Document:

EXHIBIT 10.18

 

AMENDMENT
NO. 1 TO ASSET PURCHASE AGREEMENT

 

This
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this “Amendment”) is entered into as of December 16, 2021 by and
among (i) Hawaii Energy Connection, LLC, a Hawaii limited liability company, and E-Gear, LLC, a Hawaii limited liability company
(each a “Seller” and together, the “Company”), (ii) Steven P. Godmere, a resident of the
State of Hawaii, as representative for the Sellers (the “Seller Representative”), and (iii) Pineapple Energy
LLC, a Delaware limited liability company (“Buyer”).

 

BACKGROUND

 

A.       Buyer,
the Company and the Seller Representative are parties to that certain Asset Purchase Agreement, dated as of March 1, 2021 (the
“Existing Agreement”).

 

B.       Buyer,
the Company and the Seller Representative desire to amend the Existing Agreement in certain limited respects, as set forth in
this Amendment.

 

AGREEMENT

 

In
consideration of the foregoing and the mutual promises and covenants made herein, and of the mutual benefits to be derived here
from, the parties agree as follows:

 

Section
1.          Termination Date. The “Termination Date” (as defined in Section 8(a)(iv) of the Existing
Agreement) was August 31, 2021, and shall be amended to be March 31, 2022.

 

Section
2.          Additional Payment. A new Section 8(e) is hereby added to the Existing Agreement, which shall read
as follows:

 

(e)
Additional Payment. If the Closing shall not have occurred on or before the Termination Date other than as a result of
termination of the Agreement to Section 8(a)(i) or Section 8(a)(ii), then, in addition to any payments owed pursuant
to Section 8(c), Buyer shall pay or cause to be paid by wire transfer of immediately available funds to the Sellers a total amount
equal to $250,000 to account(s) designated by the Seller Representative in writing; provided, that this amount shall be
payable only if none of the Sellers or Seller Representative are in material breach of any representation, warranty, covenant
or other agreement contained herein as of the Termination Date.

 

Section
3.         Closing Equity Consideration. Section (C) of Exhibit A of the Existing Agreement is hereby
amended and restated to read in its entirety as follows:

 

(C)
Upon execution and delivery of a joinder in the form attached as Exhibit A to the Buyer LLC Agreement, Buyer shall issue and deliver
to Sellers in accordance with the Allocation Statement 6,250,000 Class B Units of Buyer (the “Closing Equity Consideration”),
which in turn will provide Sellers with the right to receive (upon execution and delivery to CSI of a joinder in the form attached
as Exhibit D-2 to the Merger Agreement) shares of Common Stock of the Public Company pursuant to the terms and conditions of the
Merger Agreement, including the adjustment provisions therein and in the Buyer LLC Agreement relating to the trading price of
the Public Company shares; provided, that Sellers may direct that 2.5% of such Closing Equity Consideration be issued and
delivered to Independent Investment Bankers Corp. as designated by the Seller Representative in writing in advance of the Closing;
provided further, at Sellers’ sole discretion, Sellers may elect to relinquish a portion of the Closing Equity Consideration
in such amount as shall be set forth in a written notice provided by Seller Representative to Buyer not less than three (3) Business
Days prior to the Closing.

     

     

    

 

 

Section
4.          Target Working Capital. Exhibit C of the Existing Agreement is hereby amended and restated
to read in its entirety as set forth on Annex A hereto.

 

Section
5.          Miscellaneous.

 

(a)       Governing
Law. This Agreement shall be governed by the laws of the State of Delaware, without giving effect to choice-of-law principles.

 

(b)       Entire
Agreement. The Existing Agreement (including the Exhibits and Schedules thereto), as amended by this Amendment, constitute
the entire agreement, and supersede all prior agreements and understandings, both written and oral, between the parties with respect
to the subject matter of the Existing Agreement, as amended by this Amendment.

 

(c)       Severability.
If any provision, including any phrase, sentence, clause, Section or subsection, of this Amendment is invalid, inoperative
or unenforceable for any reason, such circumstances shall not have the effect of rendering such provision in question invalid,
inoperative or unenforceable in any other case or circumstance, or of rendering any other provision herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.

 

(d)       Headings.
The headings contained in this Amendment are for purposes of convenience only and shall not affect the meaning or interpretation
of this Amendment.

 

(e)       Counterparts.
This Amendment 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. Such counterparts may be executed and delivered by facsimile or other electronic
means by any of the parties, and the receiving party may rely on the receipt of such document so executed and delivered as if
the original had been received.

 

(f)       Reference
to and Effect on the Existing Agreement. 

 

(i)       Except
as expressly amended hereby, all of the terms, conditions and provisions of the Existing Agreement shall remain unamended and
in full force and effect in accordance with its terms, and the Existing Agreement, as amended hereby, is hereby ratified and confirmed.

 

(ii)       Each
reference in the Existing Agreement to “this Agreement,” “hereunder,” “hereof,” “herein”
or words of like import, and each reference in any Transaction Document to the “Asset Purchase Agreement,” “Purchase
Agreement” or words of like import that reasonably would be construed as being a reference to the Existing Agreement, in
each case, shall mean and be a reference to the Existing Agreement, as amended and modified hereby.

 

(g)       Defined
Terms. All capitalized terms used herein but undefined shall have the meanings ascribed to them in the Existing Agreement.

 

[SIGNATURE
PAGE FOLLOWS]

 

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IN
WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first above written.

 

	 	BUYER:
	 	PINEAPPLE ENERGY LLC
	 	 
	 	By: 	/s/ Kyle Udseth
	 	Name: Kyle Udseth
	 	Title: Chief Executive Officer
	 	 
	 	SELLERS:
	 	Hawaii Energy Connection, LLC
	 	 
	 	By: 	/s/ Christopher DeBone
	 	Name: Christopher DeBone
	 	Title: Managing Partner
	 	 
	 	E-Gear, LLC
	 	 
	 	By:	 /s/ Christopher DeBone
	 	Name: Christopher DeBone
	 	Title: Managing Partner
	 	 
	 	SELLER REPRESENTATIVE:
	 	 
	 	By: 	/s/ Steven P. Godmere
	 	Name: Steven P. Godmere

 

Signature
Page to Amendment No. 1 to Asset Purchase Agreement 

  

     

     

    

Annex
A

 

Exhibit
C

 

Working
Capital

 

Target
Working Capital shall be (i) $1,500,000 less (ii) an amount not to exceed $150,000 equal to the cash actually paid by Sellers
to third-party vendors after October 1, 2021 and prior to the Closing Date for work trucks, patent renewals and other capital
expenditures mutually agreed to by Seller Representative and Buyer.EXHIBIT
                                        10.19

 

consent and amendment to LOAN AND SECURITY AGREEMENT

 

THIS CONSENT AND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and dated as of December 16, 2021 and is entered into by and between PINEAPPLE ENERGY LLC, a Delaware limited liability company, for itself and on behalf of any Subsidiary (collectively, “Borrower”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as Lender (“Lender”) and as administrative agent and collateral agent for itself and the Lender (in such capacity, “Agent”).

 

RECITALS

 

A.          The Borrower and Lender are parties to that certain Loan and Security Agreement, dated as of December 11, 2020 (as amended, modified, supplemented or restated and in effect from time to time, collectively, the “Loan Agreement”);

 

B.           The Loan Agreement made available to Borrower a term loan in a principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) (the “Term Loan”) to finance the acquisition of certain assets.

 

C.            Borrower, Communication Systems, Inc., a Minnesota corporation (“CSI”), Helios Merger Co., a Delaware corporation and a wholly owned subsidiary of CSI (“Helios”), and the other parties thereto are parties to that certain Agreement and Plan of Merger, dated as of March 1, 2021 (as amended, modified, supplemented or restated and in effect from time to time, collectively, the “Merger Agreement”), pursuant to which, on the terms and subject to the conditions set forth therein, Helios will be merged with and into the Borrower and Borrower will become a wholly-owned subsidiary of CSI (the “Merger”);

 

D.          Pursuant to the terms and conditions of the Loan Agreement, the Borrower is not authorized to complete the Merger without consent from the Lender and Agent and a written amendment to the Loan Agreement;

 

E.           Borrower has requested that the Lender and Agent consent to the Merger and modify and amend certain terms and conditions of the Loan Agreement in connection with the Merger; and

 

F.           Lender and Agent are willing to consent to the Merger and to modify and amend certain terms and conditions of the Loan Agreement, subject to the terms and conditions contained herein.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrower, Agent and the Lender agree as follows:

 

1.           Capitalized Terms. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.

 

2.           Consent to Merger and Pre-Closing Financing.

 

a.        Pursuant to Section 7.8 of the Loan Agreement, the Borrower may not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate. In addition, Section 7.10 of the Loan Agreements prohibits the Borrower from changing its corporate name, legal form or jurisdiction of formation without ten (10) days’ prior written notice to Agent and prohibits the Borrower from suffering any Change in Control.  

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Notwithstanding anything to the contrary set forth in the Loan Agreement and subject to the terms and conditions set forth herein, Agent and Lender hereby consent, effective as of the date hereof, to the Merger, in accordance with the Merger Agreement.

 

b.        Pursuant to Sections 7.3 and 7.18 of the Loan Agreement, the Borrower may not (i) create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness other than certain Indebtedness permitted pursuant to Section 7.3 or (ii) enter into any transactions with any Affiliates of Borrower or any Subsidiaries of Borrower. Notwithstanding anything to the contrary set forth in the Loan Agreement and subject to the terms and conditions set forth herein, Agent and Lender hereby consent, effective as of the date hereof, to any Pre-Closing Financing (as defined in the Merger Agreement) that may be entered into by Borrower pursuant to the terms of the Merger Agreement.

 

3.           Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:

 

a.        The definition of the term “Term Loan Maturity Date” as found in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and is replaced with the following:

 

“Term Loan Maturity Date” means December 31, 2024.

 

b.        Section 2.1(f) shall be amended and restated as follows:

 

(f) Prepayment. At its option by providing at least three (3) Business Days prior written notice to Agent, Borrower may prepay all or a portion of the outstanding Term Loan by paying the entire principal balance (or such portion thereof), all accrued and unpaid interest thereon, in each case without prepayment premium or fee. Immediately after CSI receives proceeds from the PIPE Investors (as defined in the Merger Agreement) pursuant to the PIPE Agreement (as defined in the Merger Agreement), Borrower shall repay $4,500,000.00 of the outstanding Term Loan plus all accrued and upaid interest and expenses, with the remaining principal to be paid upon the Term Loan Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any Secured Obligations (including principal and interest) in such order and priority as Agent may choose in its sole discretion. For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day. The amount of the Term Loan that has not been repaid from time to time may not be reborrowed.

 

c.        Section 2.1(g) shall be amended and restated as follows:

 

(g)       Notwithstanding anything contained herein to the contrary, Borrower shall prepay all of the outstanding Term Loan by paying the entire principal balance (or such portion thereof), plus all accrued and unpaid interest thereon, if CSI, Borrower or any of their respective Subsidiaries closes on one or more sales of equity (or another form of equity financing), other than any transaction pursuant to the PIPE Agreement or any sales governed by the CVR Agreement (an “Equity Transaction”), that generates proceeds of at least $25,000,000, in the aggregate. Such prepayment shall occur simultaneously with the closing of the sale of Equity Transaction.

 

d.        Section 7.20 is hereby deleted in its entirety.

 

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4.        Effective Date of Amendment. This Amendment shall be effective as of the date set forth above.

 

5.        Termination of Amendment. This Amendment shall automatically terminate and be of no further force and effect without further action of either party hereto upon the termination of the Merger Agreement in accordance with its terms.

 

6.        Integration. This Amendment and the Loan Agreement represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Agreement merge into this Amendment and the Loan Agreement.

 

7.        Prior Agreement. The Loan Agreement is hereby ratified and reaffirmed and shall remain in full force and effect. This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Agreement. In the event of any conflict or inconsistency between this Amendment and the Loan Agreement, the terms of this Amendment shall be controlling, but the Loan Agreement shall not otherwise be affected or the rights therein impaired. The amendments in Section 3 above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term of the Loan Agreement, or (b) otherwise prejudice any right or remedy which Lender or Agent may now have, or may have in the future under or in connection with the Loan Agreement.

 

8.        Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

9.        Counterparts. This Amendment may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

 

10.      Binding Effect. This Amendment shall inure to the benefit of the and be binding on the Borrower and its permitted assigns (if any).

 

(SIGNATURES TO FOLLOW)

 

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IN WITNESS WHEREOF, Borrower, Lender and Agent have duly executed and delivered this Consent and Amendment to Loan and Security Agreement as of the day and year first above written.

 

	
 

	
BORROWER:

	
 

	
 

	
 

	
PINEAPPLE ENERGY LLC,
a Delaware limited liability company

	
 

	
 

	
 

	
Signature:

	
/s/ Kyel Udseth

	
 

	
Print Name:

	
Kyle Udseth

	
 

	
Title:

	
Chief Executive Officer

	 

	 

	 

	Accepted in Palo Alto,
California:	 	 
	 	 	 
	
 

	
AGENT:

	
 

	
 

	
 

	
HERCULES CAPITAL, INC.

	
 

	
 

	
 

	
Signature:

	
/s/ Zhuo Huang

	
 

	
Print Name:

	
Zhuo Huang

	
 

	
Title:

	
Associate General Counsel

	
 

	
 

	
 

	
 

	
LENDER:

	
 

	
 

	
 

	
HERCULES CAPITAL, INC.

	
 

	
 

	
 

	
Signature:

	
/s/ Zhuo Huang

	
 

	
Print Name:

	
Zhuo Huang

	
 

	
Title:

	
Associate General Counsel

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