shall be received by Holder more than fifteen (15) days after the due date thereof, a “Late
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Charge” of one percent (1.0%) of the amount of such Monthly Payment shall be immediately due to Holder and shall accompany any such Monthly Payment when made. Holder may refuse to accept any Monthly Payment which is not accompanied by the applicable Late Charge. It is agreed that the amount of such Late Charge has been established to compensate Holder for additional costs and expenses which will be incurred by reason of a Monthly Payment not being made on time and which costs and expenses are difficult to predict or quantify. The parties agree that the amount of Late Charges, if any, are reasonable under the circumstances.
7.Default Interest. Upon the occurrence of an Event of Default under this Note, the entire unpaid principal balance hereof, together with accrued but unpaid interest and Late Charges shall, for all purposes, thereafter earn interest at the rate of twelve percent (12.0%) per annum (the “Default Rate”) from the date of such default until the default shall have been cured to the satisfaction of Holder in its sole discretion. In no event shall the Default Rate exceed the highest rate of interest which may be charged upon default against the obligation of Maker evidenced by this Note in accordance with the law applicable thereto.
8.No Right of Setoff. Except as provided in the Purchase Agreement, Maker shall have no right to set off, offset or deduct any amount otherwise due, payable or owing under or pursuant to this Note.
9.Place of Payment. Unless until otherwise revised in writing, all Payments required to be made under this Note shall be made payable to Andrew Spence, or his heir, beneficiary, or assign, with an address of: ___________________________________________
10.Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:
a.Maker shall fail to pay (whether due on the date provided herein or by acceleration or otherwise), any amounts due and payable under this Note;
b.There shall occur a default under the Purchase Agreement, or Maker shall otherwise fail to perform its obligations under the Purchase Agreement;
c.Maker or Guarantor become insolvent or bankrupt or are generally not paying its debts as such debts become due or if a custodian, trustee, or receiver as defined in the Bankruptcy Code is appointed over all or any portion of Maker’s or Guarantor’s property, or bankruptcy, reorganization or liquidation proceedings are instituted or consented to by Maker or instituted against and not consented to by Maker or Guarantor and not dismissed within thirty (30) days after the institution of such proceedings;
d.A general assignment by the Maker or Guarantor for the benefit of creditors;
e.The attachment, levy, execution or other judicial seizure of substantially all of the Maker’s or Guarantor’s assets;
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f.The Maker or Guarantor shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors, or made or suffered a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall have made any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or shall have suffered or permitted while insolvent, any creditor to obtain a lien upon any of its property through legal proceedings or distraint which is not vacated within thirty (30) days from the date thereof; or
g.the dissolution, termination of existence, or other Change of Control (defined below) of Maker or Guarantor.
11.Acceleration Upon Default. Upon the occurrence of any Event of Default under this Note, then the entire principal balance and accrued interest, irrespective of the Balloon Maturity Date specified herein, shall become immediately due and payable at the option of Holder.
12.Assignment. This Note is non-negotiable and may not be sold, assigned or transferred (by operation of law or otherwise) or pledged by Holder, without the prior written consent of Maker, which shall not be unreasonably withheld.
13.Cumulative Remedies. The rights or remedies of the Holder as provided in this Note shall be cumulative and concurrent, and may be pursued singly, successively, or together against Maker, any guarantor hereof or otherwise at the sole discretion of the Holder. The failure to exercise any such right or remedy shall in no event be construed as a waiver or release of said rights or remedies or a waiver of the right to exercise them at any later time.
14.Waivers and Consents. The Maker and all endorsers, guarantors, sureties, accommodation parties hereof, and all other persons liable or to become liable for all or any part of this indebtedness, jointly and severally waive diligence, presentment, protest and demand, and also notice of protest, of demand, of nonpayment, of dishonor and of maturity and also recourse to suretyship defenses generally; and they also jointly and severally hereby consent to any and all renewals, extensions or modifications of the terms hereof, including time for payment, and further agree that any such renewal, extension or modification of the terms hereof or the release or substitution of any security for the indebtedness evidenced hereby or any other indulgences shall not affect the liability of said parties for the indebtedness evidenced by this Note.
15.Payment of Costs and Liability. The Maker, guarantors, sureties, accommodation parties hereof, and all other persons liable or to become liable on this Note, agree jointly and severally, to pay all costs of collection, including reasonable attorneys’ fees and all costs of suit and appeal (the “Costs”), in the event that (a) there shall occur an Event of Default under this Note; (b) the Holder is made party to any litigation merely because of the existence of this Note; or (c) it becomes necessary by reason of the acts or omissions of Maker for the Holder to seek the advice of counsel with respect to this Note. Costs shall be paid whether suit be brought or not, and whether they are incurred through courts of original jurisdiction, or through a bankruptcy court or through other legal proceedings.
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16.Amendments. This Note may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought.
17.Joint and Several Liability. This Note shall be the joint and several obligations of all Makers.
18.Severability. If any term or condition of this Note shall be held to be invalid or unenforceable, the rest of the Note shall be enforced without the invalid or the unenforceable provision.
19.References. Whenever used herein, the words “Maker” and “Holder” shall be deemed to include their respective heirs, devisees, personal representatives, successors and assigns.
20.Limitation of Interest. It is the intent of Maker and Holder in the execution of this Note to contract in strict compliance with the usury laws governing this Note. In furtherance thereof, Holder and Maker stipulate and agree that none of the terms and provisions contained in this Note shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by such laws. Maker or any guarantor, endorser or other party now or hereafter becoming liable for the payment of this Note shall never be required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under applicable law, and the provisions of this section shall control over all other provisions of this Note and any other instrument executed in connection herewith which may be in apparent conflict herewith. In the event any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of that permitted to be charged, all such sums deemed to constitute interest in excess of the maximum permissible rate shall be immediately returned to the maker upon such determination.
21.Due on Sale. It is expressly agreed and understood by Maker that this Note is made for the sole and absolute benefit of Maker and that this Note is not assumable by any other person or party. If such an assignment is attempted and/or if more than fifty percent (50%) of the voting power of Maker is disposed of, the Holder or its successors and assigns shall have the right to immediately declare the entire unpaid balance of this Note, including all accrued but unpaid interest and Late Charges, to be immediately due and payable. Nothing in this section shall be construed as relieving any successor in interest to Maker of payment under the terms of this Note.
22.Governing Law. This Note shall be governed in accordance with the laws of the Indiana.
23.Change of Control. The occurrence of any one or more of the following (each a "Change of Control"):
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(a) Maker sells, leases, assigns, transfers, conveys, or otherwise disposes of all or a substantial part of the Maker’s assets (excluding equipment financing or bank financing), or
(b) Maker liquidates, dissolves, or substantially suspends the active business operations, or the equity of Maker is transferred, assigned, or otherwise conveyed to any person or entity, or
(c) The consummation of any consolidation, merger or reorganization of Maker with or into any limited liability company, corporation or other entity, or any other corporate transaction in which Maker shall not be the continuing or surviving entity of such transaction.
The Maker hereby signs this Note as of the date first written above.
Maker: |
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A4 Technologies Inc. |
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a Delaware corporation |
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By: |
/s/ Kent Wilson |
Name: |
Kent Wilson |
Title: |
Chief Executive Officer |
By signing below, Holder hereby confirms and accepts the terms and conditions of this Note.
ACCEPTED BY HOLDER:
/s/ Andrew Spence |
Date: |
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Mr. Andrew Spence |
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EXHIBIT A
CORPORATE GUARANTY
GUARANTY
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of Andrew Spence (“Holder”) having agreed to take a note from A4 Technologies Inc, a Delaware corporation (the “Company”) in connection with the Membership Interest Purchase Agreement (the “Purchase Agreement”) of even or near date herewith, to which Maker and Company are among the contracting parties, in the amount of $200,000.00 for the benefit of Company (the “Note”), the undersigned parent company of Company, Alpine 4 Holdings Inc, a Delaware corporation (the “Guarantor”), does hereby unconditionally guarantee to Holder, its successors and assigns, full and prompt payment and performance of all present and future obligations of the Company to Holder under the Note including all renewals and extensions thereof or substitutions therefor (the “Guaranty”). The Guarantor also agrees to pay in addition thereto all costs, expenses and reasonable attorney’s fees at any time paid or incurred by Holder in endeavoring to enforce this Guaranty.
Notice of acceptance of and action taken by Holder from time to time under this Guaranty are hereby waived and this Guaranty shall operate as a continuing, absolute and irrevocable Guaranty covering all obligations of the Company to Holder under the Note, now existing or hereafter arising.
Upon any default by the Company with respect to any of the obligations herein guaranteed, the liability of the Guarantor hereunder shall be deemed to have become immediately due and payable, without demand, presentment, protest or notice of any kind, all of which are hereby waived, and without any suit or action against the Company or the Guarantor and without further steps to be taken or further conditions to be performed by Holder or anyone. Failure of Holder to make any demand or otherwise to proceed against the Guarantor in respect to any default by the Company or the Guarantor, or any delay by Holder in doing so, shall not constitute a waiver of any Holder right to proceed in respect to any or all other defaults by the Company or the Guarantor.
The liability of the Guarantor is primary and shall not be terminated or otherwise affected or impaired by, and the Guarantor waives notice of, any granting time by Holder to the Company (regardless of the number of length of such grant of time) or any other indulgence or indulgences granted by Holder to the Company; Holder heretofore, now or hereafter acquiring, releasing or in any way modifying any guaranty from any other person or persons or any collateral or other security in whatever form for any of the obligations hereby guaranteed, whether or not notice thereof shall have been or be given to the Guarantor; any failure on the part of Holder to take any action with respect to, or to realize upon any security, rights, endorsements or guaranties which Holder may now or hereafter hold with respect to any obligation hereby guaranteed, including without limitation rights against the Company; any alterations, waivers, extensions, renewals or modifications of any such obligation to which Holder may agree from time to time; any invalidity
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or unenforceability of any of the obligations guaranteed hereby; any change in the membership of the Company; any fraud, illegal or improper acts of the Company; any relief of the Company with respect to its obligations to Holder because of any right of set-off, deduction or defense of any kind or otherwise; any other defenses which might constitute a legal or equitable discharge of a surety or guarantor; the failure of Holder to perfect any lien securing any Company obligations or the obligations of other parties, including any other guarantors; voluntary or involuntary bankruptcy (including a reorganization in bankruptcy) of the Company or entry of an order for relief against or with respect to the Company under any applicable bankruptcy or like laws; composition, extension, moratoria or other forms of debtor relief granted to the Company pursuant to law presently in force or hereafter enacted; payment of any or all obligations and indebtedness of the Company in the event such payment is invalidated or avoided by a trustee, custodian or receiver of the Company; the dissolution of the Company; or the reorganization, merger or consolidation of the Company into or with another entity, corporate or otherwise, or the sale or disposition of all or substantially all of the capital stock, business or assets of the Company to any other person or party. The Guarantor further waives all suretyship defenses and defenses in the nature thereof; any right or claim to right to cause a marshalling of the guarantors before enforcing this guaranty; any right of subrogation to any Holder rights against the Company and any right of reimbursement, indemnity, contribution, exoneration and the like now or hereafter accorded by law to indemnitors, guarantors, sureties or accommodation parties, provided that such waiver shall not be effective to the extent that by virtue of such waiver the liability of the Guarantor is rendered invalid, avoidable or unenforceable under any applicable law dealing with the recovery of avoidance of so-called fraudulent conveyances or otherwise.
This Guaranty shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of the Holder and Holder’s successors and permitted assigns.
This Guaranty shall be governed by and construed in accordance with the laws of the state of Indiana (without reference to the conflicts of law provisions thereof). The invalidity or unenforceability of any provision hereof shall not limit the validity or enforceability of any other provision hereof. This Guaranty may not be amended except by an instrument in writing signed by the party to be charged.
The Guarantor hereby signs this Guaranty as of December 9, 2021.
GUARANTOR: |
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Alpine 4 Holdings, Inc. |
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a Delaware corporation |
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By: |
/s/ Kent Wilson |
Name: |
Kent Wilson |
Title: |
Chief Executive Officer |
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Alpine 4 Holdings (ALPP) Acquires RCA Commercial Electronics, a Continuation from the American Conglomerate Founded in 1919
Alpine 4 Holdings, Inc.
Dec 13, 2021, 09:00 ET
PHOENIX, Dec. 13, 2021 /PRNewswire/ -- Alpine 4 Holdings, Inc. (Nasdaq: ALPP), a leading operator and owner of small market businesses, announced today that it has acquired RCA Commercial Electronics (RCA) of Indianapolis, Indiana, and its operating entity DTI Services.
RCA Commercial Electronics is the continuance of the US-based legacy conglomerate RCA Corporation which dominated the electronics industry in the 20th century. DTI Services acquired the rights to the RCA brand in 2006 to design and build products for the Hospital, Lodging, Education, and Institutional markets. In 2018, DTI Services acquired the entire lighting division of LG including all IP for smart lighting products, also now sold under the RCA banner.
www.rcaled.com
www.rcacommercialtv.com
The RCA Corporation, an American electronics company, was founded as the Radio Corporation of America in 1919 and headquartered in Indiana. It was initially a patent trust owned by General Electric (GE), Westinghouse, AT&T Corporation, and United Fruit Company. As a company whose beginnings derived from patents, it quickly became the gold standard of innovation around the world. As the dominant electronics and communications firm in the United States for over five decades, RCA was at the forefront of the rapidly growing radio industry in the early 1920s as a major manufacturer of radio receivers and the exclusive manufacturer of the first superheterodyne sets. Additionally, RCA created the first nationwide American radio network, the National Broadcasting Company (NBC). The company was also a pioneer in the introduction and development of television, both black and white and especially color. RCA became the leader in consumer satellite technology and is the legacy system that is now known as DirectTV.
In the 1970s, RCA diversified into a multinational conglomerate, and in December 1985, it was announced that GE would reacquire its former subsidiary for $6.28 billion in cash, or $66.50 per share of stock. The sale was completed the next year, and despite initial assurances that RCA would continue to operate as a mostly autonomous unit, it was revealed that GE’s main motivation in purchasing RCA was to acquire the NBC Television Network which RCA owned; GE proceeded to sell off most of the other RCA assets. In 2004, the RCA brand was sold off to Technicolor SA, a French conglomerate. One of the largest TV distributors of RCA’s former TV division, and one of RCA’s lead engineers approached Technicolor to license the name from Technicolor to continue on the RCA brand as RCA Commercial.
Kent B. Wilson, Alpine 4’s CEO, had this to say: “There are very few moments in life outside of being a parent, where life presents something of enormous gravity that you have the opportunity to be the caretaker of. This acquisition represents one of those moments in time. I, and by
extension Alpine 4, are unabashedly proud of being a collector of American companies, and the RCA name is the purest expression of what we call ‘Americana.’ RCA’s historical importance to shaping our daily lives is rarely seen in companies of today. The radio of the 1920’s and 30’s and then the TV of the 1940’s and beyond are the equivalent to the internet and the smart phone of today. Over the last seven months, as we put this deal together, we recognized vast opportunities for the RCA brand within the Alpine 4 family of companies. As a company of innovation, like RCA has been historically, we come across various products, ideas, and inventions that have real possibilities of becoming branded under the RCA name. The power of this name is already starting to bear fruit as we have several products that will come to market in 2022 with the RCA name on it.”
Jeff Kingston, President of RCA commented, “RCA’s reputation as the most trusted name in Electronics, is just as relevant today as it was back in 1919. We proudly operate out of our new 70,000 sq ft Technology Center with offices strategically placed around the country and we are poised for expansive growth. It’s a pivotal time to join Alpine 4 and we look forward to the combined collaborative creativity being put into action through innovative products and projects.”
RCA will reside in the A4 Technologies, Inc., Portfolio as both a Stabilizer and Facilitator from Alpine 4’s DSF business model.
About Alpine 4 Holdings: Alpine 4 Holdings, Inc. (ALPP) is a NASDAQ traded conglomerate that acquires businesses that fit into its disruptive DSF business model of Drivers, Stabilizers, and Facilitators. At Alpine 4, we understand the nature of how technology and innovation can accentuate a business. Our focus is on how the adaptation of new technologies, even in brick-and-mortar businesses, can drive innovation. We also believe that our holdings should benefit synergistically from each other, have the ability to collaborate across varying industries, spawn new ideas, and create fertile ground for competitive advantages.
Four principles at the core of our business are Synergy. Innovation. Drive. Excellence. At Alpine 4, we believe synergistic innovation drives excellence. By anchoring these words to our combined experience and capabilities, we can aggressively pursue opportunities within and across vertical markets. We deliver solutions that not only drive industry standards, but also increase value for our shareholders.
Contact: Investor Relations
investorrelations@alpine4.com
www.alpine4.com
Forward-Looking Statements: Certain statements and information in this press release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Statements that relate to our future operations, our ability to develop the technologies discussed
above, and any financial performance based on the results of our merger with RCA, among others, as well as any statements that are not statements of historical facts constitute forward-looking statements. The information disclosed in this press release is made as of the date hereof and reflects Alpine 4 most current assessment of its historical financial performance. Actual financial results filed with the SEC may differ from those contained herein due to timing delays between the date of this release and confirmation of final audit results. These forward-looking statements are not guarantees of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements including, without limitation, the risks, uncertainties, including the uncertainties surrounding the current market volatility, and other factors the Company identifies from time to time in its filings with the SEC. Although Alpine 4 believes that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this release are made as of the date hereof, and Alpine 4 disclaims any intention or obligation to update the forward-looking statements for subsequent events.
SOURCE Alpine 4 Holdings, Inc.