# EDGAR Filing Document

**Accession Number:** 0001574152
**File Stem:** 0001670254-23-000256
**Filing Date:** 2023-3
**Character Count:** 427192
**Document Hash:** 3f22e4d0c407b63a52a2f7d0acee1f12
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001670254-23-000256.hdr.sgml**: 20230324

**ACCESSION NUMBER**: 0001670254-23-000256

**CONFORMED SUBMISSION TYPE**: C

**PUBLIC DOCUMENT COUNT**: 12

**FILED AS OF DATE**: 20230324

**DATE AS OF CHANGE**: 20230324

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Cardinal Spirits LLC
- **CENTRAL INDEX KEY:** 0001574152
- **IRS NUMBER:** 452673392
- **STATE OF INCORPORATION:** IN
- **FISCAL YEAR END:** 1213

**FILING VALUES:**
- **FORM TYPE:** C
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 020-32047
- **FILM NUMBER:** 23760783

**BUSINESS ADDRESS:**
- **STREET 1:** 1821 E. RUBY LANE
- **CITY:** BLOOMINGTON
- **STATE:** IN
- **ZIP:** 47401
- **BUSINESS PHONE:** 8122026789

**MAIL ADDRESS:**
- **STREET 1:** 1821 E. RUBY LANE
- **CITY:** BLOOMINGTON
- **STATE:** IN
- **ZIP:** 47401

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Cardinal Spirits, LLC
- **DATE OF NAME CHANGE:** 20130410

## Ex-99

### Attached PDF Documents

**Attachment 1:** `document_1.pdf`

# Form C

## Cover Page

Name of issuer:

Cardinal Spirits LLC

Legal status of issuer:

Form: Limited Liability Company

Jurisdiction of Incorporation/Organization: IN

Date of organization: 3/14/2011

Physical address of issuer:

922 S Morton St.
Bloomington IN 47403

Website of issuer:

https://www.cardinalspirits.com/

Name of intermediary through which the offering will be conducted:

Wefunder Portal LLC

CIR number of intermediary:

0001570254

SEC file number of intermediary:

007-00033

CRD number, if applicable, of intermediary:

283503

Amount of compensation to be paid to the intermediary, whether as a dollar amount or a percentage of the offering amount, or a good faith estimate if the exact amount is not available at the time of the filing, for conducting the offering, including the amount of referral and any other fees associated with the offering.

5.5% of the offering amount upon a successful fundraiser, and be entitled to reimbursement for out-of-pocket third party expenses it pays or incurs on behalf of the issuer in connection with the offering.

Any other direct or indirect interest in the issuer held by the intermediary, or any arrangement for the intermediary to acquire such an interest:

No

Type of security offered:

☐ Common Stock
☐ Preferred Stock
☐ Bank
☑ Other

If Other, describe the security offered:

Convertible Note

Target number of securities to be offered:

50,000

Price:

$1.00000

Method for determining price:

Pro-rated portion of the total principal value of $50,000; interests will be sold in increments of $1 each investment is convertible to one unit as described under item 13.

Target offering amount:

$50,000.00

Oversubscriptions accepted:

☑ Yes
☐ No

If yes, disclose how oversubscriptions will be allocated:

☐ Pro-rata basis
☐ First-come, first-served basis
☑ Other

If other, describe how oversubscriptions will be allocated:

As determined by the issuer

Maximum offering amount (if different from target offering amount):

$1,235,000.00

Deadline to reach the target offering amount:

4/29/2024

NOTE: If the sum of the investment commitments does not equal or exceed the target offering amount at the offering deadline, no securities will be sold in the offering. Investment commitments will be cancelled and committed funds will be returned.

Current number of employees:

45

|  | Most recent fiscal year-end | Prior fiscal year-end |
| --- | --- | --- |
| Total Assets: | $1,964,880.00 | $2,721,604.00 |
| Cash & Cash Adjustments: | $274,785.00 | $128,586.00 |
| Accounts Receivable: | $420,554.00 | $1,004,825.00 |
| Short-term Debt: | $2,481,724.00 | $2,210,823.00 |
| Long-term Debt: | $2,411,692.00 | $1,104,325.00 |
| Revenues/Sales: | $6,338,046.00 | $7,554,795.00 |
| Cost of Goods Sold: | $4,983,599.00 | $7,223,245.00 |
| Taxes Paid: | $0.00 | $0.00 |
| Net Income: | ($1,831,123.00) | ($2,157,615.00) |

Select the jurisdictions in which the issuer intends to offer the securities:

AL, AK, AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NV, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI, WI,

## Offering Statement

Respond to each question in each paragraph of this part. Set forth each question and any notes, but not any instructions thereto, in their entirety. If disclosure in response to any question is responsive to one or more other questions, it is not necessary to report the disclosure. If a question or series of questions is inapplicable or the response is available elsewhere in the form, either state that it is inapplicable, include a cross-reference to the responsive disclosure, or omit the question or series of questions.

Be very careful and precise in answering all questions. Give full and complete answers so that they are not misleading under the circumstances involved. Do not discuss any future performance or other anticipated event unless you have a reasonable basis to believe that it will actually occur within the foreseeable future. If any answer requiring significant information is materially inaccurate, incomplete or misleading, the Company, its management and principal shareholders may be liable to investors based on that information.

### THE COMPANY

1. Name of Issuer:

Cardinal Spirits LLC

### COMPANY ELIGIBILITY

2. ☑ Check this box to certify that all of the following statements are true for the issuer:

- Unigenized under, and subject to, the laws of a State or territory of the United States or the District of Columbia.
- Not subject to the requirement to file reports pursuant to Section 13 or Section 15(c) of the Securities Exchange Act of 1934.
- Not an investment company registered or required to be registered under the Investment Company Act of 1940.
- Not ineligible to rely on this exemption under Section 4(c)(6) of the Securities Act as a result of a disqualification specified in Rule 503(a) of Regulation Crowdfunding.
- Has filed with the Commission and provided to investors, to the extent required, the ongoing annual reports required by Regulation Crowdfunding during the two years immediately preceding the filing of this offering statement (or for such shorter period that the issuer was required to file such reports).
- Not a development stage company that (a) has no specific business plan or (b) has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies.

INSTRUCTION TO QUESTION 2: If any of these statements are not true, then you are NOT eligible to rely on this exemption under Section 4(c)(6) of the Securities Act.

3. Has the issuer or any of its predecessors previously failed to comply with the ongoing reporting requirements of Rule 202 of Regulation Crowdfunding?

☐ Yes ☑ No

### DIRECTORS OF THE COMPANY

4. Provide the following information about such director (and any persons occupying a similar status or performing a similar function) of the issuer:

| Director | Principal Occupation | Main Employer | Year Joined as Director |
| --- | --- | --- | --- |
| Jeff Wustick | President | Cardinal Spirits | 2011 |
| Adam Guirk | CEO | Cardinal Spirits | 2011 |

For three years of business experience, refer to Appendix D: Director & Officer Work History.

### OFFICERS OF THE COMPANY

5. Provide the following information about each officer (and any persons occupying a similar status or performing a similar function) of the issuer:

| Officer | Positions Held | Year Joined |
| --- | --- | --- |
| Jeff Wustick | President | 2011 |
| Adam Guirk | CEO | 2011 |

For three years of business experience, refer to Appendix D: Director & Officer Work History.

INSTRUCTION TO QUESTION 5: For purposes of this Question 5, the information is available, you provide, security, insurance or principal financial officers comparable to principal accounting officers and any person that authority performing similar functions.

### PRINCIPAL SECURITY HOLDERS

6. Provide the name and ownership level of each person, as of the most recent practicable date, who is the beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power:

| Name of Holder | No. and Class of Securities Now Held | % of Voting Power Prior to Offering |
| --- | --- | --- |
| Jeff Wustick | 604600.0 Class A Common | 50.0 |
| Adam Guirk | 604600.0 Class A Common | 50.0 |

INSTRUCTION TO QUESTION 6: The above information must be provided as of a date that is no more than 120 days prior.

to the time of filing of this offering statement.

To calculate total voting power, include all securities for which the person directly or indirectly has or shares the voting power, which includes the power to vote or to direct the voting of such securities. If the person has the right to acquire voting power of such securities within 60 days, including through his exercise of any return, contract or right, the conversion of a security, or other arrangement, or if securities are held by a member of his family, through compensation or otherwise, or otherwise, to a business that would allow a person to do so or control the voting of the securities set down in such direction or control - as, for example, a committee then should be included as being "beneficially owned." This should include an explanation of three circumstances on a particular basis: "Number of and Class of Securities from Place". To calculate outstanding voting rights securities, assume all outstanding options are executed and all outstanding securities securities converted.

## BUSINESS AND ANTICIPATED BUSINESS PLAN

7. Describe in detail the business of the issuer and the anticipated business plan of the issuer.

For a description of our business and our business plan, please refer to the attached Appendix A, Business Description & Plan

INSTRUCTION REQUISITION 7. Appendix will provide your company's Wefunder profile to an appendix (Appendix A) in the Form C to PDF format. The submission will include all Q&A terms and "maximum" data to an unassigned format. All issues will be encountered.

This issues that any information provided in your Wefunder profile will be provided to the SEC in response to this question. As a result, your company will be personally liable for misstatements and omissions in your profile under the Securities Act of 1933, which requires you to provide material information related to your business and anticipated business plans. Please review your Wefunder profile carefully to ensure it provides all material information, is not false or misleading, and does not omit any information that could cause the information included to be false or misleading.

## RISK FACTORS

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.

In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

8. Discuss the material factors that make an investment in the issuer speculative or risky:

The US is undergoing a trend that sees less people drinking alcohol in favor of cannabis or N/A beverages. Historically alcohol has been resilient.

Prohibition of alcohol in the United States has historical precedent. Politicians may try to reinstate alcohol prohibition for political reasons.

Alcohol may be more heavily taxed in the future to pay for more and more government services.

The bourbon and whiskey trend will eventually decline, it is just a matter of when. Hedging against this decline with other spirits is important.

Distributors are consolidating across the country. This presents both risk and opportunity for smaller suppliers.

COGS could change - unforeseen fluctuations in raw materials could affect our cost of goods and gross margin.

Customer acquisition channels could change in cost or effectiveness. Distributors may increase their margins.

Local/state/federal regulations could change, affecting how we run our business and what we are legally allowed to do.

Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.

INSTRUCTION REQUISITION 9. Avoid procedural statements and include only those parties that are unique to the issuer. Documents should be reduced to the issuer's business and the offering and should not remain the factors addressed at the expense set forth above. No specific number of risk factors is required to be identified.

# The Offering

## USE OF FUNDS

9. What is the purpose of this offering?

The Company intends to use the net proceeds of this offering for working capital and general corporate purposes, which includes the specific items listed in Item 10 below. While the Company expects to use the net proceeds from the Offering in the manner described above, it cannot specify with certainty the particular uses of the net proceeds that it will receive from this Offering. Accordingly, the Company will have broad discretion in using these proceeds.

10. How does the issuer intend to use the proceeds of this offering?

If not in use: $50,000

Use of Business: 50% towards salespeople, 18.5% towards marketing, 16% towards whiskey production, 10% towards additional equipment, 5.5% Wefunder Fee.

If not in use: $1,235,000

Use of Products: 45% towards salespeople, 17.5% towards marketing, 22% towards whiskey production, 10% towards additional equipment, 5.5% Wefunder Fee.

INSTRUCTION REQUISITION 10. An issuer must provide a reasonable detailed description of any intended use of products, such that business are provided with an adequate amount of information to understand how the offering proceeds will be used. If an issuer has identified a range of possible uses, the issuer should identify and describe each probable use and the factors the issuer may consider in allocating proceeds among the potential uses. If the issuer will accept proceeds in excess of the target offering amount, the issuer must describe the purpose, method for allocating reasonable options, and

intended use of the service provided with another specialty. Please include all potential uses of the property of the offering, including any that may apply only to the uses of uncertified options. If you do not do so, you may have to register to amend your Form C. Reynolds is not responsible for any failure by you to describe a potential use of offering proceeds.

## DELIVERY & CANCELLATIONS

11. How will the issuer complete the transaction and deliver securities to the investors?

Book Entry and Investment in the Co-Issuer. Investors will make their investments by investing in interests issued by one or more co-issuers, each of which is a special purpose vehicle ("SPV"). The SPV will invest all amounts it receives from investors in securities issued by the Company. Interests issued to investors by the SPV will be in book entry form. This means that the investor will not receive a certificate representing his or her investment. Each investment will be recorded in the books and records of the SPV. In addition, investors' interests in the investments will be recorded in each investor's "Portfolio" page on the Wefunder platform. All references in this Form C to an investor's investment in the Company (or similar phrases) should be interpreted to include investments in a SPV.

12. How can an investor cancel an investment commitment?

NOTE: Investors may cancel an investment commitment until 48 hours prior to the deadline identified in those offering materials.

The intermediary will notify investors when the target offering amount has been met. If the issuer reaches the target offering amount prior to the deadline identified in the offering materials, it may close the offering early if it provides notice about the new offering deadline at least five business days prior to such new offering deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment).

If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the issuer upon closing of the offering and the investor will receive securities in exchange for his or her investment.

If an investor does not reconfirm his or her investment commitment after a material change is made to the offering, the investor's investment commitment will be cancelled and the committed funds will be returned.

An Investor's right to cancel. An investor may cancel his or her investment commitment at any time until 48 hours prior to the offering deadline.

If there is a material change to the terms of the offering or the information provided to the investor about the offering and/or the Company, the investor will be provided notice of the change and must reconfirm his or her investment commitment within five business days of receipt of the notice. If the investor does not reconfirm, he or she will receive notifications disclosing that the commitment was cancelled, the reason for the cancellation, and the refund amount that the investor is required to receive. If a material change occurs within five business days of the maximum number of days the offering is to remain open, the offering will be extended to allow for a period of five business days for the investor to reconfirm.

If the investor cancels his or her investment commitment during the period when cancellation is permissible, or does not reconfirm a commitment in the case of a material change to the investment, or the offering does not close, all of the investor's funds will be returned within five business days.

Within five business days of cancellation of an offering by the Company, the Company will give each investor notification of the cancellation, disclose the reason for the cancellation, identify the refund amount the investor will receive, and refund the investor's funds.

The Company's right to cancel. The Investment Agreement you will execute with us provides the Company the right to cancel for any reason before the offering deadline.

If the sum of the investment commitments from all investors does not equal or exceed the target offering amount at the time of the offering deadline, no securities will be sold in the offering, investment commitments will be cancelled and committed funds will be returned.

## Ownership and Capital Structure

### THE OFFERING

13. Describe the terms of the securities being offered.

Convertible note with $20,000,000.00 valuation cap: 20.000% discount; 6.0% interest.

See exact security attached as Appendix B, Investor Contracts.

Type of Security: Convertible Promissory Notes ("Notes").

Amount to be Offered: The goal of the note is $50,000.00

Valuation Cap: $20,000,000.00

Discount Rate: 80%

Maturity Date: January 1, 2026

Interest Rate: 6.0%. Interest shall commence with the date of the convertible note and shall continue on the outstanding principal amount until paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed. All unpaid interest and principal shall be due and payable upon request of the Majority Holders on or after the Maturity Date.

Early-Bird: Investors investing in the first $100,000.00, will receive a higher interest rate of 8.0%.

### Conversion and Repayment

(a) Conversion upon a Qualified Financing. In the event that the Company issues and sells equity securities ("Next Round Securities") to investors (the "investors") while this Note remains outstanding in a transaction or series of related transactions with aggregate gross proceeds to the Company of not less than $5,000,000 (including the conversion of the Notes and any other indebtedness of the Company) and with the principal purpose of raising capital (a "Qualified Financing"), then the outstanding principal amount of this Note and any unpaid

accrued interest shall automatically convert in whole without any further action by the Holder into the Next Round Securities sold in the Qualified Financing at a conversion price equal to the lesser of (i) the cash price paid per membership unit by the Investors in the Qualified Financing multiplied by 0.80, and (ii) the price per membership unit that would be obtained by dividing $20,000,000 by the aggregate number of outstanding membership units of the Company immediately prior to the initial closing of the Qualified Financing (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing, but excluding the Next Round Securities issuable upon the conversion of the Notes or other indebtedness of the Company). The issuance of Next Round Securities pursuant to the conversion of this Note shall be upon and subject to the same terms and conditions applicable to Next Round Securities sold in the Qualified Financing. Notwithstanding the foregoing or anything in this Note to the contrary, the Company may, solely at its option, elect to convert this Note into units of a newly created series or class of membership units having the identical rights, privileges, preferences and restrictions as the membership units issued in the Qualified Financing, and otherwise on the same terms and conditions, other than with respect to (if applicable): (i) the per unit liquidation preference and the conversion price for purposes of any price-based anti-division protection, which will equal the conversion price; and (ii) the per unit dividend or preferred return, if any, which will be the same percentage of the conversion price as applied to determine the per unit dividends or preferred return, if any, of new investors in the Qualified Financing relative to the purchase price paid by such investors.

(b) Optional Conversion at non-Qualified Financing. In the event the Company consummates, while this Note remains outstanding, an equity financing pursuant to which it sells Next Round Securities in a transaction that does not constitute a Qualified Financing, then the Majority Holders shall have the option to treat such equity financing as a Qualified Financing on the same terms set forth herein and elect to convert each of the Notes.

(c) Maturity Date Conversion. In the event that this Note remains outstanding on the Maturity Date, then the outstanding principal balance of this Note and any unpaid accrued interest shall automatically without any further action by the Holder convert as of the Maturity Date into Series A Preferred Units of the Company at a conversion price equal to the quotient resulting from dividing $20,000,000 by the aggregate number of outstanding membership units of the Company as of the Maturity Date (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, but excluding the Series A Preferred Units of the Company issuable upon the conversion of the Notes or other indebtedness of the Company).

(d) Change of Control. If the Company consummates a Change of Control (as defined below) while this Note remains outstanding, the Company shall pay the Holder in cash an amount equal to (i) 150% of the outstanding principal amount of this Note plus (ii) any unpaid accrued interest on the original principal. For purposes of this Note, a "Change of Control" means (i) a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the equity securities of the Company immediately prior to such consolidation, merger or reorganization continue to represent a majority of the voting power of the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company's voting power is transferred; or (iii) the sale or transfer of all or substantially all of the Company's assets, or the exclusive license of all or substantially all of the Company's material intellectual property; provided that a Change of Control shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor, indebtedness of the Company is cancelled or converted or a combination thereof. The Company shall give the Holder notice of a Change of Control not less than 10 days prior to the anticipated date of consummation of the Change of Control. Any repayment pursuant to this paragraph in connection with a Change of Control shall be subject to any required tax withholdings, and may be made by the Company (or any party to such Change of Control or its agent) following the Change of Control in connection with payment procedures established in connection with such Change of Control.

(e) Procedure for Conversion. In connection with any conversion of this Note into equity securities, the Holder shall surrender this Note to the Company and deliver to the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing, all financing documents executed by the Investors in connection with such Qualified Financing). The Company shall not be required to issue or deliver the equity securities into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company any such documentation. Upon the conversion of this Note into equity securities pursuant to the terms hereof, in lieu of any fractional security to which the Holder would otherwise be entitled, the Company shall pay the Holder cash equal to such fraction multiplied by the price at which this Note converts.

(f) Interest Accrual. If a Change of Control or Qualified Financing is consummated, all interest on this Note shall be deemed to have stopped accruing as of a date selected by the Company that is up to 10 days prior to the signing of the definitive agreement for the Change of Control or Qualified Financing.

### Senior Indebtedness

The indebtedness evidenced by this Note is subordinated in right of payment to the prior payment in full of any Senior Indebtedness in existence on the date of this Note or hereafter incurred. "Senior indebtedness" shall mean, unless expressly subordinated to or made on a parity with the amounts due under this Note, all amounts due in connection with (i) indebtedness of the Company to banks or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), and (ii) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior indebtedness, or any indebtedness arising from the satisfaction of such Senior indebtedness by a guarantor.

### Securities Issued by the SPV

Instead of issuing its securities directly to investors, the Company has decided to issue its securities to the SPV, which sell then issue interests in the SPV to investors. The SPV has been formed by Wehunder Admin, LLC and is a co-issuer with the Company of the securities being offered in this offering. The Company's use of the SPV is intended to allow investors in the SPV to achieve the same

economic exposure, voting power, and ability to assert State and Federal law rights, and receive the same disclosures, as if they had invested directly in the Company. The Company's use of the SPV will not result in any additional fees being charged to investors.

The SPV has been organized and will be operated for the sole purpose of directly acquiring, holding and disposing of the Company's securities, will not borrow money and will use all of the proceeds from the sale of its securities solely to purchase a single class of securities of the Company. As a result, an investor investing in the Company through the SPV will have the same relationship to the Company's securities, in terms of number, denomination, type and rights, as if the investor invested directly in the Company.

### Voting Rights

If the securities offered by the Company and those offered by the SPV have voting rights, those voting rights may be exercised by the investor or his or her proxy. The applicable proxy is the Lead Investor, if the Proxy (described below) is in effect.

### Proxy to the Lead Investor

The SPV securities have voting rights. With respect to those voting rights, the investor and his, her, or its transferees or assignees (collectively, the "Investor"), through a power of attorney granted by Investor in the Investor Agreement, has appointed or will appoint the Lead Investor as the Investor's true and lawful proxy and attorney (the "Proxy") with the power to act alone and with full power of substitution, on behalf of the investor to: (i) vote all securities related to the Company purchased in or offering hosted by Wefunder Portal, and (ii) execute, in connection with such voting power, any instrument or document that the Lead Investor determines is necessary and appropriate in the exercise of his or her authority. Such Proxy will be irrevocable by the Investor unless and until a successor lead investor ("Replacement Lead Investor") takes the place of the Lead Investor. Upon notice that a Replacement Lead Investor has taken the place of the Lead Investor, the investor will have five (5) calendar days to revoke the Proxy. If the Proxy is not revoked within the 5-day time period, it shall remain in effect.

### Restriction on Transferability

The SPV securities are subject to restrictions on transfer, as set forth in the Subscription Agreement and the Limited Liability Company Agreement of Wefunder SPV, LLC, and may not be transferred without the prior approval of the Company, on behalf of the SPV.

14. Do the securities offered have voting rights?

☐ Yes
☑ No

15. Are there any limitations on any voting or other rights identified above?

See the above description of the Proxy to the Lead Investor.

16. How may the terms of the securities being offered be modified?

Any term of this Note may be amended or waived with the written consent of the Company and the Holder. In addition, any term of this Note may be amended or waived with the written consent of the Company and the Majority Holders. Upon the effectuation of such waiver or amendment with the consent of the Majority Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes, and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver.

Pursuant to authorization in the Investor Agreement between each Investor and Wefunder Portal, Wefunder Portal is authorized to take the following actions with respect to the investment contract between the Company and an Investor:

A. Wefunder Portal may amend the terms of an investment contract, provided that the amended terms are more favorable to the investor than the original terms; and
B. Wefunder Portal may reduce the amount of an investor's investment if the reason for the reduction is that the Company's offering is oversubscribed.

### RESTRICTIONS ON TRANSFER OF THE SECURITIES BEING OFFERED:

The securities being offered may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:

1. to the issuer;
2. to an accredited investor;
3. as part of an offering registered with the U.S. Securities and Exchange Commission; or
4. to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust control for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.

NOTE: The term "accredited Investor" means any person who comes within any of the categories set forth in Rule 501(a) of Regulation D, or who the seller reasonably believes comes within any of such categories, at the time of the sale of the securities to that person.

The term "member of the family of the purchaser or the equivalent" includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the purchaser, and includes adoptive relationships. The term "spousal equivalent" means a cohabitant occupying a relationship generally equivalent to that of a spouse.

### DESCRIPTION OF ISSUER'S SECURITIES

17. What other securities or classes of securities of the issuer are outstanding? Describe the material terms of any other outstanding securities or classes of securities of the issuer.

| Class of Security | Securities (or Amount) Authorized | Securities (or Amount) Outstanding | Voting Rights |
| --- | --- | --- | --- |
| Series AA Preferred (2013) | 850,000 | 850,000 | No |
| Class A Common | 1,500,000 | 1,500,000 | Yes |
| Class B Common | 72,182 | 72,182 | No |

Series A

Preferred

(2018)

132,774

132,774

No

# Securities Reserved for

# Class of Security Issuance upon Exercise or Conversion

Warrants:

Options:

Describe any other rights:

Series A and Series AA Preferred have a 1x liquidation preference over both classes of common units. Class A Common is the only class of unit with voting rights.

18. How may the rights of the securities being offered be materially limited, diluted or qualified by the rights of any other class of security identified above?

The holders of a majority-in-interest of voting rights in the Company could limit the Investor's rights in a material way. For example, those interest holders could vote to change the terms of the agreements governing the Company's operations or cause the Company to engage in additional offerings (including potentially a public offering). These changes could result in further limitations on the voting rights the Investor will have as an owner of equity in the Company, for example by diluting those rights or limiting them to certain types of events or consents. To the extent applicable, in cases where the rights of holders of convertible debt, SAPES, or other outstanding options or warrants are exercised, or if new awards are granted under our equity compensation plans, an Investor's interests in the Company may be diluted. This means that the pro-rata portion of the Company represented by the Investor's securities will decrease, which could also diminish the Investor's voting and/or economic rights. In addition, as discussed above, if a majority-in-interest of holders of securities with voting rights cause the Company to issue additional equity, an Investor's interest will typically also be diluted. Based on the risk that an Investor's rights could be limited, diluted or otherwise qualified, the Investor could lose all or part of his or her investment in the securities in this offering, and may never see positive returns. Additional risks related to the rights of other security holders are discussed below, in Question 20.

19. Are there any differences not reflected above between the securities being offered and each other class of security of the issuer?

No.

20. How could the exercise of rights held by the principal shareholders identified in Question 8 above affect the purchasers of the securities being offered?

As holders of a majority-in-interest of voting rights in the Company, the unitholders may make decisions with which the Investor disagrees, or that negatively affect the value of the Investor's securities in the Company, and the Investor will have no recourse to change these decisions. The Investor's interests may conflict with those of other investors, and there is no guarantee that the Company will develop in a way that is optimal for or advantageous to the Investor.

For example, the unitholders may change the terms of the operating agreement for the company, change the terms of securities issued by the Company, change the management of the Company, and even force out minority holders of securities. The unitholders may make changes that affect the tax treatment of the Company in ways that are unfavorable to you but favorable to them. They may also vote to engage in new offerings and/or to register certain of the Company's securities in a way that negatively affects the value of the securities the Investor owns. Other holders of securities of the Company may also have access to more information than the Investor, leaving the Investor at a disadvantage with respect to any decisions regarding the securities he or she owns.

The unitholders have the right to redeem their securities at any time. Unitholders could decide to force the Company to redeem their securities at a time that is not favorable to the Investor and is damaging to the Company. Investors' exit may affect the value of the Company and/or its viability.

In cases where the rights of holders of convertible debt, SAPES, or other outstanding options or warrants are exercised, or if new awards are granted under our equity compensation plans, an Investor's interests in the Company may be diluted. This means that the pro-rata portion of the Company represented by the Investor's securities will decrease, which could also diminish the Investor's voting and/or economic rights. In addition, as discussed above, if a majority-in-interest of holders of securities with voting rights cause the Company to issue additional units, an Investor's interest will typically also be diluted.

21. How are the securities being offered being valued? Include examples of methods for how such securities may be valued by the issuer in the future, including during subsequent corporate actions.

The offering price for the securities offered pursuant to this Form C has been determined arbitrarily by the Company, and does not necessarily bear any relationship to the Company's book value, assets, earnings or other generally accepted valuation criteria. In determining the offering price, the Company did not employ investment banking firms or other outside organizations to make an independent appraisal or evaluation. Accordingly, the offering price should not be considered to be indicative of the actual value of the securities offered hereby.

The initial amount invested in a Convertible Note is determined by the Investor, and we do not guarantee that the Convertible Note will be converted into any particular number of units. As discussed in Question 13, when we engage in an offering of equity involving Unit, Investors may receive a number of units of Preferred Unit calculated as either the conversion price equal to the issuer of (i) 60% of the price paid per unit for Equity Securities by the investors in the Qualified Financing or (ii) the price equal to the quotient of the valuation cap of $20,000,000.00 (the "Valuation Cap") divided by the aggregate number of outstanding units of the Company's unit as of immediately prior to the initial closing of the Qualified Financing (assuming full conversion or exercise of all convertible and exercisable securities then outstanding, but excluding the units of equity securities of the Company issuable upon the conversion of the Notes or any other debt). Because there will likely be no public market for our securities prior to an initial public offering or similar liquidity event, the price of the Unit that Investors will receive, and/or the total value of the Company's capitalization, will be determined by our board of directors. Among the factors we may consider in determining the price of Unit are prevailing market conditions, our financial information, market valuations of other companies that are believed to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant. In the future, we will perform valuations of our units that take into account, as applicable, factors such as the following:

- unrelated third party valuations;

- the price at which we sell other securities in light of the relative rights, preferences and privileges of those

- our results of operations, financial position and capital resources;
- current business conditions and projections;
- the marketability or lack thereof of the securities;
- the hiring of key personnel and the experience of our management;
- the introduction of new products;
- the risk inherent in the development and expansion of our products;
- our stage of development and material risks related to our business;
- the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the
- market conditions and the nature and history of our business;
- industry trends and competitive environment;
- trends in consumer spending, including consumer confidence;
- overall economic indicators, including gross domestic product, employment, inflation and interest rates; and
- the general economic outlook.

We sell analyze factors such as those described above using a combination of financial and market-based methodologies to determine our business enterprise value. For example, we may use methodologies that assume that businesses operating in the same industry will unit similar characteristics and that the Company's value will correlate to those characteristics, and/or methodologies that compare transactions in similar securities issued by us that were conducted in the market.

23. What are the risks to purchasers of the securities relating to minority ownership in the issuer?

An investor in the Company will likely hold a minority position in the Company, and thus be limited as to its ability to control or influence the governance and operations of the Company.

The marketability and value of the investor's interest in the Company will depend upon many factors outside the control of the investor. The Company will be managed by its officers and be governed in accordance with the strategic direction and decision-making of its Management, and the investor will have no independent right to name or remove an officer or member of the Management of the Company.

Following the investor's investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the investor in the Company. The investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured.

The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the investor's interest in the Company.

23. What are the risks to purchasers associated with corporate actions, including additional issuances of securities, issuer repurchases of securities, a sale of the issuer or of assets of the issuer or transactions with related parties?

Additional issuances of securities. Following the investor's investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the investor in the Company. The investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured. The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the investor's interest in the Company.

Issuer repurchases of securities. The Company may have authority to repurchase its securities from unitholders, which may serve to decrease any liquidity in the market for such securities, decrease the percentage interests held by other similarly situated investors to the investor, and create pressure on the investor to sell its securities to the Company concurrently.

A sale of the issuer or of assets of the issuer. As a minority owner of the Company, the investor will have limited or no ability to influence a potential sale of the Company or a substantial portion of its assets. Thus, the investor will rely upon the executive management of the Company to manage the Company so as to maximize value for unitholders. Accordingly, the success of the investor's investment in the Company will depend in large part upon the skill and expertise of the executive management of the Company. If the Management of the Company authorizes a sale of all or a part of the Company, or a disposition of a substantial portion of the Company's assets, there can be no guarantee that the value received by the investor, together with the fair market estimate of the value remaining in the Company, will be equal to or exceed the value of the investor's initial investment in the Company.

Transactions with related parties. The investor should be aware that there will be occasions when the Company may encounter potential conflicts of interest in its operations. On any issue involving conflicts of interest, the executive management of the Company will be guided by their good faith judgement as to the Company's best interests. The Company may engage in transactions with affiliates, subsidiaries or other related parties, which may be on terms which are not semi-length, but will be in all cases consistent with the duties of the management of the Company to its unitholders. By acquiring an interest in the Company, the investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.

24. Describe the material terms of any indebtedness of the issuer:

Loan

Lender

SBA

Issue date

09/26/15

Amount

$208,000.00

Outstanding principal plus interest

$55,800.00 as of 03/22/23

Interest rate

1.75% per annum

Maturity date

09/30/15

Current with payments

Yes

Current with payments

SBS Equipment Loan

Loan

Lender First Financial Bank

Issue date 05/29/21

Amount $440,000.00

Outstanding principal plus interest $289,535.11 as of 03/22/23

Interest rate 4.25% per annum

Maturity date 05/30/26

Current with payments Yes

First Financial Bank Loan

Loan

Lender First Financial Commercial Loan

Issue date 09/28/22

Amount $191,727.00

Outstanding principal plus interest $178,158.27 as of 03/22/23

Interest rate 7.0% per annum

Maturity date 09/29/27

Current with payments Yes

First Financial Commercial Loan

Loan

Lender Morton & Eleventh, LLC

Issue date 12/29/22

Amount $1,608,000.00

Outstanding principal plus interest $1,608,000.00 as of 03/20/23

Interest rate 3.5% per annum

Current with payments Yes

Morton has made multiple loans to the Company. Their repayment is dependent upon cash flow availability and accrue interest at rates ranging from 1.1-7.0%. It is expected that these notes will be converted to Equity in 2023.

Loan

Lender Jeff Woolich

Issue date 12/29/22

Amount $157,000.00

Outstanding principal plus interest $157,000.00 as of 03/20/23

Interest rate 3.5% per annum

Current with payments Yes

Woolich has made two loans to the Company. Their repayment is dependent upon cash flow availability and accrue interest at 3.5%. It is expected that these notes will be converted to Equity in 2023.

INTEREST FOR REQUISITION 24. Note the other amounts to the interest rate, maturity date, and any other material terms.

25. What other exempt offerings has the issuer conducted within the past three years?

| Offering Date | Exemption | Security Type | Amount Sold | Use of Proceeds |
| --- | --- | --- | --- | --- |
| No exempt offerings. |  |  |  |  |

26. Was or is the issuer or any entities controlled by or under common control with the issuer a party to any transaction since the beginning of the issuer's last fiscal year or any currently proposed transaction, where the amount involved exceeds five percent of the aggregate amount of capital raised by the issuer in reliance on Section A(a)(6) of the Securities Act during the preceding 12-month period, including the amount the issuer seeks to raise in the current offering, in which any of the following persons had or is to have a direct or indirect material interest:

1. any director or officer of the issuer;

2. any person who is, as of the most recent practicable date, the beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power;

3. if the issuer was incorporated or organized within the past three years, any perimeter of the issuer;

4. or any immediate family member of any of the foregoing persons.

☑ Yes

☐ No

For each transaction specify the person, relationship to issuer, nature of interest in transaction, and amount of interest.

Name Morton & Eleventh, LLC

Amount invested $1,608,000.00

Transaction type Loan

Issue date 12/29/22

Outstanding principal plus interest $1,608,000.00 as of 03/20/23

Interest rate 3.5% per annum

Current with payments Yes

Relationship Entity controlled by Shareholder (Jeff Woolich)

Name Jeff Woolich

Amount invested $157,000.00

Transaction type Loan

Issue date 12/29/22

Outstanding principal plus interest $157,000.00 as of 03/20/23

Interest rate 3.5% per annum

Current with payments Yes

Relationship Co-Founder

INSTRUCTIONS TO QUESTION 26: The terms, instructions, and/or instructions for the use of the financial statements, and the information contained in this document are not intended to be used for any purpose other than as specified in the United States, except as otherwise provided in the United States.

Beneficial to the use of the financial statements, and the information contained in this document are not intended to be used for any purpose other than as specified in the United States, except as otherwise provided in the United States.

The terms "number of the funds" includes any other, any kind, general fund, interest, compensation, compensation, income, or special compensation, adding, making or any other, other, and/or any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any, any

Compare the amounts of a related party's interest in any transaction to the extent of the party in law, and not in the transaction. Where it is not practicable to make the approximate amount of the interest, and/or the approximate amount shall not be the transaction.

# FINANCIAL CONDITION OF THE ISSUER

27. Does the issuer have an operating history?

☑ Yes
☐ No

28. Describe the financial condition of the issuer, including, to the extent material, liquidity, capital resources and historical results of operations.

## Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

### Overview

Cardinal Spirits is a growing craft distillery and spirits manufacturer with a line of successful canned cocktails and craft spirits.

### Milestones

Cardinal Spirits LLC was incorporated in the State of Indiana in March 2011.

Since then, we have:

- Case sales grew from 8k in 2017 to 127k in 2022 ($6.3M annual revenue, $32M in cumulative revenue).
- Products sold in 6,400 retail outlets (up from 1,000 in 2018), including Walmart, Kroger, CVS, etc.
- Gross margin has improved from 13% in 2019, to 39% in 2022.
- Media darlings: Featured in the Wall Street Journal and New York Times.
- Co-founder lobbied for law change that opened the door for 50+ craft distilleries now in Indiana.
- Successful distillery locking room with 4.8 stars on Yelp and 4.8 stars on Google.
- Voted USA Today's Readers' Choice in 2019, 2020, 2021, and 2022.

### Historical Results of Operations

- Revenues & Gross Margin. For the period ended December 31, 2022, the Company had revenues of $6,338,048 compared to the year ended December 31, 2021, when the Company had revenues of $1,554,795. Our gross margin was 21.37% in fiscal year 2022, compared to 4.39% in 2021.
- Assets. As of December 31, 2022, the Company had total assets of $1,984,880, including $374,785 in cash. As of December 31, 2021, the Company had $2,721,604 in total assets, including $138,586 in cash.
- Net Loss. The Company has had net losses of $1,831,123 and net losses of $2,157,615 for the fiscal years ended December 31, 2022 and December 31, 2021, respectively.
- Liabilities. The Company's liabilities totaled $4,895,426 for the fiscal year ended December 31, 2022 and $3,319,148 for the fiscal year ended December 31, 2021.

### Liquidity & Capital Resources

To-date, the company has been financed with $1,531,975 in equity and $3,295,377 in debt.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 36 months before we need to raise further capital.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don't have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 24 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

### Runway & Short/Mid Term Expenses

Cardinal Spirits LLC cash in hand is $271,180.93, as of March 2023. Over the last three months, revenues have averaged $352,333/month, cost of goods sold has

averaged $172,333/month, and operational expenses have averaged

$260,000/month, for an average burn rate of $80,000 per month. Our intent is to be profitable in 3 months.

There have been no material changes or trends in our operations or finances since the date that our financial statements cover.

In six months, we expect to generate approximately $3M and incur roughly $3M in expenses. This is due in part to the seasonality of our business.

We believe we can reach profitability in approximately three months. We do not believe we need any additional capital to make that happen.

Outside this Wefunder offering, we could potentially solicit previous investors for additional capital.

All projections in the above narrative are forward-looking and not guaranteed.

INSTRUCTIONS TO QUESTION 29: The information must cover each year for which financial statements are provided. For issuers with or prior operating history, the document should focus on financial statements and operational, liquidity and other challenges. For issuers with an operating history, the document should focus on whether internal trends and with flows are representative of what investors should expect in the future. This may account for the possibility of the offering and any other factors or pending sources of capital. Doctors have the proceeds from the offering with other liquidity, whether receiving these funds and any other additional funds in accounts on the inability of the business, and how quickly the issuer anticipates using the available cash. Describe the other available sources of capital in the business, such as lines of credit or required contributions by shareholders. References to the issues in this Question 29 and those instructions refer to the issues and its predecessors if any.

## FINANCIAL INFORMATION

29. Include financial statements covering the two most recently completed fiscal years or the period(s) since inception, if shorter:

Refer to Appendix C, Financial Statements

1. Adam Quirk, certify that

- (1) the financial statements of Cardinal Spirits LLC included in this Form are true and complete in all material respects; and
- (2) the financial information of Cardinal Spirits LLC included in this Form reflects accurately the information reported on the tax return for Cardinal Spirits LLC filed for the most recently completed fiscal year.

Adam Quirk
CEO

## STAKEHOLDER ELIGIBILITY

30. With respect to the issuer, any predecessor of the issuer, any affiliated issuer, any director, officer, general partner or managing member of the issuer, any beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, any promoter connected with the issuer in any capacity at the time of such sale, any person that has been or will be paid (directly or indirectly) nonaccrual for solicitation of purchasers in connection with such sale of securities, or any general partner, director, officer or managing member of any such solicitor, prior to May 18, 2016.

(1) Has any such person been convicted, within 10 years (or five years, in the case of issuers, their predecessors and affiliated issuers) before the filing of this offering statement, of any felony or misdemeanor:

- i. In connection with the purchase or sale of any security? ☐ Yes ☑ No
- ii. Inquiring the making of any false filing with the Commission? ☐ Yes ☑ No
- iii. arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment advisor, funding portal or paid solicitor of purchasers of securities? ☐ Yes ☑ No

(2) Is any such person subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years before the filing of the information required by Section 4A(1) of the Securities Act (1st), at the time of filing of this offering statement, business or enjoins such person from engaging or continuing to engage in any conduct or practice:

- i. In connection with the purchase or sale of any security? ☐ Yes ☑ No
- ii. Inquiring the making of any false filing with the Commission? ☐ Yes ☑ No
- iii. arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment advisor, funding portal or paid solicitor of purchasers of securities? ☐ Yes ☑ No

(3) Is any such person subject to a final order of a state securities commission (or an agency or officer of a state performing like functions), a state authority that supersizes or examines banks, savings associations or credit unions, a state insurance commission (or an agency or officer of a state performing like functions), an appropriate federal banking agency, the U.S. Commodity Futures Trading Commission, or the National Credit Union Administration that:

i. at the time of the filing of this offering statement bars the person from:

- A. association with an entity regulated by such commission, authority, agency or officer? ☐ Yes ☑ No
- B. engaging in the business of securities, insurance or banking? ☐ Yes ☑ No
- C. engaging in savings association or credit union activities? ☐ Yes ☑ No

ii. constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, materialized or deceptive conduct and for which the order was entered within the 10-year period ending on the date of the filing of this offering statement? ☐ Yes ☑ No

(4) Is any such person subject to an order of the Commission entered pursuant to Section 10(b) or 10(c) of the Exchange Act or Section 2001(c) or (3) of the Investment Advisors Act of 1940 that, at the time of the filing of this offering statement:

- i. suspends or revokes such person's registration as a broker, dealer, municipal securities dealer, investment advisor or funding portal? ☐ Yes ☑ No
- ii. places limitations on the activities, functions or operations of such person? ☐ Yes ☑ No
- iii. bars such person from being associated with any entity or from participating in the offering of any penny stock? ☐ Yes ☑ No

(5) Is any such person subject to any order of the Commission entered within five years before the filing of this offering statement that, at the time of the filing of this offering statement, orders the person to cease and desist from committing or causing a violation or future violation of:

i. any investor-based with-Head-प्रशासन of the federal securities laws, including without limitation Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act, Section 16(c)(3) of the Exchange Act and Section 2(a)(1) of the Investment

Advisors Act of 1940 or any other rule or regulation thereunder? ☐ Yes ☑ No

If Section 5 of the Securities Act? ☐ Yes ☑ No

(6) Is any such person suspended or expelled from membership in, or suspended or towed from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade?

☐ Yes ☑ No

(7) Has any such person filed (as a registrant or issuer), or was any such person or was any such person named as an underwriter in, any registration statement or Regulation A offering statement filed with the Commission that, within five years before the filing of this offering statement, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is any such person, at the time of such filing, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued?

☐ Yes ☑ No

(8) Is any such person subject to a United States Postal Service false representation order entered within five years before the filing of the information required by Section 4A(b) of the Securities Act, or is any such person, at the time of filing of this offering statement, subject to a temporary recruiting order or preliminary objection with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations?

☐ Yes ☑ No

If you would have answered "Yes" to any of these questions had the conviction, order, judgment, decree, suspension, expulsion or bar occurred or been issued after May 16, 2016, then you are NOT eligible to rely on this exemption under Section 4(A)(5) of the Securities Act.

INSTRUCTIONS TO QUESTION 20: Final order measures written directly or indirectly; measures issued by a federal or state agency described in Rule 2(b)(2) of Regulation Crowdfunding, under applicable statutes; measures that prohibit the action and an opportunity for hearing, which constitutes a final disposition to action by that federal or state agency.

See section 4A(5) of the Securities Act, as applicable in the following terms of the offer and order, and the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer and order of the offer

## OTHER MATERIAL INFORMATION

In addition to the information expressly required to be included in this Form, include:

- (1) any other material information presented to investors; and

- (2) such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.

The Lead Investor. As described above, each investor that has entered into the Investor Agreement will grant a power of attorney to make voting decisions on behalf of that Investor to the Lead Investor (the "Proxy"). The Proxy is irrevocable unless and until a Successor Lead Investor takes the place of the Lead Investor, in which case, the Investor has a five (5) calendar day period to revoke the Proxy. Pursuant to the Proxy, the Lead Investor or his or her successor will make voting decisions and take any other actions in connection with the voting on Investors' behalf.

The Lead Investor is an experienced investor that is chosen to act in the role of Lead Investor on behalf of Investors that have a Proxy in effect. The Lead Investor will be chosen by the Company and approved by Wefunder Inc. and the identity of the Initial Lead Investor will be disclosed to Investors before Investors make a final Investment decision to purchase the securities related to the Company.

The Lead Investor can quit at any time or can be removed by Wefunder Inc. for cause or pursuant to a vote of Investors as detailed in the Lead Investor Agreement. In the event the Lead Investor quits or is removed, the Company will choose a Successor Lead Investor who must be approved by Wefunder Inc. The identity of the Successor Lead Investor will be disclosed to Investors, and those that have a Proxy in effect can choose to either leave such Proxy in place or revoke such Proxy during a 5-day period beginning with notice of the replacement of the Lead Investor.

The Lead Investor will not receive any compensation for his or her services to the SPV. The Lead Investor may receive compensation if, in the future, Wefunder Advisors LLC forms a fund ("Fund") for accredited investors for the purpose of investing in a non-Regulation Crowdfunding offering of the Company. In such as circumstance, the Lead Investor may act as a portfolio manager for that Fund (and as a supervised person of Wefunder Advisors) and may be compensated through that role.

Although the Lead Investor may act in multiple roles with respect to the Company's offerings and may potentially be compensated for some of its services, the Lead Investor's goal is to maximize the value of the Company and therefore maximize the value of securities issued by or related to the Company. As a result, the Lead Investor's interests should always be aligned with those of Investors. It is, however, possible that in some limited circumstances the Lead Investor's interests could diverge from the interests of Investors, as discussed in section 8 above.

Investors that wish to purchase securities related to the Company through Wefunder Portal must agree to give the Proxy described above to the Lead Investor, provided that if the Lead Investor is replaced, the Investor will have a 5-day period during which he or she may revoke the Proxy. If the Proxy is not revised during this 5-day period, it will remain in effect.

Tax Filings. In order to complete necessary tax filings, the SPV is required to include information about each investor who holds an interest in the SPV, including each investor's taxpayer identification number ("TIN") (e.g., social security number or employer identification number). To the extent they have not already done so, each investor will be required to provide their TIN within the earlier of (i) two (2) years of making their investment or (ii) twenty (20) days prior to the date of any distribution from the SPV. If an investor does not provide their TIN within this time, the SPV reserves the right to withhold from any proceeds otherwise payable to the Investor an amount necessary for the SPV to satisfy its tax withholding obligations as well as the SPV's reasonable estimation of any penalties that may be charged by the IRS or other relevant authority as a result of the investor's failure to provide their TIN. Investors should carefully review the terms of the SPV Subscription Agreement for additional information about tax filings.

INSTRUCTIONS TO QUESTION 20: If information is presented to investors in a format, such investor reserves not otherwise

be reflected in text or partially discussed format, the issuer should include:

your description of the material content of each information;

your description of the format in which such disclosure is presented; and

11. In the case of dividends in value, under or other dynamic media or format, a transcript or description of such dividends.

# ONGOING REPORTING

12. The issuer will file a report electronically with the Securities & Exchange Commission annually and send the report on its website, no later than:

120 days after the end of each fiscal year covered by the report.

13. Once posted, the annual report may be found on the issuer's website at:

https://www.cardinalspirits.com/invest

The issuer must continue to comply with the ongoing reporting requirements until:

1. the issuer is required to file reports under Exchange Act Sections 13(a) or 15(d).
2. the issuer has filed at least one annual report and has fewer than 300 holders of record;
3. the issuer has filed at least three annual reports and has total assets that do not exceed $10 million;
4. the issuer or another party purchases or repurchases all of the securities issued pursuant to Sections 4(a)(6), including any payment in full of debt securities or any complete redemption of redeemable securities; or the issuer legislates or dissolves in accordance with state law.

# APPENDICES

Appendix A: Business Description & Plan

Appendix B: Investor Contracts

SPV Subscription Agreement - Early Bird

Early Bird Cardinal Spirits Early Bird Convertible Note

SPV Subscription Agreement

Cardinal Spirits Convertible Note

Appendix C: Financial Statements

Financials 1

Appendix D: Director & Officer Work History

Adam Quirk

Jeff Wuslich

Appendix E: Supporting Documents

Cardinal_Spirits_LLC_-

_Amended_and_Restated_Operating_Agreement_Exhibit_-c.pdf

# Signatures

Intentional misstatements or omissions of facts constitute federal criminal violations. See 18 U.S.C. 1001.

The following documents will be filed with the SEC:

Cover Page XML

Offering Statement (this page)

Appendix A: Business Description & Plan

Appendix B: Investor Contracts

SPV Subscription Agreement - Early Bird

Early Bird Cardinal Spirits Early Bird Convertible Note

SPV Subscription Agreement

Cardinal Spirits Convertible Note

Appendix C: Financial Statements

Financials 1

Appendix D: Director & Officer Work History

Adam Quirk

Jeff Wuslich

Appendix E: Supporting Documents

Cardinal_Spirits_LLC_-_Amended_and_Restated_Operating_Agreement_Exhibit_-c.pdf

Pursuant to the requirements of Sections 4(a)(6) and 4A of the Securities Act of 1933 and Regulation Crowdfunding (§ 227.506 et seq.), the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form C and has duly caused this Form to be signed on its behalf by the duly authorized undersigned.

Cardinal Spirits LLC

By

Adam Quirk

CEO

Pursuant to the requirements of Sections 4(a)(6) and 4A of the Securities Act of 1933 and Regulation Crowdfunding (§ 227.100 et seq.), this Form C and Transfer Agent Agreement has been signed by the following persons in the capacities and on the dates indicated.

Jeff Wuslich

President
3/23/2023

Adam Quirk

CEO
3/23/2023

The Form C must be signed by the issuer, its principal executive officer or officers, its principal financial officer, its controller or principal accounting officer and at least a majority of the board of directors or persons performing similar functions.

I authorize Wefunder Portal to submit a Form C to the SEC based on the information I provided through this online form and my company's Wefunder profile.

As an authorized representative of the company, I appoint Wefunder Portal as the company's true and lawful representative and attorney-in-fact, in the company's name, place and stead to make, execute, sign, acknowledge, swear to and file a Form C on the company's behalf. This power of attorney is coupled with an interest and is irrevocable. The company hereby waives any and all defenses that may be available to contest, negate or disaffirm the actions of Wefunder Portal taken in good faith under or in reliance upon this power of attorney.

**Attachment 2:** `document_2.pdf`

CARDINAL SPIRITS

# Beloved, award-winning craft spirits & canned cocktails from $6M ARR distillery▲

![img-0.jpeg](img-0.jpeg)

cardinalspirits.com Bloomington Indiana

# Highlights

1 Case sales grew from 8k in 2017 to 127k in 2022 ($6.3M annual revenue, $32M in cumulative revenue).
2 Products sold in 8,400 retail outlets (up from 1,000 in 2018). Including Walmart, Kroger, CVS, etc.
3 Gross margin has improved from 13% in 2019, to 39% in 2022.
4 Media darlings: Featured in the Wall Street Journal and New York Times.
5 Co-founder lobbied for law change that opened the door for 50+ craft distilleries now in Indiana.
6 Successful distillery tasting room with 4.5 stars on Yelp and 4.6 stars on Google.
7 Voted USA Today's Readers' Choice in 2019, 2020, 2021, and 2022.
8 Over 35k followers across social media, and 10k newsletter subscribers with 45% open rate.

# Our Team

Adam Quirk CEO

Previously exited boutique media/marketing agency in NYC; CMO for tech startup incubator, early web video pioneer (has the 7th video uploaded to Youtube).

Erica Sagon Director of Communications

Head cheerleader for Cardinal Spirits, overseeing social media, media relations, branding. Never far from a newspaper and a negrons. Former and forever journalist.

Jeff Wuslich President

I love bringing a team together to accomplish complex and almost unsolvable tasks. I work on production, sales, regulatory, HR, and other day-to-day operations like our tasting room. Heavily involved in the craft spirits community state and nationwide.

## Our investor deck

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

1. In 2015 we opened our tasting room doors and sold out of vodka in about six hours.
2. Eight years later and we've generated over $32,000,000 in revenue.
3. We have produced 4,910,197 bottles and cans!

![img-4.jpeg](img-4.jpeg)

# OVERVIEW: LEADERSHIP

![img-5.jpeg](img-5.jpeg)

![img-6.jpeg](img-6.jpeg)

## INVESTMENT OPPORTUNITIES

Management has prioritized four key areas for investment, all of which contribute to increasing the enterprise value of the business:

1. Brand Sales
2. Whiskey
3. Copacking
4. Tasting Room

| Funding Use | Amount |
| --- | --- |
| Brand | $600,000 |
| Whiskey | $750,000 |
| Copacking | $350,000 |
| Tasting Room | $800,000 |
| Total Funding Cost | $2,000,000 |

![img-7.jpeg](img-7.jpeg)

![img-8.jpeg](img-8.jpeg)

## BRAND SALES: ANNUAL CASES

- After investing in sales and marketing, Brand Sales achieved outstanding growth.
- Management raised the process of ensuring and growing new geographic markets.

![img-9.jpeg](img-9.jpeg)

![img-10.jpeg](img-10.jpeg)

## BRAND SALES: POINTS OF DISTRIBUTION

- Cardinal products are widely distributed within current markets.
- The brand is exclusively received by both distributors and retailers.
- This growth was achieved in existing states - no additional markets.
- Brand's growth achieved

1000% from store placements accounted for significant growth

![img-11.jpeg](img-11.jpeg)

![img-12.jpeg](img-12.jpeg)

# BRAND SALES: CHAIN PLACEMENTS

![img-13.jpeg](img-13.jpeg)

# BRAND SALES: CHAIN PLACEMENTS

![img-14.jpeg](img-14.jpeg)

# BRAND SALES: INVESTMENT HIGHLIGHTS

- Greenfield Opportunity in RTD (ready-to-drink) Market: Spirits based RTDs have been the national model in the industry the past several years, growing at a 50% CAGR from 2018 to 2021, enhancing volume's visibility at percent 1.4%.
- Cardinal writes to the RTD's current cardinal market as the beginning of the trend in 2018 and continued to grow within this category with investment. Future and creative packaging.
- Cardinal's RTD line outpaced the category, netting 60% CAGR during that same 2018-2021 period.
- 40% way based RTD "Boulder-Ocean Side" has seen massive, rebound demand, including response from markets well as trade of Cardinal's sales areas. Dynamic currently outstrips the Company's ability to produce due to lack of barriers.
- In response to demand, Cardinal has continued to develop additional RTD offerings including a Canada Council variety to track that results for 2022 with 40% CAGR and has three additional 100% scheduled for release in 2023 which will support continued growth in this high volume business.

![img-15.jpeg](img-15.jpeg)

# BRAND SALES: INVESTMENT HIGHLIGHTS

![img-16.jpeg](img-16.jpeg)

# BRAND SALES: RTD + SPIRITS GROWTH

![img-17.jpeg](img-17.jpeg)

![img-18.jpeg](img-18.jpeg)

## BRAND SALES: NATIONAL PRESS

- Wall Street Journal - Covid Brings America's Beer-vs.-Liquor Rivalry to a Head
- Imbibe - Drink of the Week: Cardinal Spirits Bourbon Cream Soda
- Forbes - Refreshing Canned Cocktails That Are Ready for Summer Adventures
- Uncrate - Cardinal Spirits Bourbon Cream Soda
- Boston Herald - These canned cocktails let you skip bartender duty
- Washington Post - These 16 cocktails are actually worth popping open
- New York Post - Best Canned Cocktails of Summer 2020
- Midwest Living - Fall Getaway to Bloomington, Indiana
- New York Times - Canned Cocktails in Quarantine Make Mixing a One-Step Process
- Vogue - The 18 Best Canned Cocktails to Kick Off Your Summer Nights
- Bloomberg - The Best Spirits of 2019
- Wall Street Journal - The Canned Cocktails You Should Be Sipping This Summer
- Saveur - The Best Canned Cocktails You Can Take Absolutely Anywhere

## BRAND SALES: PROJECTED CASES

![img-19.jpeg](img-19.jpeg)

![img-20.jpeg](img-20.jpeg)

Forward-looking projections cannot be guaranteed.

## BRAND SALES: FUNDING USES

- Sales and Marketing to Drive Midwest Growth
- $600,000 - Two new markets at $500k per salesperson and $500k for marketing spend.
- Cardinal has developed a national and repeatable model for ensuring new markets is professional salesperson in a nearby market, followed up with a merchandised case, close management, of the distributor, and a modern marketing campaign.
- One sales manager is responsible for 10,000 annual cases. Average case revenue is $55. Expected timeline for 10K is 18 months after market entry.

| Investment | Annual Cases Generated | Annual Revenue Generated | Annual Profit @ 4/14/24 |
| --- | --- | --- | --- |
| $600,000 for two new markets: 2 new sales people + marketing | 30,000 | $1,000,000 | $762,500 |

![img-21.jpeg](img-21.jpeg)

## BRAND SALES: NEW MARKETS

![img-22.jpeg](img-22.jpeg)

![img-23.jpeg](img-23.jpeg)

## EMERGING OPPORTUNITY: ECOMMERCE

While in recent news, the company will likely start a regulatory and health issues, the opportunity is getting more effective. Just as it is a compliance burden and more public must be the key. Commerce will not be up to 10 years.

**Working with LibDiv** (eCommerce platform for market support) will allow Cardiac to enter up to 6 new markets without going through the traditional three for distribution system.

- • **Subsidiaries** (eCommerce platform for market support) will allow Cardiac to enter up to 6 new markets without going through the traditional three for distribution system.
- • **Subsidiaries** (eCommerce platform for market support) will allow Cardiac to enter up to 6 new markets without going through the traditional three for distribution system.
- • **Subsidiaries** (eCommerce platform for market support) will allow Cardiac to enter up to 6 new markets without going through the traditional three for distribution system.

**Working with BioStock (Q2 2023) we will be launching a direct-to-consumer site for fans to purchase our products directly.**

![img-24.jpeg](img-24.jpeg)

![img-25.jpeg](img-25.jpeg)

![img-26.jpeg](img-26.jpeg)

![img-27.jpeg](img-27.jpeg)

## WHISKEY: INVESTMENT HIGHLIGHTS

- Whiskey is one of the best performing casts, classy and parrot to score, friendly gold and above score on years and three market in silver.
- Incoming in whiskey as a brand-swaring bottler, lower on further, action was can be continued by Grand Slate on Copacking clients' attention meeting in mixed private markets.
- As the bouncer and lye whiskey team continues to grow, management has uncovered several segments of the category with significant untapped market potential.
- With an end user experience in country of good goods there is enormous opportunity in the RTD whiskey category, premium single brand sources, of shortness, whiskey testing.
- In addition to sourcing high quality, aged whiskey, additional margin can be captured by increasing in-house production of whiskey. Historically, and pal has not aided less this due to workflow constraints.
- Increasing in-house whiskey production has three primary benefits:
  - 1. Increase margin in Cardinal branded whiskey products.
  - 2. Increased valuation in potential sub-contractor.
  - 3. Increased brand equity in the whiskey consumer market.

![img-28.jpeg](img-28.jpeg)

## WHISKEY: FUNDING USES

AGED WHISKEY: $840,000

| Age | 1yr | 2yr | 3yr | 4yr |
| --- | --- | --- | --- | --- |
| Quantity | 100 barrels | 50 barrels | 50 barrels | 100 barrels |
| Price each | $1,200 | $2,000 | $2,400 | $2,900 |
| Total | $120,000 | $100,000 | $120,000 | $200,000 |

WHISKEY: PRODUCTION: $100,000

| Item | Chiller | Barrels | Grain |
| --- | --- | --- | --- |
| Quantity | 1 | 300 | 300 |
| Price Each | $60,000 | $200 | $600 |
| Total | $60,000 | $60,000 | $60,000 |

![img-29.jpeg](img-29.jpeg)

![img-30.jpeg](img-30.jpeg)

![img-31.jpeg](img-31.jpeg)

## COPACKING: INVESTMENT HIGHLIGHTS

Market Leader in Specialty Spirits Bottling with Stable Customer and Revenue Base to Build On

- Cardinal has created a niche in the market, where they can quickly and profitably produce custom work for both large companies and startups.

![img-32.jpeg](img-32.jpeg)

- Cardinal focuses on every level service or specialty bedding needs. He may mean extra hand bedding and consulting, but it builds a stronger relationship with the client.
- Cardinals in every product to be held. Since then the competition, which has given more profit for their customers.
- Cardinal has built long term relationships with vendors who help readily source in domestic raw materials for their clients.

![img-33.jpeg](img-33.jpeg)

# COPACKING: CASE VOLUME

![img-34.jpeg](img-34.jpeg)

![img-35.jpeg](img-35.jpeg)

# COPACKING: FUNDING USES

- Larger, more efficient facility and equipment + sales to drive Copacking growth.
- Sales manager position to focus on acquiring new clients and selling additional capacity to existing accounts.
- New facility increases our footprint from 18,000 to 28,700 square feet.
- Home-dumping equipment is custom-built to suit specifications to increase productivity for single-barrel whiskey bedding.

| Detail | Cost |
| --- | --- |
| Recoverager to grow client base | $100,000 |
| New facility built to cut overhead for single-barrel production and efficiency | $75,000 |
| Basic equipment and bedding automation | $275,000 |
| Total | $500,000 |

![img-36.jpeg](img-36.jpeg)

![img-37.jpeg](img-37.jpeg)

# TASTING ROOM: INVESTMENT HIGHLIGHTS

- The primary function of the tasting room is to assist in a marketing tool for the Cardinal Sports brand.
- Only operations consist of four main activities: education, brand marketing, on-premise consumption, and on-your-sales of beverages and other products.
- The Cardinal Sports tasting room is the only stability tasting room in Bloomington.
- Unit if any hours are available every week.
- Boulder now available your sound in cocktails.
- Managing to better margins on food and drink menu.
- Engaging local business and nonprofit community with special events.
- Managing to not pass bottom line in the near term as we rebuilt to pre-Covid revenue levels.

![img-38.jpeg](img-38.jpeg)

## TASTING ROOM: FUNDING USES

Refocus efforts on post-covid rebuilding of tasting room operations

- The tasting room was created for people to engage with the Cardinal Spirit brand in a physical space. This is where people fill in love with Cardinal Spirits. During the post-covid, we found the tasting room in this public. During the event, a 100% trial focus was on employee and guest safety and comfort. This led to decreased income and profit, but not a necessary diet towards rebuilding its normal operations.
- The tasting room must be financially self-sustaining, which means a refocus of tourism, cocktail and food sales, and away from the restaurant concept.

| Detail | Cost |
| --- | --- |
| Improving the brand, improve the taste, taste, and educational material | $50,000 |
| Response marketing to drink to unsold tobacco | $50,000 |
| Total | $100,000 |

![img-39.jpeg](img-39.jpeg)

## Summary and Investment Overview

![img-40.jpeg](img-40.jpeg)

## SUMMARY: TOTAL CASE VOLUME

Commitment cases produced (Cardinal Brand + Copacking)

![img-41.jpeg](img-41.jpeg)

![img-42.jpeg](img-42.jpeg)

## SUMMARY: BRAND STRENGTH

![img-43.jpeg](img-43.jpeg)

- **The Tasting Room:** creates brand awareness and loyalty which feeds Brand Sales
- **Brand Sales:** creates organic, natural foods for Copacking efforts, and high-quality Cardinal products with key assets and doing well in the market, and want to build, so that brands in our facility:
  - Brand awareness also shows that Unana tobacco with solid business, strong having our relationship with key buyers
- **Copacking:** profits are reinvested, completing the crop
- This is a case where we are your group is stronger at Cardinal than at similar companies that only have 1 of 2 of these essential lines. It is especially helpful to our goals making it as all three departments increase sales.

![img-44.jpeg](img-44.jpeg)

**$1,800,000**
Brand Sales Revenue 2022

**$3,240,000**
Copacking Revenue 2022

![img-45.jpeg](img-45.jpeg)

**$700,000**
Tasting Room Revenue 2022

**$560,000**
Other Revenue 2022

**$6,300,000**
Total Revenue 2022

![img-46.jpeg](img-46.jpeg)

# SUMMARY: FINANCIAL METRICS

| $ in Units | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | $5,191 | $5,579 | $5,559 | $6,303 | $6,361 | $6,907 | $8,106 |
| Gross Margin | $5,399 | $6,253 | $5,582 | $7,011 | $4,514 | $7,069 | $9,507 |
| GM % | 44% | 56% | 27% | 45% | 49% | 57% | 53% |
| EBITDA | $(560) | $2,265 | $(2,270) | $(1,527) | $754 | $1,901 | $2,001 |
| EBITDA % | -15% | 27% | -30% | -25% | 8% | 14% | 17% |

* Hand print per sales in 2020, of $5.6M | Loss of 'recuperative' function, rev

![img-47.jpeg](img-47.jpeg)

Forward-looking projections cannot be guaranteed.

# SUMMARY: 2023 STRATEGY

![img-48.jpeg](img-48.jpeg)

# SUMMARY: FUNDING USES

| Funding Use | Amount |
| --- | --- |
| Brand | $600,000 |
| Whiskey | $750,000 |
| Copecking | $550,000 |
| Fasting Room | $300,000 |
| Total Funding Goal | $2,000,000 |

![img-49.jpeg](img-49.jpeg)

Only $1.25M of the $2M will be solicited through Wefender.

# SUMMARY: INVESTMENT OVERVIEW

- Goal for 2023 is $4.5M/UA, at least the other remaining in 2022 from high volume. Gross Margin (excl. 2022) is relatively, improved gross margin, and significant overhead reductions.
- After reviewing and analyzing operating expenses, management has created a leaner, more flexible Central. They have taken the following steps:
  - Reduce overall payroll by $12 million (annual)
  - Reduce consulting fees by $50,000 (annual)
  - Reduce other revenues to $100,000 (annual)
- Positive cash flow was achieved during several months of 2022 with the investment commitment, an end up-to-date sales volume

![img-50.jpeg](img-50.jpeg)

# SUMMARY: TERMS OF INVESTMENT

SUMMARY

This Investment is structured as a Convertible Promissory Note

Convertible notes are originally structured as a cost. Investments but have a provision that allows the principal plan accrued interest to convert into an equity investment at a later date. This allows the original investment to get done more quickly with lower legal fees for the company at the time, but ultimately gives the investment the economic exposure of an equity investment.
The terms of this investment are detailed in the document "Cardinal Spirits Convertible Promissory Note 2022"
The target for this investment round is $50,000
The max rate for the investment round is $1,250,000
Additional capital would allow the target amount will be invested in additional sales for brand growth, and additional expeditiously necessary
If the total raised does not meet the target amount, these strategy will be prioritized above Cassos and Testing Room.

![img-0.jpeg](img-0.jpeg)

# SUMMARY: GOALS AND LIQUIDITY

SUMMARY

Cardinal Spirits plans to grow the BTD line until it reaches a sizeable volume by industry standards, at which point they may choose to sell off this line of business.
Management has developed new analysis with M&A directors at several multinational beverage companies, in conversations with these industry experts. They have shared metrics for attractive acquisition
Strategic acquisitions are most common when a brand reaches 50,000 clinical cases, or has monthly depositions per store of 5 cases or more.
Acquisitions in craft spirits are numerous and accelerating, with attractive, substantial valuations

![img-1.jpeg](img-1.jpeg)

Forward-looking projections cannot be guaranteed.

# SUMMARY: PATH TO ACQUISITION

SUMMARY

Grow sales to 50,000 cases per year

Currently at 30,000 total 35,000 BTD.
Cardinal's cost volume annual growth rate is 47% over the past 3 years. Projected growth rate is 35%.
At projected growth rate, Cardinal will hit 50,000 cases per year in late 2023 or early 2024.
Create clean BTD data in financials (completed 2023)
Refine requests BTD line to end identity (Q2 2024)

![img-2.jpeg](img-2.jpeg)

Forward-looking projections cannot be guaranteed.

# SUMMARY: EXIT POTENTIALS

SUMMARY

$50,000,000 Assumes 50,000 cases/year at $1,000 per case valuation
Currently Cardinal sells 32,000 cases/year
$100,000,000 Assumes 5% Revenue at projected 2023 $364 revenue level
Currently Cardinal generates $64 in annual revenue

![img-3.jpeg](img-3.jpeg)

Forward-looking projections cannot be guaranteed.

# SUMMARY: PUBLIC DEAL NEWS

Craft Spirit Valuations Start At $1,000 per case: Forbes
Note that Cardinal currently sells 32,000 cases/year
High West Purchased by Constellation for $160,000,000 ($2,285 per case) -

# **WSJ**

- Casamigos Purchased by Diageo for $1,000,000,000 ($58,000 per case) - Reuters
- Bulldog Purchased by Campari for $58,000,000 (5.7x revenue) - PR Newswire
- Distill Ventures and other craft spirit incubators: SevenFifty
- Big spirit companies invest in craft brands: Bevnet
- RTD Cocktail Growth: SevenFifty
- Apax Partners acquires controlling interest in Ole Smoky Distillery: PE Hub
- Heaven Hill Brands acquires Samson & Surrey: KY Bourbon Trail
- Pritzker Private Capital acquires Bardstown Bourbon Co: BusinessWire
- Bardstown Bourbon Co. to acquire Green River Spirits Co: Distillery Trail
- Diageo acquires Australian cold brew liqueur Mr. Black: Beverage Daily
- Diageo acquires Texas-based Balcones Distilling: Forbes
- Milestone Brands acquires Canadian distillery Victoria Distillers 1908 Gin: PR Newswire
- Campari acquires 15% interest in Howler Head Banana Bourbon: Shanken News
- Campari acquires French aperitif brand Picon for $125 million: Reuters
- Campari acquires stake in Wilderness Trail Distillery for $420 million: VinePair
- Brown-Forman acquires Gin Mare brands from Vantguard: Spirits Business
- Pernod "significantly increases" its minority stake in Sovereign Brands: Beverage Journal
- Deutsch Family Wine & Spirits acquires stake in Negra Tequila: PR Newswire
- Constellation Brands fully acquires Austin Cocktails: Beverage Daily

# **Thanks!**

Adam Quirk & Jeff Wuslich
Cofounders, Cardinal Spirits

![img-4.jpeg](img-4.jpeg)

# **BRAND SALES: NATIONAL PRESS**

- Wall Street Journal - Could Be the American's Best in a Green World in a Head
- Invalida - On the 17th Street, Cardinal Spirits is a Green Green Side
- Prairie - Defending Cardinal Cocktails That are Ready for Summer Allurements
- Unilever - Cardinal Spirits Bourbon Green Side
- Boston Post - Auto-Corona Cocktails for any more of the world
- Washington Post - These 'Goodsticks' are actually worth seeing again
- Rock Rock, Red - Who's Cardinal Cocktails in 'Summer 2000'
- Midwest Living - RTD Cocktails in New York, Indiana
- East York Times - Cardinal Cocktails in Quarter the Week, We're a New Day, Proud
- Wapin - The 14 Best Cardinal Cocktails in New York, Indiana
- Bloomberg - The New York Times
- Wall Street Journal - The Cardinal Cocktails You Should Be Seating This Summer
- Travel - The Best Cardinal Cocktails You Can Take About, Any Incubator

![img-5.jpeg](img-5.jpeg)

1

## SUMMARY: PUBLIC DEAL NEWS (1)

- Craft Spirit Valuations Start At $1,000 per case: Forbes
  - Note that Cardinal currently sells 32,000 cours/year
- High Used Purchased by Controllation for $100,000,000 ($2,000 per case) - WSC
- Cozomigos Purchased by Diageo for $1,000,000,000 ($50,000 per case) - Reuters
- Building Purchased by Camps: for $50,000,000 (in % interest) - US Bureaucracy
- Distri Ventures and other craft spirit incubators: SearsCity
- big spirit consumers invest in craft brands: SearsCity
- RTD Cocktail Growth: SearsCity
- Apex Partners acquires consulting interest in Ole Smoky Distillery: PE Fruit
- Heaven Hill Brands acquires Samson & Summy: 8X Business Trail
- Fritzer Process Capital acquires Sandstown Southern Oil: Businessville
- Kohlstown Business Co. to acquire Greer River South: 7X Business Trail

![img-6.jpeg](img-6.jpeg)

## SUMMARY: PUBLIC DEAL NEWS (2)

- Diageo acquires Australian cold brew liquor Mr. Dade: Sauranga Daily
- Diageo acquires Texas-based Balconies Distilling: Forbes
- Milestone Brands acquires Canadian distillery Victoria Distillers NCR Gin: 7X Newswire
- Camps acquires 10A interest in Premier Head Banana Bourbon: Shaman News
- Camps acquires French open 1/2 board Hoon for $125 million: Reuters
- Camps acquires stake in Wilderness Trail Distillery for $420 million: VisaTrail
- Brown-Forman acquires Gin More brands from Vertigo and Spirits Business
- Forrest "High-Rottery Increased" its minority stake in Stowesign Brands: Sauranga Journal
- Deutsch Family Wine & Spirits acquires stake in Negro Tropics: 7X Newswire
- Controllation Brands fully accedes Austin Rockfalls: Newswire Daily

![img-7.jpeg](img-7.jpeg)

**Attachment 3:** `document_3.pdf`

# **Cardinal Spirits I (THE "SPV"),**
a series of **Wefunder SPV, LLC**, a Delaware limited
liability company (the "LLC")

# Subscription Agreement

**[INVESTMENT AMOUNT]**

**[INVESTMENT DATE]**

**Cardinal Spirits I** (the "SPV"), a series of **Wefunder SPV, LLC** (the "LLC"), is a special purpose vehicle that will invest all of its assets in securities issued by **Cardinal Spirits LLC** (the "Company"). By making an investment in the SPV through the **Wefunder website**, I understand and agree to the representations set forth below.

I have reviewed the following information and documents in connection with this Subscription Agreement:

1. The information on the **Wefunder website** about the Company. I acknowledge that this information was prepared solely by either the Company or a third party whose work has been verified by the Company, and that none of **Wefunder, Inc.**, **Wefunder Portal, LLC**, **Wefunder Admin, LLC** or **Wefunder Advisors, LLC**, nor any of their affiliates, employees or agents, are responsible for the adequacy, completeness, or accuracy of this information;
2. The Form C relating to this investment, which provides information about investment in the Company through the use of the SPV;
3. The Series Appendix, an appendix to the **Wefunder SPV, LLC** limited liability company agreement (the "**LLC Agreement**"), which sets forth certain specific terms of the SPV;
4. The Terms Appendix, which summarizes the terms of the Company securities to be purchased by the SPV;
5. The **LLC Agreement**, which sets forth other terms applicable to each SPV;
6. This Subscription Agreement, which sets forth the terms governing your investment in the SPV, and that sets forth certain representations you are making in connection with your investment in the SPV;
7. The **Wefunder Investor Agreement**; and
8. The **Wefunder Terms of Service**.

**By making an investment in the SPV through the Wefunder website, I agree to be bound by this Subscription Agreement and the terms of the other agreements listed above with respect to my investment in the SPV.**

# Subscription Agreement

# SCOPE OF AGREEMENT AND INVESTOR ELIGIBILITY
REPRESENTATIONS

A. This agreement ("Agreement") applies to each investment in a series ("SPV") of Wefunder SPV, LLC (the "LLC"). Each series is a separate pool of assets from every other series. Each SPV will invest all of its assets in securities issued by a single company ("Company") as set forth in the applicable series appendix ("Series Appendix") to the Wefunder SPV, LLC limited liability company agreement (LLC Agreement). The terms of the Company securities to be purchased by the SPV are summarized in an appendix ("Terms Appendix") attached to this Agreement.
B. Each SPV is formed by and operated by Wefunder Admin, LLC on behalf of the Company in whose securities that SPV invests.
C. Important information about the Company, about the related SPV, and more generally about investments through the Wefunder website, is available through the Wefunder website. The Investor should review that information, and all relevant Company Information (as defined below), carefully before making an investment in any SPV.
D. Each SPV will offer membership interests ("Interests") in that SPV pursuant to Regulation Crowdfunding under the U.S. Securities Act of 1933, as amended (the "Securities Act").
E. You hereby agree that each time you make an investment in any SPV, you will be deemed to have entered into this Agreement, and will be deemed to have made each representation and covenant contained in this Agreement.
F. Except as the context otherwise requires, any reference in this Subscription Agreement to:

1. a "SPV" shall mean "The LLC acting solely on behalf of and for the account of the SPV";
2. "Investor" and "you" shall mean a person (whether individually, jointly with another person, or through his or her individual retirement account) who has agreed to invest, or has invested, in any SPV; and
3. "Company Information" means:

a. The information on the Wefunder website about the Company. I acknowledge that this information was prepared solely by either the Company or a third party whose work has been verified by the Company, and that neither Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC or Wefunder Advisors, LLC (together, the "Wefunder entities," nor any of their affiliates, employees or agents, are responsible for the adequacy, completeness, or accuracy of this information;
b. The Form C relating to this investment, which provides information about investment in the Company through the use of the SPV;
c. The Series Appendix, an appendix to the Wefunder SPV, LLC limited liability company agreement (the "LLC Agreement"), which sets forth certain specific terms of the SPV;
d. The Terms Appendix, which summarizes the terms of the Company securities to be purchased by the SPV;
e. The LLC Agreement, which sets forth other terms applicable to each SPV;
f. This Subscription Agreement, which sets forth the terms governing your investment in the SPV, and that sets forth certain representations you are making in connection with your investment in the SPV;
g. The Wefunder Investor Agreement; and
h. The Wefunder Terms of Service.

INVESTOR'S REPRESENTATIONS AND COVENANTS

# 1. Investor's Review of Information and Investment Decision

1.1. The Investor has carefully read and understands the Company Information. The Investor acknowledges that it has made an independent decision to invest indirectly in the Company through the SPV and that, in making its decision to invest in a SPV, the Investor has relied solely upon the Company Information, any other relevant information on the Wefunder website, and independent investigations made by the Investor. The Investor understands that no representations or warranties have been made to the Investor by the LLC, the relevant SPV, any administrator appointed from time to time with respect to the SPV (the "Administrator"), any lead investor appointed from time to time with respect to the SPV (the "Lead Investor"), or any partner, member, officer, employee, agent, affiliate or subsidiary of any of them regarding the Company.

1.2. The Investor has been provided an opportunity to request additional information concerning the Company and the offering through the Ask A Question feature on wefunder.com.

1.3. The Investor understands and agrees that neither Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC, any of their affiliates, nor any director, manager, officer, shareholder, member, employee or agent of Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC or any of their affiliates (each, a "Wefunder Party," and collectively, "Wefunder Parties") shall be liable in connection with any information or omission of information contained in materials prepared or supplied by the Company. Such materials may include, but are not limited to, information provided by the Company in the Form C related to the offering, information available through the Wefunder website, and materials distributed to the Investor by the SPV on behalf of a Company.

1.4. The Investor represents and agrees that no Wefunder Party has recommended or suggested any investment in a SPV, or any investment related to a Company, to the Investor.

1.5. Investor understands that no Wefunder Party is an adviser to Investor, and that Investor is not an advisory or other client of any Wefunder Party.

1.6. The Investor is not relying on any Wefunder Party or any other person or entity with respect to the legal, accounting, business, investment, pension, tax or other economic considerations involved in this investment other than the Investor's own advisers that are not affiliated with any of the foregoing persons.

1.7. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of the Investor's investment in the SPV and is able to bear such risks. The Investor has obtained, in the Investor's judgment, sufficient information to evaluate the merits and risks of such investment. The Investor has evaluated the risks of investing in the SPV, understands there are substantial risks of loss incidental to the purchase of an Interest and has determined that the Interest is a suitable investment for the Investor and consistent with the general investment objectives of the Investor.

# 2. Investor's Representations Related To Investment in a SPV.

2.1. The Investor is acquiring the Interest for its own account, for investment purposes only and not with an intent to resell or distribute the Interest (or any distributions received from the SPV in whole or in part), and the Investor agrees that it will not sell or otherwise transfer the Interest unless in compliance with Regulation Crowdfunding and other applicable securities laws, and with the terms and conditions of this Agreement.
2.2. The Investor's investment in the Interest is consistent with the investment purposes, objectives and cash flow requirements of the Investor and will not adversely affect the Investor's overall need for diversification and liquidity.
2.3. The Investor has all requisite power, authority and capacity to acquire and hold the Interest and to execute, deliver and comply with the terms of each of the instruments required to be executed and delivered by the Investor in connection with the Investor's subscription for the Interest, including without limitation this Subscription Agreement, and such execution, delivery and compliance does not conflict with, or constitute a default under, any instruments governing the Investor, any law, regulation or order, or any agreement or other undertaking to which the Investor is a party or by which the Investor may be bound. If the Investor is an entity, the person executing and delivering each of such instruments on behalf of the Investor has all requisite power, authority and capacity to execute and deliver such instruments, and, upon request by the SPV, will furnish to the SPV a true and correct copy of any instruments governing the Investor, including all amendments thereto. The signature on each of such instruments is genuine and each of such instruments constitutes a legal, valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms.
2.4. The Wefunder Parties are each hereby authorized and instructed to accept and execute any instructions in respect of the Interest given by the Investor in written or electronic form. The Wefunder Parties may rely conclusively upon and shall incur no liability in respect of any action take upon any notice, consent, request, instructions or other instrument believed in good faith to be genuine or to be signed by properly authorized persons of the Investor.
2.5. Pursuant to the requirements of Treas. Reg. § 301.6109-1(c), the Investor has provided, or agrees to provide upon the earlier of (i) two years of an acquisition of an Interest or (ii) twenty (20) days before any distribution is to be made from the SPV, his, her or its taxpayer identification number (e.g., social security number or employer identification number) under penalties of perjury and has or will attest that the Internal Revenue Service has not notified the Investor that he, she or it is subject to backup withholding.

# 3. The Manager Has The Right To Reject Any Subscription, In Whole Or In Part.

3.1. The Investor understands that the SPV will not register as an investment company under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), nor will it make a public offering of its securities within the United States.
3.2. The Investor understands that the value of all investments in any SPV made through individual retirement accounts ("IRAs") must be less than \(25\%\) of the value of the SPV's assets.

3.3. If the Investor is investing in a SPV through an employee benefit plan of any kind, including an individual retirement account (the "Plan"), and an individual or entity (the "Fiduciary") has entered into this Agreement on behalf of the Plan, the Fiduciary hereby makes the following representations, warranties, and covenants:

i. The Fiduciary is a fiduciary of the Plan who is authorized to invest Plan assets or is acting at the direction of a Plan fiduciary authorized to invest Plan assets. The Fiduciary has determined that an investment in the Fund is consistent with the Fiduciary's responsibilities to the Plan under Employee Retirement Income Security Act of 1974, as amended ("ERISA") or other applicable law, and is qualified to make such investment decision. The Fiduciary is authorized to make all representations, covenants and agreements set forth in this Agreement about and on behalf of the Investor, and the Fiduciary hereby agrees that, except for the representations, covenants and agreements contained in this section 3.3, all representations, covenants and agreements contained in this Agreement are made on behalf of the Investor who is investing through the Plan.

ii. The execution and delivery of this Subscription Agreement, and the investment contemplated hereby has been duly authorized by all appropriate and necessary parties pursuant to the provisions of the instrument or instruments governing the Plan and any related trust; and (B) will not violate, and is not otherwise inconsistent with, the terms of such instrument or instruments.

iii. The Fiduciary acknowledges that the assets of the Fund will be invested in accordance with the Company Information related to that Fund.

iv. The Plan's purchase and holding of an Interest will not constitute a non-exempt transaction prohibited under ERISA, Section 4975 of the Internal Revenue Code (the "Code"), or any similar laws or other federal, state, local, foreign or other laws or regulations applicable to the Plan and its investments. None of the Wefunder entities nor any of their affiliates, agents, or employees: (A) exercises any authority or control with respect to the management or disposition of assets of the Plan used to purchase an Interest; (B) renders investment advice for a fee (pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions and that such advice will be based on the particular investment needs of the Plan), with respect to such assets of the Plan, or has the authority to do so, or (C) is an employer maintaining or contributing to, or any of whose employees are covered by, the Plan.

v. The Fiduciary understands and agrees to the fee arrangements described in the Company Information.

vi. The Fiduciary understands and agrees that, to prevent the assets of the SPV from being treated as "plan assets" for purposes of ERISA and Section 4975 of the Code, the Investor may be prohibited from purchasing or acquiring an Interest or may be required to redeem its Interest or a portion thereof.

3.4. The Investor acknowledges that the SPV and any Administrator, on the SPV's behalf, may not accept any investment from an Investor if the Investor cannot truthfully make the representations contained herein.

4. The Correctness And Accuracy Of All Information Provided By Investor To The LLC Or The SPV.

4.1. The Investor confirms that all information and documentation provided to the LLC, the SPV, and any Administrator, including, but not limited to, all information regarding the Investor's identity, taxpayer identification number, the source of the funds to be invested in the SPV, and the Investor's eligibility to invest in offerings under Regulation Crowdfunding, is true, correct and complete. Should any such information change or no longer be accurate, the Investor agrees and covenants that they will promptly notify the Wefunder Parties of such changes via the wefunder.com platform. The Investor agrees and covenants that he, she or it will maintain accurate and up-to-date contact information (including email and mailing address) on the wefunder.com platform and will promptly update such information in the event it changes or is no longer accurate.

4.2. The representations, warranties, agreements, undertakings and acknowledgments made by the Investor in this Subscription Agreement will be relied upon by the LLC, the SPV, and any Administrator in determining the Fund's compliance with federal and state securities laws, and shall survive the Investor's admission as a Member of the SPV.

4.3. All information that the Investor has provided to the LLC, the SPV, and any Administrator concerning the knowledge and experience of financial, tax and business matters of the Investor is correct and complete.

# 5. The Wefunder Parties' Right To Use Investor Information.

5.1. The Investor agrees and consents to the Wefunder Parties, their delegates and their duly authorized agents and any of their respective related, associated or affiliated companies obtaining, holding, using, disclosing and processing the Investor's data:

a. to facilitate the acceptance, management and administration of the Investor's subscription for an Interest on an on-going basis;
b. for any other specific purposes where the Investor has given specific consent to do so;
c. to carry out statistical analysis, market research, and tracking of investment performance over time;
d. to comply with legal or regulatory requirements applicable to the SPV and any Administrator or the Investor, including, but not limited to, in connection with anti-money laundering and similar laws;
e. for disclosure or transfer to third parties including the Investor's financial adviser (where appropriate), regulatory bodies, auditors, technology providers or to the SPV, any Administrator, any Lead Investor, and their delegates or their duly appointed agents and any of their respective related, associated or affiliated companies for the purposes specified above;
1. If the contents thereof are relevant to any issue in any action, suit or proceeding to which the LLC, the SPV, any Administrator, any Lead Investor, or their affiliates are a party or by which they are or may be bound;
g. for other legitimate business of the LLC, the SPV, any Administrator, or any Lead Investor.

5.2. The Investor acknowledges and agrees that it will provide additional information or take such other actions as may be necessary or advisable for the SPV or any Administrator (in the sole judgment of the SPV and/or any Administrator) to comply with any disclosure and compliance policies, related legal process or appropriate requests (whether formal or informal) or otherwise.
5.3. The Investor agrees and consents to disclosure by the LLC, the SPV and any of their agents, including any Administrator or any Lead Investor, to relevant third parties of information pertaining to the Investor in respect of disclosure and compliance policies or information requests related thereto. Without limiting the generality of the foregoing, the Investor agrees that information about the Investor may be provided to the Company in whose securities a SPV will or proposes to invest.
5.4. The Investor authorizes the LLC, the SPV, any Administrator, and each SPV service provider to disclose the Investor's nonpublic personal information to comply with regulatory and contractual requirements applicable to the SPV and its investments. Any such disclosure shall be permitted notwithstanding any privacy policy or similar restrictions regarding the disclosure of the Investor's nonpublic personal information.

# 6. Key Risk Factors

6.1. The Investor understands that investment in a SPV may involve a complete loss of the Investor's investment. In this regard, the Investor understands that such venture investments involve a high degree of risk, and that many or most venture company investments lose money. An Investor may ultimately receive cash, securities, or a combination of cash and securities (and in many cases nothing at all). If the Investor receives securities, the securities may not be publicly traded, and may not have any significant value.
6.2. The Investor understands and agrees that the Interests are subject to restrictions on transfer and cannot be redeemed. Instead, an Investor typically must hold his or her Interest in a SPV until the SPV has sold or otherwise disposed of its investments and the SPV distributes its investments to the investors in the SPV (a "Liquidation Event"). An Investor typically will not receive any distributions until such a Liquidation Event (and may not receive anything even upon a Liquidation Event), which may not occur for many years. The Investor must therefore bear the economic risk of holding their investment for an indefinite period of time.

6.3. The Investor understands and agrees that the Interests: (a) have not been registered under the Securities Act or any other law of the United States, or under the securities laws of any state or other jurisdiction, and therefore an Interest cannot be resold, pledged, assigned or otherwise disposed of unless it is so registered or an exemption from registration is available; and (b) can only be transferred as permitted under Regulation Crowdfunding and subject to the terms and conditions of this Agreement.

6.4. The Investor understands that no guarantees have been made to the Investor about future performance or financial results of the SPV, and an investment in the SPV may result in a gain or loss upon termination or liquidation of the SPV. It is possible that the investors in a SPV will have "phantom income," which could require them to pay taxes on their investment in a SPV even though the SPV does not distribute any income (or does not distribute sufficient income to pay the taxes).

6.5. The Investor understands and agrees that the SPV was formed by and is operated by Wefunder Admin, LLC on behalf of the Company. Investors will have no right to manage or influence the management of any SPV or of the LLC.

6.6. The Investor understands and agrees that the Company may appoint a Lead Investor and that, if appointed, pursuant to a power of attorney granted by the Investor in the Investor Agreement, the Lead Investor will exercise voting authority on behalf of the Investor with respect to the SPV securities the Investor owns.

6.7. The Investor represents that he or she has read and understands the risk factors contained in the Company Information. The Investor understands and agrees that each Company is solely responsible for providing risk factors, conflicts of interest, and other disclosures that investors should consider when investing in securities issued by that Company (including through a SPV), and that the Wefunder Parties have no ability to assure, and have not in any way assured, that any or all such risk factors, conflicts of interest and other disclosures have been presented fully and fairly, or have been presented at all.

6.8. The Investor understands that any privacy statements, reports or other communications regarding the SPV and the Investor's investment in the SPV (including annual and other updates, and tax documents) will be delivered via electronic means, including through wefunder.com. The Investor hereby consents to electronic delivery as described in the preceding sentence. In so consenting, the Investor acknowledges that email messages are not secure and may contain computer viruses or other defects, may not be accurately replicated on other systems, or may be intercepted, deleted or interfered with, with or without the knowledge of the sender or the intended recipient. The Investor also acknowledges that an email from the Wefunder Parties may be accessed by recipients other than the Investor and may be interfered with, may contain computer viruses or other defects and may not be successfully replicated on other systems. No Wefunder Party gives any warranties in relation to these matters.

6.9. The Investor understands and agrees that if he, she or it does not provide a valid taxpayer identification number under penalties of perjury, and attest that the Investor has not been notified by the Internal Revenue Service that he, she or it is subject to backup withholding, the SPV will be required to withhold from any proceeds otherwise payable to the Investor an amount necessary to satisfy the SPV's backup withholding obligations.

6.10. The Investor understands and agrees that if he, she or it does not provide a valid taxpayer identification number to the SPV, the SPV will withhold from any proceeds otherwise payable to the Investor an amount necessary for the SPV to satisfy its tax withholding obligations with respect to such amount. The SPV may also withhold any other amounts representing the SPV's reasonable estimation of penalties that may be charged by the Internal Revenue Service or any other taxing authority as a result of the Investor's failure to provide a valid taxpayer identification number.

# 7. Compliance With Anti-Money Laundering Laws.

7.1. The Investor represents and warrants that the Investor's investment was not directly or indirectly derived from illegal activities, including any activities that would violate U.S. Federal or State laws or any laws and regulations of other countries.

7.2. The Investor acknowledges that U.S. Federal law, regulations and Executive Orders administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") may prohibit the SPV, any Administrator, or any Lead Investor from, among other things, engaging in transactions with, and the provision of services to, persons on the list of Specially Designated Nationals and Blocked Persons and persons, foreign countries and territories that are the subject of U.S. sanctions administered by OFAC (collectively, the "OFAC Maintained Sanctions").

7.3. The Investor acknowledges that the SPV prohibits the investment of funds by any persons or entities that are (i) the subject of OFAC Maintained Sanctions, (ii) acting, directly or indirectly, in contravention of any applicable laws and regulations, including anti-money laundering regulations or conventions, or on behalf of persons or entities subject to an OFAC Maintained Sanction, (iii) acting, directly or indirectly, for a senior foreign political figure, any member of a senior foreign political figure's immediate family or any close associate of a senior foreign political figure, unless the SPV, after being specifically notified by the Investor in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted, or (iv) acting, directly or indirectly, for a foreign shell bank (such persons or entities in (i) - (iv) are collectively referred to as "Prohibited Persons"). The Investor represents and warrants that it is not, and is not acting directly or indirectly on behalf of, a Prohibited Person.

7.4. To the extent the Investor has any beneficial owners, (i) it has carried out thorough due diligence to establish the identities of such beneficial owners, (ii) based on such due diligence, the Investor reasonably believes that no such beneficial owners are Prohibited Persons, (iii) it holds the evidence of such identities and status and will maintain all such evidence for at least five years from the date of the liquidation or termination of the SPV, and (iv) it will make available such information and any additional information requested by the SPV that is required under applicable regulations.

7.5. The Investor acknowledges and agrees that the SPV or any Administrator may "freeze the account" of the Investor, including, but not limited to, by suspending distributions from the SPV to which the Investor would otherwise be entitled, if necessary to comply with anti-money laundering statutes or regulations.

7.6. The Investor acknowledges and agrees that the SPV and/or any Administrator, in complying with anti-money laundering statutes, regulations and goals, may file voluntarily and/or as required by law suspicious activity reports ("SARs") or any other information with governmental and law enforcement agencies that identify transactions and activities that the SPV or any Administrator or their agents reasonably determine to be suspicious, or is otherwise required by law. The Investor acknowledges that the LLC, the SPV, and any Administrator are prohibited by law from disclosing to third parties, including the Investor, any filing or the substance of any SARs.

7.7. The Investor agrees that, upon the request of the LLC, the SPV, or any Administrator, it will provide such information as the LLC, the SPV, or any Administrator requires to satisfy applicable anti-money laundering laws and regulations, including, without limitation, background documentation about the Investor

# 8. Regulatory Provisions

8.1. The Investor understands that no federal or state agency has passed upon the Interests or made any findings or determination as to the fairness of this investment.

8.2. The Investor certifies that the information contained in the executed copy of Form W-9 submitted to the SPV (if any) and/or the taxpayer identification provided to the SPV is correct. The Investor agrees to provide such other documentation as the SPV determines may be necessary for the SPV to fulfill any tax reporting and/or withholding requirements.

8.3. The Investor understands and agrees that the Company may cause the SPV to make an election under Section 754 of the Internal Revenue Code (the "Code") or an election to be treated as an "electing investment partnership" for purposes of Section 743 of the Code. If the SPV elects to be treated as an electing investment partnership, the Investor shall cooperate with the SPV to maintain that status and shall not take any action that would be inconsistent with such election. Upon request, the Investor shall provide the SPV with any information necessary to allow the SPV to comply with (a) its obligations to make tax basis adjustments under Section 734 or 743 of the Code and (b) its obligations as an electing investment partnership.

8.4. The Investor consents to receive any Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) from the SPV electronically via email, the Internet and/or another electronic reporting medium in lieu of paper copies. The Investor agrees that it will confirm this consent electronically at a future date in a manner set forth by the Company at such time and as required by the electronic receipt consent rules set forth by the Internal Revenue Service. The Investor may request a paper copy of the Investor's Schedule K-1 by contacting Wefunder Inc. at support@wefunder.com or such other email address as specified on the wefunder.com platform. Requesting a paper copy will not constitute a withdrawal of the Investor's consent to receive reports or other communications, including Schedule K-1, electronically. The Investor may withdraw its consent for electronic delivery or change its contact preferences for such delivery at any time by writing to support@wefunder.com or such other email address as specified on the wefunder.com platform. Such withdrawal will take effect promptly after receipt, unless otherwise agreed upon. Upon receipt of a withdrawal request, the SPV will confirm the withdrawal and the date on which it takes effect in writing (either electronically or on paper). A withdrawal of consent does not apply to a statement that was furnished electronically before the date on which the withdrawal of consent takes effect. The SPV will cease providing information electronically upon termination of the SPV. Notwithstanding the Investor's consent to receive materials electronically, the Investor still may be required to print and attach its Schedule K-1 to a federal, state or local tax return.

# 9. Miscellaneous Provisions

# 9.1. Indemnification

9.1.1. The Investor agrees to indemnify and hold harmless the LLC, the SPV, any Administrator, any Lead Investor, or any partner, member, officer, employee, agent, affiliate or subsidiary of any of them, and each other person, if any, who controls, is controlled by, or is under common control with, any of the foregoing, within the meaning of Section 15 of the Securities Act, and their respective officers, directors, partners, members, shareholders, owners, employees and agents (collectively, the "Indemnified Parties") against any and all loss, liability, claim, damage and expense whatsoever (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) arising out of or based upon (i) any false representation or warranty made by the Investor, or breach or failure by the Investor to comply with any covenant or agreement made by the Investor, in this Subscription Agreement or in any other document furnished by the Investor to any of the foregoing in connection with this transaction, or (ii) any action for securities law violations instituted by the Investor that is finally resolved by judgment against the Investor.

9.1.2. The Investor also agrees to indemnify each Indemnified Party for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the Investor's misrepresentation or misstatement contained herein, or the assertion of the Investor's lack of proper authorization from the beneficial owner to enter into this Subscription Agreement or perform the obligations hereof.

9.1.3. The Investor agrees to indemnify and hold harmless each Indemnified Party from and against any tax, interest, additions to tax, penalties, reasonable attorneys' and accountants' fees and disbursements, together with interest on the foregoing amounts at a rate determined by the SPV or any Administrator computed from the date of payment through the date of reimbursement, arising from the failure to withhold and pay over to the U.S. Internal Revenue Service or the taxing authority of any other jurisdiction any amounts computed, as required by applicable law, with respect to the income or gains allocated to or amounts distributed to the Investor with respect to its Interest during the period from the Investor's acquisition of the Interest until the Investor's transfer of the Interest in accordance with this Agreement, the LLC Agreement, and Regulation Crowdfunding.

9.1.4. If for any reason (other than the willful misfeasance or gross negligence of the entity that would otherwise be indemnified) the foregoing indemnification is unavailable to, or is insufficient to hold such Indemnified Party harmless, then the Investor shall contribute to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the Investor on the one hand and the Indemnified Parties on the other but also the relative fault of the Investor and the Indemnified Parties, as well as any relevant equitable considerations.

9.1.5. The reimbursement, indemnity and contribution obligations of the Investor under this section shall be in addition to any liability that the Investor may otherwise have, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Indemnified Parties.

9.2. Limitation of Liability. The LLC is a Delaware "multi-series" limited liability company. As a multi-series limited liability company, the LLC may operate multiple series with the benefit of segregation of assets and liabilities among each of its series pursuant to the Delaware Limited Liability Company Act, as amended (the "Delaware Act"). Accordingly, the Investor hereby agrees that the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a series (including the SPV) shall be enforceable against the assets of that series only and not against the LLC generally or the assets of any other series. In addition, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the LLC generally, or any particular series, shall be enforceable against the assets of any other series.

9.3. **Counsel** The Investor understands that Morrison & Foerster LLP serves as legal counsel on certain matters to Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC and Wefunder Advisors, LLC and not to the SPV or any Investor by virtue of its investment in the SPV, and that no independent counsel has been retained to represent the SPV or Investors in the SPV. The Investor also understands that Morrison & Foerster LLP has not independently verified any factual assertions made in the Company Information or on the Wefunder website and is not responsible for the SPV's compliance with its investment program or applicable law.

9.4. **Power of Attorney** The Investor hereby appoints each of the Company and Wefunder Admin, LLC as its true and lawful representative and attorney-in-fact, in its name, place and stead to make, execute, sign, acknowledge, swear to and file:

9.4.1. a Certificate of Formation of the LLC and any amendments required under the Delaware Act
9.4.2. the LLC Agreement and any duly adopted amendments;
9.4.3. any and all instruments, certificates and other documents that may be deemed necessary or desirable to effect the winding-up and termination of the LLC or the SPV (including a Certificate of Cancellation of the Certificate of Formation); and
9.4.4. any business certificate, fictitious name certificate, related amendment or other instrument or document of any kind necessary or desirable to accomplish the LLC's or the SPV's business, purpose and objectives or required by any applicable U.S., state, local or other law.

This power of attorney is coupled with an interest, is irrevocable, and shall survive and shall not be affected by the subsequent death, disability, incompetency, termination, bankruptcy, insolvency or dissolution of the Investor; provided, however, that this power of attorney will terminate upon the substitution of another SPV member for all of the Investor's investment in the LLC or the SPV or upon the liquidation or termination of the LLC or the SPV. The Investor hereby waives any and all defenses that may be available to contest, negate or disaffirm the actions of the LLC, the SPV, and any Administrator taken in good faith under this power of attorney.

# 9.5. Confidentiality

9.5.1. The Investor agrees that the Company Information and all financial statements (if any), tax reports (if any), portfolio valuations (if any), private placement memoranda (if any), reviews or analyses of potential or actual investments (if any), reports or other materials prepared or produced by the SPV and/or any Administrator and all other documents and information concerning the affairs of the SPV and/or the Fund's investments, including, without limitation, information about the Company, and/or the persons directly or indirectly investing in the SPV (collectively, the "Confidential Information") that the Investor may receive pursuant to or in accordance with the use of the Wefunder website, an investment in one or more SPVs, or otherwise as a result of its ownership of an Interest in the SPV, constitute proprietary and confidential information about the SPV, any Administrator, and/or any Lead Investor (the "Affected Parties").

9.5.2. The Investor acknowledges that the Affected Parties derive independent economic value from the Confidential Information not being generally known and that the Confidential Information is the subject of reasonable efforts to maintain its secrecy. The Investor further acknowledges that the Confidential Information is a trade secret, the disclosure of which is likely to cause substantial and irreparable competitive harm to the Affected Companies or their respective businesses. The Investor shall not reproduce any of the Confidential Information or portion thereof or make the contents thereof available to any third party other than a disclosure on a need-to-know basis to the Investor's legal, accounting or investment advisers, auditors and representatives (collectively, "Advisers"), except to the extent compelled to do so in accordance with applicable law (in which case the Investor shall promptly notify the SPV of the Investor's obligation to disclose any Confidential Information) or with respect to Confidential Information that otherwise becomes publicly available other than through breach of this provision by the Investor.

9.5.3. To the fullest extent permitted by law, the Investor agrees not to request disclosure or inspection of any such information after the Investor is notified (whether in response to the Investor's request for information or otherwise) that the SPV has determined not to disclose such information.

9.5.4. The Investor agrees that the LLC, the SPV, and the SPV service providers would be subject to potentially irreparable injury as a result of any breach by the Investor of the covenants and agreements set forth in this Item 9.5, and that monetary damages would not be sufficient to compensate or make whole the LLC, the SPV, and the SPV services providers for any such breach. Accordingly the Investor agrees that the LLC, the SPV, and the SPV service providers shall be entitled to equitable and injunctive relief, on an emergency, temporary, preliminary and/or permanent basis, to prevent any such breach or the continuation thereof.

9.6. Amendments. Neither this Subscription Agreement nor any term hereof may be supplemented, changed, waived, discharged or terminated except with the written consent of the Investor and the Company on behalf of the relevant SPV. For the sake of clarity, the restriction on the Company in the preceding sentence applies solely to the form of this Subscription Agreement applicable to SPVs that have had a closing, and does not prevent the Company from changing the form and content of this Subscription Agreement for use in offerings of SPVs that have not had a closing.

9.7. Assignability and Transferability. This Subscription Agreement is not transferable or assignable by the Investor without the prior written consent of the Company on behalf of the SPV, and any transfer or assignment in violation of this provision shall be null and void. The Interests in the SPV being acquired by Investor herein may only be transferred by Investor in compliance with Regulation Crowdfunding and the terms and conditions of this Agreement. If Investor seeks to transfer the Interests, Investor shall first give written notice to the Company and Wefunder Admin, LLC, including the number of Interests that Investor desires to transfer, the proposed price, the name and contact information of the proposed buyer, and any other information that the Company or Wefunder Admin, LLC may reasonably request. To the extent possible, such notice shall be provided through the Wefunder.com website. Any transfer of Interests shall be subject to execution by Investor and the proposed transferee of appropriate documentation, as may be required by the Company or Wefunder Admin, LLC, in their discretion. Investor further acknowledges that pursuant to the LLC Agreement, Wefunder Admin, LLC (as Series Manager of the SPV), may impose additional restrictions on or prohibit the Transfer of Interests for any reason or no reason, in its sole discretion.

9.8. **Repurchase.** In the event that the SPV or any Administrator determines that it is likely that within twelve (12) months the securities of the SPV or the Company will be held of record by a number of persons that would require the SPV or the Company to register a class of its equity securities under the Securities Exchange Act of 1934, as amended ('Exchange Act'), as required by Section 12(g) or 15(d) thereof, the SPV shall have the option to repurchase the Interests from each Investor to the extent necessary to avoid the requirement to register a class of its securities under the Exchange Act. Such repurchase of Interests shall be for the greater of (i) the purchase price of the Interests, or (ii) the fair market value of the Interests, as determined by an independent appraiser of securities chosen by the Administrator. Any such repurchase may only occur with the consent of Wefunder Admin, LLC, as Series Manager of the SPV.

9.9. **Governing Law.** Consent to Jurisdiction. Notwithstanding the place where this Subscription Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Delaware. Any action or proceeding brought by the SPV or any SPV service provider against one or more investors in the SPV relating in any way to this Subscription Agreement or the LLC Agreement may, and any action or proceeding brought by any other party against the SPV or any SPV service provider relating in any way to this Subscription Agreement or the Company Information shall, be brought and enforced in the state courts of the State of Delaware located in Wilmington or (to the extent subject matter jurisdiction exists therefore) in the courts of the United States located in the District of Delaware; and the Investor and the SPV irrevocably submit to the jurisdiction of both such state and federal courts in respect of any such action or proceeding. The Investor and the SPV irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to laying the venue of any such action or proceeding in the courts of the State of Delaware located in Wilmington or in the courts of the United States located in the District of Delaware and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

9.10. **Severability.** If any provision of this Subscription Agreement is invalid or unenforceable under any applicable law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such applicable law. Any provision hereof that may be held invalid or unenforceable under any applicable law shall not affect the validity or enforceability of any other provisions hereof, and to this extent the provisions hereof shall be severable.

9.11. **Headings.** The headings in this Subscription Agreement are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof.

9.12. **General.** This Subscription Agreement shall be binding upon the Investor and the legal representatives, successors and assigns of the Investor, shall survive the admission of the Investor as a member of a SPV, and shall, if the Investor consists of more than one person, be the joint and several obligation of all such persons.

*[Remainder of page intentionally left blank. Signature page follows.]*

The undersigned have executed this instrument as of the date first above written.

SPV

Cardinal Spirits I, as series of Wefunder SPV, LLC

By: Wefunder Admin, LLC, its Manager

By: *Founder Signature*

Date:

Name: **Nicholas Tommarello**

Title: **Chief Executive Officer**

Investor

[INVESTOR NAME]

By: *Investor Signature*

Date:

CONTACT INFORMATION:

Name: **[INVESTOR NAME]**

Mailing Address:

City:

Country:

E-mail:

# TERMS APPENDIX FOR THE PURCHASE OF Cardinal
Spirits LLC SECURITIES BY Cardinal Spirits I, A SERIES
OF WEFUNDER SPV, LLC, A DELAWARE LIMITED
LIABILITY COMPANY

**Type of Security:** Convertible Note

**Terms** $20M valuation cap and 20% discount

To view a copy of the contract, please see **Appendix B, Investor Contracts** of
the Form C. The latest Form C or C/A filing be found here:
https://www.sec.gov/cgi-bin/srch-edgar?text=%28FORM-
TYPE%3DC%2FA+or+FORM-
TYPE%3DC%29+and+CIK%3D0001574152&first=2016

**Attachment 4:** `document_4.pdf`

**Cardinal Spirits I EB (THE "SPV"),**
a series of Wefunder SPV, LLC, a Delaware limited
liability company (the "LLC")

# Subscription Agreement

**[INVESTMENT AMOUNT]**

**[INVESTMENT DATE]**

**Cardinal Spirits I EB** (the "SPV"), a series of Wefunder SPV, LLC (the "LLC"), is a special purpose vehicle that will invest all of its assets in securities issued by **Cardinal Spirits LLC** (the "Company"). By making an investment in the SPV through the Wefunder website, I understand and agree to the representations set forth below.

I have reviewed the following information and documents in connection with this Subscription Agreement:

1. The information on the Wefunder website about the Company. I acknowledge that this information was prepared solely by either the Company or a third party whose work has been verified by the Company, and that none of Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC or Wefunder Advisors, LLC, nor any of their affiliates, employees or agents, are responsible for the adequacy, completeness, or accuracy of this information;
2. The Form C relating to this investment, which provides information about investment in the Company through the use of the SPV;
3. The Series Appendix, an appendix to the Wefunder SPV, LLC limited liability company agreement (the "**LLC Agreement**"), which sets forth certain specific terms of the SPV;
4. The Terms Appendix, which summarizes the terms of the Company securities to be purchased by the SPV;
5. The LLC Agreement, which sets forth other terms applicable to each SPV;
6. This Subscription Agreement, which sets forth the terms governing your investment in the SPV, and that sets forth certain representations you are making in connection with your investment in the SPV;
7. The Wefunder Investor Agreement; and
8. The Wefunder Terms of Service.

**By making an investment in the SPV through the Wefunder website, I agree to be bound by this Subscription Agreement and the terms of the other agreements listed above with respect to my investment in the SPV.**

# Subscription Agreement

# SCOPE OF AGREEMENT AND INVESTOR ELIGIBILITY
REPRESENTATIONS

A. This agreement ("Agreement") applies to each investment in a series ("SPV") of Wefunder SPV, LLC (the "LLC"). Each series is a separate pool of assets from every other series. Each SPV will invest all of its assets in securities issued by a single company ("Company") as set forth in the applicable series appendix ("Series Appendix") to the Wefunder SPV, LLC limited liability company agreement (LLC Agreement). The terms of the Company securities to be purchased by the SPV are summarized in an appendix ("Terms Appendix") attached to this Agreement.
B. Each SPV is formed by and operated by Wefunder Admin, LLC on behalf of the Company in whose securities that SPV invests.
C. Important information about the Company, about the related SPV, and more generally about investments through the Wefunder website, is available through the Wefunder website. The Investor should review that information, and all relevant Company Information (as defined below), carefully before making an investment in any SPV.
D. Each SPV will offer membership interests ("Interests") in that SPV pursuant to Regulation Crowdfunding under the U.S. Securities Act of 1933, as amended (the "Securities Act").
E. You hereby agree that each time you make an investment in any SPV, you will be deemed to have entered into this Agreement, and will be deemed to have made each representation and covenant contained in this Agreement.
F. Except as the context otherwise requires, any reference in this Subscription Agreement to:

1. a "SPV" shall mean "The LLC acting solely on behalf of and for the account of the SPV";
2. "Investor" and "you" shall mean a person (whether individually, jointly with another person, or through his or her individual retirement account) who has agreed to invest, or has invested, in any SPV; and
3. "Company Information" means:

a. The information on the Wefunder website about the Company. I acknowledge that this information was prepared solely by either the Company or a third party whose work has been verified by the Company, and that neither Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC or Wefunder Advisors, LLC (together, the "Wefunder entities," nor any of their affiliates, employees or agents, are responsible for the adequacy, completeness, or accuracy of this information;
b. The Form C relating to this investment, which provides information about investment in the Company through the use of the SPV;
c. The Series Appendix, an appendix to the Wefunder SPV, LLC limited liability company agreement (the "LLC Agreement"), which sets forth certain specific terms of the SPV;
d. The Terms Appendix, which summarizes the terms of the Company securities to be purchased by the SPV;
e. The LLC Agreement, which sets forth other terms applicable to each SPV;
f. This Subscription Agreement, which sets forth the terms governing your investment in the SPV, and that sets forth certain representations you are making in connection with your investment in the SPV;
g. The Wefunder Investor Agreement; and
h. The Wefunder Terms of Service.

INVESTOR'S REPRESENTATIONS AND COVENANTS

# 1. Investor's Review of Information and Investment Decision

1.1. The Investor has carefully read and understands the Company Information. The Investor acknowledges that it has made an independent decision to invest indirectly in the Company through the SPV and that, in making its decision to invest in a SPV, the Investor has relied solely upon the Company Information, any other relevant information on the Wefunder website, and independent investigations made by the Investor. The Investor understands that no representations or warranties have been made to the Investor by the LLC, the relevant SPV, any administrator appointed from time to time with respect to the SPV (the "Administrator"), any lead investor appointed from time to time with respect to the SPV (the "Lead Investor"), or any partner, member, officer, employee, agent, affiliate or subsidiary of any of them regarding the Company.

1.2. The Investor has been provided an opportunity to request additional information concerning the Company and the offering through the Ask A Question feature on wefunder.com.

1.3. The Investor understands and agrees that neither Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC, any of their affiliates, nor any director, manager, officer, shareholder, member, employee or agent of Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC or any of their affiliates (each, a "Wefunder Party," and collectively, "Wefunder Parties") shall be liable in connection with any information or omission of information contained in materials prepared or supplied by the Company. Such materials may include, but are not limited to, information provided by the Company in the Form C related to the offering, information available through the Wefunder website, and materials distributed to the Investor by the SPV on behalf of a Company.

1.4. The Investor represents and agrees that no Wefunder Party has recommended or suggested any investment in a SPV, or any investment related to a Company, to the Investor.

1.5. Investor understands that no Wefunder Party is an adviser to Investor, and that Investor is not an advisory or other client of any Wefunder Party.

1.6. The Investor is not relying on any Wefunder Party or any other person or entity with respect to the legal, accounting, business, investment, pension, tax or other economic considerations involved in this investment other than the Investor's own advisers that are not affiliated with any of the foregoing persons.

1.7. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of the Investor's investment in the SPV and is able to bear such risks. The Investor has obtained, in the Investor's judgment, sufficient information to evaluate the merits and risks of such investment. The Investor has evaluated the risks of investing in the SPV, understands there are substantial risks of loss incidental to the purchase of an Interest and has determined that the Interest is a suitable investment for the Investor and consistent with the general investment objectives of the Investor.

# 2. Investor's Representations Related To Investment in a SPV.

2.1. The Investor is acquiring the Interest for its own account, for investment purposes only and not with an intent to resell or distribute the Interest (or any distributions received from the SPV in whole or in part), and the Investor agrees that it will not sell or otherwise transfer the Interest unless in compliance with Regulation Crowdfunding and other applicable securities laws, and with the terms and conditions of this Agreement.
2.2. The Investor's investment in the Interest is consistent with the investment purposes, objectives and cash flow requirements of the Investor and will not adversely affect the Investor's overall need for diversification and liquidity.
2.3. The Investor has all requisite power, authority and capacity to acquire and hold the Interest and to execute, deliver and comply with the terms of each of the instruments required to be executed and delivered by the Investor in connection with the Investor's subscription for the Interest, including without limitation this Subscription Agreement, and such execution, delivery and compliance does not conflict with, or constitute a default under, any instruments governing the Investor, any law, regulation or order, or any agreement or other undertaking to which the Investor is a party or by which the Investor may be bound. If the Investor is an entity, the person executing and delivering each of such instruments on behalf of the Investor has all requisite power, authority and capacity to execute and deliver such instruments, and, upon request by the SPV, will furnish to the SPV a true and correct copy of any instruments governing the Investor, including all amendments thereto. The signature on each of such instruments is genuine and each of such instruments constitutes a legal, valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms.
2.4. The Wefunder Parties are each hereby authorized and instructed to accept and execute any instructions in respect of the Interest given by the Investor in written or electronic form. The Wefunder Parties may rely conclusively upon and shall incur no liability in respect of any action take upon any notice, consent, request, instructions or other instrument believed in good faith to be genuine or to be signed by properly authorized persons of the Investor.
2.5. Pursuant to the requirements of Treas. Reg. § 301.6109-1(c), the Investor has provided, or agrees to provide upon the earlier of (i) two years of an acquisition of an Interest or (ii) twenty (20) days before any distribution is to be made from the SPV, his, her or its taxpayer identification number (e.g., social security number or employer identification number) under penalties of perjury and has or will attest that the Internal Revenue Service has not notified the Investor that he, she or it is subject to backup withholding.

# 3. The Manager Has The Right To Reject Any Subscription, In Whole Or In Part.

3.1. The Investor understands that the SPV will not register as an investment company under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), nor will it make a public offering of its securities within the United States.
3.2. The Investor understands that the value of all investments in any SPV made through individual retirement accounts ("IRAs") must be less than \(25\%\) of the value of the SPV's assets.

3.3. If the Investor is investing in a SPV through an employee benefit plan of any kind, including an individual retirement account (the "Plan"), and an individual or entity (the "Fiduciary") has entered into this Agreement on behalf of the Plan, the Fiduciary hereby makes the following representations, warranties, and covenants:

i. The Fiduciary is a fiduciary of the Plan who is authorized to invest Plan assets or is acting at the direction of a Plan fiduciary authorized to invest Plan assets. The Fiduciary has determined that an investment in the Fund is consistent with the Fiduciary's responsibilities to the Plan under Employee Retirement Income Security Act of 1974, as amended ("ERISA") or other applicable law, and is qualified to make such investment decision. The Fiduciary is authorized to make all representations, covenants and agreements set forth in this Agreement about and on behalf of the Investor, and the Fiduciary hereby agrees that, except for the representations, covenants and agreements contained in this section 3.3, all representations, covenants and agreements contained in this Agreement are made on behalf of the Investor who is investing through the Plan.

ii. The execution and delivery of this Subscription Agreement, and the investment contemplated hereby has been duly authorized by all appropriate and necessary parties pursuant to the provisions of the instrument or instruments governing the Plan and any related trust; and (B) will not violate, and is not otherwise inconsistent with, the terms of such instrument or instruments.

iii. The Fiduciary acknowledges that the assets of the Fund will be invested in accordance with the Company Information related to that Fund.

iv. The Plan's purchase and holding of an Interest will not constitute a non-exempt transaction prohibited under ERISA, Section 4975 of the Internal Revenue Code (the "Code"), or any similar laws or other federal, state, local, foreign or other laws or regulations applicable to the Plan and its investments. None of the Wefunder entities nor any of their affiliates, agents, or employees: (A) exercises any authority or control with respect to the management or disposition of assets of the Plan used to purchase an Interest; (B) renders investment advice for a fee (pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions and that such advice will be based on the particular investment needs of the Plan), with respect to such assets of the Plan, or has the authority to do so, or (C) is an employer maintaining or contributing to, or any of whose employees are covered by, the Plan.

v. The Fiduciary understands and agrees to the fee arrangements described in the Company Information.

vi. The Fiduciary understands and agrees that, to prevent the assets of the SPV from being treated as "plan assets" for purposes of ERISA and Section 4975 of the Code, the Investor may be prohibited from purchasing or acquiring an Interest or may be required to redeem its Interest or a portion thereof.

3.4. The Investor acknowledges that the SPV and any Administrator, on the SPV's behalf, may not accept any investment from an Investor if the Investor cannot truthfully make the representations contained herein.

4. The Correctness And Accuracy Of All Information Provided By Investor To The LLC Or The SPV.

4.1. The Investor confirms that all information and documentation provided to the LLC, the SPV, and any Administrator, including, but not limited to, all information regarding the Investor's identity, taxpayer identification number, the source of the funds to be invested in the SPV, and the Investor's eligibility to invest in offerings under Regulation Crowdfunding, is true, correct and complete. Should any such information change or no longer be accurate, the Investor agrees and covenants that they will promptly notify the Wefunder Parties of such changes via the wefunder.com platform. The Investor agrees and covenants that he, she or it will maintain accurate and up-to-date contact information (including email and mailing address) on the wefunder.com platform and will promptly update such information in the event it changes or is no longer accurate.

4.2. The representations, warranties, agreements, undertakings and acknowledgments made by the Investor in this Subscription Agreement will be relied upon by the LLC, the SPV, and any Administrator in determining the Fund's compliance with federal and state securities laws, and shall survive the Investor's admission as a Member of the SPV.

4.3. All information that the Investor has provided to the LLC, the SPV, and any Administrator concerning the knowledge and experience of financial, tax and business matters of the Investor is correct and complete.

# 5. The Wefunder Parties' Right To Use Investor Information.

5.1. The Investor agrees and consents to the Wefunder Parties, their delegates and their duly authorized agents and any of their respective related, associated or affiliated companies obtaining, holding, using, disclosing and processing the Investor's data:

a. to facilitate the acceptance, management and administration of the Investor's subscription for an Interest on an on-going basis;
b. for any other specific purposes where the Investor has given specific consent to do so;
c. to carry out statistical analysis, market research, and tracking of investment performance over time;
d. to comply with legal or regulatory requirements applicable to the SPV and any Administrator or the Investor, including, but not limited to, in connection with anti-money laundering and similar laws;
e. for disclosure or transfer to third parties including the Investor's financial adviser (where appropriate), regulatory bodies, auditors, technology providers or to the SPV, any Administrator, any Lead Investor, and their delegates or their duly appointed agents and any of their respective related, associated or affiliated companies for the purposes specified above;
1. If the contents thereof are relevant to any issue in any action, suit or proceeding to which the LLC, the SPV, any Administrator, any Lead Investor, or their affiliates are a party or by which they are or may be bound;
g. for other legitimate business of the LLC, the SPV, any Administrator, or any Lead Investor.

5.2. The Investor acknowledges and agrees that it will provide additional information or take such other actions as may be necessary or advisable for the SPV or any Administrator (in the sole judgment of the SPV and/or any Administrator) to comply with any disclosure and compliance policies, related legal process or appropriate requests (whether formal or informal) or otherwise.
5.3. The Investor agrees and consents to disclosure by the LLC, the SPV and any of their agents, including any Administrator or any Lead Investor, to relevant third parties of information pertaining to the Investor in respect of disclosure and compliance policies or information requests related thereto. Without limiting the generality of the foregoing, the Investor agrees that information about the Investor may be provided to the Company in whose securities a SPV will or proposes to invest.
5.4. The Investor authorizes the LLC, the SPV, any Administrator, and each SPV service provider to disclose the Investor's nonpublic personal information to comply with regulatory and contractual requirements applicable to the SPV and its investments. Any such disclosure shall be permitted notwithstanding any privacy policy or similar restrictions regarding the disclosure of the Investor's nonpublic personal information.

# 6. Key Risk Factors

6.1. The Investor understands that investment in a SPV may involve a complete loss of the Investor's investment. In this regard, the Investor understands that such venture investments involve a high degree of risk, and that many or most venture company investments lose money. An Investor may ultimately receive cash, securities, or a combination of cash and securities (and in many cases nothing at all). If the Investor receives securities, the securities may not be publicly traded, and may not have any significant value.
6.2. The Investor understands and agrees that the Interests are subject to restrictions on transfer and cannot be redeemed. Instead, an Investor typically must hold his or her Interest in a SPV until the SPV has sold or otherwise disposed of its investments and the SPV distributes its investments to the investors in the SPV (a "Liquidation Event"). An Investor typically will not receive any distributions until such a Liquidation Event (and may not receive anything even upon a Liquidation Event), which may not occur for many years. The Investor must therefore bear the economic risk of holding their investment for an indefinite period of time.

6.3. The Investor understands and agrees that the Interests: (a) have not been registered under the Securities Act or any other law of the United States, or under the securities laws of any state or other jurisdiction, and therefore an Interest cannot be resold, pledged, assigned or otherwise disposed of unless it is so registered or an exemption from registration is available; and (b) can only be transferred as permitted under Regulation Crowdfunding and subject to the terms and conditions of this Agreement.

6.4. The Investor understands that no guarantees have been made to the Investor about future performance or financial results of the SPV, and an investment in the SPV may result in a gain or loss upon termination or liquidation of the SPV. It is possible that the investors in a SPV will have "phantom income," which could require them to pay taxes on their investment in a SPV even though the SPV does not distribute any income (or does not distribute sufficient income to pay the taxes).

6.5. The Investor understands and agrees that the SPV was formed by and is operated by Wefunder Admin, LLC on behalf of the Company. Investors will have no right to manage or influence the management of any SPV or of the LLC.

6.6. The Investor understands and agrees that the Company may appoint a Lead Investor and that, if appointed, pursuant to a power of attorney granted by the Investor in the Investor Agreement, the Lead Investor will exercise voting authority on behalf of the Investor with respect to the SPV securities the Investor owns.

6.7. The Investor represents that he or she has read and understands the risk factors contained in the Company Information. The Investor understands and agrees that each Company is solely responsible for providing risk factors, conflicts of interest, and other disclosures that investors should consider when investing in securities issued by that Company (including through a SPV), and that the Wefunder Parties have no ability to assure, and have not in any way assured, that any or all such risk factors, conflicts of interest and other disclosures have been presented fully and fairly, or have been presented at all.

6.8. The Investor understands that any privacy statements, reports or other communications regarding the SPV and the Investor's investment in the SPV (including annual and other updates, and tax documents) will be delivered via electronic means, including through wefunder.com. The Investor hereby consents to electronic delivery as described in the preceding sentence. In so consenting, the Investor acknowledges that email messages are not secure and may contain computer viruses or other defects, may not be accurately replicated on other systems, or may be intercepted, deleted or interfered with, with or without the knowledge of the sender or the intended recipient. The Investor also acknowledges that an email from the Wefunder Parties may be accessed by recipients other than the Investor and may be interfered with, may contain computer viruses or other defects and may not be successfully replicated on other systems. No Wefunder Party gives any warranties in relation to these matters.

6.9. The Investor understands and agrees that if he, she or it does not provide a valid taxpayer identification number under penalties of perjury, and attest that the Investor has not been notified by the Internal Revenue Service that he, she or it is subject to backup withholding, the SPV will be required to withhold from any proceeds otherwise payable to the Investor an amount necessary to satisfy the SPV's backup withholding obligations.

6.10. The Investor understands and agrees that if he, she or it does not provide a valid taxpayer identification number to the SPV, the SPV will withhold from any proceeds otherwise payable to the Investor an amount necessary for the SPV to satisfy its tax withholding obligations with respect to such amount. The SPV may also withhold any other amounts representing the SPV's reasonable estimation of penalties that may be charged by the Internal Revenue Service or any other taxing authority as a result of the Investor's failure to provide a valid taxpayer identification number.

# 7. Compliance With Anti-Money Laundering Laws.

7.1. The Investor represents and warrants that the Investor's investment was not directly or indirectly derived from illegal activities, including any activities that would violate U.S. Federal or State laws or any laws and regulations of other countries.

7.2. The Investor acknowledges that U.S. Federal law, regulations and Executive Orders administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") may prohibit the SPV, any Administrator, or any Lead Investor from, among other things, engaging in transactions with, and the provision of services to, persons on the list of Specially Designated Nationals and Blocked Persons and persons, foreign countries and territories that are the subject of U.S. sanctions administered by OFAC (collectively, the "OFAC Maintained Sanctions").

7.3. The Investor acknowledges that the SPV prohibits the investment of funds by any persons or entities that are (i) the subject of OFAC Maintained Sanctions, (ii) acting, directly or indirectly, in contravention of any applicable laws and regulations, including anti-money laundering regulations or conventions, or on behalf of persons or entities subject to an OFAC Maintained Sanction, (iii) acting, directly or indirectly, for a senior foreign political figure, any member of a senior foreign political figure's immediate family or any close associate of a senior foreign political figure, unless the SPV, after being specifically notified by the Investor in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted, or (iv) acting, directly or indirectly, for a foreign shell bank (such persons or entities in (i) - (iv) are collectively referred to as "Prohibited Persons"). The Investor represents and warrants that it is not, and is not acting directly or indirectly on behalf of, a Prohibited Person.

7.4. To the extent the Investor has any beneficial owners, (i) it has carried out thorough due diligence to establish the identities of such beneficial owners, (ii) based on such due diligence, the Investor reasonably believes that no such beneficial owners are Prohibited Persons, (iii) it holds the evidence of such identities and status and will maintain all such evidence for at least five years from the date of the liquidation or termination of the SPV, and (iv) it will make available such information and any additional information requested by the SPV that is required under applicable regulations.

7.5. The Investor acknowledges and agrees that the SPV or any Administrator may "freeze the account" of the Investor, including, but not limited to, by suspending distributions from the SPV to which the Investor would otherwise be entitled, if necessary to comply with anti-money laundering statutes or regulations.

7.6. The Investor acknowledges and agrees that the SPV and/or any Administrator, in complying with anti-money laundering statutes, regulations and goals, may file voluntarily and/or as required by law suspicious activity reports ("SARs") or any other information with governmental and law enforcement agencies that identify transactions and activities that the SPV or any Administrator or their agents reasonably determine to be suspicious, or is otherwise required by law. The Investor acknowledges that the LLC, the SPV, and any Administrator are prohibited by law from disclosing to third parties, including the Investor, any filing or the substance of any SARs.

7.7. The Investor agrees that, upon the request of the LLC, the SPV, or any Administrator, it will provide such information as the LLC, the SPV, or any Administrator requires to satisfy applicable anti-money laundering laws and regulations, including, without limitation, background documentation about the Investor

# 8. Regulatory Provisions

8.1. The Investor understands that no federal or state agency has passed upon the Interests or made any findings or determination as to the fairness of this investment.

8.2. The Investor certifies that the information contained in the executed copy of Form W-9 submitted to the SPV (if any) and/or the taxpayer identification provided to the SPV is correct. The Investor agrees to provide such other documentation as the SPV determines may be necessary for the SPV to fulfill any tax reporting and/or withholding requirements.

8.3. The Investor understands and agrees that the Company may cause the SPV to make an election under Section 754 of the Internal Revenue Code (the "Code") or an election to be treated as an "electing investment partnership" for purposes of Section 743 of the Code. If the SPV elects to be treated as an electing investment partnership, the Investor shall cooperate with the SPV to maintain that status and shall not take any action that would be inconsistent with such election. Upon request, the Investor shall provide the SPV with any information necessary to allow the SPV to comply with (a) its obligations to make tax basis adjustments under Section 734 or 743 of the Code and (b) its obligations as an electing investment partnership.

8.4. The Investor consents to receive any Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) from the SPV electronically via email, the Internet and/or another electronic reporting medium in lieu of paper copies. The Investor agrees that it will confirm this consent electronically at a future date in a manner set forth by the Company at such time and as required by the electronic receipt consent rules set forth by the Internal Revenue Service. The Investor may request a paper copy of the Investor's Schedule K-1 by contacting Wefunder Inc. at support@wefunder.com or such other email address as specified on the wefunder.com platform. Requesting a paper copy will not constitute a withdrawal of the Investor's consent to receive reports or other communications, including Schedule K-1, electronically. The Investor may withdraw its consent for electronic delivery or change its contact preferences for such delivery at any time by writing to support@wefunder.com or such other email address as specified on the wefunder.com platform. Such withdrawal will take effect promptly after receipt, unless otherwise agreed upon. Upon receipt of a withdrawal request, the SPV will confirm the withdrawal and the date on which it takes effect in writing (either electronically or on paper). A withdrawal of consent does not apply to a statement that was furnished electronically before the date on which the withdrawal of consent takes effect. The SPV will cease providing information electronically upon termination of the SPV. Notwithstanding the Investor's consent to receive materials electronically, the Investor still may be required to print and attach its Schedule K-1 to a federal, state or local tax return.

# 9. Miscellaneous Provisions

# 9.1. Indemnification

9.1.1. The Investor agrees to indemnify and hold harmless the LLC, the SPV, any Administrator, any Lead Investor, or any partner, member, officer, employee, agent, affiliate or subsidiary of any of them, and each other person, if any, who controls, is controlled by, or is under common control with, any of the foregoing, within the meaning of Section 15 of the Securities Act, and their respective officers, directors, partners, members, shareholders, owners, employees and agents (collectively, the "Indemnified Parties") against any and all loss, liability, claim, damage and expense whatsoever (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) arising out of or based upon (i) any false representation or warranty made by the Investor, or breach or failure by the Investor to comply with any covenant or agreement made by the Investor, in this Subscription Agreement or in any other document furnished by the Investor to any of the foregoing in connection with this transaction, or (ii) any action for securities law violations instituted by the Investor that is finally resolved by judgment against the Investor.

9.1.2. The Investor also agrees to indemnify each Indemnified Party for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the Investor's misrepresentation or misstatement contained herein, or the assertion of the Investor's lack of proper authorization from the beneficial owner to enter into this Subscription Agreement or perform the obligations hereof.

9.1.3. The Investor agrees to indemnify and hold harmless each Indemnified Party from and against any tax, interest, additions to tax, penalties, reasonable attorneys' and accountants' fees and disbursements, together with interest on the foregoing amounts at a rate determined by the SPV or any Administrator computed from the date of payment through the date of reimbursement, arising from the failure to withhold and pay over to the U.S. Internal Revenue Service or the taxing authority of any other jurisdiction any amounts computed, as required by applicable law, with respect to the income or gains allocated to or amounts distributed to the Investor with respect to its Interest during the period from the Investor's acquisition of the Interest until the Investor's transfer of the Interest in accordance with this Agreement, the LLC Agreement, and Regulation Crowdfunding.

9.1.4. If for any reason (other than the willful misfeasance or gross negligence of the entity that would otherwise be indemnified) the foregoing indemnification is unavailable to, or is insufficient to hold such Indemnified Party harmless, then the Investor shall contribute to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the Investor on the one hand and the Indemnified Parties on the other but also the relative fault of the Investor and the Indemnified Parties, as well as any relevant equitable considerations.

9.1.5. The reimbursement, indemnity and contribution obligations of the Investor under this section shall be in addition to any liability that the Investor may otherwise have, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Indemnified Parties.

9.2. Limitation of Liability. The LLC is a Delaware "multi-series" limited liability company. As a multi-series limited liability company, the LLC may operate multiple series with the benefit of segregation of assets and liabilities among each of its series pursuant to the Delaware Limited Liability Company Act, as amended (the "Delaware Act"). Accordingly, the Investor hereby agrees that the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a series (including the SPV) shall be enforceable against the assets of that series only and not against the LLC generally or the assets of any other series. In addition, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the LLC generally, or any particular series, shall be enforceable against the assets of any other series.

9.3. **Counsel** The Investor understands that Morrison & Foerster LLP serves as legal counsel on certain matters to Wefunder, Inc., Wefunder Portal, LLC, Wefunder Admin, LLC and Wefunder Advisors, LLC and not to the SPV or any Investor by virtue of its investment in the SPV, and that no independent counsel has been retained to represent the SPV or Investors in the SPV. The Investor also understands that Morrison & Foerster LLP has not independently verified any factual assertions made in the Company Information or on the Wefunder website and is not responsible for the SPV's compliance with its investment program or applicable law.

9.4. **Power of Attorney** The Investor hereby appoints each of the Company and Wefunder Admin, LLC as its true and lawful representative and attorney-in-fact, in its name, place and stead to make, execute, sign, acknowledge, swear to and file:

9.4.1. a Certificate of Formation of the LLC and any amendments required under the Delaware Act
9.4.2. the LLC Agreement and any duly adopted amendments;
9.4.3. any and all instruments, certificates and other documents that may be deemed necessary or desirable to effect the winding-up and termination of the LLC or the SPV (including a Certificate of Cancellation of the Certificate of Formation); and
9.4.4. any business certificate, fictitious name certificate, related amendment or other instrument or document of any kind necessary or desirable to accomplish the LLC's or the SPV's business, purpose and objectives or required by any applicable U.S., state, local or other law.

This power of attorney is coupled with an interest, is irrevocable, and shall survive and shall not be affected by the subsequent death, disability, incompetency, termination, bankruptcy, insolvency or dissolution of the Investor; provided, however, that this power of attorney will terminate upon the substitution of another SPV member for all of the Investor's investment in the LLC or the SPV or upon the liquidation or termination of the LLC or the SPV. The Investor hereby waives any and all defenses that may be available to contest, negate or disaffirm the actions of the LLC, the SPV, and any Administrator taken in good faith under this power of attorney.

# 9.5. Confidentiality

9.5.1. The Investor agrees that the Company Information and all financial statements (if any), tax reports (if any), portfolio valuations (if any), private placement memoranda (if any), reviews or analyses of potential or actual investments (if any), reports or other materials prepared or produced by the SPV and/or any Administrator and all other documents and information concerning the affairs of the SPV and/or the Fund's investments, including, without limitation, information about the Company, and/or the persons directly or indirectly investing in the SPV (collectively, the "Confidential Information") that the Investor may receive pursuant to or in accordance with the use of the Wefunder website, an investment in one or more SPVs, or otherwise as a result of its ownership of an Interest in the SPV, constitute proprietary and confidential information about the SPV, any Administrator, and/or any Lead Investor (the "Affected Parties").

9.5.2. The Investor acknowledges that the Affected Parties derive independent economic value from the Confidential Information not being generally known and that the Confidential Information is the subject of reasonable efforts to maintain its secrecy. The Investor further acknowledges that the Confidential Information is a trade secret, the disclosure of which is likely to cause substantial and irreparable competitive harm to the Affected Companies or their respective businesses. The Investor shall not reproduce any of the Confidential Information or portion thereof or make the contents thereof available to any third party other than a disclosure on a need-to-know basis to the Investor's legal, accounting or investment advisers, auditors and representatives (collectively, "Advisers"), except to the extent compelled to do so in accordance with applicable law (in which case the Investor shall promptly notify the SPV of the Investor's obligation to disclose any Confidential Information) or with respect to Confidential Information that otherwise becomes publicly available other than through breach of this provision by the Investor.

9.5.3. To the fullest extent permitted by law, the Investor agrees not to request disclosure or inspection of any such information after the Investor is notified (whether in response to the Investor's request for information or otherwise) that the SPV has determined not to disclose such information.

9.5.4. The Investor agrees that the LLC, the SPV, and the SPV service providers would be subject to potentially irreparable injury as a result of any breach by the Investor of the covenants and agreements set forth in this Item 9.5, and that monetary damages would not be sufficient to compensate or make whole the LLC, the SPV, and the SPV services providers for any such breach. Accordingly the Investor agrees that the LLC, the SPV, and the SPV service providers shall be entitled to equitable and injunctive relief, on an emergency, temporary, preliminary and/or permanent basis, to prevent any such breach or the continuation thereof.

9.6. Amendments. Neither this Subscription Agreement nor any term hereof may be supplemented, changed, waived, discharged or terminated except with the written consent of the Investor and the Company on behalf of the relevant SPV. For the sake of clarity, the restriction on the Company in the preceding sentence applies solely to the form of this Subscription Agreement applicable to SPVs that have had a closing, and does not prevent the Company from changing the form and content of this Subscription Agreement for use in offerings of SPVs that have not had a closing.

9.7. Assignability and Transferability. This Subscription Agreement is not transferable or assignable by the Investor without the prior written consent of the Company on behalf of the SPV, and any transfer or assignment in violation of this provision shall be null and void. The Interests in the SPV being acquired by Investor herein may only be transferred by Investor in compliance with Regulation Crowdfunding and the terms and conditions of this Agreement. If Investor seeks to transfer the Interests, Investor shall first give written notice to the Company and Wefunder Admin, LLC, including the number of Interests that Investor desires to transfer, the proposed price, the name and contact information of the proposed buyer, and any other information that the Company or Wefunder Admin, LLC may reasonably request. To the extent possible, such notice shall be provided through the Wefunder.com website. Any transfer of Interests shall be subject to execution by Investor and the proposed transferee of appropriate documentation, as may be required by the Company or Wefunder Admin, LLC, in their discretion. Investor further acknowledges that pursuant to the LLC Agreement, Wefunder Admin, LLC (as Series Manager of the SPV), may impose additional restrictions on or prohibit the Transfer of Interests for any reason or no reason, in its sole discretion.

9.8. **Repurchase.** In the event that the SPV or any Administrator determines that it is likely that within twelve (12) months the securities of the SPV or the Company will be held of record by a number of persons that would require the SPV or the Company to register a class of its equity securities under the Securities Exchange Act of 1934, as amended ('Exchange Act'), as required by Section 12(g) or 15(d) thereof, the SPV shall have the option to repurchase the Interests from each Investor to the extent necessary to avoid the requirement to register a class of its securities under the Exchange Act. Such repurchase of Interests shall be for the greater of (i) the purchase price of the Interests, or (ii) the fair market value of the Interests, as determined by an independent appraiser of securities chosen by the Administrator. Any such repurchase may only occur with the consent of Wefunder Admin, LLC, as Series Manager of the SPV.

9.9. **Governing Law.** Consent to Jurisdiction. Notwithstanding the place where this Subscription Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Delaware. Any action or proceeding brought by the SPV or any SPV service provider against one or more investors in the SPV relating in any way to this Subscription Agreement or the LLC Agreement may, and any action or proceeding brought by any other party against the SPV or any SPV service provider relating in any way to this Subscription Agreement or the Company Information shall, be brought and enforced in the state courts of the State of Delaware located in Wilmington or (to the extent subject matter jurisdiction exists therefore) in the courts of the United States located in the District of Delaware; and the Investor and the SPV irrevocably submit to the jurisdiction of both such state and federal courts in respect of any such action or proceeding. The Investor and the SPV irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to laying the venue of any such action or proceeding in the courts of the State of Delaware located in Wilmington or in the courts of the United States located in the District of Delaware and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

9.10. **Severability.** If any provision of this Subscription Agreement is invalid or unenforceable under any applicable law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such applicable law. Any provision hereof that may be held invalid or unenforceable under any applicable law shall not affect the validity or enforceability of any other provisions hereof, and to this extent the provisions hereof shall be severable.

9.11. **Headings.** The headings in this Subscription Agreement are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof.

9.12. **General.** This Subscription Agreement shall be binding upon the Investor and the legal representatives, successors and assigns of the Investor, shall survive the admission of the Investor as a member of a SPV, and shall, if the Investor consists of more than one person, be the joint and several obligation of all such persons.

*[Remainder of page intentionally left blank. Signature page follows.]*

The undersigned have executed this instrument as of the date first above written.

SPV

Cardinal Spirits I EB, as series of Wefunder SPV, LLC
By: Wefunder Admin, LLC, its Manager

By: Founder Signature

Date:

Name: Nicholas Tommarello

Title: Chief Executive Officer

Investor

[INVESTOR NAME]

By: Investor Signature

Date:

CONTACT INFORMATION:

Name: [INVESTOR NAME]

Mailing Address:

City:

Country:

E-mail:

# TERMS APPENDIX FOR THE PURCHASE OF Cardinal
Spirits LLC SECURITIES BY Cardinal Spirits I EB, A
SERIES OF WEFUNDER SPV, LLC, A DELAWARE
LIMITED LIABILITY COMPANY

**Type of Security:** Convertible Note

**Terms** $20M valuation cap and 20% discount

To view a copy of the contract, please see **Appendix B, Investor Contracts** of
the Form C. The latest Form C or C/A filing be found here:
https://www.sec.gov/cgi-bin/srch-edgar?text=%28FORM-
TYPE%3DC%2FA+or+FORM-
TYPE%3DC%29+and+CIK%3D0001574152&first=2016

**Attachment 5:** `document_5.pdf`

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES IN THE UNITED STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

## CONVERTIBLE PROMISSORY NOTE

Note Series: 2023A

Date of Note: [EFFECTIVE DATE]

Principal Amount of Note: $[AMOUNT]

For value received, Cardinal Spirits, LLC, an Indiana limited liability company (the “*Company*”), promises to pay to the undersigned holder or such party’s assigns (the “*Holder*”) the principal amount set forth above with simple interest on the outstanding principal amount at the rate of 8% per annum. Interest shall commence with the date hereof and shall continue on the outstanding principal amount until paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed. All unpaid interest and principal shall be due and payable on January 1, 2026 (the “*Maturity Date*”).

All amounts of principal and accrued but unpaid interest outstanding hereunder will convert into equity securities of the Company as more fully described herein. Other than upon an Event of Default (as defined below), no payments on the Note are ever due and owing.

### 1. BASIC TERMS.

(a) **Series of Notes.** This convertible promissory note (the “*Note*”) is issued as part of a series of notes designated by the Note Series above (collectively, the “*Notes*”), and having an aggregate principal amount of up to $3,000,000 (which aggregate amount may be increased by the Board of Managers or as may be necessary to accommodate the exercise of any rights of first offer or preemptive rights) and issued in a series of multiple closings to certain persons and entities (collectively, the “*Holders*”). The Company shall maintain a ledger of all Holders.

(b) **Payments.** All payments of interest and principal shall be in lawful money of the United States of America and shall be made pro rata among all Holders. All payments shall be applied first to accrued interest, and thereafter to principal.

(c) **Prepayment.** The Company may not prepay this Note prior to the Maturity Date without the consent of the Holders of a majority of the outstanding principal amount of the Notes (the “*Majority Holders*”).

# 2. CONVERSION AND REPAYMENT.

(a) Conversion upon a Qualified Financing. In the event that the Company issues and sells equity securities ("Next Round Securities") to investors (the "Investors") while this Note remains outstanding in a transaction or series of related transactions with aggregate gross proceeds to the Company of not less than $5,000,000 (including the conversion of the Notes and any other indebtedness of the Company) and with the principal purpose of raising capital (a "Qualified Financing"), then the outstanding principal amount of this Note and any unpaid accrued interest shall automatically convert in whole without any further action by the Holder into the Next Round Securities sold in the Qualified Financing at a conversion price equal to the lesser of (i) the cash price paid per membership unit by the Investors in the Qualified Financing multiplied by 0.80, and (ii) the price per membership unit that would be obtained by dividing $20,000,000 by the aggregate number of outstanding membership units of the Company immediately prior to the initial closing of the Qualified Financing (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing, but excluding the Next Round Securities issuable upon the conversion of the Notes or other indebtedness of the Company). The issuance of Next Round Securities pursuant to the conversion of this Note shall be upon and subject to the same terms and conditions applicable to Next Round Securities sold in the Qualified Financing. Notwithstanding the foregoing or anything in this Note to the contrary, the Company may, solely at its option, elect to convert this Note into units of a newly created series or class of membership units having the identical rights, privileges, preferences and restrictions as the membership units issued in the Qualified Financing, and otherwise on the same terms and conditions, other than with respect to (if applicable): (i) the per unit liquidation preference and the conversion price for purposes of any price-based anti-dilution protection, which will equal the conversion price; and (ii) the per unit dividend or preferred return, if any, which will be the same percentage of the conversion price as applied to determine the per unit dividends or preferred return, if any, of new Investors in the Qualified Financing relative to the purchase price paid by such investors.

(b) Optional Conversion at non-Qualified Financing. In the event the Company consummates, while this Note remains outstanding, an equity financing pursuant to which it sells Next Round Securities in a transaction that does not constitute a Qualified Financing, then the Majority Holders shall have the option to treat such equity financing as a Qualified Financing on the same terms set forth herein and elect to convert each of the Notes.

(c) Maturity Date Conversion. In the event that this Note remains outstanding on the Maturity Date, then the outstanding principal balance of this Note and any unpaid accrued interest shall automatically without any further action by the Holder convert as of the Maturity Date into Series A Preferred Units of the Company at a conversion price equal to the quotient resulting from dividing $20,000,000 by the aggregate number of outstanding membership units of the Company as of the Maturity Date (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, but excluding the Series A Preferred Units of the Company issuable upon the conversion of the Notes or other indebtedness of the Company).

(d) Change of Control. If the Company consummates a Change of Control (as defined below) while this Note remains outstanding, the Company shall pay the Holder in cash an amount equal to (i) 150% of the outstanding principal amount of this Note plus (ii) any unpaid accrued interest on the original principal. For purposes of this Note, a "Change of Control" means (i) a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the equity securities

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of the Company immediately prior to such consolidation, merger or reorganization continue to represent a majority of the voting power of the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company's voting power is transferred; or (iii) the sale or transfer of all or substantially all of the Company's assets, or the exclusive license of all or substantially all of the Company's material intellectual property; provided that a Change of Control shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor, indebtedness of the Company is cancelled or converted or a combination thereof. The Company shall give the Holder notice of a Change of Control not less than 10 days prior to the anticipated date of consummation of the Change of Control. Any repayment pursuant to this paragraph in connection with a Change of Control shall be subject to any required tax withholdings, and may be made by the Company (or any party to such Change of Control or its agent) following the Change of Control in connection with payment procedures established in connection with such Change of Control.

(e) Procedure for Conversion. In connection with any conversion of this Note into equity securities, the Holder shall surrender this Note to the Company and deliver to the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing, all financing documents executed by the Investors in connection with such Qualified Financing). The Company shall not be required to issue or deliver the equity securities into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company any such documentation. Upon the conversion of this Note into equity securities pursuant to the terms hereof, in lieu of any fractional security to which the Holder would otherwise be entitled, the Company shall pay the Holder cash equal to such fraction multiplied by the price at which this Note converts.

(f) Interest Accrual. If a Change of Control or Qualified Financing is consummated, all interest on this Note shall be deemed to have stopped accruing as of a date selected by the Company that is up to 10 days prior to the signing of the definitive agreement for the Change of Control or Qualified Financing.

### 3. REPRESENTATIONS AND WARRANTIES.

(a) Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder as of the date the first Note was issued as follows:

(i) Organization, Good Standing and Qualification. The Company is a limited liability company duly organized and validly existing under the laws of the State of Indiana. The Company has the requisite company power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign company in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business (a "Material Adverse Effect").

(ii) Company Power. The Company has all requisite company power to issue this Note and to carry out and perform its obligations under this Note. The Company's Board of Managers (the "Board") and the requisite members of the Company have approved the issuance of this Note based upon a reasonable belief that the issuance of this Note is appropriate for the Company after reasonable inquiry concerning the Company's financing objectives and financial situation.

(iii) Authorization. All company action on the part of the Company, the Board and the Company's members necessary for the issuance and delivery of this Note has been taken.

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This Note constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. Any securities issued upon conversion of this Note (the "Conversion Securities"), when issued in compliance with the provisions of this Note, will be validly issued, fully paid, nonassessable, free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws.

(iv) Governmental Consents. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations or filings with, any governmental authority required on the part of the Company in connection with issuance of this Note has been obtained.

(v) Offering. Assuming the accuracy of the representations and warranties of the Holder contained in subsection (b) below, the offer, issue, and sale of this Note and the Conversion Securities (collectively, the "Securities") are and will be exempt from the registration and prospectus delivery requirements of the Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

(b) Representations and Warranties of the Holder. The Holder hereby represents and warrants to the Company as of the date hereof as follows:

(i) Purchase for Own Account. The Holder is acquiring the Securities solely for the Holder's own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

(ii) Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in subsection (a) above, the Holder hereby: (A) acknowledges that the Holder is aware of the Company's business affairs and financial condition and has received all the information the Holder has requested from the Company and the Holder considers necessary or appropriate for deciding whether to acquire the Securities, (B) represents that the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business and affairs of the Company, and to obtain any additional information necessary to verify the accuracy of the information given the Holder, (C) further represents that the Holder has such knowledge and experience in financial and business matters that the Holder is capable of evaluating the merits and risk of this investment, and (D) acknowledges that the Company has not prepared and has not delivered to the Holder, and has not been requested by the Holder to deliver, a private placement or similar memorandum or any written disclosure of the types of information customarily furnished to purchasers of securities in such memorandums or other disclosure materials. The Holder understands that any business plan or similar document which the Holder may have been shown or of which the Holder may have been furnished a copy, is not a prospectus, placement memorandum, offering circular, offering statement, or similar document. Any such document was not prepared with the purpose of providing full and accurate disclosure to investors. The Holder understands that any such document has been furnished to the Holder only as part of an overall furnishing of information about the Company and that the Holder has viewed the information set forth therein with a critical frame of mind and, to the extent that information contained in any such document was deemed by the Holder to be important information in making an investment decision, the Holder has discussed such information with the officers and other personnel of the Company in order to form a better judgment regarding the accuracy and adequacy of such information. The Holder agrees that no statement in any document, even if framed as a factual statement,

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will, of itself, constitute a factual representation by the Company in light of the various purposes for which any such document may have been created.

**(iii) Ability to Bear Economic Risk.** The Holder acknowledges that investment in the Securities involves a high degree of risk, and represents that the Holder is able, without materially impairing the Holder’s financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Holder’s investment. The Holder, either alone or with the assistance of the Holder’s own professional advisors, has such knowledge and experience in financial and business matters that the Holder is capable of reading and interpreting financial statements and evaluating the merits and risks of the prospective investment in the Securities in light of the Holder’s financial condition, objectives, and investment needs. The Holder has adequate means for providing for the Holder’s current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Securities.

**(iv) Further Limitations on Disposition.** Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Securities unless and until:

**(1)** There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

**(2)** The Holder shall have notified the Company of the proposed disposition and furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws; provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances.

**(3)** Notwithstanding the provisions of paragraphs (1) and (2) above, no such registration statement or opinion of counsel shall be necessary for a transfer by the Holder to a partner (or retired partner) or member (or retired member) of the Holder in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were the Holders hereunder.

**(v) No “Bad Actor” Disqualification.** The Holder represents and warrants that neither (A) the Holder nor (B) any entity that controls the Holder or is under the control of, or under common control with, the Holder, is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Act and disclosed in writing in reasonable detail to the Company. The Holder represents that the Holder has exercised reasonable care to determine the accuracy of the representation made by the Holder in this paragraph, and agrees to notify the Company if the Holder becomes aware of any fact that makes the representation given by the Holder hereunder inaccurate.

**(vi) Foreign Investors.** If the Holder is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “*Code*”)), the Holder hereby represents that he, she or it has satisfied itself as to the full observance of the laws of the Holder’s jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Note, including (A) the legal requirements within the Holder’s jurisdiction for the purchase of the Securities, (B)

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any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The Holder's subscription, payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Holder's jurisdiction.

(vii) Forward-Looking Statements. With respect to any forecasts, projections of results and other forward-looking statements and information provided to the Holder (including financial projections), the Holder acknowledges that such statements were prepared based upon assumptions deemed reasonable by the Company at the time of preparation. There is no assurance that such statements will prove accurate, and the Company has no obligation to update such statements. It can be expected that some or all of the assumptions underlying such statements will not materialize or will vary significantly from actual results. Any financial projections of the Company provided to the Holder are based on assumptions concerning facts and events over which that Company may have little or no control, including, among others, (1) demand for the Company's products and services; (2) timing and number of strategic relationships; (3) the amount and timing of operating costs and capital expenditures related to the expansion of the Company's business operations and infrastructure; (4) market acceptance of new products or services of the Company and those of its competitors; (5) governmental regulations; (6) fluctuations in general economic conditions; and (7) the Company's ability to attract, train, and retain qualified personnel. The Company's assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur, which could produce results significantly different from those set forth in the projections. The projections reflect the Company's current expectations and are inherently uncertain. There can be no assurance that: (A) the Company's projections will be attained; (B) the Company will be able to successfully implement any of its business plans; or (C) the assumptions and expectations regarding its future plans and performance will not be materially different from the present expectations.

# 4. EVENTS OF DEFAULT.

(a) If there shall be any Event of Default (as defined below) hereunder, at the option and upon the declaration of the Majority Holders and upon written notice to the Company (which election and notice shall not be required in the case of an Event of Default under subsection (ii) or (iii) below), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. The occurrence of any one or more of the following shall constitute an "Event of Default":

(i) The Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any unpaid accrued interest or other amounts due under this Note on the date the same becomes due and payable;

(ii) The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any company action in furtherance of any of the foregoing; or

(iii) An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 60 days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company).

(b) In the event of any Event of Default hereunder, the Company shall pay all reasonable attorneys' fees and court costs incurred by the Holder in enforcing and collecting this Note.

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# 5. MISCELLANEOUS PROVISIONS.

(a) Waivers. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.
(b) Further Assurances. The Holder agrees and covenants that at any time and from time to time the Holder will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals.
(c) Transfers of Notes. This Note may be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Company's obligation to pay such interest and principal.
(d) Amendment and Waiver. Any term of this Note may be amended or waived with the written consent of the Company and the Holder. In addition, any term of this Note may be amended or waived with the written consent of the Company and the Majority Holders. Upon the effectuation of such waiver or amendment with the consent of the Majority Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver.
(e) Governing Law. This Note shall be governed by and construed under the laws of the State of Indiana, as applied to agreements among Indiana residents, made and to be performed entirely within the State of Indiana, without giving effect to conflicts of laws principles.
(f) Binding Agreement. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Note, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities under or by reason of this Note, except as expressly provided in this Note.
(g) Counterparts; Manner of Delivery. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(h) Titles and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.
(i) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five days after having been sent by registered or certified mail, return receipt

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requested, postage prepaid, or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications to a party shall be sent to the party's address set forth on the signature page hereto or at such other address(es) as such party may designate by 10 days' advance written notice to the other party hereto.

(j) Expenses. The Company and the Holder shall each bear its respective expenses and legal fees incurred with respect to the negotiation, execution and delivery of this Note and the transactions contemplated herein.

(k) Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder, upon any breach or default of the Company under this Note shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by the Holder of any breach or default under this Note, or any waiver by the Holder of any provisions or conditions of this Note, must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Note, or by law or otherwise afforded to the Holder, shall be cumulative and not alternative. This Note shall be void and of no force or effect in the event that the Holder fails to remit the full principal amount to the Company within five calendar days of the date of this Note.

(l) Entire Agreement. This Note constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.

(m) Exculpation among Holders. The Holder acknowledges that the Holder is not relying on any person, firm or corporation, other than the Company and its officers, in making its investment or decision to invest in the Company.

(n) Senior Indebtedness. The indebtedness evidenced by this Note is subordinated in right of payment to the prior payment in full of any Senior Indebtedness in existence on the date of this Note or hereafter incurred. "Senior Indebtedness" shall mean, unless expressly subordinated to or made on a parity with the amounts due under this Note, all amounts due in connection with (i) indebtedness of the Company to banks or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), and (ii) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor.

(o) Broker's Fees. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this subsection being untrue.

(p) Security. This Note and the indebtedness evidenced hereby, including, without limitation, the principal amount and interest due hereunder, costs of collection and all amounts owed under

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any modifications, renewals or extensions of any of the foregoing obligations, shall be unsecured, general obligations of the Company.

*(signature pages follow)*

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IN WITNESS WHEREOF, the parties have executed this agreement as of [INVESTMENT DATE].

Investment Amount: $[AMOUNT]

COMPANY:

Cardinal Spirits LLC

Founder Signature

Name: [FOUNDER NAME]

Title: [FOUNDER TITLE]

Read and Approved (For IRA Use Only):

SUBSCRIBER:

[ENTITY NAME]

By:

Investor Signature

Name: [INVESTOR NAME]

Title: [INVESTOR TITLE]

The Subscriber is an “accredited investor” as that term is defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act.

Please indicate Yes or No by checking the appropriate box:

☐ Accredited

☐ Not Accredited

SIGNATURE PAGE

**Attachment 6:** `document_6.pdf`

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES IN THE UNITED STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

## CONVERTIBLE PROMISSORY NOTE

Note Series: 2023A

Date of Note: [EFFECTIVE DATE]

Principal Amount of Note: $[AMOUNT]

For value received, Cardinal Spirits, LLC, an Indiana limited liability company (the “*Company*”), promises to pay to the undersigned holder or such party’s assigns (the “*Holder*”) the principal amount set forth above with simple interest on the outstanding principal amount at the rate of 6% per annum. Interest shall commence with the date hereof and shall continue on the outstanding principal amount until paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed. All unpaid interest and principal shall be due and payable on January 1, 2026 (the “*Maturity Date*”).

All amounts of principal and accrued but unpaid interest outstanding hereunder will convert into equity securities of the Company as more fully described herein. Other than upon an Event of Default (as defined below), no payments on the Note are ever due and owing.

### 1. BASIC TERMS.

(a) **Series of Notes.** This convertible promissory note (the “*Note*”) is issued as part of a series of notes designated by the Note Series above (collectively, the “*Notes*”), and having an aggregate principal amount of up to $3,000,000 (which aggregate amount may be increased by the Board of Managers or as may be necessary to accommodate the exercise of any rights of first offer or preemptive rights) and issued in a series of multiple closings to certain persons and entities (collectively, the “*Holders*”). The Company shall maintain a ledger of all Holders.

(b) **Payments.** All payments of interest and principal shall be in lawful money of the United States of America and shall be made pro rata among all Holders. All payments shall be applied first to accrued interest, and thereafter to principal.

(c) **Prepayment.** The Company may not prepay this Note prior to the Maturity Date without the consent of the Holders of a majority of the outstanding principal amount of the Notes (the “*Majority Holders*”).

# 2. CONVERSION AND REPAYMENT.

(a) Conversion upon a Qualified Financing. In the event that the Company issues and sells equity securities ("Next Round Securities") to investors (the "Investors") while this Note remains outstanding in a transaction or series of related transactions with aggregate gross proceeds to the Company of not less than $5,000,000 (including the conversion of the Notes and any other indebtedness of the Company) and with the principal purpose of raising capital (a "Qualified Financing"), then the outstanding principal amount of this Note and any unpaid accrued interest shall automatically convert in whole without any further action by the Holder into the Next Round Securities sold in the Qualified Financing at a conversion price equal to the lesser of (i) the cash price paid per membership unit by the Investors in the Qualified Financing multiplied by 0.80, and (ii) the price per membership unit that would be obtained by dividing $20,000,000 by the aggregate number of outstanding membership units of the Company immediately prior to the initial closing of the Qualified Financing (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing, but excluding the Next Round Securities issuable upon the conversion of the Notes or other indebtedness of the Company). The issuance of Next Round Securities pursuant to the conversion of this Note shall be upon and subject to the same terms and conditions applicable to Next Round Securities sold in the Qualified Financing. Notwithstanding the foregoing or anything in this Note to the contrary, the Company may, solely at its option, elect to convert this Note into units of a newly created series or class of membership units having the identical rights, privileges, preferences and restrictions as the membership units issued in the Qualified Financing, and otherwise on the same terms and conditions, other than with respect to (if applicable): (i) the per unit liquidation preference and the conversion price for purposes of any price-based anti-dilution protection, which will equal the conversion price; and (ii) the per unit dividend or preferred return, if any, which will be the same percentage of the conversion price as applied to determine the per unit dividends or preferred return, if any, of new Investors in the Qualified Financing relative to the purchase price paid by such investors.

(b) Optional Conversion at non-Qualified Financing. In the event the Company consummates, while this Note remains outstanding, an equity financing pursuant to which it sells Next Round Securities in a transaction that does not constitute a Qualified Financing, then the Majority Holders shall have the option to treat such equity financing as a Qualified Financing on the same terms set forth herein and elect to convert each of the Notes.

(c) Maturity Date Conversion. In the event that this Note remains outstanding on the Maturity Date, then the outstanding principal balance of this Note and any unpaid accrued interest shall automatically without any further action by the Holder convert as of the Maturity Date into Series A Preferred Units of the Company at a conversion price equal to the quotient resulting from dividing $20,000,000 by the aggregate number of outstanding membership units of the Company as of the Maturity Date (assuming full conversion of all securities convertible into membership units and exercise of all outstanding options and warrants, including all membership units reserved and available for future grant under any equity incentive or similar plan of the Company, but excluding the Series A Preferred Units of the Company issuable upon the conversion of the Notes or other indebtedness of the Company).

(d) Change of Control. If the Company consummates a Change of Control (as defined below) while this Note remains outstanding, the Company shall pay the Holder in cash an amount equal to (i) 150% of the outstanding principal amount of this Note plus (ii) any unpaid accrued interest on the original principal. For purposes of this Note, a "Change of Control" means (i) a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the equity securities

2

of the Company immediately prior to such consolidation, merger or reorganization continue to represent a majority of the voting power of the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company's voting power is transferred; or (iii) the sale or transfer of all or substantially all of the Company's assets, or the exclusive license of all or substantially all of the Company's material intellectual property; provided that a Change of Control shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor, indebtedness of the Company is cancelled or converted or a combination thereof. The Company shall give the Holder notice of a Change of Control not less than 10 days prior to the anticipated date of consummation of the Change of Control. Any repayment pursuant to this paragraph in connection with a Change of Control shall be subject to any required tax withholdings, and may be made by the Company (or any party to such Change of Control or its agent) following the Change of Control in connection with payment procedures established in connection with such Change of Control.

(e) Procedure for Conversion. In connection with any conversion of this Note into equity securities, the Holder shall surrender this Note to the Company and deliver to the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing, all financing documents executed by the Investors in connection with such Qualified Financing). The Company shall not be required to issue or deliver the equity securities into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company any such documentation. Upon the conversion of this Note into equity securities pursuant to the terms hereof, in lieu of any fractional security to which the Holder would otherwise be entitled, the Company shall pay the Holder cash equal to such fraction multiplied by the price at which this Note converts.

(f) Interest Accrual. If a Change of Control or Qualified Financing is consummated, all interest on this Note shall be deemed to have stopped accruing as of a date selected by the Company that is up to 10 days prior to the signing of the definitive agreement for the Change of Control or Qualified Financing.

### 3. REPRESENTATIONS AND WARRANTIES.

(a) Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder as of the date the first Note was issued as follows:

(i) Organization, Good Standing and Qualification. The Company is a limited liability company duly organized and validly existing under the laws of the State of Indiana. The Company has the requisite company power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign company in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business (a "Material Adverse Effect").

(ii) Company Power. The Company has all requisite company power to issue this Note and to carry out and perform its obligations under this Note. The Company's Board of Managers (the "Board") and the requisite members of the Company have approved the issuance of this Note based upon a reasonable belief that the issuance of this Note is appropriate for the Company after reasonable inquiry concerning the Company's financing objectives and financial situation.

(iii) Authorization. All company action on the part of the Company, the Board and the Company's members necessary for the issuance and delivery of this Note has been taken.

3

This Note constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. Any securities issued upon conversion of this Note (the "Conversion Securities"), when issued in compliance with the provisions of this Note, will be validly issued, fully paid, nonassessable, free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws.

(iv) Governmental Consents. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations or filings with, any governmental authority required on the part of the Company in connection with issuance of this Note has been obtained.

(v) Offering. Assuming the accuracy of the representations and warranties of the Holder contained in subsection (b) below, the offer, issue, and sale of this Note and the Conversion Securities (collectively, the "Securities") are and will be exempt from the registration and prospectus delivery requirements of the Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

(b) Representations and Warranties of the Holder. The Holder hereby represents and warrants to the Company as of the date hereof as follows:

(i) Purchase for Own Account. The Holder is acquiring the Securities solely for the Holder's own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

(ii) Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in subsection (a) above, the Holder hereby: (A) acknowledges that the Holder is aware of the Company's business affairs and financial condition and has received all the information the Holder has requested from the Company and the Holder considers necessary or appropriate for deciding whether to acquire the Securities, (B) represents that the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business and affairs of the Company, and to obtain any additional information necessary to verify the accuracy of the information given the Holder, (C) further represents that the Holder has such knowledge and experience in financial and business matters that the Holder is capable of evaluating the merits and risk of this investment, and (D) acknowledges that the Company has not prepared and has not delivered to the Holder, and has not been requested by the Holder to deliver, a private placement or similar memorandum or any written disclosure of the types of information customarily furnished to purchasers of securities in such memorandums or other disclosure materials. The Holder understands that any business plan or similar document which the Holder may have been shown or of which the Holder may have been furnished a copy, is not a prospectus, placement memorandum, offering circular, offering statement, or similar document. Any such document was not prepared with the purpose of providing full and accurate disclosure to investors. The Holder understands that any such document has been furnished to the Holder only as part of an overall furnishing of information about the Company and that the Holder has viewed the information set forth therein with a critical frame of mind and, to the extent that information contained in any such document was deemed by the Holder to be important information in making an investment decision, the Holder has discussed such information with the officers and other personnel of the Company in order to form a better judgment regarding the accuracy and adequacy of such information. The Holder agrees that no statement in any document, even if framed as a factual statement,

4

will, of itself, constitute a factual representation by the Company in light of the various purposes for which any such document may have been created.

**(iii) Ability to Bear Economic Risk.** The Holder acknowledges that investment in the Securities involves a high degree of risk, and represents that the Holder is able, without materially impairing the Holder’s financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Holder’s investment. The Holder, either alone or with the assistance of the Holder’s own professional advisors, has such knowledge and experience in financial and business matters that the Holder is capable of reading and interpreting financial statements and evaluating the merits and risks of the prospective investment in the Securities in light of the Holder’s financial condition, objectives, and investment needs. The Holder has adequate means for providing for the Holder’s current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Securities.

**(iv) Further Limitations on Disposition.** Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Securities unless and until:

**(1)** There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

**(2)** The Holder shall have notified the Company of the proposed disposition and furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws; provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances.

**(3)** Notwithstanding the provisions of paragraphs (1) and (2) above, no such registration statement or opinion of counsel shall be necessary for a transfer by the Holder to a partner (or retired partner) or member (or retired member) of the Holder in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were the Holders hereunder.

**(v) No “Bad Actor” Disqualification.** The Holder represents and warrants that neither (A) the Holder nor (B) any entity that controls the Holder or is under the control of, or under common control with, the Holder, is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Act and disclosed in writing in reasonable detail to the Company. The Holder represents that the Holder has exercised reasonable care to determine the accuracy of the representation made by the Holder in this paragraph, and agrees to notify the Company if the Holder becomes aware of any fact that makes the representation given by the Holder hereunder inaccurate.

**(vi) Foreign Investors.** If the Holder is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “*Code*”)), the Holder hereby represents that he, she or it has satisfied itself as to the full observance of the laws of the Holder’s jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Note, including (A) the legal requirements within the Holder’s jurisdiction for the purchase of the Securities, (B)

5

any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The Holder's subscription, payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Holder's jurisdiction.

(vii) Forward-Looking Statements. With respect to any forecasts, projections of results and other forward-looking statements and information provided to the Holder (including financial projections), the Holder acknowledges that such statements were prepared based upon assumptions deemed reasonable by the Company at the time of preparation. There is no assurance that such statements will prove accurate, and the Company has no obligation to update such statements. It can be expected that some or all of the assumptions underlying such statements will not materialize or will vary significantly from actual results. Any financial projections of the Company provided to the Holder are based on assumptions concerning facts and events over which that Company may have little or no control, including, among others, (1) demand for the Company's products and services; (2) timing and number of strategic relationships; (3) the amount and timing of operating costs and capital expenditures related to the expansion of the Company's business operations and infrastructure; (4) market acceptance of new products or services of the Company and those of its competitors; (5) governmental regulations; (6) fluctuations in general economic conditions; and (7) the Company's ability to attract, train, and retain qualified personnel. The Company's assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur, which could produce results significantly different from those set forth in the projections. The projections reflect the Company's current expectations and are inherently uncertain. There can be no assurance that: (A) the Company's projections will be attained; (B) the Company will be able to successfully implement any of its business plans; or (C) the assumptions and expectations regarding its future plans and performance will not be materially different from the present expectations.

# 4. EVENTS OF DEFAULT.

(a) If there shall be any Event of Default (as defined below) hereunder, at the option and upon the declaration of the Majority Holders and upon written notice to the Company (which election and notice shall not be required in the case of an Event of Default under subsection (ii) or (iii) below), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. The occurrence of any one or more of the following shall constitute an "Event of Default":

(i) The Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any unpaid accrued interest or other amounts due under this Note on the date the same becomes due and payable;

(ii) The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any company action in furtherance of any of the foregoing; or

(iii) An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 60 days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company).

(b) In the event of any Event of Default hereunder, the Company shall pay all reasonable attorneys' fees and court costs incurred by the Holder in enforcing and collecting this Note.

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# 5. MISCELLANEOUS PROVISIONS.

(a) Waivers. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.
(b) Further Assurances. The Holder agrees and covenants that at any time and from time to time the Holder will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals.
(c) Transfers of Notes. This Note may be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Company's obligation to pay such interest and principal.
(d) Amendment and Waiver. Any term of this Note may be amended or waived with the written consent of the Company and the Holder. In addition, any term of this Note may be amended or waived with the written consent of the Company and the Majority Holders. Upon the effectuation of such waiver or amendment with the consent of the Majority Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver.
(e) Governing Law. This Note shall be governed by and construed under the laws of the State of Indiana, as applied to agreements among Indiana residents, made and to be performed entirely within the State of Indiana, without giving effect to conflicts of laws principles.
(f) Binding Agreement. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Note, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities under or by reason of this Note, except as expressly provided in this Note.
(g) Counterparts; Manner of Delivery. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(h) Titles and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.
(i) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five days after having been sent by registered or certified mail, return receipt

7

requested, postage prepaid, or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications to a party shall be sent to the party's address set forth on the signature page hereto or at such other address(es) as such party may designate by 10 days' advance written notice to the other party hereto.

(j) Expenses. The Company and the Holder shall each bear its respective expenses and legal fees incurred with respect to the negotiation, execution and delivery of this Note and the transactions contemplated herein.

(k) Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder, upon any breach or default of the Company under this Note shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by the Holder of any breach or default under this Note, or any waiver by the Holder of any provisions or conditions of this Note, must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Note, or by law or otherwise afforded to the Holder, shall be cumulative and not alternative. This Note shall be void and of no force or effect in the event that the Holder fails to remit the full principal amount to the Company within five calendar days of the date of this Note.

(l) Entire Agreement. This Note constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.

(m) Exculpation among Holders. The Holder acknowledges that the Holder is not relying on any person, firm or corporation, other than the Company and its officers, in making its investment or decision to invest in the Company.

(n) Senior Indebtedness. The indebtedness evidenced by this Note is subordinated in right of payment to the prior payment in full of any Senior Indebtedness in existence on the date of this Note or hereafter incurred. "Senior Indebtedness" shall mean, unless expressly subordinated to or made on a parity with the amounts due under this Note, all amounts due in connection with (i) indebtedness of the Company to banks or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), and (ii) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor.

(o) Broker's Fees. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this subsection being untrue.

(p) Security. This Note and the indebtedness evidenced hereby, including, without limitation, the principal amount and interest due hereunder, costs of collection and all amounts owed under

8

any modifications, renewals or extensions of any of the foregoing obligations, shall be unsecured, general obligations of the Company.

*(signature pages follow)*

9

IN WITNESS WHEREOF, the parties have executed this agreement as of [INVESTMENT DATE].

Investment Amount: $[AMOUNT]

COMPANY:

Cardinal Spirits LLC

Founder Signature

Name: [FOUNDER NAME]

Title: [FOUNDER TITLE]

Read and Approved (For IRA Use Only):

SUBSCRIBER:

[ENTITY NAME]

By:

Investor Signature

Name: [INVESTOR NAME]

Title: [INVESTOR TITLE]

The Subscriber is an “accredited investor” as that term is defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act.

Please indicate Yes or No by checking the appropriate box:

☐ Accredited

☐ Not Accredited

SIGNATURE PAGE

**Attachment 7:** `document_7.pdf`

![img-0.jpeg](img-0.jpeg)

**Cardinal Spirits, LLC** (the “Company”) an Indiana Limited Liability Company

Financial Statements (unaudited) and
Independent Accountant’s Review Report

Years ended December 31, 2022 & 2021

![img-1.jpeg](img-1.jpeg)

## INDEPENDENT ACCOUNTANT'S REVIEW REPORT

Cardinal Spirits, LLC

We have reviewed the accompanying financial statements of the Company which comprise the statement of financial position as of December 31, 2021 & 2022 and the related statements of operations, statement of changes in member’s equity, and statement of cash flows for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of Company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

### Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

### Accountant’s Responsibility

Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.

### Accountant’s Conclusion

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

### Emphasis of Matter Regarding Going Concern

As discussed in Note 8, certain conditions indicate substantial doubt that the Company will be able to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management has evaluated these conditions and plans to generate revenues and raise capital as needed to satisfy its capital needs.

Vince Mongio, CPA, CIA, CFE, MACC

*Vincenzo Mongio*

# **Statement of Financial Position**

|  | As of December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| ASSETS |  |  |
| Current Assets |  |  |
| Cash and Cash Equivalents | 274,785 | 128,586 |
| Accounts Receivable | 420,554 | 1,004,825 |
| Prepaid Expenses | 51,665 | 50,493 |
| Inventory | 1,051,114 | 1,327,041 |
| Total Current Assets | 1,798,117 | 2,510,945 |
| Non-current Assets |  |  |
| Furniture, Equipment, and Leasehold Improvements, net of Accumulated Depreciation | 156,942 | 179,658 |
| Intangible Assets: Trademark, net of Accumulated Depreciation | 29,821 | 31,001 |
| Total Non-Current Assets | 186,763 | 210,659 |
| TOTAL ASSETS | 1,984,880 | 2,721,604 |
| LIABILITIES AND EQUITY |  |  |
| Liabilities |  |  |
| Current Liabilities |  |  |
| Accounts Payable | 360,248 | 1,170,145 |
| Distributions Payable | 456,879 | - |
| Accrued Taxes | 1,495,075 | 707,453 |
| Line of Credit | - | 190,650 |
| Accrued Interest | 106,774 | 64,091 |
| Accrued Payroll | 32,635 | 51,039 |
| Accrued Insurance | 28,452 | 27,446 |
| Other Liabilities | 1,671 | - |
| Total Current Liabilities | 2,481,734 | 2,210,823 |
| Long-term Liabilities |  |  |
| Equipment Loan | 60,884 | 82,297 |
| Long-Term Loans | 675,634 | 393,457 |
| Related Party Loans | 1,675,173 | 628,570 |
| Total Long-Term Liabilities | 2,411,692 | 1,104,325 |
| TOTAL LIABILITIES | 4,893,426 | 3,315,148 |
| EQUITY |  |  |
| Preferred Stock | 1,531,981 | 1,531,981 |
| Additional Paid in Capital | 7,874 | 7,874 |
| Accumulated Deficit | (4,448,401) | (2,133,399) |
| Total Equity | (2,908,546) | (593,544) |
| TOTAL LIABILITIES AND EQUITY | 1,984,880 | 2,721,604 |

# Statement of Operations

|  | Year Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Revenue | 6,338,046 | 7,554,795 |
| Cost of Revenue | 4,983,598 | 7,223,245 |
| Gross Profit | 1,354,448 | 331,549 |
| Operating Expenses |  |  |
| Advertising and Marketing | 90,711 | 236,148 |
| General and Administrative | 306,341 | 308,201 |
| Payroll and Related Expenses | 1,499,320 | 1,058,058 |
| Utilities and Facilities | 442,309 | 628,819 |
| Bad Debt Expenses | 280,517 |  |
| Operating and Maintenance Expenses | 330,562 | 577,141 |
| Depreciation | 22,716 | 26,629 |
| Amortization | 3,466 | 4,062 |
| Total Operating Expenses | 2,975,942 | 2,839,058 |
| Operating Income (loss) | (1,621,494) | (2,507,509) |
| Other Income |  |  |
| Interest Income | 11,109 | - |
| COVID-19 Relief | - | 452,197 |
| Other |  |  |
| Total Other Income | 11,109 | 452,197 |
| Other Expense |  |  |
| Interest Expense | (220,738) | (51,467) |
| Loss on Inventory Write Down | - | (50,835) |
| Other |  |  |
| Total Other Expense | (220,738) | (102,302) |
| Net Income (Loss) | (1,831,123) | (2,157,615) |

# **Statement of Cash Flows**

|  | Year Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| OPERATING ACTIVITIES |  |  |
| Net Income (Loss) | (1,831,123) | (2,278,428) |
| Adjustments to reconcile Net Income to Net Cash provided by operations: |  |  |
| Depreciation | 22,716 | 26,629 |
| Amortization | 3,466 | 4,062 |
| Accrued Interest | 42,684 | 27,930 |
| PPP Loan Forgiveness | - | (192,967) |
| Accounts Payable and Accrued Expenses | (9,923) | 1,705,589 |
| Accrued Liabilities | (1,171) | 308,197 |
| Inventory | 396,740 | (419,029) |
| Accounts Receivable | 584,271 | (395,674) |
| Other | 2,162 | - |
| Total Adjustments to reconcile Net Income to Net Cash provided by operations: | 1,040,944 | 1,064,738 |
| Net Cash provided by (used in) Operating Activities | (790,179) | (1,213,690) |
| INVESTING ACTIVITIES |  |  |
| Capital Expenditures | (2,285) | (13,200) |
| Net Cash provided by (used by) Investing Activities | (2,285) | (13,200) |
| FINANCING ACTIVITIES |  |  |
| Member Distributions | (27,000) | (334,007) |
| Debt Issuances | 1,756,727 | 440,000 |
| Debt Payments | (600,415) | (442,936) |
| Credit Line | (190,650) | 190,650 |
| Net Cash provided by (used in) Financing Activities | 938,662 | (146,292) |
| Cash at the beginning of period | 128,586 | 1,501,769 |
| Net Cash increase (decrease) for period | 146,198 | (1,373,182) |
| Cash at end of period | 274,785 | 128,586 |

# Statement of Changes in Member Equity

Common Shares

Preferred Shares

|  | # of shares | $ Amount | # of shares | $ Amount | Additional Paid in Capital | Retained Earnings (Accumulated Deficit) | Total Stockholder Equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Beginning Balance at 1/1/2021 | 1,500,000 | - | 987,774 | 1,531,981 | 7,874 | 358,223 | 1,898,078 |
| Member Distributions | - | - | - | - | - | (334,007) | (334,007) |
| Net Loss | - | - | - | - | - | (2,157,615) | (2,157,615) |
| Ending Balance 12/31/2021 | 1,500,000 | - | 987,774 | 1,531,981 | 7,874 | (2,133,398) | (593,544) |
| Member Distributions | - | - | - | - | - | (27,000) | (27,000) |
| Accrued Member Distributions | - | - | - | - | - | (456,879) | (456,879) |
| Net Loss | - | - | - | - | - | (1,831,123) | (1,831,123) |
| Ending Balance 12/31/2022 | 1,500,000 | - | 987,774 | 1,531,981 | 7,874 | (4,448,400) | (2,908,545) |

# Cardinal Spirits LLC

# Notes to the Unaudited Financial Statements

# December 31st, 2022

# SUSD

# NOTE 1 - ORGANIZATION AND NATURE OF ACTIVITIES

Cardinal Spirits LLC (“the Company”) was formed in Indiana on March 14, 2011. Cardinal. The Company earns revenue in three primary business divisions. “Brand Sales” consists of producing and selling distilled spirits to wholesalers across the United States. “Copacking” consists of producing distilled spirits for other brand owners and suppliers on a contract basis. “Tasting Room” consists of operating a restaurant and bar that serves Cardinal Spirits products in cocktails. The Company’s headquarters is in Bloomington, Indiana. The Company’s customers will be located in the United States.

The company will conduct a crowdfunding campaign under regulation CF in 2023 to raise operating capital.

# NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Our fiscal year ends on December 31. The Company has no interest in variable interest entities and no predecessor entities.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances, and highly liquid investments with maturities of three months or less when purchased.

Fair Value of Financial Instruments

ASC 820 “Fair Value Measurements and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1: defined as observable inputs such as quoted prices in active markets;

Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

## Concentrations of Credit Risks

The Company's financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. The Company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

## Revenue Recognition

The Company recognizes revenue from the sale of products and services in accordance with ASC 606, "Revenue Recognition" following the five steps procedure:

Step 1: Identify the contract(s) with customers

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to performance obligations

Step 5: Recognize revenue when or as performance obligations are satisfied

Branded Products - The Company generates revenues through the delivery of spirits and ready-to-drink cocktail products to distributors, who in turn sell the product into retail establishments. Revenue is recognized at the time of shipment, net of estimated returns. Coincident with revenue recognition, the Company establishes a liability for expected returns and records an asset (and corresponding adjustment to cost of sales) for its right to recover products from customers on settling the refund liability.

|  | Spirits | Ready-to-Drink Cocktails | Other | Total |
| --- | --- | --- | --- | --- |
| 2022 | $1,269,235 | $528,963 | - | $1,798,198 |
| 2021 | $1,534,853 | $413,649 | - | $1,948,502 |

Contract Bottling - The Company generates revenues by providing contract bottling services to third party spirit brands. The Company's payments are generally collected with 30-60 days after the service is provided. The Company's primary performance obligation is bottle, label and package bulk spirits into case packaging that can be sold to retail outlets. For certain customers, the Company will also source certain ingredients and packaging materials and include these costs in the final price. While the Company is liable for quality deviations, these have historically been minimal and, as such, the Company does not carry a reserve for such obligations.

|  | Private Label | Bottling | Other | Total |
| --- | --- | --- | --- | --- |
| 2022 | $785,633 | $2,486,472 | $638,793 | $3,910,989 |
| 2021 | $1,139,161 | $2,434,125 | $1,388,579 | $4,961,865 |

Food Service - The Company also generates foodservice revenue through the sale of spirits, food, and merchandise to customers visiting their Tasting Room. Revenue is recognized at the time of delivery, net of discounts provided at the point of sale.

|  | Spirits | Food | Other | Total |
| --- | --- | --- | --- | --- |
| 2022 | $310,927 | $247,190 | $70,833 | $628,950 |
| 2021 | $330,688 | $245,074 | $68,666 | $644,428 |

## Accounts Receivable

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. Payments are generally collected upfront, but some of the merchants that products are sold through have a delay between collecting from the customer and sending to the Company.

The Company estimates an allowance for doubtful accounts based upon an evaluation of the current status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change.

As of December 31, 2022, two customers accounted for 38% and 24% of the Company's gross accounts receivable, respectively.

## Advertising Costs

Advertising costs associated with marketing the Company's products and services are generally expensed as costs are incurred.

## General and Administrative

General and administrative expenses consist of payroll and related expenses for employees and independent contractors involved in general corporate functions, including accounting, finance, tax, legal, business development, and other miscellaneous expenses.

## Royalty Agreement Obligations

On occasion, the Company will enter into a private label agreement with a third party that calls for a royalty agreement. These agreements range from 5-10% of sales and are accrued within the same period as accounts payable.

## Income Taxes

The Company is a passthrough entity for tax purposes.

## Recent Accounting Pronouncements

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.

## **NOTE 3 - RELATED PARTY TRANSACTIONS**

The Company follows ASC 850, 'Related Party Disclosures,' for the identification of related parties and disclosure of related party transactions.

The Company has entered into loan and lease agreements with an entity ('The Entity') that is controlled by a member.

The Company and The Entity have reached a lease agreement that calls for a monthly payment of $3,750.

The Entity has provided multiple loans to the Company with an outstanding balance of $1,608,922 as of December 31, 2022. The interest rates range from 3.5 - 7%.

The Company has a loan agreement with one of its members with an outstanding balance of $157,271 as of December 31, 2022. The payment is dependent upon cash flow availability and it bears an interest rate of 3.5%. The balance of the loan is expected to be converted into equity.

#### NOTE 4 - COMMITMENTS, CONTINGENCIES, COMPLIANCE WITH LAWS AND REGULATIONS

We are currently not involved with or know of any pending or threatening litigation against the Company or any of its officers. Further, the Company is currently complying with all relevant laws and regulations. The Company does not have any long-term commitments or guarantees.

#### NOTE 5 - LIABILITIES AND DEBT

During the year ending in 2015, the Company entered into a loan agreement for $208,000 with an interest rate of 3.35% and a maturity date of September, 2025. This loan is secured by certain equipment and guaranteed by the US Small Business Administration. Monthly payments of $2,042 are required. The balance of this loan was $60,884 and $82,297 as of December 31, 2022 and 2021, respectively.

During the year ending 2021, the Company entered into a Revolving Line of Credit agreement with a borrowing limit of $200,000 with an interest rate of 4.00% and a maturity date of August, 2022. This loan is secured by all assets of the Company. The balance of this loan was $0 and $190,650 as of December 31, 2022 and 2021, respectively.

During the year ending 2021, the Company entered into a loan agreement for $440,000 with an interest rate of 4.25% and a maturity date of May, 2026. This loan is secured by all assets of the Company. Monthly payments of $8,166 are required. The balance of this loan was $310,802 and $393,457 as of December 31, 2022 and 2021, respectively.

During the year ending 2022, the Company entered into a loan agreement for $191,727 with an interest rate of 6.75% and a maturity date of September, 2027. This loan is secured by all assets of the Company. Monthly payments of $3,782 are required. The balance of this loan was $183,605 and $0 as of December 31, 2022 and 2021, respectively.

In April 2022, the Company entered into an agreement to sell future cash receipts totaling $645,000 for $500,000, which is a discount factor of 1.29. The agreement does not have a termination date and is secured by future cash receipts. The interest rate of the agreement is 20%. The company made payments of $12,797.65 each week during 2022. The balance of this indebtedness was $197,082 and $0 as of December 31, 2022 and 2021, respectively.

#### Debt Summary

| Debt Instrument Name | Principal Amount | Interest Rate | Maturity Date | For the Year Ended December 2022 |  |  |  | For the Year Ended December 2021 |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Current Portion | Non-Current Portion | Total Indebtedness | Accrued Interest | Current Portion | Non-Current Portion | Total Indebtedness | Accrued Interest |
| First Financial - Line of Credit | 200,000 | - | Aug-22 | - | - | - | - | 190,650 | - | 190,650 | - |
| First Financial Commercial Loan | 440,000 | 4% | May-26 | 86,281 | 224,521 | 310,802 | - | 82,655 | 310,802 | 393,457 | - |
| SBA Equipment - Wells Fargo Admin | 208,000 | 2% | Sep-25 | 21,796 | 39,088 | 60,884 | - | 21,413 | 60,884 | 82,297 | - |
| First Financial Commercial Loan #2 | 191,727 | 7% | Sep-27 | 33,772 | 149,833 | 183,605 | - | - | - | - | - |
| Libertas Funding - Cash Receipts Loan | 500,000 | 54% | - | 181,227 | - | 181,227 | 15,855 | - | - | - | - |
| Related Party Loans | 1,675,173 | - | - | - | 1,675,173 | 1,675,173 | 90,919 | - | 628,570 | 628,570 | 62,065 |
| Total |  |  |  | 323,076 | 2,088,615 | 2,411,692 | 106,774 | 294,718 | 1,000,256 | 1,294,974 | - |

# **Debt Principal Maturities 5 Years  
Subsequent to 2022**

| Year | Amount |
| --- | --- |
| 2023 | 181,227 |
| 2024 | - |
| 2025 | 60,884 |
| 2026 | 310,802 |
| 2027 | 183,605 |
| Thereafter |  |

# **NOTE 6 - EQUITY**

The Company has authorized 1,500,000 of common membership units with a par value of $4.95 per unit. 1,500,000 units were issued and outstanding as of December 31, 2022.

**Voting:** Common unit holders are entitled to one vote per unit

**Dividends:** The holders of common membership units are entitled to receive dividends when and if declared by the Board of Directors.

The Company has authorized 987,774 of preferred membership units with a par value of $4.95 per unit. 987,774 units were issued and outstanding as of December 31, 2022

**Voting:** Preferred unit holders shall not be entitled to vote on any matters required or permitted to be voted on by the members.

# **NOTE 7 - SUBSEQUENT EVENTS**

The Company has evaluated events subsequent to December 31, 2022 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through March 14, 2023, the date these financial statements were available to be issued.

In January 2023, the Company refinanced the existing loan agreement to sell future cash receipts, see note 5. The new terms consist of selling future cash receipts totaling $387,000 for $300,000, which is a discount factor of 1.29. The agreement does not have a termination date and is secured by future cash receipts. The interest rate of the agreement is 20%. The refinanced loan agreement reduces the weekly payment to $7,678.

# **NOTE 8 - GOING CONCERN**

The accompanying balance sheet has been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The entity has realized losses and negative cashflows from operations and may continue to generate losses. During the next twelve months, the Company intends to finance its operations with funds from a crowdfunding campaign and revenue producing activities. The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenues and raise capital as needed to satisfy its capital needs. No assurance can be given that the Company will be successful in these efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The financial

statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities.

## NOTE 9 - RISKS AND UNCERTAINTIES

### *COVID-19*

The spread of COVID-19 has severely impacted many local economies around the globe. In many countries, businesses are being forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses remains unclear currently. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.

**Attachment 8:** `document_8.pdf`

# **Adam Quirk**

Cofounder / Builder

Bloomington, Indiana, United States

# **Summary**

A jack of all trades is a master of none, but oftentimes better than a master of one.

# **Experience**

# **Adam C Quirk**

Strategic Advisor

January 2020 - Present (3 years 3 months)

Remote

Here are some business-related things I like to think about and work on:

- Biz dev
- Big picture strategy
- Preparing to exit
- Product development
- Crowdfunding and creative project funding

And here are some personal things:

- The meaning of life
- The future of work
- The future of humanity
- Balancing technology and nature

# **Cardinal Spirits LLC**

CEO

March 2011 - Present (9 years 11 months)

Bloomington, Indiana Area

I am co-founder of the first craft spirits distillery in Bloomington, Indiana. We started the company from a shared passion for craft spirits and American manufacturing. We also wanted to create meaningful employment for ourselves and others - a place that values entrepreneurial thinking and encourages creativity. Since launching we've grown to distribute in 12 different states and employ over 50 hard-working people.

# **Cardinal Copacking**

CEO

December 2014 - Present (8 years 4 months)

Bloomington, Indiana Area

# Gasmedix

Board Member

January 2020 - January 2022 (2 years 1 month)

Indiana, United States

I began working with GasMedix as business consultant in 2020. The founder (my Dad) had been in the medical gas industry since 1982 and was considering options for how to exit day-to-day operations. In the two years I worked with him, I helped my dad systemize processes that he was handling, coached his COO to become more self-sufficient, and helped the team grow top and bottom lines significantly. In December 2021 we sold the company to a strategic acquirer and my dad was able to retire comfortably, leaving the team he built in excellent hands.

# Self-employed

Book Author

January 2019 - May 2021 (2 years 5 months)

I wrote a short book about the meaning of life called 'Five Meanings'. It is a distillation of my thoughts on how to find meaning through building things - especially companies. I wrote it in 2019, spent most of 2020 editing it, and published it on my 42nd birthday in May 2021: https://www.amazon.com/Five-Meanings-short-about-meaning-ebook/dp/B092WWNYQC

# Cheddar

Chief Marketing Officer

May 2011 - April 2013 (2 years)

I oversaw marketing and sales, and helped guide product development towards our market segments. I also handled social media and advertising, and made the occasional awesome video.

# SproutBox

Marketing Director

October 2010 - May 2011 (8 months)

I helped companies make money. SproutBox is a technology incubator that builds applications for web startups in exchange for equity. My position was created to help the founders of these portfolio companies determine effective marketing and customer acquisition strategies, as well as implement tactics.

# Collective Context

Director of Technology, CD of Video, Co-Founder

May 2009 - October 2010 (1 year 6 months)

Brooklyn, New York, United States

We helped agencies (Advertising, PR, Events, Consulting, Dev Shops etc.), Start-ups, and some pretty large companies navigate the digital space. We provided Strategy, Design, UX, Technology, and Marketing Services. Depending on the need, we provided an end-to-end team to get a project off the ground, or a couple of key players to fill the gaps on a team. We worked with startups like Uber before they were public, as well as larger corporations like Trojan, Cointreau, Talbots, HBO, and more.

## MallTalent

Vice President

April 2008 - January 2009 (10 months)

I built and launched an integrated entertainment and marketing platform in the form of a modular video performance kiosk. Think “Youtube meets American Idol in the Mall”. I managed all operations: information technology, audio/video technology, audio/video production, staffing, marketing materials, web site build, site deployment and maintenance.

## Wreck & Salvage

Co-Founder/Producer

November 2006 - 2009 (3 years)

Wreck & Salvage is a joint effort with two other independent video producers and myself. We produce a weekly video podcast featuring original comedy and entertainment videos and animations. We take turns producing the weekly video, which includes the responsibilities of editing, compressing, and uploading the show to our hosting server and several other video-sharing communities. I developed the web site wreckandsalvage.com using Wordpress, PHP, XHTML/CSS, and some Javascript. I hacked Wordpress to generate different RSS 2.0 compliant feeds for each of our 3 media formats.

## The PAN

CEO/Producer

May 2005 - November 2006 (1 year 7 months)

I built The PAN from the ground up with my business partner Mica and an incredible video production team. Nowadays I spend my time making videos, working on promoting The PAN, and freelancing in video editing and HTML/CSS site design and development.

## New York Consulting Group, Inc

Web Developer

February 2004 - April 2006 (2 years 3 months)

I launched and maintained web video sites and blogs for two multi-millionpageview female fitness websites. I was responsible for all phases of video deployment including: shooting, editing, compressing, and publishing. I structured our sites to deliver videos and other media to customers via RSS 2.0 with enclosures (now MediaRSS). This garnered us a foothold in the

iTunes Store before many people knew what podcasts were, and allowed us to become the most popular fitness podcast when iPods became popular.

### **ARS Group**

Graphic Designer

2003 - 2003 (less than a year)

I developed advertising research graphics for Fortune 500 companies, edited video with FCP and Premiere, laid out materials for print in QuarkXpress, and maintained an extensive tape library. A new PDF compression process I developed saved the company $18,000 annually, and my introduction of Photoshop action sets streamlined the processes of the graphics department.

### **Education**

Ball State University

Sociology, Computer Science, Rock and Roll, Hunter

Thompson · (1997 - 2002)

**Attachment 9:** `document_9.pdf`

**Jeff Wuslich**

President and Co-Founder at Cardinal Spirits LLC
Bloomington, Indiana, United States

**Experience**

**Cardinal Spirits LLC**

President and Co-Founder
March 2011 - Present (9 years 6 months)
Bloomington, IN

**Might and Main**

Partner
June 2011 - December 2018 (7 years 7 months)

**Indiana University**

Chief of Staff to University Chancellor
July 2004 - January 2012 (7 years 7 months)

- Lead day to day operations and coordinate office's needs with other departments including marketing, public relations, government relations, student affairs, diversity, and student services leading to integrated solutions
- Responsible for solving complex student and parent complaints and problems
- Coordinate speech research, speech writing, and compilation of multifaceted presentations to Board of Trustees
- Led university-wide effort to admit 120 Hurricane Katrina affected students in less than five days

**1ton Technologies, Inc.**

Co-Founder
1997 - 2006 (9 years)

- Winner University of Notre Dame McCloskey Business Plan Competition, Best Undergraduate Business Plan and Pace
- Global People's Choice Award
- Grew the company to over 6,000 paying users in two years
- Designed features, capabilities, and functions for MightyBrain.com, bringing a complete product to market ahead of competition
- Developed client-relationships and implemented 24-hour customer service for users which led to increased customer
- satisfaction and a decrease in amount of in house technical support
- Accountable for company leadership including sales, financing, training, and strategic management

**Fidelity Professional DJ Services**

Co-Founder and DJ

1997 - 2006 (9 years)

- Operated high-end mid-west area music entertainment service for weddings, corporate events, and private parties
- Conducted professional client meetings and on-site event management for over 350 functions
- Developed a strong reputation for quality performances resulting in an increase of referral business

**Education**

Indiana University Bloomington

Sociology · (1999 - 2004)

**Attachment 10:** `document_10.pdf`

# **AMENDED AND RESTATED OPERATING AGREEMENT  
OF  
CARDINAL SPIRITS LLC**

Effective as of September 24, 2018

# TABLE OF CONTENTS

Page

ARTICLE I. PURPOSE...1

ARTICLE II. ORGANIZATIONAL MATTERS ...1

Section 2.1. Formation and Name...1

Section 2.2. Principal Office...2

Section 2.3. Registered Office and Registered Agent ...2

Section 2.4. Duration...2

ARTICLE III. MEMBERS AND CAPITAL STRUCTURE...2

Section 3.1. Names and Addresses of Members ...2

Section 3.2. Units Representing Membership Interests ...2

Section 3.3. Capital Contributions ...3

Section 3.4. Additional Capital...3

Section 3.5. Capital Accounts...3

Section 3.6. Issuance of Incentive Units; Profits Interests...4

Section 3.7. No Rights of Redemption...5

Section 3.8. Member Loans or Services ...6

Section 3.9. No Member Responsible for Other Member's Commitment ...6

Section 3.10. Preemptive Rights...6

ARTICLE IV. MEMBERS...8

Section 4.1. Action by the Voting Members ...8

Section 4.2. Waiver of Partition...9

Section 4.3. Limitation on Authority ...9

Section 4.4. Liability ...9

ARTICLE V. MANAGEMENT OF THE COMPANY ...9

Section 5.1. Managers...9

Section 5.2. Management Powers of the Board...11

Section 5.3. Meetings; Action by Written Consent...11

Section 5.4. Voting Deadlock of Managers...12

Section 5.5. Guaranteed Payments; Salaries...12

Section 5.6. Removal...12

Section 5.7. Resignation ...12

Section 5.8. Delegation of Certain Management Authority ...13

Section 5.9. Vacancies...13

Section 5.10. Advisory Board...13

ARTICLE VI. ACCOUNTING AND RECORDS ...14

Section 6.1. Appointment of Partnership RepresentativeError! Bookmark not defined.

Section 6.2. Records and Accounting ...14

Section 6.3. Access to Records...14

Section 6.4. Delivery of Tax Information and Financial Statements ...14

-i-

# TABLE OF CONTENTS

# (Continued)

Page

Section 6.5. Accounting Decisions ...15

Section 6.6. Federal Income Tax Elections ...15

# ARTICLE VII. ALLOCATIONS AND DISTRIBUTIONS ...15

Section 7.1. Allocation of Net Income, Net Loss or Capital Gains ...15

Section 7.2. Capital Transaction Profits ...16

Section 7.3. Special Allocations ...16

Section 7.4. Curative Allocations ...17

Section 7.5. Section 704(c) Allocations ...18

Section 7.6. Distributions. ...18

Section 7.7. "Clean Cut-Off"; Allocation of Income and Loss and
Distributions in Respect of Interests Transferred. ...19

# ARTICLE VIII. RESTRICTIONS ON WITHDRAWAL AND TRANSFERS OF
INTERESTS ...19

Section 8.1. Withdrawal ...19

Section 8.2. General Restrictions on Transfer. ...19

Section 8.3. Permitted Transfers. ...21

Section 8.4. Right of First Refusal. ...21

Section 8.5. Drag Along Rights ...25

Section 8.6. Repurchase Option on Class A Common Units. ...25

Section 8.7. Status of Transferee and Transferor ...27

# ARTICLE IX. DISSOCIATION OF A MEMBER ...27

Section 9.1. Dissociation ...27

Section 9.2. Rights of Dissociating Member ...28

# ARTICLE X. DISSOLUTION AND WINDING UP ...28

Section 10.1. Dissolution ...28

Section 10.2. Winding Up ...28

Section 10.3. Distribution of Assets ...29

# ARTICLE XI. RESTRICTIVE COVENANTS ...29

Section 11.1. Confidentiality ...29

Section 11.2. Remedies ...29

# ARTICLE XII. AMENDMENTS ...30

Section 12.1. Proposal of Amendments ...30

Section 12.2. Approval of Amendments. ...30

# ARTICLE XIII. MISCELLANEOUS ...31

Section 13.1. Complete Agreement ...31

-ii-

# **TABLE OF CONTENTS**
(Continued)

|  | Page |
| --- | --- |
| Section 13.2. Governing Law; Choice of Forum | 31 |
| Section 13.3. Binding Effect; Conflicts | 31 |
| Section 13.4. Headings; Interpretation | 31 |
| Section 13.5. Severability | 31 |
| Section 13.6. Multiple Counterparts | 32 |
| Section 13.7. Additional Documents and Acts | 32 |
| Section 13.8. No Third Party Beneficiary | 32 |
| Section 13.9. Notices | 32 |
| Section 13.10. Title to Company Property | 32 |
| Section 13.11. Reliance on Authority of Person Signing Agreement | 32 |
| Section 13.12. No Remedies Exclusive | 32 |
| Section 13.13. Advice of Counsel | 32 |
| Section 13.14. Incorporated Schedules and Exhibits | 33 |
| Schedule I (Schedule of Definitions) |  |
| Exhibit A Names and Addresses of Members; Capital Contributions, and Units of Members |  |

-iii-

# AMENDED AND RESTATED OPERATING AGREEMENT

THIS AMENDED AND RESTATED OPERATING AGREEMENT (this 'Agreement') of Cardinal Spirits LLC, an Indiana limited liability company (the 'Company'), is entered into and made as of this 24th day of September, 2018 (the 'Effective Date'). Certain defined terms used in this Agreement are set forth in Schedule I (Schedule of Definitions) attached hereto and made a part hereof.

## RECITALS

**WHEREAS**, the rights and obligations of the members of the Company are set forth in that certain Operating Agreement of Cardinal Spirits LLC effective as of April 12, 2013, as amended by that certain Cardinal Spirits LLC First Amendment to Operating Agreement (the 'Operating Agreement');

**WHEREAS**, Section 12.2(a) of the Operating Agreement provides that the Operating Agreement may be amended by the Company and a Majority in Interest of the Voting Members (as defined in the Operating Agreement); and

**WHEREAS**, the Board (as defined below) has authorized the issuance of additional Units as Series A Preferred Units (as defined herein) and it is intended by the Company and a Majority in Interest of the Voting Members, by execution hereof, that this Amended and Restated Operating Agreement of Cardinal Spirits LLC shall amend and restate the Operating Agreement and memorialize the rights and obligations of the members of the Company with respect to the Company following the authorization and issuance of the Series A Preferred Units;

**NOW, THEREFORE**, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties hereto hereby agree as follows:

## ARTICLE I.

### PURPOSE

The purpose of the Company is to engage in and conduct any and all lawful businesses and activities for which limited liability companies may be organized under the Act.

## ARTICLE II.

### ORGANIZATIONAL MATTERS

# **Section 2.1. Formation and Name.**

(a) The Company was formed as an Indiana limited liability company in accordance with the Act on March 14, 2011. The rights and obligations of the Members shall be as provided under the Act, the Articles and this Agreement. The Members agree to each of the provisions of

the Articles and this Agreement. This Agreement amends, restates and supersedes the Operating Agreement in its entirety.

(b) The name of the Company is "Cardinal Spirits LLC". The business of the Company may be conducted upon compliance with all applicable laws under any other name designated by the Board.

Section 2.2. Principal Office. The Principal Office of the Company shall be 922 S. Morton St., Bloomington, Indiana 47403, or such other address as may be established by the Board.

Section 2.3. Registered Office and Registered Agent. The registered office of the Company shall be the office of the registered agent named in the Articles or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by the Act. The registered agent for service of process on the Company in the State of Indiana shall be the registered agent named in the Articles or such other Person or Persons as the Board may designate from time to time in the manner provided by the Act.

Section 2.4. Duration. The existence of the Company shall continue in perpetuity, unless the Company is dissolved in accordance with Article X or the Act.

### ARTICLE III.

### MEMBERS AND CAPITAL STRUCTURE

Section 3.1. Names and Addresses of Members. All Members of the Company and their appropriate contact information (including such Member's mailing address, facsimile number (if any) and email address, as well as, in the case of a Member that is an entity, the name or title of an individual to whom notices and other correspondence should be directed) shall be listed on the attached Exhibit A. The Company shall be required to update Exhibit A from time to time as necessary to accurately reflect the information therein, including the information referred to in Section 3.2 and Section 3.3. Each Member shall promptly provide the Company with the information required to be set forth for such Member on Exhibit A and shall thereafter promptly notify the Company of any change to such information.

Section 3.2. Units Representing Membership Interests. The Interests of Members in the Company are divided into and represented by Units, which may be divided into one or more types, classes or series. Each type, class or series of Units shall have the privileges, preference, duties, liabilities, obligations and rights, including voting rights, if any, set forth in this Agreement with respect to such type, class or series. The Board shall maintain on Exhibit A the amount and class/series of Units held by each Member, and shall update Exhibit A upon the issuance or Transfer of any Units. The Company is hereby authorized to issue four (4) classes of Units designated as Class A Common Units, Class B Common Units, Series AA Preferred Units, and Series A Preferred Units. Each Member holding Class A Common Units shall be entitled to one vote per Class A Common Unit held with respect to all matters required or permitted to be voted on by the Members of the Company. The Class B Common Units shall not entitle the

- 2 -

holders thereof to vote on any matters required or permitted to be voted on by the Members. Except as set forth in Section 12.2(a) below, the Series AA Preferred Units and Series A Preferred Units (collectively, the 'Preferred Units') shall not entitle the holders thereof to vote on any matters required or permitted to be voted on by the Members. In addition to the Class A Common Units, the Class B Common Units and the Preferred Units, the Company is hereby authorized, subject to compliance with the provisions of Section 3.10 below, to authorize and issue or sell to any Person any new type, class or series of Units and Units Equivalents (collectively, 'New Interests'). The Board is hereby authorized, subject to Section 12.2(a), to amend this Agreement to reflect such issuance and to fix the relative privileges, preference, duties, liabilities, obligations and rights of any such New Interests, including the number of such New Interests (and Units represented thereby) to be issued, the preference (with respect to distributions, in liquidation or otherwise) over any other Units and any contributions required in connection therewith. Unless otherwise approved by the Board, the Company will not issue certificates representing the Units, but at the written request of a Member, the Company will provide a certified statement setting forth the total number of Units issued and outstanding and the number of Units issued to the requesting Member, as of the date of the statement.

**Section 3.3. Capital Contributions.** The Capital Contributions to the Company of each Member are set forth on Exhibit A. Absent approval by the Board, no Capital Contributions may be made other than in cash and the Company shall not be obligated to recognize as a Capital Contribution any transfer to the Company of property other than cash. No interest shall be paid on any Capital Contribution.

**Section 3.4. Additional Capital.** Absent approval by the Board and such Member, no Member shall be obligated to make any Capital Contributions other than the Capital Contributions specified in Section 3.3; provided, however, the Board may determine from time to time that additional Capital Contributions are necessary for the operation of the Company. In such case, the Company may sell additional Units on such terms and conditions as are determined by, and upon the approval of, the Board in connection with an issuance of Units in compliance with Section 3.10. The Company may admit Additional Members to the Company, which may include Substitute Members, who will be entitled to participate in the rights of Members as described in Section 3.2, with admission thereof to be on such terms and conditions as are determined by the Board. Admission of any such Additional Member shall require the approval of the Board. Such Additional Members shall be allocated net income, gains, losses, deductions and credits by such method as may be provided in this Agreement, and if no method is specified, then as may be permitted by Section 706(d) of the Code. All Persons acquiring Units who are not parties to this Agreement shall, as a condition precedent to acquisition of such Units, execute a joinder agreement to this Agreement in the form determined by the Board, or such Persons shall not be permitted to be admitted as a Member of the Company.

# **Section 3.5. Capital Accounts.**

(a) An individual capital account (the 'Capital Account') shall be established and maintained on behalf of each Member, including any Additional Member who shall hereafter receive an Interest, in the manner provided by Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent consistent with Treasury Regulation Section 1.704-1(b)(2)(iv), the Capital Account of each Member shall consist of (i) the amount of cash such Member has contributed to the

- 3 -

Company, plus (ii) the agreed fair market value of any property such Member has contributed to the Company, net of any liabilities assumed by the Company or to which such property is subject, plus (iii) the amount of profits or income (including tax-exempt income) allocated to such Member, less (iv) the amount of losses and deductions allocated to such Member, less (v) the amount of all cash distributed to such Member, less (vi) the fair market value of any property distributed to such Member, net of any liability assumed by such Member or to which such property is subject, less (vii) such Member's share of any other expenditures which are not deductible by the Company for federal income tax purposes or which are not allowable as additions to the basis of Company property, and (viii) subject to such other adjustments as may be required under the Code. The Capital Account of a Member shall not be affected by any adjustments to basis made pursuant to Section 743 of the Code but shall be adjusted with respect to adjustments to basis made pursuant to Section 734 of the Code to the extent provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m).

(b) No Member shall have any liability or obligation to restore a negative or deficit balance in such Member's Capital Account.

### Section 3.6. Issuance of Incentive Units; Profits Interests.

(a) Subject to Section 3.6(d) below, the Company is hereby authorized to issue Class B Common Units (and/or any other New Interests designated by the Board for such purpose) (collectively referred to herein as "Incentive Units") to Managers, officers, employees, Advisory Board members, consultants or other service providers of the Company or any Company Subsidiary (collectively, "Service Providers"). The Board is hereby authorized to and may adopt a written plan pursuant to which such Incentive Units may be granted in compliance with Rule 701 of the Securities Act or another applicable exemption (such plan as in effect from time to time, the "Incentive Plan"). In connection with the adoption of the Incentive Plan and/or issuance of such Incentive Units, the Board is hereby authorized to negotiate and enter into award agreements with each Service Provider to whom it grants Incentive Units (such agreements, "Award Agreements"). Each Award Agreement shall include such terms, conditions, rights and obligations as may be determined by the Board, in its sole discretion, consistent with the terms herein. The Board may establish vesting criteria for such Incentive Units as it determines in its sole discretion and shall include such vesting criteria in the Incentive Plan and/or the applicable Award Agreement.

(b) Incentive Units granted to Service Providers at the sole discretion of the Board are intended to be treated as profits interests for U.S. federal income tax purposes (each, a "Profits Interest"). Upon the issuance of any Profits Interest, the Board shall revalue Company property and adjust the Members' Capital Accounts pursuant to Treasury Regulations Section 1-704-1(b)(2)(iv)(f). Immediately upon receipt of a Profits Interest, the recipient will have no initial Capital Account balance and the Profits Interest received shall not entitle such Person to any portion of the capital of the Company at the time of such Person's admission to the Company as a Member, such that if the Company's assets were sold at fair market value immediately after the grant to such Member of a Profits Interest and the proceeds distributed in complete liquidation of the Company, the Profits Interest so received would entitle such Member to receive no share of those proceeds. The grant of a Profits Interest to a Member is intended to comply with Rev

- 4 -

Proc 93-27, 1993-2 CB 343 (1993) and Rev Proc 2001-43, 2001-2 CB 191 (2001) and shall be interpreted consistently therewith.

(c) Incentive Units shall receive the following tax treatment:

(i) The Company and each Service Provider who receives Incentive Units shall treat such Service Provider as the owner of such Incentive Units from the date of their receipt, and the Service Provider receiving such Incentive Units shall take into account his distributive share of Capital Account Profits, Capital Account Losses, income, gain, loss and deduction associated with the Incentive Units in computing such Service Provider's income tax liability for the entire period during which such Service Provider holds the Incentive Units;

(ii) Each Service Provider that receives Incentive Units shall make a timely and effective election under Code Section 83(b) with respect to such Incentive Units and shall promptly provide a copy to the Company. Except as otherwise determined by the Board, both the Company and all Members shall (A) treat such Incentive Units as outstanding for tax purposes, (B) treat such Service Provider as a partner for tax purposes with respect to such Incentive Units and (C) file all tax returns and reports consistently with the foregoing. Neither the Company nor any of its Members shall deduct any amount (as wages, compensation or otherwise) with respect to the receipt of such Incentive Units for federal income tax purposes.

(iii) In accordance with the finally promulgated successor rules to Proposed Regulations Section 1.83-3(l) and IRS Notice 2005-43, each Member, by executing this Agreement, authorizes and directs the Company to elect a safe harbor under which the fair market value of any Incentive Units issued after the effective date of such Proposed Regulations (or other guidance) will be treated as equal to the liquidation value (within the meaning of the Proposed Regulations or successor rules) of the Incentive Units as of the date of issuance of such Incentive Units. In the event that the Company makes a safe harbor election as described in the preceding sentence, each Member hereby agrees to comply with all safe harbor requirements with respect to Transfers of Units while the safe harbor election remains effective.

(d) Notwithstanding anything contained herein to the contrary, the number of Incentive Units that the Company may issue, when combined with any Incentive Units already issued and outstanding (excluding, for such purposes, any Class B Common Units held by a Class A Common Member following the conversion of any of such Class A Common Member's Class A Common Units into Class B Common Units pursuant to Section 8.6(d)), shall not exceed ten percent (10%) of the aggregate total of Units outstanding as of the date of the proposed grant.

(e) If Incentive Units are issued or granted in the future to Service Providers, such grants or issuances shall dilute the Percentage Interests of existing Members on a pro rata basis in proportion to such Members' Percentage Interests.

**Section 3.7. No Rights of Redemption.** No Member shall have the right to: (a) have that Member's Units or Interest redeemed, (b) have that Member's Capital Contribution returned,

- 5 -

or (c) subject to Article VII, otherwise receive property of the Company; even if that Member dissociates prior to termination of the Company. Even at termination, the Member's rights are limited to those set forth in Article X. To the extent a Member has a right to demand a distribution or return of the Member's Capital Contributions, the Member shall have only the right to demand and receive cash therefor.

Section 3.8. Member Loans or Services. Unless otherwise approved by the Board, loans or services by any Member to the Company shall not be considered Capital Contributions.

Section 3.9. No Member Responsible for Other Member's Commitment. In the event that any Member (or any of such Member's shareholders, partners, members, owners, or Affiliates (collectively, the "Liable Member")) has incurred any indebtedness or obligation prior to the date of this Agreement that relates to or otherwise affects the Company, neither the Company nor any other Member shall have any liability or responsibility for or with respect to such indebtedness or obligation unless such indebtedness or obligation is assumed by the Company pursuant to a written instrument signed by all of the Managers.

### Section 3.10. Preemptive Rights.

(a) Except for Exempt Securities, the Company shall not issue or sell any Units or Unit Equivalents (collectively, the "Offered Securities") without providing each of the Preferred Members a preemptive right to purchase or subscribe for the Offered Securities in accordance with this Section 3.10; provided, however, notwithstanding the foregoing, if the Offered Securities are being offered by the Company pursuant to a federal or state securities law exemption that requires the purchaser of the Offered Securities to be an "accredited investor" (as defined in Rule 501(a) of Regulation D promulgated by the United States Securities and Exchange Commission under the Securities Act), then a Preferred Member must meet the accredited investor requirements in order to exercise such Preferred Member's preemptive rights under this Section 3.10.

(b) At least fifteen (15) days prior to the date of any closing at which Offered Securities are sold to any party (including third parties and current Members of the Company), the Company will provide each of the Preferred Member a written notice (the "Preemptive Rights Notice") describing: (i) the nature of the Offered Securities, (ii) the price and other terms upon which the Offered Securities are to be issued or sold, (iii) the proposed date of the issuance or sale of the Offered Securities and (iv) the identity of the Persons (if known) to whom or with which the Offered Securities are to be offered, issued or sold. Thereafter, each Preferred Member will have ten (10) days from the date of the Preemptive Rights Notice to irrevocably elect to purchase an amount equal to his, her or its Percentage Interest of the Offered Securities, by providing written notice to the Company of the Preferred Member's election to exercise his, her or its rights pursuant to this Section 3.10(b) (the "Notice of Acceptance"). In the event a Preferred Member fails to timely provide his, her or its Notice of Acceptance within such ten (10) day period (the "Exercise Period"), he, she or it shall be deemed to have waived his, her or its preemptive rights pursuant to this Section 3.10(b).

(c) Within five (5) days after the expiration of the Exercise Period, the Company shall notify in writing each Preferred Member who elected to purchase his, her or its pro rata

- 6 -

share of the Offered Securities (each, an "Electing Member") of the aggregate number of Offered Securities that the Preferred Members chose not to purchase (the "Over-Allotment Notice"). Each Electing Member shall have the option (but not the obligation) to purchase, on a pro rata basis, that portion of the Offered Securities that such other Preferred Members elected not to purchase (the "Over-Allotment Option"). Each Electing Member shall notify the Company within five (5) days after receipt of the Over-Allotment Notice (the "Over-Allotment Period") whether such Electing Member desires to exercise his, her or its Over-Allotment Option.

(d) After the expiration of the Over-Allotment Period, the Company shall be free to complete, during the one hundred eighty (180) day period immediately following the end of the Exercise Period, the proposed sale or issuance of the Offered Securities described in the Preemptive Rights Notice (including those Offered Securities with respect to which the Preferred Members declined to exercise the preemptive right set forth in this Section 3.10) upon the same terms and conditions as those set forth in the Preemptive Rights Notice. The closing of any purchase of Offered Securities by any Preferred Member shall be consummated concurrently with the consummation of the issuance or sale described in the Preemptive Rights Notice. In the event the Company has not sold the Offered Securities within said one hundred eighty (180) day period, the Company shall not thereafter issue or sell any Offered Securities without first offering such securities to the Preferred Members pursuant to this Section 3.10.

(e) The rights of Preferred Members under this Section 3.10 shall not apply to Units or Unit Equivalents issued or sold by the Company in connection with: (i) a grant of Incentive Units to any existing or prospective Manager, officer or other Service Provider; (ii) the conversion or exchange of any securities of the Company into Units, or the exercise of any warrants or other rights to acquire Units; (iii) any acquisition by the Company or any Company Subsidiary of any equity interests, assets, properties or business of any Person; (iv) any merger, consolidation or other business combination involving the Company or any Company Subsidiary; (v) any subdivision of Units (by a split of Units or otherwise), payment of distributions or any similar recapitalization; (vi) any private placement of warrants to purchase Units to lenders or other institutional investors (excluding the Members) in any arm's length transaction in which such lenders or investors provide debt financing to the Company or any Company Subsidiary; (vii) a joint venture, strategic alliance or other commercial relationship with any Person (including Persons that are customers, suppliers and strategic partners of the Company or any Company Subsidiary) relating to the operation of the Company's or any Company Subsidiary's business and not for the primary purpose of raising equity capital; (viii) any office lease or equipment lease or similar equipment financing transaction in which the Company or any Company Subsidiary obtains from a lessor or vendor the use of such office space or equipment for its business; or (ix) Series A Preferred Units issued pursuant to certain Confidential Private Placement Memorandums of the Company, dated on or about the date hereof, as the same may be amended, modified or supplemented from time to time (collectively, "Exempt Securities").

- 7 -

# ARTICLE IV.

# MEMBERS

Section 4.1. Action by the Voting Members. The Voting Members may act by vote or resolution approved or adopted at a meeting held in accordance with this Section 4.1, by a written consent signed in accordance with this Section or by written agreement of the holder(s) of the requisite number of Voting Units. Rules for the conduct at meetings of the Voting Members and for action by written consent of the Voting Members follow:

(a) Meetings. Meetings of the Voting Members may be called by a Majority in Interest of the Voting Members or the Board. Meetings of the Voting Members shall be called upon delivery to the Voting Members of notice of a meeting of the Voting Members given in accordance with Section 4.1(b) signed and dated by a Majority in Interest of the Voting Members or the Board, as the case may be. Members who are not entitled to vote on a matter to be brought to a meeting of the Members shall not be required to be notified or invited to attend such meeting. Only Voting Members shall have the right to receive notice of, and to attend, meetings of the Members. Except as specifically provided in this Agreement, there shall be no requirement of annual or periodic meetings of the Members within the meaning of the Act.
(b) Notice of Meetings. The Company shall deliver, mail or send by electronic transmission (with confirmation of transmission) written notice stating the date, time and place of any meeting and a description of the purposes for which the meeting is called, to each Voting Member of record entitled to vote at the meeting, at such address as appears in the records of the Company and at least two (2), but no more than thirty (30), days before the date of the meeting.
(c) Waiver of Notice. A Voting Member may waive notice of any meeting, before or after the date and time of the meeting as stated in the notice, by delivering a signed waiver to the Company for inclusion in the minutes. A Voting Member's attendance at any meeting, in person or by proxy (i) waivers objection to lack of notice or defective notice of the meeting, unless the Voting Member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (ii) waivers objection to consideration of a particular matter at the meeting that is not within the purposes described in the meeting notice, unless the Voting Member objects to considering the matter when it is presented.
(d) Voting by Proxy. A Voting Member may appoint a proxy to vote or otherwise act for the Voting Member at a meeting pursuant to a written appointment form executed by the Voting Member or the Voting Member's duly authorized attorney-in-fact, provided that the appointment form is submitted to the Company for inclusion in the Company records. The general proxy of a fiduciary is given the same effect as the general proxy of any other Voting Member.
(e) Presence. Any or all Voting Members may participate in any meeting by, or through the use of, any means of communication by which all Voting Members participating may simultaneously hear each other during the meeting. A Voting Member so participating is deemed to be present in person at the meeting.

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(f) Conduct of Meetings. At any meeting of the Voting Members, the Chairman of the Board or, if no Chairman of the Board exists, then any Manager shall preside or appoint a person to preside at the meeting and shall appoint a person to act as Secretary of the meeting. The secretary of the meeting shall prepare minutes of the meeting which shall be placed in the minute books of the Company.

(g) Quorum; Approval. The presence of a Majority in Interest of the Voting Members at a meeting is necessary for a quorum, unless approval of any action to be taken is required from more than a Majority in Interest of the Voting Members, in which case the presence of at least the minimum number of the Voting Members required for approval of such action is necessary for a quorum with respect to such action. Any action proposed to be taken by the Voting Members shall be approved upon the affirmative vote of a Majority in Interest of the Voting Members, unless approval by more than a Majority in Interest of the Voting Members is required by the Articles, this Agreement or the Act, in which case such action shall be approved only upon the affirmative vote of the minimum number of Voting Members required for approval of such action.

(h) Action by Written Consent. Any action required or permitted to be taken at a meeting of the Voting Members may be taken without a meeting if the action is taken by the Voting Members holding Voting Units representing not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Voting Members entitled to vote thereon are present and voted. The written consent evidencing such action shall be signed by the requisite Members and shall promptly thereafter be delivered to the Company for inclusion in the minutes.

Section 4.2. Waiver of Partition. Each Member on behalf of such Member, and such Member's successors and assigns, hereby waives any rights to have any Company property partitioned.

Section 4.3. Limitation on Authority. No Member (other than a Member who is also a Manager of the Company, and then, only in such capacity) has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company, or to make any expenditures or commitments of expenditures on behalf of the Company.

Section 4.4. Liability. No Member shall be liable for the debts, obligations or liabilities of the Company or of any Company Subsidiary by reason of being a Member of the Company.

# ARTICLE V.

# MANAGEMENT OF THE COMPANY

# Section 5.1. Managers.

(a) Except for situations in which the approval of the Members is required by the Articles, this Agreement or by non-waivable provisions of the Act, (i) the powers of the Company shall be exercised by or under the authority of a Board of Managers (each, a "Manager" and, collectively, the "Board"), and (ii) the Board may make all decisions and take all

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actions for the Company not otherwise provided for in this Agreement. Subject to this Section 5.1, the Managers shall be elected by the affirmative vote of a Majority in Interest of the Voting Members by written consent or at any meeting of the Voting Members called for such purpose. The Board shall be composed of two (2) individuals unless changed by the vote of a Majority in Interest of the Voting Members by written consent or at any meeting of the Voting Members. A Manager need not be a Member. The Board may from time to time select one of the Managers to serve as Chairman of the Board. Each Manager shall serve for a term of one (1) year and thereafter until such Manager's successor has been duly elected and qualified, or until his earlier death, resignation or removal. Such elections shall be recorded in the records of the Company. The Managers of the Company, as of the Effective Date, are Adam Quirk and Jeff Wuslich. Unless otherwise determined by the Board, the composition of any board of directors or comparable board of managers of any Company Subsidiary shall be the same as that of the Board.

(b) Managers shall not be personally liable for the debts, obligations or liabilities of the Company, whether arising in contract, tort or otherwise, or for the acts or omissions of any Member, other Manager, agent or employee of the Company or any Company Subsidiary. A Manager shall perform the Manager's duties as a Manager in good faith, in a manner the Manager reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. A Manager is not liable for any action taken as a Manager, or any failure to take any action, unless the Manager has breached or failed to perform the Manager's duties and the breach or failure to perform constitutes willful misconduct or recklessness.
(c) In performing the Manager's duties, a Manager shall be entitled to rely on information, opinions, reports, or statements of the following persons or groups unless the Manager has knowledge concerning the matter in question that would cause such reliance to be unwarranted:

(i) One or more employees or other agents of the Company or any Company Subsidiary whom the Manager reasonably believes to be reliable and competent in the matters presented;

(ii) Any attorney, public accountant, or other person as to matters which the Manager reasonably believes to be within such person's professional or expert competence; or
(iii) A committee upon which the Manager does not serve, duly designated in accordance with a provision of the Articles or this Agreement, as to matters within its designated authority, which committee the Manager reasonably believes to merit confidence.

(d) Except to the extent provided in the Articles, every Manager is an agent of the Company for the purpose of apparently carrying on in the usual way the business of the Company, and the act of every Manager, including the execution in the Company name of any instrument for apparently carrying on in the usual way the business of the Company, binds the Company, unless such act is in contravention of the Articles or this Agreement or unless the

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Manager so acting otherwise lacks the authority to act for the Company, and the person with whom the Manager is dealing has knowledge of the fact that such Manager has no such authority.

Section 5.2. Management Powers of the Board. Except as otherwise set forth herein, the Board shall have full and complete authority, power and discretion to act for and bind the Company in the ordinary course of its business, to manage the property, business and affairs of the Company, and to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business to be in furtherance of the purpose of the Company.

# Section 5.3. Meetings; Action by Written Consent.

(a) Unless otherwise required by law or provided in the Articles or this Agreement, the presence of a majority of the Managers fixed by, or in the manner provided in, the Articles or this Agreement shall constitute a quorum for the transaction of business of the Board. Each Manager shall have one (1) vote on all matters submitted to the Board. With respect to any matter before the Board, the act of a majority of the Managers constituting a quorum shall be the act of the Board. A Manager who is present at a meeting of the Board at which action on any Company matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Manager who voted in favor of such action.
(b) Meetings of the Board may be held at such place or places as shall be determined from time to time by resolution of the Board. At all meetings of the Board, business shall be transacted in such order as shall from time to time be determined by resolution of the Board. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
(c) Managers shall be able to discuss and approve Company business informally, and may, at their discretion, call and hold regular meetings. Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by the Board. Notice of such regular meetings shall be given at least three (3) days prior to the date of the meeting.
(d) Special meetings of the Board may be called by any Manager on at least twenty-four (24) hours' notice to each other Manager. Such notice shall state the purpose or purposes of, and the business to be transacted at, such meeting.
(e) Any or all of the Managers may participate in any meeting by, or through the use of, any means of communication by which all Managers participating may simultaneously hear each other during the meeting. A Manager so participating is deemed to be present in person at the meeting.
(f) Any action required or permitted to be taken at a Managers' meeting may be taken without a meeting if the action is taken by the unanimous written consent of the Managers. The

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written consent shall promptly thereafter be delivered to the Company for inclusion in the minutes.

**Section 5.4. Voting Deadlock of Managers.** The parties hereto acknowledge and agree that the conduct of the business of the Company shall require the Managers (and each of them) to act reasonably, in good faith, and in the best interests of the Company. The parties further acknowledge and agree that even while adhering to such standards certain issues or decisions regarding the business of the Company may result in deadlock among the Managers in which an equal number of Managers align themselves on each side of a particular matter (a "Management Dispute"). If at two (2) successive meetings of the Board, the Managers are unable to reach a decision by the required vote regarding a Management Dispute (a "Deadlock"), the Management Dispute resulting in the Deadlock shall be presented for a vote of the Voting Members and each Significant Investor (collectively, the "Deadlock Members") and be resolved by the vote of those Deadlock Members who hold a majority of the then outstanding Voting Units and Preferred Units held by all Deadlock Members. During the continuation of any Deadlock, the Company shall continue to operate in a manner consistent with its prior practices and this Agreement until such time as such Deadlock is resolved. If the Deadlock is with respect to the approval of the Company's annual business plan or budget, the Company shall operate its business in accordance with the business plan or budget then in effect.

**Section 5.5. Guaranteed Payments; Salaries.** The Company may make a guaranteed payment under Section 707(c) of the Code to any Member or pay to any Manager, officer, employee or other Person a salary and/or bonus as compensation for services rendered to the Company. Subject to Section 707(c) of the Code, any such guaranteed payments, salaries and/or bonuses shall be treated as expenses of the Company and shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company.

**Section 5.6. Removal.** A Majority in Interest of the Voting Members may remove all or any Manager(s) with or without Cause; provided, however, so long as a Founder owns any Voting Units, such Founder may not be removed from the Board except for Cause. Any removal of a Manager shall become effective when written notice thereof is given by a Majority in Interest of the Voting Members unless a later effective date is specified in such notice. Such notice must be delivered to the Manager being removed, any remaining Managers and the Manager, if any, elected to replace the removed Manager. Should a Manager be removed who is also a Member, such removal shall not affect the Person's rights as a Member except as may otherwise be provided in the Act, the Articles or this Agreement.

**Section 5.7. Resignation.** A Manager of the Company may resign from his or her position as a Manager at any time by providing written notice to the Members; provided, however, unless otherwise agreed to by the other Founders, if any Founder voluntarily terminates his active, ongoing involvement with the Company in a senior capacity, such Founder must resign from his or her position as a Manager effective as of the date of such Founder's voluntary termination of service. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the remaining Managers. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

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**Section 5.8. Delegation of Certain Management Authority.** The Board may delegate to one or more officers of the Company or one or more employees of the Company any management responsibility or authority. The Board may create such offices, appoint such officers and delegate thereto such responsibility or authority as the Board determines to be appropriate. Officers may, but need not be, Managers or Members of the Company. The Board may assign titles (including, without limitation, Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, President, Vice President, Secretary, Assistant Secretary, Treasurer and Assistant Treasurer) to any Manager or other Person. Unless the Board decides otherwise, if the title is one commonly used for officers of a business corporation formed under the Indiana Business Corporation Law, the assignment of such title shall constitute the delegation to such Manager or other Person of the authority and duties that are normally associated with that office, subject to any specific delegation of authority and duties made pursuant to a resolution of the Board. Any number of titles may be held by the same Manager or Person. Any delegation pursuant to this Section 5.8 may be revoked, with or without cause, at any time by the Board. Except as otherwise set forth herein, the Chief Executive Officer, President, Chief Financial Officer and Chief Operating Officer shall, subject to the approval of the Board, have the authority to sign agreements and other instruments on behalf of the Company and bind the Company thereby; provided, however, only the Board shall have the authority to initiate, respond to or otherwise participate in any lawsuit, arbitration or other legal proceeding on behalf of the Company.

**Section 5.9. Vacancies.** Any vacancy in a Manager position shall be filled by appointment of the remaining Managers. Any vacancy in an officer position shall be filled by appointment by the Managers. An individual chosen to fill a vacancy shall serve the unexpired term of his or her predecessor in office. Any position on the Board to be filled by reason of an increase in the number of Managers shall be filled in the same manner or by election at a meeting of Voting Members called for that purpose. A Manager chosen to fill a position resulting from an increase in the number of Managers shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal

**Section 5.10. Advisory Board.** The Board may appoint individuals to one or more advisory boards (each, an "Advisory Board" and collectively, the "Advisory Boards") which shall provide such advice and counsel as is requested by the Board in connection with various Company matters. The purpose of any Advisory Board is to provide advice and counsel concerning the specific strategies (to be) adopted by the Company and the nature of the market in which the Company is involved. The members of any Advisory Boards shall have no official standing with the Company and shall have no voting, management or operating rights within the Company as a result of their participation on an Advisory Board. Any actions taken by any Advisory Board shall be advisory only, and neither the Board nor the Company shall be required or otherwise bound to act in accordance with any decision, action or comment of the Advisory Board or any of its members. The Board shall retain ultimate responsibility for making all decisions relating to the operation and management of the Company.

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# ARTICLE VI.

# ACCOUNTING AND RECORDS

Section 6.1. Appointment of Partnership Representative. Jeff Wuslich is hereby designated as the "partnership representative" of the Company within the meaning of Section 6223(a) of the Code (the "Partnership Representative"). Each person (for purposes of this Section 6.1, called a "Pass-Thru Member") that holds or controls an interest as a Member on behalf of, or for the benefit of another person or persons, or which Pass-Thru Member is beneficially owned (directly or indirectly) by another person or persons shall, within 30 days following receipt from the Partnership Representative of any notice, demand, request for information or similar document, convey such notice or other document in writing to all holders of beneficial interests in the Company holding such interests through such Pass-Thru Member. In the event the Company shall be the subject of an income tax audit by any federal, state or local authority, to the extent the Company is treated as an entity for purposes of such audit, including administrative settlement and judicial review, the Partnership Representative shall be authorized to act for and his decision shall be final and binding upon, the Company and each Member thereof. All expenses incurred in connection with any such audit, investigation, settlement or review shall be borne by the Company. To the extent permitted by applicable law, the Partnership Representative may, in his sole discretion, make an election on behalf of the Company under Sections 6221(b) or 6226 of the Code as in effect for the first taxable year beginning on or after January 1, 2018 and for each taxable year thereafter. All references to Code Sections in this Section 6.1 refer to those Code Sections as amended by the Bipartisan Budget Act of 2015 (P.L. 114-74).

Section 6.2. Records and Accounting. The books and records of the Company and Company Subsidiaries shall be kept, and the financial position and the results of operations recorded, in accordance with the accounting methods elected to be followed by the Company for federal income tax purposes. The books and records of the Company and Company Subsidiaries shall reflect all Company or Company Subsidiary transactions (as the case may be) and shall be appropriate and adequate for the business of the Company and Company Subsidiaries. The fiscal year of the Company for financial reporting and for federal income tax purposes shall be the calendar year.

Section 6.3. Access to Records. The books and records of the Company, to the extent required by the Act, shall be maintained at the Company's Principal Office, and each Preferred Member, and his, her, or its duly authorized representative, to the extent required by the Act, shall, subject to Section 11.1, have access to where they are located and have the right to inspect and copy them during ordinary business hours.

Section 6.4. Delivery of Tax Information and Financial Statements. The Company shall use its reasonable best efforts to deliver to each Member within ninety (90) days after the end of each fiscal year all information necessary for the preparation of such Member's federal and state income tax returns. The Company shall also use its reasonable best efforts to prepare and deliver to each Preferred Member:

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(a) as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and Company Subsidiaries as of the end of such year, (ii) consolidated statements of income and cash flows for such year, and (iii) a statement of members' equity as of the end of such year, all such financial statements may be audited or unaudited, as determined by the Board, in its sole discretion; and

(b) as soon as practicable, but in any event within forty-five (45) days of the end of each of the first three (3) calendar quarters, (i) an unaudited consolidated balance sheet of the Company and Company Subsidiaries as of the end of such quarter and (ii) unaudited consolidated statements of income and cash flows for such quarter.

Section 6.5. Accounting Decisions. All decisions as to accounting matters, except as otherwise specifically set forth in this Agreement, shall be made by the Board. The Board may rely upon the advice of the Company's accountants as to whether such decisions are in accordance with accounting methods followed for federal income tax purposes.

Section 6.6. Federal Income Tax Elections. The Company may make, but is not required to make, all elections for federal income tax purposes, including, but not limited to, the following:

(a) To the extent permitted by applicable law and regulations, elect to use an accelerated depreciation method on any depreciable unit of the assets of the Company; and

(b) In case of a transfer of all or part of the Interest of any Member, the Company may elect, pursuant to Sections 734, 743, and 754 of the Code to adjust the basis of the assets of the Company.

# ARTICLE VII.

# ALLOCATIONS AND DISTRIBUTIONS

Section 7.1. Allocation of Net Income, Net Loss or Capital Gains. Except as may be expressly provided otherwise in this Article VII, including the allocation of gain from a Capital Transaction as provided in Section 7.2, and subject to the provisions of Sections 704(b) and 704(c) of the Code, Capital Account Profits and Capital Account Losses for each tax year of the Company shall be allocated to the Members in the following order and priority:

(a) Capital Account Losses. Capital Account Losses shall be allocated to the Members in the following order and priority:

(i) First, to the Members in proportion to and to the extent of any Capital Account Profits allocated to the Members under Section 7.1(b)(iii);

(ii) Next, to the Class A Common Members and Class B Common Members in proportion to and to the extent of the positive balances in their Capital Accounts;

(iii) Then, to the Preferred Members in proportion to and to the extent of the positive balances in their Capital Accounts; and

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(iv) Thereafter, to the Members in accordance with their Percentage Interests.

(b) Capital Account Profits. Capital Account Profits shall be allocated to the Members in the following order and priority:

(i) First, to the Preferred Members in proportion to and to the extent of the losses allocated under Section 7.1(a)(iii);

(ii) Next, to the Class A Common Members and Class B Common Members in proportion to and to the extent of the losses allocated under Section 7.1(a)(ii); and

(iii) Thereafter, to the Members in accordance with their Percentage Interests.

Section 7.2. Capital Transaction Profits. Except as may be expressly provided otherwise in this Article VII, any gain from a Capital Transaction shall be allocated to the Members under Section 7.1(b) above.

Section 7.3. Special Allocations. The following special allocations shall be made in the following order:

(a) Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation Section 1.704-2(f), notwithstanding any other provision of this Article VII, if there is a net decrease in Company Minimum Gain during any fiscal year, each Member shall be specially allocated items of Company income and gain for such fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 7.3(a) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Member Nonrecourse Debt Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this Article VII, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 7.3(b) is intended to comply with the partner nonrecourse debt minimum

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gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 7.3(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article VII have been tentatively made as if this Section 7.3(c) were not in the Agreement.

(d) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any fiscal year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 7.3(d) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article VII have been made as if Section 7.3(c) hereof and this Section 7.3(d) were not in the Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year shall be specially allocated among the Members in proportion to their Percentage Interests.

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any fiscal year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i)(1).

(g) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of the Member's Interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in accordance with their Interests in the Company in the event Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.

**Section 7.4. Curative Allocations.** The allocations set forth in Section 7.3(a) through Section 7.3(g) hereof (the 'Regulatory Allocations') are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or

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with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 7.4. Therefore, notwithstanding any other provision of this Article VII (other than the Regulatory Allocations), the Members shall make such offsetting special allocations of Company income, gain, loss, or deduction so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Section 7.1.

**Section 7.5. Section 704(c) Allocations.** In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property that is treated as having been contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value in Schedule 1); provided that such allocations shall be based upon the "traditional method" described in the Treasury Regulations under Section 704(c) of the Code. In the event that Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (iv) of the definition of Gross Asset Value in Schedule 1, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder; provided that such allocations shall be based upon the "traditional method" described in the Treasury Regulations under Section 704(c) of the Code.

### Section 7.6. Distributions.

(a) During each fiscal year or within ninety (90) days thereafter, to the extent there is Available Cash to make such distributions, the Company shall distribute to each Member, in cash, an amount approximately equal to such Member's local, state and federal income tax liability (determined at the highest combined income tax rate applicable to any Member with respect to the Company's applicable fiscal year) with respect to the taxable income of the Company for such fiscal year (collectively, the "Tax Distributions").

(b) To the extent of remaining Available Cash and to the extent permitted by the Act, the Company shall make distributions at such times and in such amounts as the Board deems appropriate, in its sole discretion, to the Members as follows:

- (i) First, 100% to all Preferred Members in proportion to their respective Capital Contributions, until each Preferred Member has received aggregate distributions (including any Tax Distributions) equal in value to such Preferred Member's paid-in Capital Contribution; and
- (ii) Thereafter, to all Members pro rata in accordance with their respective Percentage Interests.

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# **Section 7.7. 'Clean Cut-Off'; Allocation of Income and Loss and Distributions in Respect of Interests Transferred.**

(a) If any Interest is transferred, or is increased or decreased by reason of the admission of an Additional Member or otherwise, during any fiscal year of the Company, each item of net income, gain, loss, deduction, or credit of the Company for such fiscal year shall be assigned to each day in the particular period of such fiscal year to which such item is attributable (i.e., the day on or during which it is accrued or otherwise incurred), and the amount of each such item so assigned to any such day shall be allocated to the Member based upon the Member's respective Percentage Interest at the close of such day.

(b) Authorized distributions of Company assets in respect of an Interest shall be made only to the Members who, according to the books and records of the Company, are the holders of record of the Interests in respect of which such distributions are made on the actual date of distribution. Neither the Company nor any Member shall incur any liability for making distributions in accordance with the provisions of the preceding sentence, whether or not the Company or the Member has knowledge or notice of any transfer or purported transfer of ownership of an Interest which has not met the requirements of Article VIII. Notwithstanding any provision above to the contrary, gain or loss of the Company realized in connection with a sale or other disposition of any of the assets of the Company shall be allocated solely to the parties owning Interests as of the date such sale or other disposition occurs.

# **ARTICLE VIII.**

# **RESTRICTIONS ON WITHDRAWAL AND TRANSFERS OF INTERESTS**

**Section 8.1. Withdrawal.** No Member shall withdraw from the Company or otherwise voluntarily cause an Event of Dissociation as to that Member except upon the express written consent of the Board. Upon any such withdrawal or other voluntarily caused Event of Dissociation, the Member shall be an Assignee as to the Member's Units, but shall not be entitled to have the Member's Interest redeemed or to otherwise receive any distribution or other payment on account of the Member's withdrawal or other voluntarily caused Event of Dissociation. The Company may recover damages for breach of this Section 8.1 and may offset the Company's damages against any amount owed to a Member for distributions or otherwise.

# **Section 8.2. General Restrictions on Transfer.**

(a) Each Member acknowledges and agrees that such Member (or any Permitted Transferees of such Member) shall not Transfer any Units or Unit Equivalents except as permitted pursuant to Section 8.3 or in accordance with the provisions set forth in Section 8.4 through Section 8.6, as applicable. Notwithstanding the foregoing or anything in this Agreement to the contrary,

(B) when required of a Non-Control Seller pursuant to Section 8.5; or

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(C) as set forth in any Incentive Plan or applicable Award Agreement.

(ii) Transfers of Class A Common Units by a Member (or any Class B Common Units owned by such Member following the conversion of any of such Member's Class A Common Units into Class B Common Units pursuant to Section 8.6(d)) shall not be permitted except:

(A) pursuant to Section 8.3;

(B) when required of a Non-Control Seller pursuant to Section 8.5; or

(C) when the Member has obtained the prior written consent of all of the Class A Common Members, which consent may be given, withheld, conditioned or delayed as such Class A Common Members may determine in their sole and absolute discretion.

(b) Notwithstanding any other provision of this Agreement (including Section 8.3), each Member agrees that it will not, directly or indirectly, Transfer any of its Units or Unit Equivalents, and the Company agrees that it shall not issue any Units or Unit Equivalents:

(i) except as permitted under the Securities Act and other applicable federal or state securities or blue sky laws, and then, with respect to a Transfer of Units or Unit Equivalents, if requested by the Company, only upon delivery to the Company of an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act;

(ii) if such Transfer or issuance would cause the Company to be considered a "publicly traded partnership" under Section 7704(b) of the Code within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii), including the look-through rule in Treasury Regulation Section 1.7704-1(h)(3);

(iii) if such Transfer or issuance would affect the Company's existence or qualification as a limited liability company under the Act;

(iv) if such Transfer or issuance would cause the Company to lose its status as a partnership for federal income tax purposes;

(v) if such Transfer or issuance would cause a termination of the Company for federal income tax purposes; or

(vi) if such Transfer or issuance would cause the Company or any of the Company Subsidiaries to be required to register as an investment company under the Investment Company Act of 1940, as amended.

In any event, the Board may refuse to consent to a Transfer to any Person if such Transfer would have a material adverse effect on the Company as a result of any regulatory or other restrictions imposed by any governmental authority.

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(c) Any Transfer or attempted Transfer of any Units or Unit Equivalents in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company's books and the purported Transferee in any such Transfer shall not be treated (and the purported Transferor shall continue be treated) as the owner of such Units or Unit Equivalents for all purposes of this Agreement.

## Section 8.3. Permitted Transfers.

(a) The provisions of Section 8.2(a), Section 8.4 and Section 8.5 (with respect to the Control Seller only) shall not apply to any of the following Transfers by any Member of any of its Units or Unit Equivalents:

(i) with respect to each Member who is a natural person, to (A) such Member's spouse, parent, siblings, descendants (including adoptive relationships and stepchildren) and the spouses of each such natural persons (collectively, "Family Members"), (B) a trust under which the distribution of Units may be made only to such Member and/or any Family Member of such Member, (C) a charitable remainder trust, the income from which will be paid to such Member during his/her life, (D) a corporation, partnership or limited liability company, the stockholders, partners or members of which are only such Member and/or Family Members of such Member, or (E) by will or by the laws of intestate succession, to such Member's executors, administrators, testamentary trustees, legatees or beneficiaries; or

(ii) with respect to each Member that is an Entity, to (A) any Affiliate of such Member, or (B) in the event of a winding up or dissolution of such Member, any of its equity holders in accordance with its constitutive documents.

(b) In connection with and as a condition precedent to any Permitted Transfer, the Permitted Transferee, if not currently a party to this Agreement, shall execute a joinder agreement to this Agreement in the form determined by the Board, and shall be bound by the terms hereof as a Member hereunder.

(c) With respect to any Permitted Transfer, the Company may accept such evidence of Transfer of Units as it considers appropriate in the sole discretion of the Board.

## Section 8.4. Right of First Refusal.

(a) Offered Units. Subject to the terms and conditions specified in Section 8.2, Section 8.3 and this Section 8.4, the Company, first, and each Preferred Member, second, shall have a right of first refusal if any Preferred Member (the "Offering Member") receives a bona fide offer that the Offering Member desires to accept to Transfer all or any portion of the Preferred Units (or applicable Unit Equivalents) (the "Offered Units") it owns. As used herein, the term "ROFR Rightholders" shall mean all Preferred Members other than the Offering Member.

(b) Offering; Exceptions. Each time the Offering Member receives an offer for a Transfer of any of its Preferred Units (or applicable Unit Equivalents) (other than Transfers that

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(i) are permitted by Section 8.3, or (ii) are proposed to be made by a Control Seller or required to be made by a Non-Control Seller pursuant to Section 8.5), the Offering Member shall first make an offering of the Offered Units to the Company, first, and the ROFR Rightholders, second, all in accordance with the following provisions of this Section 8.4, prior to Transferring such Offered Units to the proposed purchaser.

(c) Offer Notice.

(i) The Offering Member shall, within five (5) Business Days of receipt of the Transfer offer, give written notice (the "Offering Member Notice") to the Company and the ROFR Rightholders stating that it has received a bona fide offer for a Transfer of its Preferred Units (or applicable Unit Equivalents) and specifying:

(A) the number of Offered Units to be Transferred by the Offering Member;

(B) the proposed date, time and location of the closing of the Transfer, which shall not be less than sixty (60) days from the date of the Offering Member Notice;

(C) the purchase price per Offered Unit (which shall be payable solely in cash) and the other material terms and conditions of the Transfer; and

(D) the name of the Person who has offered to purchase such Offered Units.

(ii) The Offering Member Notice shall constitute the Offering Member's offer to Transfer the Offered Units to the Company and the ROFR Rightholders, which offer shall be irrevocable until the end of the ROFR Rightholder Option Period described in Section 8.4(d)(iii).

(iii) By delivering the Offering Member Notice, the Offering Member represents and warrants to the Company and each ROFR Rightholder that:

(A) the Offering Member has full right, title and interest in and to the Offered Units;

(B) the Offering Member has all the necessary power and authority and has taken all necessary action to Transfer such Offered Units as contemplated by this Section 8.4; and

(C) the Offered Units are free and clear of any and all liens other than those arising as a result of or under the terms of this Agreement.

(d) Exercise of Right of First Refusal.

(i) Upon receipt of the Offering Member Notice, the Company and each ROFR Rightholder shall have the right to purchase the Offered Units in the following order of priority: first, the Company shall have the right to purchase all or any portion of

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the Offered Units in accordance with the procedures set forth in Section 8.4(d)(ii), and thereafter, the ROFR Rightholders shall have the right to purchase the Offered Units, in accordance with the procedures set forth in Section 8.4(d)(iii), to the extent the Company does not exercise its right in full. Notwithstanding the foregoing, the Company and the ROFR Rightholders may only exercise their right to purchase the Offered Units if, after giving effect to all elections made under this Section 8.4(d), no less than all of the Offered Units will be purchased by the Company and/or the ROFR Rightholders.

(ii) The initial right of the Company to purchase any Offered Units shall be exercisable with the delivery of a written notice (the "Company ROFR Exercise Notice") by the Company to the Offering Member and the ROFR Rightholders within ten (10) Business Days of receipt of the Offering Member Notice (the "Company Option Period"), stating the number (including where such number is zero) of Offered Units the Company elects irrevocably to purchase on the terms and purchase price set forth in the Offering Member Notice. The Company ROFR Exercise Notice shall be binding upon delivery and irrevocable by the Company.

(iii) If the Company shall have indicated an intent to purchase any less than all of the Offered Units, the ROFR Rightholders shall have the right to purchase the remaining Offered Units not selected by the Company. For a period of fifteen (15) Business Days following the receipt of a Company ROFR Exercise Notice in which the Company has elected to purchase less than all the Offered Units (such period, the "ROFR Rightholder Option Period"), each ROFR Rightholder shall have the right to elect irrevocably to purchase all or none of its Preferred Pro Rata Portion of the remaining Offered Units by delivering a written notice to the Company and the Offering Member (a "Member ROFR Exercise Notice") specifying its desire to purchase its Preferred Pro Rata Portion of the remaining Offered Units, on the terms and purchase price set forth in the Offering Member Notice. In addition, each ROFR Rightholder shall include in its Member ROFR Exercise Notice the number of remaining Offered Units that it wishes to purchase if any other ROFR Rightholders do not exercise their rights to purchase their entire Preferred Pro Rata Portions of the remaining Offered Units. Any Member ROFR Exercise Notice shall be binding upon delivery and irrevocable by the ROFR Rightholder. For purposes of this Section 8.4, "Preferred Pro Rata Portion" means, with respect to a ROFR Rightholder, on any date of a proposed Transfer by an Offering Member, a fraction determined by dividing (A) the number of Preferred Units owned by such ROFR Rightholder immediately prior to such Transfer by (B) the total number of Preferred Units held by all ROFR Rightholders on such date immediately prior to such Transfer.

(iv) The failure of the Company or any ROFR Rightholder to deliver a Company ROFR Exercise Notice or Member ROFR Exercise Notice, respectively, by the end of the Company Option Period or ROFR Rightholder Option Period, respectively, shall constitute a waiver of their respective rights of first refusal under this Section 8.4 with respect to the Transfer of Offered Units, but shall not affect their respective rights with respect to any future Transfers.

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(e) Allocation of Offered Units. Upon the expiration of the ROFR Rightholder Option Period, the Offered Units not selected for purchase by the Company pursuant to Section 8.4(d)(ii) shall be allocated for purchase among the ROFR Rightholders as follows:

(i) First, to each ROFR Rightholder having elected to purchase its entire Preferred Pro Rata Portion of such Preferred Units, such ROFR Rightholder's Preferred Pro Rata Portion of such Preferred Units; and

(ii) Second, the balance, if any, not allocated under clause (i) above (and not purchased by the Company pursuant to Section 8.4(d)(ii)), shall be allocated to those ROFR Rightholders who set forth in their Member ROFR Exercise Notices a number of Offered Units that exceeded their respective Preferred Pro Rata Portions (the "Purchasing Rightholders"), in an amount, with respect to each such Purchasing Rightholder, that is equal to the lesser of:

(A) the number of Offered Units that such Purchasing Rightholder elected to purchase in excess of its Preferred Pro Rata Portion; or

(B) the product of (x) the number of Offered Units not allocated under clause (i) (and not purchased by the Company pursuant to Section 8.4(d)(ii)), multiplied by (y) a fraction, the numerator of which is the number of Offered Units that such Purchasing Rightholder was permitted to purchase pursuant to clause (i), and the denominator of which is the aggregate number of Offered Units that all Purchasing Rightholders were permitted to purchase pursuant to clause (i).

The process described in clause (ii) shall be repeated until no Offered Units remain or until such time as all Purchasing Rightholders have been permitted to purchase all Offered Units that they desire to purchase.

(f) Consummation of Sale. In the event that the Company and/or the ROFR Rightholders shall have, in the aggregate, exercised their respective rights to purchase all and not less than all of the Offered Units, then the Offering Member shall sell such Offered Units to the Company and/or the ROFR Rightholders, and the Company and/or the ROFR Rightholders, as the case may be, shall purchase such Offered Units, within sixty (60) days following the expiration of the ROFR Rightholder Option Period (which period may be extended for a reasonable time not to exceed ninety (90) days to the extent reasonably necessary to obtain required approvals or consents from any governmental authority). Each Member shall take all actions as may be reasonably necessary to consummate the sale contemplated by this Section 8.4(f), including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate. At the closing of any sale and purchase pursuant to this Section 8.4(f), the Offering Member shall deliver to the Company and/or the participating ROFR Rightholders certificates (if any) representing the Offered Units to be sold, free and clear of any liens or encumbrances (other than those contained in this Agreement), accompanied by evidence of transfer and all necessary transfer taxes paid and stamps affixed, if necessary, against receipt of the purchase price therefor from the Company and/or such ROFR Rightholders by certified or official bank check or by wire transfer of immediately available funds.

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(g) Sale to Proposed Purchaser. In the event that the Company and/or the ROFR Rightholders shall not have collectively elected to purchase all of the Offered Units, then the Offering Member may Transfer all of such Offered Units, at a price per Offered Unit not less than specified in the Offering Member Notice and on other terms and conditions which are not materially more favorable in the aggregate to the proposed purchaser than those specified in the Offering Member Notice, but only to the extent that such Transfer occurs within ninety (90) days after expiration of the ROFR Rightholder Option Period. Any Offered Units not Transferred within such 90-day period will be subject to the provisions of this Section 8.4 upon subsequent Transfer.

Section 8.5. Drag Along Rights. Members holding at least a majority of the then outstanding Class A Common Units (such Members, the "Control Seller") may, in connection with a bona fide offer by a Third Party to acquire for value at least a majority of the then outstanding Units (an "Approved Sale"), require each other Member to sell to such Third Party that percentage of the Units then held by such Member (calculated based upon the total number of Units which such Member owns or has the right to acquire pursuant to outstanding Unit Equivalents) as shall be equal to the percentage obtained by dividing the number of Units to be sold to such Third Party by the Members, taken as a group, by the aggregate number of Units then held by the Members, taken as a group. If the Control Seller elects to exercise its right to compel a sale pursuant to this Section 8.5, the Control Seller will cause a written notice of the Approved Sale to be delivered to each of the other Members, setting forth the aggregate consideration, the identity of the Third Party and the other principal terms and conditions thereof. Each other Member (a "Non-Control Seller") shall consent to and raise no objections against the Approved Sale, and shall promptly take all actions reasonably necessary or reasonably desirable (in the judgment of the Control Seller) to facilitate the consummation of the Approved Sale (whether in such Non-Control Seller's capacity as a Member, Manager or officer of the Company or otherwise). Without limiting the foregoing, (i) each Non-Control Seller shall sell or exchange the Units held by such Non-Control Seller on the terms and conditions approved by the Control Seller and (ii) each Non-Control Seller shall enter into and become a party to any merger agreement, unit purchase agreement or other agreement entered into by the Company and/or the Control Seller in order to effect such Approved Sale and shall be bound by the same obligations under such Agreement as the Control Seller. Each Non-Control Seller agrees not to directly or indirectly (without the prior written consent of the Company), disclose to any other Person (other than to such Non-Control Seller's legal counsel in confidence, as otherwise necessary to protect such Non-Control Seller's rights under this Agreement or as otherwise required by law) any information related to such potential sale of the Company.

### Section 8.6. Repurchase Option on Class A Common Units.

(a) Repurchase Option. In the event of the voluntary or involuntary termination of any Class A Common Member's active, ongoing involvement with the Company or any Company Subsidiary for any reason (including death or Disability), the Company shall upon the date of such termination (the "Termination Date") have an irrevocable, exclusive option (the "Repurchase Option") for a period of one hundred eighty (180) days from such date to repurchase all or any portion of the Class A Common Units (and/or any Class A Common Units which have been converted into Class B Common Units pursuant to Section 8.6(d)) held by such Class A Common Member or such Class A Common Member's Permitted Transferees as of the

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Termination Date which have not yet been released from the Company's Repurchase Option as set forth in Section 8.6(c) at a price per Class A Common Unit equal to their Last Cost.

(b) Procedures. If the Company desires to exercise its Repurchase Option, the Company shall deliver to such Class A Common Member, such Class A Common Member's Permitted Transferees or such Class A Common Member's executor (as applicable), within one hundred eighty (180) days following the Termination Date, a written notice specifying the number of Class A Common Units to be repurchased by the Company and the purchase price therefore in accordance with Section 8.6(a) (the 'Repurchase Notice'). The closing of any repurchase of Class A Common Units pursuant to this Section 8.6 shall take place no later than thirty (30) days following the Company's delivery of the Repurchase Notice. The Company shall pay the purchase price for such Class A Common Units by certified or official bank check or by wire transfer of immediately available funds. The Class A Common Member, such Class A Common Member's Permitted Transferees or such Class A Common Member's executor (as applicable) shall take all actions as may be reasonably necessary to consummate the sale contemplated by this Section 8.6, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed reasonably necessary or appropriate by the Company. Upon delivery of the Repurchase Notice and payment of the purchase price, the Company shall become the legal and beneficial owner of the Class A Common Units being repurchased and all rights and interest therein or related thereto, and the Company shall have the right to Transfer to its own name the number of Class A Common Units being repurchased by the Company, without any further action by such Class A Common Member or such Class A Common Member's Permitted Transferees.

(c) Class A Common Units Subject to Repurchase Option.

(i) With respect to Adam Quirk, Jeff Wuslich, Jason Katz and Rick Dietz, fifty percent (50%) of the Class A Common Units held by such Class A Common Member (or such Class A Common Member's Permitted Transferees) shall initially be subject to the Repurchase Option. Twenty five percent (25%) of the total number of Class A Common Units held by such Class A Common Member subject to the Repurchase Option shall be released from the Repurchase Option on December 31, 2013, and an additional twenty five percent (25%) of the total number of Class A Common Units held by such Class A Common Member subject to the Repurchase Option shall be released from the Repurchase Option on the last day of each calendar year thereafter, until all of the Class A Common Units held by such Class A Common Member are released from the Repurchase Option; provided, however, that any such scheduled releases from the Repurchase Option shall immediately cease as of the Termination Date.

(ii) *[intentionally deleted]*

(iii) To the extent the provisions of this Section 8.6(c) result in any Class A Common Member owning fractional Units, such fractional Units shall be rounded to the nearest whole Unit.

(d) Conversion of Class A Common Units to Class B Common Units. Following any Class A Common Member's Termination Date, the Class A Common Units

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owned by such Class A Common Member shall automatically be stripped of their voting rights and converted into Class B Common Units with no voting rights without any further action by the Members, the Board or the Company, and the Board shall update Exhibit A accordingly to reflect such conversion. Notwithstanding anything contained herein to the contrary, the Repurchase Option shall apply to any such Class A Common Units which are converted into Class B Common Units pursuant to this Section 8.6(d) to the extent such Class A Common Units have not been released from the Repurchase Option pursuant to Section 8.6(c)(i).

**Section 8.7. Status of Transferee and Transferor.** Notwithstanding anything contained in this Agreement to the contrary, any transferee or recipient of a Unit or Units subject to an effective Transfer by a Member, other than a Permitted Transferee, shall be an Assignee and shall have no right to (a) vote any Voting Units or portion thereof subject to the Transfer or to otherwise participate in the management of the business or affairs of the Company, (b) become a Substitute Member or otherwise exercise any rights of a Member, or (c) have access to the Company records; unless the Board, in its sole and absolute discretion, approves the admission of the Assignee as a Substitute Member and the Assignee executes documentation satisfactory to the Board accepting and adopting the terms of this Agreement. The transferor in a Transfer of the transferor's entire Interest to an Assignee shall cease to be a Member and shall not have any power to exercise any rights of a Member; provided, however, that such transferor is not released from any unpaid contributions or other liability.

### ARTICLE IX.

### DISSOCIATION OF A MEMBER

**Section 9.1. Dissociation.** A person ceases to be a Member upon the occurrence of any of the following events (each an "Event of Dissociation"):

- (a) the Person withdraws from the Company, including any retirement or resignation from membership in the Company (as opposed to retirement or resignation merely from employment with the Company or any Company Subsidiary or any position as an officer or Manager of the Company or any Company Subsidiary);
- (b) a Transfer of the Person's entire Interest, whether or not the Assignee is admitted as a Substitute Member;
- (c) in the case of a Person who is an individual, the individual's death or adjudication by a court of competent jurisdiction of the individual's mental incompetency or insanity;
- (d) in the case of a Person who is acting as a Member by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee;
- (e) in the case of a Person that is a partnership, limited partnership, limited liability partnership or limited liability company, the dissolution and commencement of winding up of the partnership, limited partnership, limited liability partnership or limited liability company;
- (f) in the case of a Person that is a corporation, the dissolution of the corporation;

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(g) in the case of a Person that is an estate, the distribution by the fiduciary of the estate's entire Interest in the Company; or

(h) Bankruptcy of the Person.

**Section 9.2. Rights of Dissociating Member.** Upon an Event of Dissociation as to a Member, except as may be otherwise expressly provided in this Agreement:

(a) if the dissociation causes a dissolution and winding up of the Company under Article X, the Member shall be entitled to participate in the winding up of the Company to the same extent as any other Member, except that if the Event of Dissociation is a breach of this Agreement, any distributions to which the Member would have been entitled shall be reduced by any damages sustained by the Company as a result of the dissolution and winding up; and
(b) if the Event of Dissociation does not cause a dissolution and winding up of the Company under Article X, the Member shall not be entitled to any distribution solely by reason of the Member's dissociation, and thereafter shall only be entitled to participate as an Assignee in the Company. The Member shall not be entitled to a redemption of the Member's Interest or otherwise receive the value of the Member's Interest until such time, and in the manner, provided under Article X for the dissolution and winding up of the Company.

# ARTICLE X.

# DISSOLUTION AND WINDING UP

**Section 10.1. Dissolution.** The Company shall be dissolved and its affairs wound up on the first of the following to occur:

(a) A determination by the Board in its sole discretion that the Company shall be dissolved; or
(b) At such earlier time as may be provided by applicable law.

Notwithstanding any other provision of this Agreement or the Act, the Members hereby agree that the business of the Company shall be continued upon the occurrence of an Event of Dissociation and that the Company shall not be dissolved upon the occurrence of an Event of Dissociation other than pursuant to the terms of Section 10.1.

**Section 10.2. Winding Up.** Upon dissolution, the Board shall cause the Company to wind up and liquidate the business and affairs of the Company, and the Company may only carry on business that is appropriate to wind up and liquidate the business and affairs of the Company, including the following: (a) collecting the Company's assets; (b) disposing of properties that will not be distributed in kind to Members; (c) discharging or making provision for discharging liabilities; (d) distributing the remaining property among the Members; and (e) doing every other act necessary to wind up and liquidate the business and affairs of the Company. The Company shall follow the procedure for disposing of known claims set forth in Article 8 of the Act.

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**Section 10.3. Distribution of Assets.** Upon the winding up of the Company, the assets shall be distributed as follows:

(a) To creditors, including Members who are creditors to the extent permitted by law, in the order of priority as provided by law to satisfy the liabilities of the Company whether by payment or by the establishment of adequate reserves, excluding liabilities for distributions to Members pursuant to Article VII;

(b) To Members to repay any loans to the Company or to satisfy any liabilities for distributions pursuant to Article VII which remain unpaid; and

(c) To Members in accordance with the positive balances in their Capital Accounts after giving effect to all contributions, distributions and allocations for all periods.

### ARTICLE XI.

### RESTRICTIVE COVENANTS

**Section 11.1. Confidentiality.** Each Member acknowledges that, as a result of the Member's relationship with the Company, the Member may acquire, or has acquired, access to or knowledge of certain "Confidential Information" of the Company and Company Subsidiaries, including, without limitation, information relating to the business and affairs and the Company and Company Subsidiaries, including, without limitation, the names, addresses and other information and records relating to the past, present and potential clients and service providers of the Company and/or Company Subsidiaries, technologies, formulas, know-how, sales, marketing and distribution methods and strategies, new products and services, project proposals and work in progress, business plans, financial results and financial conditions, computer programs and software (including flow charts, logic diagrams, object codes and source codes), and all notes, memoranda, correspondence, records and other written documents relating to such information, whether or not marked "Confidential." Each Member further acknowledges that all such Confidential Information is the property of the Company and that any disclosure of such Confidential Information in violation of this Agreement will substantially and adversely affect the business of the Company and Company Subsidiaries. Each Member, therefore, agrees to forever keep confidential all such Confidential Information and shall not, directly or indirectly, disclose to anyone (except in furtherance of the business of the Company and Company Subsidiaries), or use for such Member's benefit or to the detriment of the Company and Company Subsidiaries, any such Confidential Information, or authorize, cause, or induce any other Person to do so. Notwithstanding the foregoing, the confidentiality covenants herein shall not apply to any information (a) that is or becomes generally known or available to the public other than as a result of a disclosure by the Member or (b) that is required to be disclosed to the Company's banks, other lenders, or other Persons providing capital to the Company or in any judicial or administrative proceeding. This Section 11.1 supplements and does not supersede the Member's obligations under all statutes and common laws intended to protect the Confidential Information of the Company and Company Subsidiaries.

**Section 11.2. Remedies.** The Members acknowledge and stipulate that, by virtue of their relationship with the Company and the Members' knowledge of the affairs, business, and

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operations of the Company, and also the uniqueness and prospects of the products and services of the Company and Company Subsidiaries, irreparable loss, damage and injury will be suffered by the Company and Company Subsidiaries if any Member should breach or violate any of the terms or provisions of the covenants contained in this Article XI. In the event of breach, or threatened breach, of any such provisions, the Company shall be entitled to seek damages, if determinable, and, at the option of the Company, injunctive relief. In addition, the Company shall be entitled to all reasonable attorneys' fees incurred in the enforcement of the provisions contained in this Article XI. The Members hereby waive any requirement that the Company post bond or security when seeking to enforce any provision herein. The Members hereby waive any claim that the Company has an adequate remedy at law in the event of a breach, or a threatened breach, of this Article XI. The remedies herein provided may be cumulative and no single remedy may be construed as exclusive of any other or of any remedy provided at law. Failure to exercise any remedy at any time shall not operate as a waiver of the right to exercise any remedy for the same or subsequent breach at any time thereafter.

### ARTICLE XII.

### AMENDMENTS

**Section 12.1. Proposal of Amendments.** Amendments to the Articles and this Agreement may be proposed in writing by any Voting Member or the Board.

# **Section 12.2. Approval of Amendments.**

(a) Except as otherwise provided in this Section 12.2, this Agreement may be amended, in whole or in part, only through a written amendment executed by the Company and a Majority in Interest of the Voting Members; provided, however, that any amendment which adversely alters or affects the rights, preferences or privileges of the Preferred Units shall be effective only with the consent of the holders of a majority of the then outstanding Preferred Units. For the avoidance of doubt, any amendment to the distribution provisions of this Agreement resulting from an issuance of additional Units for the primary purpose of raising equity capital which results in such additional Units being entitled to receive certain distributions in priority and preference to the Preferred Members shall not, in and of itself, constitute an amendment that requires the separate consent of the holders of a majority of the then outstanding Preferred Units. Upon approval of any amendment in accordance with the foregoing, all Members shall be bound by the terms and provisions thereof. A copy of any amendment to this Agreement must be delivered to each Member and each Assignee who has not been admitted as a Member of the Company.

(b) Notwithstanding the foregoing provisions of this Section 12.2, the Board may, without the consent of the Voting Members, amend this Agreement to the minimum extent necessary as determined by the Board to comply with applicable law, supply a missing term or provision, or resolve an ambiguity in the existing terms and provisions of this Agreement or to preserve the economic arrangement of the Members. In addition, amendments to Exhibit A following any new issuance, redemption, repurchase, conversion or Transfer of Units in accordance with this Agreement may be made by the Board without the consent of or execution by the Voting Members.

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# ARTICLE XIII.

# MISCELLANEOUS

Section 13.1. Complete Agreement. This Agreement and the Articles constitute the complete and exclusive statement of agreement among the Members with respect to its subject matter. This Agreement and the Articles replace and supersede all prior agreements by and among the Members or any of them. This Agreement and the Articles supersede all prior written and oral statements and no representation, statement, or condition or warranty not contained in this Agreement or the Articles will be binding on the Members or have any force or effect whatsoever.

Section 13.2. Governing Law; Choice of Forum. This Agreement and the rights of the parties under this Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of Indiana. The parties to this Agreement hereby irrevocably agree and consent to the exclusive jurisdiction of the courts of the State of Indiana and the federal courts of the United States sitting in Indianapolis, Indiana, for the adjudication of any matters arising under or in connection with this Agreement. The parties to this Agreement hereby irrevocably waive, to the fullest extent they may effectively do so under applicable law, any objection which they may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court, and any claim that such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

Section 13.3. Binding Effect; Conflicts. Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and inure to the benefit of the Members, and their respective distributees, successors and assigns. This Agreement is subject to, and governed by, the Act and the Articles. In the event of a direct conflict between the provisions of this Agreement and the mandatory provisions of the Act or the provisions of the Articles, the provisions of the Act or the Articles, as the case may be, will be controlling.

Section 13.4. Headings; Interpretation. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. The singular shall include the plural, and the masculine gender shall include the feminine and neuter, and vice versa, as the context requires.

Section 13.5. Severability. If any provision of this Agreement is held to be illegal, invalid, unreasonable, or unenforceable under the present or future laws effective during the term of this Agreement, such provision will be fully severable; this Agreement will be construed and enforced as if such illegal, invalid, unreasonable, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid, unreasonable, or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid, unreasonable, or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, unreasonable, or unenforceable provision as may be possible and be legal, valid, reasonable, and enforceable.

- 31 -

**Section 13.6. Multiple Counterparts.** This Agreement may be executed in several original, facsimile or PDF counterparts, each of which will be deemed an original but all of which will constitute one and the same instrument. However, in making proof with respect to this Agreement it will be necessary to produce only one copy hereof signed by the party to be charged.

**Section 13.7. Additional Documents and Acts.** Each Member agrees to promptly execute and deliver to the Company such additional documents, statements of interest and holdings, designations, powers of attorney, and other instruments, and to perform such additional acts, as the Company may determine to be necessary, useful or appropriate to complete the organization of the Company, effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated by this Agreement, and to comply with all applicable laws, rules and regulations.

**Section 13.8. No Third Party Beneficiary.** This Agreement is made solely and specifically among and for the benefit of the Members and their respective successors and assigns subject to the express provisions of this Agreement relating to successors and assigns. This Agreement is expressly not intended for the benefit of any creditor of the Company or any other third party. No creditor or other third party will have any rights, interest, or claims under the Agreement or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

**Section 13.9. Notices.** All notices shall be in writing, delivered personally, by facsimile or by electronic transmission (with confirmation of transmission) or courier, postage prepaid (where applicable), addressed to such other party at its address indicated on Exhibit A, or to such other address as the addressee shall have last furnished in writing to the intended recipient, and shall be effective upon receipt by the addressee.

**Section 13.10. Title to Company Property.** Legal title to all property of the Company will be held and conveyed in the name of the Company.

**Section 13.11. Reliance on Authority of Person Signing Agreement.** In the event that a Member is not a natural person, neither the Company nor any Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such Person or to determine any fact or circumstance bearing upon the existence of the authority of such individual, or (b) be required to see to the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such Entity.

**Section 13.12. No Remedies Exclusive.** To the extent any remedies are provided herein for a breach of this Agreement, the Articles or the Act, such remedies shall not be exclusive of any other remedies the aggrieved party may have, at law or in equity.

**Section 13.13. Advice of Counsel.** Each Person signing this Agreement:

(a) understands that this Agreement contains legally binding provisions,

- 32 -

(b) is advised, and has had the opportunity, to consult with that Person's own attorney, and

(c) has either consulted with the Person's own attorney or consciously decided not to consult with the Person's own attorney.

**Section 13.14. Incorporated Schedules and Exhibits.** The following Schedules and Exhibits are attached to and/or have been identified as Schedules and Exhibits to this Agreement and are incorporated in this Agreement by reference as if fully set forth herein:

Schedule I - Schedule of Definitions

Exhibit A - Names and Addresses, Capital Contributions and Units of the Members

*(signature page follows)*

- 33 -

**IN WITNESS WHEREOF**, by execution of this Agreement, the Company and the undersigned Members of the Company, which undersigned Members constitute a Majority in Interest of the Voting Members as of the Effective Date, indicate their approval and consent to the foregoing Agreement, effective as of the Effective Date, and certify that the foregoing Agreement was duly adopted in accordance with the provisions of the Operating Agreement.

"COMPANY"

CARDINAL SPIRITS LLC

By:

Name: Adam Quirk

Title: CEO

"MEMBERS"

Adam Quirk

Jeff Wuslich

## SCHEDULE I

## TO

## OPERATING AGREEMENT

## SCHEDULE OF DEFINITIONS

The terms used in this Agreement with their initial letters capitalized shall have, unless the context otherwise requires or unless otherwise expressly provided in this Agreement, the meanings specified in this Schedule I. Any term used but not defined in this Agreement shall have the meaning set forth in the Act. When used in this Agreement, the following terms shall have the meanings set forth below:

"Act" means the Indiana Business Flexibility Act (Indiana Code Sections 23-18-1-1 et seq.), as the same may be amended from time to time.

"Additional Member" means any Person admitted as a Member pursuant to Section 3.4.

"Adjusted Capital Account Deficit" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (i) credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be applied in a manner consistent with such intent.

"Advisory Board" or "Advisory Boards" has the meaning set forth in Section 5.10.

"Affiliate" means, with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control," when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and the terms "controlling" and "controlled" shall have correlative meanings.

"Agreement" means this Amended and Restated Operating Agreement of the Company, including all schedules, appendices and exhibits hereto, as amended in accordance with the terms hereof.

"Approved Sale" has the meaning set forth in Section 8.5.

"Articles" means the Articles of Organization of the Company, as originally filed with the Indiana Secretary of State and as amended from time to time.

Schedule I - 1

"Assignee" means any transferee or recipient of a Transfer of any Unit or Units, or any portion thereof.

"Available Cash" means all cash funds of the Company on hand from time to time (other than cash funds obtained as contributions to the capital of the Company by the Members and cash funds obtained from loans to the Company) after payment or provision for (i) all operating expenses of the Company as of such time, (ii) all outstanding and unpaid current obligations of the Company as of such time, and (iii) a reasonable working capital reserve in an amount determined by the Board.

"Award Agreements" has the meaning set forth in Section 3.6(a).

"Bankruptcy" means, and a Member shall be deemed a "Bankrupt Member" upon, (i) the entry of a decree or order for relief against the Member by a court of competent jurisdiction in any involuntary case brought against the Member under any bankruptcy, insolvency or other similar law (collectively, "Debtor Relief Laws") generally affecting the rights of creditors and relief of debtors now or hereafter in effect, (ii) the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar agent under applicable Debtor Relief Laws for the Member or for any substantial part of its assets or property, (iii) the ordering of the winding up or liquidation of the Member's affairs, (iv) the filing of a petition in any such involuntary bankruptcy case, which petition remains undismissed for a period of 180 days or which is not dismissed or suspended pursuant to Section 303 of the Federal Bankruptcy Code (or any corresponding provision of any future United States bankruptcy laws), (v) the commencement by the Member of a voluntary case under any applicable Debtor Relief Laws now or hereafter in effect, (vi) the consent by the Member to the entry of an order for relief in an involuntary case under any such laws or to the appointment of or the taking of possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar agent under any applicable Debtor Relief Laws for the Member or for any substantial part of its assets or property, or (vii) the making by a Member of any general assignment for the benefit of its creditors.

"Board" has the meaning set forth in Section 5.1.

"Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in Indianapolis, Indiana are authorized or required to be closed.

"Capital Account" means the individual accounts established and maintained pursuant to Section 3.5(a) and in the manner provided by Treasury Regulation Section 1.704-1(b)(2)(iv), as amended from time to time.

"Capital Account Profits" and "Capital Account Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Capital Account Profits and Capital Account Losses shall be added to the Company

Schedule I - 2

taxable income or loss; (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Capital Account Profits or Capital Account Losses shall be subtracted from the Company's taxable income or loss; (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) or (iii) of the definition of Gross Asset Value set forth in this Schedule I, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Capital Account Profits and Capital Account Losses; (iv) any income, gain or loss attributable to the taxable disposition of any property shall be determined as if the adjusted basis of such property as of the date of its disposition was equal to the Gross Asset Value of such asset as of such date; (v) in lieu of the depreciation, amortization and other capital cost recovery deductions taken into account in computing taxable income or loss, there shall be taken into account Depreciation as defined in this Schedule I; (vi) the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code which may be made by the Company (except to the extent required by Treasury Regulation Section 1.704-1(b)(2)(iv)(m)); and (vii) notwithstanding any other provision in any clause of this definition, any items that are specially allocated pursuant to Sections 7.3 and 7.4 shall not be taken into account in computing Capital Account Profits and Capital Account Losses.

'**Capital Contribution**' means the total value of cash and agreed fair market value of property contributed and agreed to be contributed to the Company by each Member, as shown on Exhibit A, as the same may be amended from time to time. Any reference in this Agreement to the Capital Contribution of a current Member shall include a Capital Contribution previously made by any prior Member for the Interest of such current Member, reduced by any distribution to such prior Member in return of 'Capital Contribution' as contemplated in this Agreement.

'**Capital Transaction**' means the consummation of (a) any sale or Transfer (in one transaction or a series of related transactions) of all or substantially all of the Company's assets, property or business; (b) any sale or Transfer (in one transaction or a series of related transactions) of any Company property during the term of this Agreement; (c) any refinancing of any indebtedness on any Company property; (d) any merger or consolidation with any other entity or entities where the Company is not the surviving entity, except for a merger effected solely for the purpose of changing the domicile of the Company, or (e) a transaction or series of related transactions in which the Members of the Company immediately preceding such transaction or series of related transactions own, following such transaction or series of related transactions, less than fifty percent (50%) of the membership interests of the Company, or alternatively, when a 'book up' of the Members' Capital Accounts are required under Code Section 704(b) and the corresponding regulations.

'**Cause**' shall mean fraud, willful misconduct, gross negligence, breach of fiduciary duty or other gross misconduct by a Manager with respect to a material matter relating to the affairs of the Company.

'**Class A Common Member**' or '**Class A Common Members**' means collectively, the Members owning beneficially and of record Class A Common Units and individually, each of them.

Schedule I - 3

"Class A Common Units" means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to "Class A Common Units" in this Agreement.

"Class B Common Member" or "Class B Common Members" means collectively, the Members owning beneficially and of record Class B Common Units and individually, each of them.

"Class B Common Units" means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to "Class B Common Units" in this Agreement.

"Code" means the Internal Revenue Code of 1986, as amended. All references in this Agreement to sections of the Code shall include any corresponding provision or provisions of any succeeding law.

"Company" has the meaning set forth in the preamble to this Agreement.

"Company Minimum Gain" has the meaning set forth in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d) with respect to "partnership minimum gain," substituting the word "member" for "partner" and "company" for "partnership" wherever they appear.

"Company Option Period" has the meaning set forth in Section 8.4(d)(ii).

"Company ROFR Exercise Notice" has the meaning set forth in Section 8.4(d)(ii).

"Company Subsidiary" means a Subsidiary of the Company.

"Confidential Information" has the meaning set forth in Section 11.1.

"Control Seller" has the meaning set forth in Section 8.5.

"Deadlock" has the meaning set forth in Section 5.4.

"Deadlock Members" has the meaning set forth in Section 5.4.

"Depreciation" means, for each fiscal year, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such fiscal year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such fiscal year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such fiscal year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board.

"Disability" means "disability" within the meaning of Section 22(e)(3) of the Code.

Schedule I - 4

"Effective Date" has the meaning set forth in the preamble to this Agreement.

"Electing Member" has the meaning set forth in Section 3.10(c).

"Entity" means any association, corporation, general partnership, limited partnership, limited liability partnership, limited liability company, joint stock association, joint venture, firm, trust, business trust, cooperative, or foreign associations of like structure.

"Event of Dissociation" means any of the events listed in Section 9.1 upon which a Person ceases to be a Member.

"Exempt Securities" has the meaning set forth in Section 3.10(e).

"Exercise Period" has the meaning set forth in Section 3.10(b).

"Family Members" has the meaning set forth in Section 8.3(a)(i).

"Founder" or "Founders" means Adam Quirk and Jeff Wuslich, and each of them singly.

"Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:

(i) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the agreed gross fair market value of such asset, as determined by the contributing Members and the Board;

(ii) The Gross Asset Values of all Company assets shall be adjusted to equal their respective fair market values, as reasonably determined by the Board, as of the following times: (A) the acquisition of additional Units by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for Units; and (C) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (A) and (B) above shall be made only if the Board reasonably determine that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(iii) The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as reasonably determined by the Board; and

(iv) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent that an adjustment pursuant to

Schedule I - 5

subparagraph (ii) is required in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of the allocations made pursuant to Article VII. For purposes of this definition of Gross Asset Value, a Capital Contribution or distribution shall be considered de minimis if its value is less than $100.

"Incentive Plan" has the meaning set forth in Section 3.6(a).

"Incentive Units" has the meaning set forth in Section 3.6(a).

"Interest" means the entire ownership interest of a Member in the Company at any particular time, including the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement and under the Act, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement.

"Last Cost" means, with respect to any Class A Common Unit, the last price paid to the Company with respect to such Class A Common Unit by the Class A Common Member to whom such Class A Common Unit was originally issued. With respect to the Class A Common Units originally issued to each Class A Common Member on the Effective Date, "Last Cost" shall be determined by dividing such Class A Common Member's initial Capital Contribution as set forth on Exhibit A by the total number of Class A Common Units held by such Class A Common Member.

"Liable Member" has the meaning set forth in Section 3.9.

"Majority in Interest of the Voting Members" means the Voting Member(s) who hold a majority of the then outstanding Voting Units. Voting Unit(s) or any portion thereof that are the subject of an effective Transfer to an Assignee not a Substitute Member shall not be considered outstanding Voting Units for purposes of this definition.

"Management Dispute" has the meaning set forth in Section 5.4.

"Manager" or "Managers" means the Person(s) elected as Manager(s) pursuant to Section 5.1.

"Member" or "Members" refers to the parties to this Agreement as indicated on Exhibit A, and any Additional Members or Substitute Members.

"Member Nonrecourse Debt" has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4) with respect to "partner nonrecourse debt," substituting the word "member" for "partner" and "company" for "partnership" wherever they appear.

"Member Nonrecourse Debt Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such

Schedule I - 6

Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulation Section 1.704-2(i)(3).

"Member Nonrecourse Deductions" has the meaning set forth in Treasury Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2) with respect to "partner nonrecourse deductions," substituting the word "member" for "partner" and "company" for "partnership" wherever they appear.

"Member ROFR Exercise Notice" has the meaning set forth in Section 8.4(d)(iii).

"New Interests" has the meaning set forth in Section 3.2.

"Non-Control Seller" has the meaning set forth in Section 8.5.

"Nonrecourse Deductions" has the meaning set forth in Treasury Regulation Section 1.704-2(b)(1).

"Nonrecourse Liability" has the meaning set forth in Treasury Regulation Section 1.704-2(b)(3).

"Notice of Acceptance" has the meaning set forth in Section 3.10(b).

"Offered Securities" has the meaning set forth in Section 3.10(a).

"Offered Units" has the meaning set forth in Section 8.4(a).

"Offering Member" has the meaning set forth in Section 8.4(a).

"Offering Member Notice" has the meaning set forth in Section 8.4(c)(i).

"Over-Allotment Notice" has the meaning set forth in Section 3.10(c).

"Over-Allotment Option" has the meaning set forth in Section 3.10(c).

"Over-Allotment Period" has the meaning set forth in Section 3.10(c).

"Partnership Representative" has the meaning set forth in Section 6.1.

"Pass-Thru Member" has the meaning set forth in Section 6.1.

"Percentage Interest" of a Member means the total number of Units owned by such Member in relation to the total number of Units outstanding.

"Permitted Transfer" means a Transfer of Units carried out pursuant to Section 8.3.

"Permitted Transferee" means a recipient of a Permitted Transfer.

"Person" means an individual or an Entity.

Schedule I - 7

"Preemptive Rights Notice" has the meaning set forth in Section 3.10(b).

"Preferred Member" or "Preferred Members" means collectively, the Members owning beneficially and of record Series AA Preferred Units and Series A Preferred Units and individually, each of them.

"Preferred Pro Rata Portion" has the meaning set forth in Section 8.4(d)(iii).

"Preferred Units" has the meaning set forth in Section 3.2.

"Principal Office" means the address established pursuant to Section 2.2.

"Profits Interest" has the meaning set forth in Section 3.6(b).

"Purchasing Rightholders" has the meaning set forth in Section 8.4(e)(ii).

"Regulatory Allocations" has the meaning set forth in Section 7.4.

"Repurchase Notice" has the meaning set forth in Section 8.6(b).

"Repurchase Option" has the meaning set forth in Section 8.6(a).

"ROFR Rightholders" has the meaning set forth in Section 8.4(a).

"ROFR Rightholder Option Period" has the meaning set forth in Section 8.4(d)(iii).

"Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time.

"Series A Member" or "Series A Members" means collectively, the Members owning beneficially and of record Series A Preferred Units and individually, each of them.

"Series A Preferred Units" means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to "Series A Preferred Units" in this Agreement.

"Series AA Member" or "Series AA Members" means collectively, the Members owning beneficially and of record Series AA Preferred Units and individually, each of them.

"Series AA Preferred Units" means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to "Series AA Preferred Units" in this Agreement.

"Service Provider" has the meaning set forth in Section 3.6(a).

"Significant Investor" means each Series AA Member who owns at least 250,000 Series AA Preferred Units.

Schedule I - 8

'**Subsidiary**' means, with respect to any Entity, any other Entity of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Entity.

'**Substitute Member**' means any individual or entity admitted as a Member pursuant to Section 8.7.

'**Tax Distributions**' has the meaning set forth in Section 7.6(a).

'**Termination Date**' has the meaning set forth in Section 8.6(a).

'**Third Party**' means any Person who, immediately prior to the contemplated transaction, (a) does not directly or indirectly own or have the right to acquire any outstanding Units (or Unit Equivalents) or (b) is not a Permitted Transferee of any Person who directly or indirectly owns or has the right to acquire any Units (or Unit Equivalents).

'**Transfer**' means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any Units owned by a Person or any interest (including a beneficial interest) in any Units or Unit Equivalents owned by a Person. '**Transfer**' when used as a noun shall have a correlative meaning.

'**Transferor**' and '**Transferee**' mean a Person who makes or receives a Transfer, respectively.

'**Unit**' means a unit representing a fractional part of the Interests of the Members and shall include all types and classes of Units, including the Class A Common Units, the Class B Common Units, the Series AA Preferred Units and the Series A Preferred Units; provided, that any type or class of Unit shall have the privileges, preference, duties, liabilities, obligations and rights set forth in this Agreement and the Interests represented by such type or class or series of Unit shall be determined in accordance with such privileges, preference, duties, liabilities, obligations and rights.

'**Unit Equivalents**' means any security or obligation that is by its terms, directly or indirectly, convertible into, exchangeable or exercisable for Units, and any option, warrant or other right to subscribe for, purchase or acquire Units.

'**Voting Units**' shall mean the Class A Common Units.

'**Voting Members**' shall mean only Members who hold Voting Units.

Schedule I - 9

# EXHIBIT A
TO
OPERATING AGREEMENT

# NAMES AND ADDRESSES OF MEMBERS; CAPITAL
CONTRIBUTIONS; AND UNITS OF MEMBERS
(AS OF THE EFFECTIVE DATE)

(See Attached)

Exhibit A

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM C

### UNDER THE SECURITIES ACT OF 1933

### Issuer Information

**Name of Issuer:** Cardinal Spirits LLC

**Legal Status:** Limited Liability Company

**Jurisdiction of Incorporation/Organization:** IN

**Date of Organization:** 03-14-2011

**Physical Address:** 922 S Morton St., Bloomington, IN, 47403

**Issuer Website:** https://www.cardinalspirits.com/

**Is there a Co-Issuer?:** Yes

**Intermediary Name:** Wefunder Portal LLC

**Intermediary CIK:** 0001670254

**Intermediary File Number:** 007-00033

**Intermediary CRD Number:** 283503

### Offering Information

**Compensation to Intermediary:** 5.5% of the offering amount upon a successful fundraise, and be entitled to reimbursement for out-of-pocket third party expenses it pays or incurs on behalf of the Issuer in connection with the offering.

**Financial Interest in Issuer:** No

**Type of Security Offered:** Other

**Other Description of Security:** Convertible Note

**Number of Securities Offered:** 50000

**Price per Security:** $1.00

**Method for Determining Price:** Pro-rated portion of the total principal value of $50,000; interests will be sold in increments of $1; each investment is convertible to one unit as described under Item 13.

**Target Offering Amount:** $50,000.00

**Oversubscription Accepted:** Yes

**Oversubscription Allocation Type:** Other

**Description of Oversubscription:** As determined by the issuer

**Maximum Offering Amount:** $1,235,000.00

**Deadline to Reach Target Amount:** 04-29-2024

### Annual Report Disclosure Requirements

**Current Number of Employees:** 45

**Total Assets (Most Recent Fiscal Year):** $1,984,880.00

**Total Assets (Prior Fiscal Year):** $2,721,604.00

**Cash & Cash Equivalents (Most Recent Fiscal Year):** $274,785.00

**Cash & Cash Equivalents (Prior Fiscal Year):** $128,586.00

**Accounts Receivable (Most Recent Fiscal Year):** $420,554.00

**Accounts Receivable (Prior Fiscal Year):** $1,004,825.00

**Short-Term Debt (Most Recent Fiscal Year):** $2,481,734.00

**Short-Term Debt (Prior Fiscal Year):** $2,210,823.00

**Long-Term Debt (Most Recent Fiscal Year):** $2,411,692.00

**Long-Term Debt (Prior Fiscal Year):** $1,104,325.00

**Revenues/Sales (Most Recent Fiscal Year):** $6,338,046.00

**Revenues/Sales (Prior Fiscal Year):** $7,554,795.00

**Cost of Goods Sold (Most Recent Fiscal Year):** $4,983,598.00

**Cost of Goods Sold (Prior Fiscal Year):** $7,223,245.00

**Taxes Paid (Most Recent Fiscal Year):** $0.00

**Taxes Paid (Prior Fiscal Year):** $0.00

**Net Income (Most Recent Fiscal Year):** $-1,831,123.00

**Net Income (Prior Fiscal Year):** $-2,157,615.00

**Jurisdictions Offered:**

ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEBRASKA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, NORTH DAKOTA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA, WISCONSIN, WYOMING, B5, GU, PR, VI, 1V

### Signatures

**Issuer:** Cardinal Spirits LLC

**Signature:** Adam Quirk

**Title:** CEO

---

**Signature:** Jeff Wuslich

**Title:** President

**Date:** 03-23-2023

---

**Signature:** Adam Quirk

**Title:** CEO

**Date:** 03-23-2023