STOCK PURCHASE AGREEMENT among CASH L. MASTERS REVOCABLE TRUST, DATED OCTOBER 19, 2005 and CASH L. MASTERS and PRECISION INDUSTRIES, INC. for the stock of THE KINETIC CO., INC. June 28, 2022

Exhibit 10.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

among

CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST, DATED OCTOBER 19, 2005

and

CASH ▇. ▇▇▇▇▇▇▇

and

PRECISION INDUSTRIES, INC.

for the stock of

THE KINETIC CO., INC.

 

 

June 28, 2022

 

---

TABLE OF CONTENTS

 

 

2

---

ARTICLE I DEFINITIONS 6

ARTICLE II PURCHASE AND SALE 17

Section 2.01 Purchase and Sale 17

Section 2.02 Purchase Price 17

Section 2.03 Transactions to be Effected at the Closing 17

Section 2.04 Purchase Price Adjustment 20

Section 2.05 Closing 23

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 23

Section 3.01 Legal Capacity of Seller Individual; Authority of Seller 24

Section 3.02 Organization, Authority and Qualification of the Company 24

Section 3.03 Capitalization. 24

Section 3.04 No Subsidiaries 25

Section 3.05 No Conflicts; Consents 25

Section 3.06 Financial Statements 25

Section 3.07 Undisclosed Liabilities 26

Section 3.08 Absence of Certain Changes, Events and Conditions 26

Section 3.09 Material Contracts 29

Section 3.10 Title to Assets; Real Property 30

Section 3.11 Condition and Sufficiency of Assets 31

Section 3.12 Intellectual Property 31

Section 3.13 Inventory 34

Section 3.14 Accounts Receivable 34

Section 3.15 Customers and Suppliers 35

Section 3.16 Insurance 35

Section 3.17 Legal Proceedings; Governmental Orders 36

Section 3.18 Compliance With Laws; Permits 36

Section 3.19 Environmental Matters 36

Section 3.20 Employee Benefit Matters 38

Section 3.21 Employment Matters 41

 

3

---

Section 3.22 Taxes 43

Section 3.23 Books and Records 45

Section 3.24 Banks and Brokerage Accounts 45

Section 3.25 Directors and Officers 45

Section 3.26 Interests of Related Parties 46

Section 3.27 Product Liability; Warranties 46

Section 3.28 Data Privacy and Security 47

Section 3.29 Brokers 48

Section 3.30 Full Disclosure 48

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 48

Section 4.01 Organization and Authority of Buyer 49

Section 4.02 No Conflicts; Consents 49

Section 4.03 Investment Purpose 49

Section 4.04 Brokers 49

Section 4.05 Sufficiency of Funds 50

Section 4.06 Legal Proceedings 50

Section 4.07 Independent Investigation; Reliance 50

ARTICLE V COVENANTS 50

Section 5.01 Confidentiality 50

Section 5.02 Non-Competition; Non-Solicitation 51

Section 5.03 Books and Records 52

Section 5.04 Public Announcements 53

Section 5.05 Further Assurances 53

Section 5.06 Post-Closing Collection of Accounts Receivable 53

ARTICLE VI TAX MATTERS 53

Section 6.01 Tax Covenants 53

Section 6.02 Termination of Existing Tax Sharing Agreements 54

Section 6.03 Tax Indemnification. 54

Section 6.04 Straddle Period. 55

 

4

---

Section 6.05 Contests 55

Section 6.06 Cooperation and Exchange of Information. 55

Section 6.07 Tax Treatment of Indemnification Payments 56

Section 6.08 Payments to Buyer 56

Section 6.9 Survival 56

Section 6.10 Overlap. 57

Section 6.11 Section 338(h)(10) Election 57

ARTICLE VII INDEMNIFICATION 57

Section 7.01 Survival 57

Section 7.02 Indemnification By Seller Parties 58

Section 7.03 Indemnification By Buyer 59

Section 7.04 Certain Limitations 59

Section 7.05 Indemnification Procedures 60

Section 7.06 Payments 62

Section 7.07 Tax Treatment of Indemnification Payments 63

Section 7.08 Effect of Investigation 63

Section 7.09 Exclusive Remedies 63

Section 7.10 Exclusion of Special Damages 64

Section 7.11 Mitigation. 64

Section 7.12 No Double Recovery 64

Section 7.13 Offset Rights 64

ARTICLE VIII MISCELLANEOUS 65

Section 8.01 Expenses 65

Section 8.02 Notices 65

Section 8.03 Interpretation. 66

Section 8.04 Headings 66

Section 8.05 Severability 66

Section 8.06 Entire Agreement 67

Section 8.07 Successors and Assigns. 67

 

5

---

Section 8.08 No Third-party Beneficiaries 67

Section 8.09 Amendment and Modification; Waiver 67

Section 8.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 67

Section 8.11 Specific Performance 68

Section 8.12 Counterparts 68

 

 

6

---

 

Annex A – Earn-Out

Schedule I – Purchase Price Allocation

Exhibit A-1 – Employment Agreement with Seller Individual

Exhibit A-2 – First Amendment to Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇ Exhibit A-3 – Employment Agreement with ▇▇▇ ▇▇▇▇▇▇▇

Exhibit B – Escrow Agreement Exhibit C – Promissory Note

Exhibit D – Estimated Closing Working Capital

 

 

7

---

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”), dated as of June 28, 2022, is entered into by and among Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust dated October 19, 2005, Cash ▇. ▇▇▇▇▇▇▇, Trustee (“Seller”), Cash ▇. ▇▇▇▇▇▇▇, an individual resident of the State of Wisconsin (“Seller Individual” and collectively with Seller, “Seller Parties”), and Precision Industries, Inc., a Pennsylvania corporation (“Buyer”).

RECITALS

 

WHEREAS, contemporaneously with the execution of this Agreement, Affiliates of the Seller Parties and Buyer entered into a purchase agreement (the “Real Estate Purchase Agreement”) whereby Buyer acquired that certain real property located at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;

 

WHEREAS, Seller owns all of the issued and outstanding shares of Common Stock (defined below), no par value (the “Shares”), of The Kinetic Co., Inc., a Wisconsin corporation (the “Company”); and

 

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Shares, subject to the terms and conditions set forth in this Agreement, which the parties intend to be treated for tax purposes as a purchase of assets of the Company pursuant to the Section 338(h)(10) Election (defined below).

 

NOW, THEREFORE, in consideration of the foregoing recitals, which are hereby incorporated in this Agreement, and the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I DEFINITIONS

 

The following terms have the meanings specified or referred to in this Article I:

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

 

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

 

8

---

“Ancillary Documents” means the Employment Agreements, the Escrow Agreement, and the Promissory Note.

 

“Balance Sheet” has the meaning set forth in Section 3.06. “Balance Sheet Date” has the meaning set forth in Section 3.06. “Basket” has the meaning set forth in Section 7.04(d).

“Benefit Plan” has the meaning set forth in Section 3.20(a). “Breach” has the meaning set forth in Section 3.28(a).

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Milwaukee, Wisconsin are authorized or required by Law to be closed for business.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Indemnitees” has the meaning set forth in Section 7.02. “Buyer’s Accountants” means ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC.

“Cap” has the meaning set forth in Section 7.04(a).

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

 

“Closing” has the meaning set forth in Section 2.05.

 

“Closing Cash Payment” has the meaning set forth in Section 2.02. “Closing Date” has the meaning set forth in Section 2.05.

“Closing Date Payment” has the meaning set forth in Section 2.04(a)(i).

 

“Closing Indebtedness Certificate” means a certificate executed by the Chief Executive Officer of the Company certifying on behalf of the Company an itemized list of all outstanding Indebtedness as of the close of business on the Closing Date and the Person to whom such outstanding Indebtedness is owed and an aggregate total of such outstanding Indebtedness.

 

“Closing Transaction Expenses Certificate” means a certificate executed by the Chief Executive Officer of the Company, certifying the amount of Transaction Expenses remaining unpaid as of the close of business on the Closing Date (including an itemized list of each such unpaid Transaction Expense with a description of the nature of such expense and the Person to whom such expense is owed).

 

 

9

---

“Closing Working Capital” means: (a) the Current Assets of the Company, less (b) the Current Liabilities of the Company, determined as of the close of business on the Closing Date. For avoidance of doubt, cash of the Company will be taken into account only for purposes of computing Closing Working Capital, and Company cash shall be excluded from the determination of the Target Working Capital amount.

 

“Closing Working Capital Statement” has the meaning set forth in Section 2.04(b)(i). “Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” has the meaning set forth in Section 3.03(a). “Company” has the meaning set forth in the recitals.

“Company Intellectual Property” means all Intellectual Property that is owned by the Company.

 

“Company IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to ▇▇▇, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which the Company is a party, beneficiary or otherwise bound.

 

“Company IP Registrations” means all Company Intellectual Property that is subject to any issuance, registration or application by or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing.

 

“Company IT Systems” means all Software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) by the Company.

 

“Confidential Information” has the meaning set forth in Section 5.01.

 

“Consistent with Past Practice” means using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies, that were used in the preparation of the Unaudited Financial Statements for the most recent fiscal year end of the Company, provided that (a) such accounting methods, practices, principles, policies and procedures as related to inventory shown on the Balance Sheet shall have been materially consistent with GAAP (except that any inventory shown on the Balance Sheet shall be subject to the following deviations from GAAP: (i) there is no obsolescence reserve due to the Company’s historical LIFO inventory reporting practice, and (ii) there is no reserve for slow-moving inventory as the Company has historically retained inventory that it believes to be useful in the future, which in some cases could be held for two (2) years or longer), and (b) such accounting methods, practices, principles, policies and procedures used in the preparation of the Unaudited Financial Statements shall not have been untruthful or fraudulent.

 

 

10

---

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

 

“Current Assets” means cash, accounts receivable, inventory and prepaid expenses, but excluding (a) the portion of any prepaid expense of which Buyer will not receive the benefit following the Closing, (b) deferred Tax assets, and (c) receivables from any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined Consistent with Past Practice (other than receivables due from, and prepaid expenses applicable to, Microblade, Ltd.).

 

“Current Liabilities” means accounts payable, accrued Taxes and accrued expenses, but excluding payables to any of the Company’s Affiliates (other than (a) amounts owed pursuant to the Company’s lease of the Real Property located at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and (b) payables and other amounts owed by the Company to Microblade, Ltd.), directors, employees (except payables owed to employees consistent with their employment and consistent with ordinary practice), officers or stockholders and any of their respective Affiliates, deferred Tax liabilities, Transaction Expenses, and the current portion of any Indebtedness of the Company, determined Consistent with Past Practice.

 

“Data Security Requirements” means all of the following, to the extent relating to the access, collection, use, processing, storage, sharing, distribution, transfer, disclosure, security, destruction, or disposal of any personal, sensitive, or confidential information or data (whether in electronic or any other form or medium) or otherwise relating to privacy, security, or security breach notification requirements: (i) all applicable Laws, including, but not limited to, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and the Telephone Consumer Protection Act; (ii) policies, procedures and practices of the Company, as applicable, including any privacy policies, programs and other notices, including, but not limited to, the Payment Card Industry Data Security Standard; (iii) industry standards applicable to the industry in which the Company operates; and (iv) Contracts to which the Company is a party or is otherwise bound.

 

“Direct Claim” has the meaning set forth in Section 7.05(c).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.

 

“Dispute Resolution Procedures” has the meaning set forth in Annex A hereto. “Disputed Amounts” has the meaning set forth in Section 2.04(c)(iii).

“Dollars or $” means the lawful currency of the United States. “Earn-Outs” has the meaning set forth in Section 2.02.

 

11

---

“Earn-Out Payments” has the meaning set forth in Annex A hereto.

 

 

12

---

“EBITDA” has the meaning set forth in Annex A hereto.

 

“Employment Agreements” means those certain Employment Agreements between the Company and each of Seller Individual and ▇▇▇ ▇▇▇▇▇▇▇ and the First Amendment to Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇, respectively, substantially in the forms of Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇ and Exhibit A-3 hereto.

 

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.

§§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42

U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

 

“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

 

 

13

---

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“ERISA Affiliate” means all employers (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code or Section 4001 of ERISA.

 

“Escrow Agent” means U.S. Bank National Association.

 

“Escrow Agreement” means that certain Escrow Agreement among Buyer, Seller and Escrow Agent substantially in the form of Exhibit B hereto.

 

“Escrow Amount” has the meaning set forth in Section 2.02.

“Estimated Closing Working Capital” has the meaning set forth in Section 2.04(a)(ii). “Estimated Closing Working Capital Statement” has the meaning set forth in Section

2.04(a)(ii).

 

“Excluded Assets” means the assets excluded from this transaction identified on Schedule

1.0 of the Disclosure Schedules.

 

“Financial Statements” has the meaning set forth in Section 3.06.

 

“Fraud” means: (a) a false representation of a material fact by a Person; (b) made with knowledge or belief of its falsity; (c) with the intent of inducing another Person to act, or refrain from acting, to such other Person’s detriment; and (d) upon which such other Person acted or did not act in reliance on the representation, with resulting Losses.

 

“Fundamental Representations and Warranties” has the meaning set forth in Section

7.01.

 

“GAAP” means United States generally accepted accounting principles in effect from time

to time.

“Government Contracts” has the meaning set forth in Section 3.09(a)(viii). “Governmental Authority” means any federal, state, local or foreign government or

political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

 

14

---

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

“Indebtedness” means, without duplication and with respect to the Company, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services (other than Current Liabilities taken into account in the calculation of Closing Working Capital), (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by the Company on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g).

 

“Indemnified Party” has the meaning set forth in Section 7.05. “Indemnifying Party” has the meaning set forth in Section 7.05. “Indemnity Escrow Amount” has the meaning set forth in Section 2.02 “Independent Accountant” has the meaning set forth in Section 2.04(c)(iii). “Insurance Policies” has the meaning set forth in Section 3.16.

“Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in- part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, ▇▇▇▇▇ patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”);

 

 

15

---

secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (h) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; (i) rights of publicity; and (j) all other intellectual or industrial property and proprietary rights.

 

“Interim Balance Sheet” has the meaning set forth in Section 3.06. “Interim Balance Sheet Date” has the meaning set forth in Section 3.06. “Interim Financial Statements” has the meaning set forth in Section 3.06.

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means (a) the actual knowledge of Seller Individual or any current director or officer of the Company, and (b) the knowledge that Seller Individual or any current director or officer of the Company would reasonably be expected to have with respect to a fact or matter after discussion of such fact or matter with management level employees of the Company or a review of the Company’s books and records.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

 

“Liabilities” has the meaning set forth in Section 3.07.

 

“Licensed Intellectual Property” means all Intellectual Property in which the Company holds any rights or interests granted by other Persons, including Seller.

 

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages, except to the extent actually awarded to a Governmental Authority or other third party.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Company, or (b) the ability of Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions;

(ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 3.05; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event,

 

 

16

---

occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Company compared to other participants in the industries in which the Company conducts its businesses.

 

“Material Contracts” has the meaning set forth in Section 3.09(a). “Material Customers” has the meaning set forth in Section 3.15(a). “Material Suppliers” has the meaning set forth in Section 3.15(b). “Multiemployer Plan” has the meaning set forth in Section 3.20(c).

“Notice of Earn-Out Disagreement” has the meaning set forth in Annex A hereto. “Organic EBITDA” has the meaning set forth in Annex A hereto.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

 

“Permitted Encumbrances” has the meaning set forth in Section 3.10(a).

 

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

“Personal Data” has the meaning set forth in Section 3.28(a).

 

“Post-Closing Adjustment” has the meaning set forth in Section 2.04(b)(ii).

 

“Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

“Post-Closing Taxes” means Taxes of the Company for any Post-Closing Tax Period. “Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date

and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

 

“Pre-Closing Taxes” means Taxes of the Company for any Pre-Closing Tax Period. “Product” has the meaning set forth in Section 3.27.

“Promissory Note” means that certain promissory note in the original principal amount of

 

17

---

Three Million Dollars ($3,000,000.00) made by Buyer in favor of Seller in substantially the form of Exhibit C hereto.

 

 

18

---

“Purchase Price” has the meaning set forth in Section 2.02.

 

“QofE” means the quality of earnings analysis of the Company prepared as of November 30, 2021 performed by Buyer or its Affiliates.

 

“Qualified Benefit Plan” has the meaning set forth in Section 3.20(c).

 

“Real Estate Purchase Agreement” has the meaning set forth in the recitals.

 

“Real Property” means the real property owned, leased or subleased by the Company, together with all buildings, structures and facilities located thereon.

 

“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

 

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

 

“Resolution Period” has the meaning set forth in Section 2.04(c)(ii).

 

“Restricted Business” means the development, manufacture, and distribution of industrial saw blades and knives to cut, shear, and/or slit materials for the tissue, metals, plastic, wood, and recycling industries, and any other business conducted by the Company on or after the Closing Date.

 

“Restricted Period” has the meaning set forth in Section 5.02(a). “Review Period” has the meaning set forth in Section 2.04(c)(i). “SALT Escrow Amount” has the meaning set forth in Section 2.02. “Second Cash Payment” has the meaning set forth in Section 2.02.

“Section 338(h)(10) Election” has the meaning set forth in Section 6.11(a). “Seller” has the meaning set forth in the preamble.

“Seller Indemnitees” has the meaning set forth in Section 7.03. “Seller Individual” has the meaning set forth in the preamble. “Seller Parties” has the meaning set forth in the preamble. “Seller’s Accountants” means CliftonLarsonAllen.

 

 

19

---

“Service” has the meaning set forth in Section 3.27. “Shares” has the meaning set forth in the recitals.

“Single Employer Plan” has the meaning set forth in Section 3.20(c). “Statement” has the meaning set forth in Annex A hereto.

“Statement of Objections” has the meaning set forth in Section 2.04(c)(ii). “Straddle Period” has the meaning set forth in Section 6.04.

“Target Net Working Capital Value Range” has the meaning set forth in Section 2.04(a)(i).

 

“Target Working Capital” means Seven Million Seven Hundred Fifty-three Thousand Four Hundred and Five Dollars ($7,753,405.00).

 

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties for which Seller Parties or the Company is legally responsible.

 

“Tax Claim” has the meaning set forth in Section 6.05.

 

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Territory” means the State of Wisconsin.

 

“Third Party Claim” has the meaning set forth in Section 7.05(a).

 

“Transaction Expenses” means all fees and expenses incurred by the Company or Seller prior to, at, or following the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the transactions contemplated hereby and thereby.

 

“Unaudited Financial Statements” has the meaning set forth in Section 3.06. “Undisputed Amounts” has the meaning set forth in Section 2.04(c)(iii). “Union” has the meaning set forth in Section 3.21(b).

 

 

20

---

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

 

“Warranty Claim Threshold” has the meaning set forth in Section 7.04(e)

 

ARTICLE II PURCHASE AND SALE

 

Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Shares, free and clear of all Encumbrances, for the consideration specified in Section

2.02. Such purchase will be on a cash-free, debt-free basis; accordingly, immediately prior to the Closing Seller shall cause the Company to distribute to Seller all of the Company’s cash.

 

Section 2.02 Purchase Price. The aggregate purchase price for the Shares shall be Eighteen Million Nine Hundred Twenty Thousand Dollars ($18,920,000.00), subject to adjustment pursuant to Section 2.04 hereof (the “Purchase Price”). The parties agree to allocate the Purchase Price for tax purposes as provided in Section 6.11(b). The Purchase Price shall be paid as follows: (i) Ten Million Six Hundred Twenty-Eight Thousand Four Hundred Four and 95/100 Dollars ($10,628,404.95) shall be paid in immediately available funds at Closing (the “Closing Cash Payment”), (ii) Three Million Eight Hundred Forty-One Thousand Five Hundred Ninety-Five and 05/100 Dollars ($3,841,595.05) shall be paid in immediately available funds within three (3) Business Days after the Closing (the “Second Cash Payment”) (iii) Three Million Dollars ($3,000,000.00) shall be paid pursuant to the Promissory Note, which Buyer shall execute and deliver to Seller at Closing, (iv) One Million Dollars ($1,000,000.00) (the “Indemnity Escrow Amount”) shall be deposited in an escrow account to be established and maintained by the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement, and (v) Four Hundred Fifty Thousand Dollars ($450,000.00) (the “SALT Escrow Amount” and together with the Indemnity Escrow Amount, the “Escrow Amount”) shall be deposited in an escrow account to be established and maintained by the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement. The SALT Escrow Amount shall be used solely to secure payment of any claims for indemnification arising under Section 7.02, below, that result from or arise out the failure of the Company to pay any state or local sales Tax owed applicable to any period prior to the Closing Date. Seller shall also be entitled to earn two additional contingent purchase price payments of up to One Million Dollars ($1,000,000.00) each as determined and as payable in accordance with the terms and conditions set forth in Annex A hereto (the “Earn-Outs”).

 

Section 2.03 Transactions to be Effectuated at the Closing.

 

 

 

21

---

 

 

 

 

 

 

 

 

 

 

 

 

22

---

 

 

 

 

 

 

23

---

Buyer:

 

24

---

 

 

 

 

 

25

---

Seller;

 

executed by the applicable directors and officers;

 

 

 

 

 

26

---

 

 

 

 

 

Election, duly executed by the Company and Seller, to be filed by the Buyer; and

 

 

Section 2.04 Purchase Price Adjustment.

 

 

 

The net amount after giving effect to the adjustment described above shall be the “Closing Date Payment.” For purposes of clarity, (A) the adjustment described in this Section 2.04(a)(i) shall be made to the Closing Cash Payment, and (B) Buyer and Seller agree to treat the payment of the outstanding Indebtedness of the Company and Transaction Expenses as deductible expenses of the Company incurred during a Pre-Closing Tax Period to the fullest extent allowed by Law.

 

 

 

27

---

Date (without giving effect to the transactions contemplated herein), a calculation of Estimated Closing Working Capital (the “Estimated Closing Working Capital Statement”), and a certificate of Seller that the Estimated Closing Working Capital Statement was prepared Consistent with Past Practice.

 

 

 

 

 

 

 

28

---

manner that does not unreasonably interfere with the normal business operations of Buyer or the Company.

 

 

 

 

 

29

---

the fees and expenses of the Independent Accountant and Seller shall bear the other sixty percent (60%) of such fees and expenses.

 

 

 

2.04 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

Section 2.05 Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Shares contemplated hereby shall take place at a closing (the “Closing”) to be held at 10:00 a.m., central time, on June 28, 2022, at a place agreed upon by the parties or remotely by exchange of documents and signatures (or their electronic counterparts), or at such other time or on such other date or at such other place as Seller and Buyer may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”). The Closing shall be deemed effective as of the close of business on the Closing Date.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

 

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller Parties jointly and severally represent and warrant to Buyer that the statements contained in this Article III are true and correct as of the date hereof.

 

 

30

---

Section 3.01 Legal Capacity of Seller Individual; Authority of Seller. Seller Individual is an individual resident of the State of Wisconsin. Seller Individual has the requisite legal capacity to enter into this Agreement and the Ancillary Documents to which Seller Individual is a party, to carry out his obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Seller is a revocable trust duly organized and validly existing under the Laws of the State of Wisconsin, and Seller has full power and authority to enter into this Agreement and the Ancillary Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by Seller Parties, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller Parties enforceable against Seller Parties in accordance with its terms. When each other Ancillary Document to which a Seller Party is or will be a party has been duly executed and delivered by such Seller Party (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of such Seller Party, enforceable against it or him in accordance with its terms.

 

Section 3.02 Organization, Authority and Qualification of the Company. The Company is a corporation duly organized, validly existing and in good standing (or the legal equivalent) under the Laws of the State of Wisconsin and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section

3.02 of the Disclosure Schedules sets forth each jurisdiction in which the Company is licensed or qualified to do business, and the Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary. All corporate actions taken by the Company in connection with this Agreement and the Ancillary Documents will be duly authorized on or prior to the Closing.

 

Section 3.03 Capitalization.

 

 

 

 

31

---

Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

 

 

Section 3.04 No Subsidiaries. Except as set forth in Section 3.04 of the Disclosure Schedules, the Company does not own, have any interest in any shares in, or have an ownership interest in, any other Person.

 

Section 3.05 No Conflicts; Consents. The execution, delivery and performance by Seller Parties of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the articles of incorporation, by-laws or other organizational documents of the Company; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller Parties or the Company; (c) except as set forth in Section 3.05 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate, modify or cancel any Contract to which Seller Parties or the Company is a party or by which Seller Parties or the Company is bound or to which any of their respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of the Company; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Company. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller Parties or the Company in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 3.06 Financial Statements.

 

 

 

32

---

Unaudited Financial Statements, the “Financial Statements”) are included in Schedule 3.06(a) of the Disclosure Schedules. The Financial Statements have been prepared on a tax basis consistently applied throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Unaudited Financial Statements). The Financial Statements are based on the books and records of the Company, and fairly present the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated. The balance sheet of the Company as of November 30, 2021 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Company as of April 30, 2022 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”.

 

 

Section 3.07 Undisclosed Liabilities. The Company has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except (a) those which are adequately reflected or reserved against in the Interim Balance Sheet as of the Interim Balance Sheet Date (b) those which have been incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date (none of which is a Liability related to any failure to perform, improper performance, warranty or other breach, default, violation, tort, infringement, claim or Legal Proceedings), and (c) executory obligations under Material Contracts to which the Company is a party or by which it is bound (but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by the Company on or prior to the Closing or that result from the consummation of the transactions contemplated hereby.

 

Section 3.08 Absence of Certain Changes, Events and Conditions. Except as set forth on Section 3.08 of the Disclosure Schedules, since the Interim Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to the Company, any:

 

 

 

 

 

33

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

---

 

 

 

 

 

 

 

 

 

 

 

35

---

(aa) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

Section 3.09 Material Contracts.

 

 

 

 

 

 

 

 

 

 

 

 

36

---

 

 

 

 

 

 

Section 3.10 Title to Assets; Real Property.

 

 

 

 

 

 

 

37

---

aggregate, prohibit or in any material respect interfere with the operation of the business of the Company as currently conducted; or

 

 

 

Section 3.11 Condition and Sufficiency of Assets. Except as set forth in Section

3.11 of the Disclosure Schedules, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company are, to Seller’s Knowledge, structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is, to Seller’s Knowledge, in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Company, together with all other properties and assets of the Company, are sufficient for the continued conduct of the Company’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company as currently conducted.

 

Section 3.12 Intellectual Property.

 

 

 

38

---

number; the issue, registration, or filing date; and the current status (ii) all unregistered Trademarks included in the Company Intellectual Property; (iii) all proprietary Software of the Company; and (iv) all other the Company Intellectual Property used or held for use in the Company’s business as currently conducted and as proposed to be conducted.

 

 

 

 

39

---

 

 

 

 

 

 

40

---

has been no malfunction, failure, continued substandard performance, denial-of-service, or, to Seller’s Knowledge, other cyber incident, including any cyberattack, or other impairment of the Company IT Systems, that has resulted or is reasonably likely to result in disruption or damage to the business of the Company. The Company has taken commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of the Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and Software and hardware support arrangements.

 

 

Section 3.13 Inventory. Except as provided on Schedule 3.13 of the Disclosure Schedules, all inventory of the Company, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such inventory is owned by the Company free and clear of all Encumbrances, and no inventory is held on a consignment basis. The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Company.

 

Section 3.14 Accounts Receivable. The accounts receivable reflected on the Interim Balance Sheet and the accounts receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by the Company involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of the Company not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and (c) subject to a reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Company, are collectible in full within ninety (90) days after billing (except for accounts receivable owed by customers with standard payment terms longer than ninety (90) days). The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting

 

 

41

---

records of the Company have been determined Consistent with Past Practice, subject to normal year end adjustments and the absence of disclosures normally made in footnotes.

 

Section 3.15 Customers and Suppliers.

 

 

 

Section 3.16 Insurance. Section 3.16 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability and other casualty and property insurance maintained by Seller Parties or their Affiliates (including the Company) and relating to the assets, business, operations, employees, officers and directors of the Company (collectively, the “Insurance Policies”) and true and complete copies of such Insurance Policies have been made available to Buyer. Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Neither Seller Parties nor any of their Affiliates (including the Company) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of the Company. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who, to Seller’s Knowledge, are financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth on Section

3.16 of the Disclosure Schedules, there are no claims related to the business of the Company pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of Seller Parties or any of their Affiliates (including the Company) is in default under, or has otherwise failed to comply with, in any material respect, any

 

 

42

---

provision contained in any such Insurance Policy. The Insurance Policies are sufficient for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is bound.

 

Section 3.17 Legal Proceedings; Governmental Orders.

 

 

 

Section 3.18 Compliance With Laws; Permits.

 

 

 

Section 3.19 Environmental Matters.

 

 

 

43

---

or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

 

 

 

 

 

 

 

44

---

the Company has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company or Seller Parties.

 

 

 

 

Section 3.20 Employee Benefit Matters.

 

 

 

45

---

Schedules, each, a “Benefit Plan”). Section 3.20(a) of the Disclosure Schedules identifies each Benefit Plan that includes a change-of-control clause.

 

 

(5) year filing cycle, or with respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan or volume submitter plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to adversely affect the qualified status of any Qualified Benefit Plan. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject the Company or any of its ERISA Affiliates or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 or 4980H of the Code.

 

 

46

---

No pension plan (other than a Multiemployer Plan) which is subject to minimum funding requirements, including any multiple employer plan, (each, a “Single Employer Plan”) in which employees of the Company or any ERISA Affiliate participate or have participated has an “accumulated funding deficiency”, whether or not waived, or is subject to a lien for unpaid contributions under Section 303(k) of ERISA or Section 430(k) of the Code. No Single Employer Plan covering employees of the Company which is a defined benefit plan has an “adjusted funding target attainment percentage,” as defined in Section 436 of the Code, less than eighty percent (80%). All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, the Company’s tax basis financial reporting system and principles and Consistent with Past Practice.

 

 

(ii) no such plan is a “multiple employer plan” within the meaning of Section 413(c) of the Code or a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA); and (iii) no Action has been initiated by the Pension Benefit Guaranty Corporation to terminate any such plan or to appoint a trustee for any such plan.

 

 

 

 

47

---

represented, promised or contracted to or with any individual that such individual would be provided with post-termination or retiree health benefits.

 

 

 

 

 

 

Section 3.21 Employment Matters.

 

 

48

---

(ii) title or position (including whether full-time or part-time); (iii) hire or retention date;

(iv) current annual base compensation rate or contract fee; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof. As of the date hereof, all compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors or consultants of the Company for services performed on or prior to the date hereof have been paid in full (or accrued in full on the balance sheet contained in the Closing Working Capital Statement, and there are no outstanding agreements, understandings or commitments of the Company with respect to any compensation, commissions, bonuses or fees.

 

 

 

 

49

---

child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws.

 

 

 

Section 3.22 Taxes.

 

 

 

 

 

 

 

 

 

50

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

---

 

 

 

The Company has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.

 

 

 

Section 3.23 Books and Records. The minute books and stock record books of the Company, all of which have been made available to Buyer, accurately reflect the matters described therein. The minute books of the Company contain records of certain meetings, and certain actions taken by written consent of, the stockholders, the board of directors and any committees of the board of directors of the Company. The minute books and stock record books of the Company made available to Buyer constitute all the minute books and stock record books of the Company in existence as of the Closing Date. At the Closing, all of those books and records will be in the possession of the Company.

 

Section 3.24 Banks and Brokerage Accounts. Section 3.24 of the Disclosure Schedules sets forth (a) a true and complete list of the names and locations of all banks, trust companies, securities brokers and other financial institutions at which the Company has an account or safe deposit box or maintains a banking, custodial, trading or other similar relationship, and (b) a true and complete list and description of each such account, box and relationship, indicating in each case the account number and the names of the respective officers, employees, agents or other similar representatives of the Company having signatory power with respect thereto.

 

Section 3.25 Directors & Officers. Section 3.25 of the Disclosure Schedules lists all officers, managers and directors of the Company. Except as set forth in Section

3.25 of the Disclosure Schedules, to Seller’s Knowledge, no officer or managerial employee of the Company intends to terminate his or her employment with the Company

 

 

52

---

within twelve (12) months following the Closing, except as otherwise required by this Agreement.

 

Section 3.26 Interests of Related Parties.

 

(iii) is a party to any Contract or transaction with the Company.

 

 

Section 3.27 Product Liability; Warranties. Except as set forth in Section 3.27 of the Disclosure Schedules, during the past five (5) years, the Company has not received any written claim, and to Seller’s Knowledge has not been threatened with a claim, for material liability arising out of any injury to individuals or property as a result of any, product made, manufactured, distributed, rendered, sold (a “Product”) or service sold or rendered (a “Service”), by the Company and there has been no pattern of material defects in the design or manufacturing of any Product. All Products or Services have been manufactured or provided in conformity with all applicable contractual commitments and express and implied warranties. During the past five (5) years each Product has been designed, manufactured, packaged and labeled, and all Services have been sold and rendered, in compliance with all applicable Laws. The Company has not filed, nor has the Company been required to file, a notification or other report with the United States Consumer Product Safety Commission or any other Governmental Authority concerning actual or potential hazards with respect to any Product manufactured or sold by it during the past five (5) years. There is no currently pending, or to Seller’s Knowledge threatened, Action from, by or before any Governmental Authority relating to any Product manufactured and sold or Service sold and rendered by the Company prior to the date hereof, except such Actions (i) that are covered by the Insurance Policies, (ii) that would not reasonably be expected to be material to the Company, and (iii) that are set forth in Section 3.27 of the Disclosure Schedules. There are no material design, manufacturing or other defects, latent or otherwise, with respect to any Product, provided that Seller Parties make no representation or warranty with respect to defects in Product

 

 

53

---

designs or specifications provided by customers of the Company. There is no product warranty claim pending, or to Seller’s Knowledge threatened, with respect to any Product except for claims (x) for which reserves are established on the books and records of the Company (and the Company does not have any material liability for replacement or repair of any Products or other damages in connection therewith in excess of such reserves), (y) ordinary course product warranty claims, or (z) that are set forth in Section

3.27 of the Disclosure Schedules. Buyer has been provided complete and correct copies of all written warranties in effect as of the date hereof applicable to the products made, manufactured, distributed or sold by the Company, and (A) no Product is subject to any guarantee, warranty or other indemnity beyond such written warranties, and (B) the Products have conformed in all material respects with such written warranties. Seller Parties are not aware of any condition, event or circumstance that would reasonably be expected to cause the Liability of the Company with respect to returns and allowances of Products or Services, whether pursuant to guaranty, warranty, manufacturing defect or otherwise, to materially exceed the Company’s historical experience for such Liability. All amounts under customer invoices that are retained by such customers for warranty obligations are payable, and will be paid to Buyer, within fifteen (15) months after the Closing Date.

 

Section 3.28 Data Privacy and Security.

 

 

 

 

 

54

---

and obtained all consents from, users, customers, employees, and Governmental Authorities relating to the use and sharing of data and marketing and other communications, as required by all applicable Data Security Requirements; and (v) maintains commercially reasonable cybersecurity insurance in coverage types and amounts reasonably sufficient to respond to a Breach. The Company has made available to Buyer a true, correct, and complete copy of all such Company insurance policies. Neither the execution, delivery nor performance of this Agreement, nor the consummation of any of the transactions contemplated herein, will violate any such the Company insurance policies or any applicable Data Security Requirements.

 

Section 3.29 Brokers. Except for Taureau Group, LLC and ▇▇▇▇▇ & Company, Inc., no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Ancillary Document based upon arrangements made by or on behalf of Seller Parties or the Company.

 

Section 3.30 Full Disclosure; Disclaimer of Other Representations and Warranties. No representation or warranty by Seller Parties in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer at Closing pursuant to this Agreement contains any untrue statement of a material fact. Except for the representations and warranties contained in this Agreement, the Disclosure Schedules, any Ancillary Document, or in any certificate delivered to Buyer at Closing, (a) neither Seller nor the Company nor any other Person acting on their behalf makes any other express or implied representation or warranty with respect to the Company, Seller, or the transactions contemplated by this Agreement, and (b) Seller and the Company disclaim any other representations or warranties, whether made by Seller, the Company or any of their respective Affiliates, officers, director, employees, agents or representatives. Except for the representations and warranties contained in this Agreement, the Disclosure Schedules, any Ancillary Document or in any certificate delivered to Buyer at Closing, Seller and the Company hereby disclaim all liability and responsibility for any representation, warranty, protection, forecast, statement, or information made, communicated or furnished (orally or in writing) to Buyer or its Affiliates or representatives with respect to the Company or its business, Seller, or the transactions contemplated by this Agreement (including any opinion, information, protection, or advice that may have been or may be provided to Buyer on behalf of Seller or the Company by any director, officer, employee, agent or representative of Seller or the Company or any of their Affiliates).

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller that the statements contained in this ARTICLE IV are true and correct as of the date hereof.

 

 

55

---

Section 4.01 Organization and Authority of Buyer. Buyer is a Pennsylvania corporation duly organized, validly existing and in good standing under the Laws of Pennsylvania. Buyer has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any Ancillary Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller Parties) this Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. When each Ancillary Document to which Buyer is or will be a party has been duly executed and delivered by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms.

 

Section 4.02 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not:

(a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of Buyer; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 4.03 Investment Purpose. Buyer is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Shares are not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Buyer is able to bear the economic risk of holding the Shares for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.

 

Section 4.04 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Buyer.

 

 

56

---

Section 4.05 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement on the Closing Date.

 

Section 4.06 Legal Proceedings. There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

 

Section 4.07 Independent Investigation; Reliance. Buyer has conducted its own independent investigation, review, and analysis of the Company and the transactions contemplated under this Agreement and acknowledges and agrees that it has been provided adequate access to the personnel, properties, assets, premises, books and records and other documents and data of the Company for such purpose. Buyer acknowledges and agrees that in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller Parties set forth in this Agreement, the Disclosure Schedules or any other agreement, document or certificate delivered to Buyer at Closing.

 

 

 

ARTICLE V COVENANTS

 

Section 5.01 Confidentiality. From and after the Closing, Seller Parties shall, and shall cause their Affiliates to, hold, and shall use commercially reasonable efforts to cause their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company (“Confidential Information”), except to the extent that Seller Parties can show that such information (a) is generally available to and known by the public through no fault of Seller Parties, any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller Parties, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller Parties or any of their Affiliates or their respective Representatives are compelled to disclose any Confidential Information by tax authority, legal, judicial or administrative process or by other requirements of Law, Seller Parties shall promptly notify Buyer in writing and shall disclose only that portion of such Confidential Information which Seller Parties are advised by their counsel in writing is legally required to be disclosed, provided that Seller Parties shall reasonably cooperate with Buyer in the event Buyer, at its expense, seeks to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such Confidential Information.

 

 

57

---

Section 5.02 Non-Competition; Non-Solicitation.

 

 

 

 

 

5.02 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agree that in the event of a breach or a threatened breach by Seller Parties of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any

 

 

58

---

other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

5.02 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.02 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section

5.02 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

Section 5.03 Books and Records.

 

 

 

 

provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VI.

 

 

 

 

 

59

---

provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VI.

 

 

Section 5.04 Public Announcements. Unless otherwise required by applicable Law (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.

 

Section 5.05 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

 

Section 5.06 Post-Closing Collection of Accounts Receivable. To the extent, subsequent to the Closing, the Company collects any accounts receivable (a) for which Buyer previously asserted an indemnity claim pursuant to ARTICLE VII and received an indemnity payment, or (b) that were excluded from the final determination of Closing Working Capital pursuant to Section 2.04, above, the Company shall promptly pay the amount of such collected accounts receivable to Seller.

 

ARTICLE VI TAX MATTERS

 

Section 6.01 Tax Covenants.

 

 

 

60

---

 

 

61

---

this Agreement and the Ancillary Documents and owed to the U.S. federal government or the State of Wisconsin or any political subdivision of such State shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

 

 

Section 6.02 Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Company shall be terminated as of the Closing Date. After such date none of the Company, Seller nor any of Seller’s Affiliates and their respective Representatives shall have any further rights or liabilities thereunder.

 

Section 6.03 Tax Indemnification. Except to the extent treated as a liability in the calculation of Closing Working Capital, Seller shall indemnify the Company, Buyer, and each Buyer Indemnitee and hold them harmless from and against (a) any Loss suffered or incurred by a Buyer Indemnitee attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.22; (b) any Loss suffered or incurred by a Buyer Indemnitee attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VI; (c) all

 

 

62

---

Taxes of the Company or relating to the business of the Company for all Pre-Closing Tax Periods; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor of the Company) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any person imposed on the Company arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (including reasonable attorneys’ and accountants’ fees) incurred in connection therewith, Seller shall reimburse Buyer for any Taxes of the Company that are the responsibility of Seller pursuant to this Section 6.03 within ten (10) Business Days after payment of such Taxes by Buyer or the Company.

 

Section 6.04 Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:

 

 

 

Section 6.05 Contests. Buyer agrees to deliver to Seller a copy of any written notice received by the Company, Buyer or any of Buyer’s Affiliates, within two (2) Business Days after the receipt of such notice by the Company, Buyer or any of Buyer’s Affiliates, which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be sought by Buyer pursuant to this ARTICLE VI (a “Tax Claim”). Buyer shall control the contest or resolution of any Tax Claim; provided, however, that Buyer shall obtain the prior written consent of Seller (which consent shall not be unreasonably withheld, conditioned or delayed) before entering into any settlement of a claim or ceasing to defend such claim; and, provided further, that Seller shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Seller.

 

Section 6.06 Cooperation and Exchange of Information. Seller and Buyer shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VI or in connection with any audit or other proceeding in respect of Taxes of the Company. Such cooperation and information shall include providing copies of relevant

 

 

63

---

Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Each of Seller and Buyer shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company for any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company for any taxable period beginning before the Closing Date, Seller or Buyer (as the case may be) shall provide the other party with reasonable written notice and offer the other party the opportunity to take custody of such materials.

 

Section 6.07 Tax Treatment of Indemnification Payments. Any indemnification payments pursuant to this ARTICLE VI shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

Section 6.08 Payments to Buyer. Any amounts payable to Buyer pursuant to this ARTICLE VI shall be satisfied by: (i) at Buyer’s option, (A) a distribution of a portion of the Escrow Amount pursuant to the Escrow Agreement, provided that, if the amount payable to Buyer results from or otherwise arises out of a failure by the Company to pay any state or local sales Tax owed for any period prior to the Closing Date, such amount shall be first satisfied from the SALT Escrow Amount as provided in the Escrow Agreement, (B) an offset against the outstanding principal balance and accrued interest owed under the Promissory Note and/or (C) an offset against the amount of any Earn- Out Payment, made consistent with the provisions of Section 7.13, below, and (ii) to the extent such amounts payable to Buyer exceed the amounts available pursuant to clause “(i)”, above, payment of immediately available funds from Seller. Any offset against the outstanding principal balance and accrued interest owed under the Promissory Note shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law. Notwithstanding the preceding sentence, in the event Buyer is required under applicable Law to recognize cancellation of debt income related to any offset against the principal balance of the Promissory Note, the Seller Parties shall pay to Buyer an additional payment in an amount required to fully reimburse Buyer with respect to all federal, state and local Taxes with respect to the forgiveness of the portion of the Promissory Note subject to the offset, and any such payment shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

Section 6.09 Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.22 and this ARTICLE VI shall survive for a period of seven (7) years after the Closing Date.

 

 

64

---

Section 6.10 Overlap. To the extent that any obligation or responsibility pursuant to ARTICLE VII may overlap with an obligation or responsibility pursuant to this ARTICLE VI, the provisions of this ARTICLE VI shall govern.

 

Section 6.11 Section 338(h)(10) Election.

 

 

 

ARTICLE VII INDEMNIFICATION

 

Section 7.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained in this Agreement or the Disclosure Schedules, agreements, documents or certificates delivered at Closing (other than any representations or warranties contained in Section 3.22 which are subject to ARTICLE VI) shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months after the Closing Date; provided that the representations and warranties in Section 3.01 (Legal Capacity of Seller), Section 3.02 (Organization, Authority and Qualification of the Company), Section 3.03 (Capitalization), Section 3.10 (Title to Assets), Section 3.29 (Brokers), Section 4.01 (Organization and Authority of Buyer), 4.03 (Investment Purpose), Section 4.04 (Brokers), and Section 4.07 (Independent Investigation; Reliance) (collectively, “Fundamental Representations and Warranties”), and Actions relating to Fraud in connection with this Agreement, any

 

65

---

one or more of the Ancillary Documents, or the transactions contemplated hereby and

 

 

66

---

thereby, shall survive until the date that is thirty (30) days after the expiration of the applicable statute of limitations or, if no statute of limitations applies, indefinitely; and provided further that the representations and warranties in Section 3.22 (Taxes) and Section 3.19 (Environmental Matters) shall survive until the date that is seven (7) years after the Closing Date. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in ARTICLE VI which are subject to ARTICLE VI) shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non- breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

Section 7.02 Indemnification By Seller Parties. Subject to the other terms and conditions of this ARTICLE VII, Seller Parties shall, jointly and severally, indemnify and defend each of Buyer and its Affiliates (including the Company) and their respective Representatives (collectively, “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

 

 

 

 

 

 

67

---

Sheet after Closing because of the failure of inventory amounts shown on the Balance Sheet to be Consistent with Past Practice, to the extent any such adverse financial impacts were not included in the final determination of Closing Working Capital pursuant to Section 2.04, above; or

 

 

Section 7.03 Indemnification By Buyer. Subject to the other terms and conditions of this ARTICLE VII, Buyer shall indemnify and defend Seller Parties and their Affiliates and their respective Representatives (collectively, “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, Seller Indemnitees based upon, arising out of, with respect to or by reason of:

 

 

 

Section 7.04 Certain Limitations. The indemnification provided for Section

7.02 and Section 7.03 shall be subject to the following limitations:

 

 

 

3.19 (Environmental Matters) or Section 3.22 (Taxes).

 

 

68

---

 

(12) month period) (the “Warranty Claim Threshold”), in which event Seller Parties shall only be required to pay or be liable for such Losses in excess of the Warranty Claim Threshold.

 

 

Section 7.05 Indemnification Procedures. The party making a claim under this ARTICLE VII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this ARTICLE VII is referred to as the “Indemnifying Party”.

 

 

 

69

---

against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third-Party Claim, subject to Section 7.05(b), he or it shall have the right to take such action as he or it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third-Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third-Party Claim with counsel selected by him or it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided that if, in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or

(B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third-Party Claim, fails to promptly notify the Indemnified Party in writing of his or its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third-Party Claim, the Indemnified Party may, subject to Section 7.05(b), pay, compromise, defend such Third-Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third- Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third-Party Claim, including making available (subject to the provisions of Section 5.01) records relating to such Third-Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third-Party Claim.

 

 

 

70

---

 

 

Section 7.06 Payments.

 

 

 

71

---

Party (or the Company) under any insurance policies or any indemnity, contribution or other similar payment, the Indemnifying Party shall be entitled to a refund for the amounts covered by such insurance policies or the amount of any indemnity, contribution or other similar payment. To the extent an Indemnified Party incurs any increase in costs under any insurance policy related to the filing of a claim with the applicable insurer pursuant to this section, such costs shall be considered Losses by the Indemnified Party under this Agreement.

 

 

(ii) through the exercise by Buyer of its offset rights pursuant to Section 7.13, below; and

(iii) to the extent the amount of Losses exceeds the amounts available to the Buyer Indemnitee in the Escrow Amount and through the exercise by Buyer of its offset rights pursuant to Section 7.13, below, from the Seller Parties.

 

Section 7.07 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 7.08 Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of their or its Representatives) or by reason of the fact that the Indemnified Party or any of his or its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate.

 

Section 7.09 Exclusive Remedies. Subject to Section 5.02(e) and Section 8.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from Fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated

 

 

72

---

by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, remedies, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement he or it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VII. Nothing in this Section 7.09 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s Fraudulent, criminal or willful misconduct.

 

Section 7.10 Exclusion of Special Damages. Any “Loss” indemnifiable hereunder shall exclude special damages (including lost or anticipated profits and diminution in value), punitive damages, incidental damages and consequential damages (other than reasonable attorneys’ fees incurred in connection with enforcing the terms of this Agreement); provided that an indemnified party shall be entitled to recover such types of damages in instances (a) involving claims resulting from Fraud, criminal activity or willful misconduct of an Indemnifying Party, or (b) where such damages have been awarded to a Third Party in an Action pursuant to which the Indemnified Party is entitled to indemnification hereunder.

 

Section 7.11 Mitigation. Each Indemnified Party shall use commercially reasonable efforts to mitigate any claim or Loss that such Indemnified Party asserts or is reasonably likely to assert a claim for indemnification under this ARTICLE VII.

 

Section 7.12 No Double Recovery. No Indemnified Party shall be entitled to recover from any Indemnifying Party under this ARTICLE VII or under any other Ancillary Document, more than once in respect of the same Loss to the extent recovered (notwithstanding that such Loss may result from breaches of multiple provisions of this Agreement and/or other Ancillary Documents). For sake of clarity, no Loss may be claimed under this ARTICLE VII by any Indemnified Party to the extent such amounts are otherwise taken into account in calculating the Purchase Price in accordance with ARTICLE II of this Agreement.

 

Section 7.13 Offset Rights. In addition to a release of a portion of the Escrow Amount pursuant to the Escrow Agreement and subject to the limitations set forth in this ARTICLE VII, Buyer, as the Indemnified Party, shall be entitled to offset, deduct and retain the portion of the principal and interest payments most remotely due under the Promissory Note and/or the portion of any Earn-Out Payment owed to Seller in satisfaction of any Loss indemnifiable hereunder, provided either (a) Seller has agreed in writing that Buyer’s indemnification claim is valid, or (b) a court of competent jurisdiction has issued a final, non-appealable judgment, order, award or determination that Buyer is entitled to indemnification with respect to such Loss. Any offset against the

 

 

73

---

outstanding principal balance and accrued interest owed under the Promissory Note shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law. Notwithstanding the preceding sentence, in the event Buyer is required under applicable Law to recognize cancellation of debt income related to any offset against the principal balance of the Promissory Note, the Seller Parties shall pay to Buyer an additional payment in an amount required to fully reimburse Buyer with respect to all federal, state and local taxes with respect to the forgiveness of the portion of the Promissory Note subject to the offset, and any such payment shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

ARTICLE VIII MISCELLANEOUS

 

Section 8.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred; provided, however, Seller shall pay all amounts payable to ▇▇▇▇▇ and Company, Inc.

 

Section 8.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.02):

 

If to Seller:	Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005 Attn: Cash ▇. ▇▇▇▇▇▇▇, Trustee ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
with a copy (which shall not constitute notice) to:	▇▇▇▇▇ & Kuelthau, s.c ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ E-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. Sell or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

 

 

74

---

 

If to Buyer:	Precision Industries, Inc. c/o Live Ventures Incorporated ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ #▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Attention: ▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer ▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Operating Officer and Managing Director (Finance)
with a copy (which shall not constitute notice) to:	▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇

 

Section 8.03 Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; and (b) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

Section 8.04 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

Section 8.05 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 5.02(f), upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

 

75

---

Section 8.06 Entire Agreement. This Agreement and the Ancillary Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Buyer acknowledges and agrees that Seller and Company have not made and are not making any representations or warranties whatsoever, express or implied, except as provided in this Agreement, the Schedules, any Ancillary Document or in any certificate delivered to Buyer at Closing, and that Buyer is not relying and has not relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except for those representations in this Agreement, the Schedules, any Ancillary Document or in any certificate delivered to Buyer at Closing. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

 

Section 8.07 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign his or its rights or obligations hereunder without the prior written consent of the other parties, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that prior to the Closing Date, Buyer may, upon written notice to, but without the prior written consent of, Seller, assign all or any portion of its rights under this Agreement to one or more of its direct or indirect wholly owned subsidiaries. No assignment shall relieve the assigning party of any of his or its obligations hereunder.

 

Section 8.08 No Third-party Beneficiaries. Except as provided in Section 6.03 and ARTICLE VII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 8.09 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section 8.10 Governing Law; Submission to Jurisdiction; Waiver of Jury

Trial.

 

 

76

---

 

 

 

Section 8.11 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 8.12 Counterparts. This Agreement may be executed in counterparts (including via facsimile, .pdf, or other electronic method), each of which shall be deemed an original instrument, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other

 

 

77

---

means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 

78

---

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized, if applicable.

 

 

 

 

 

 

---

SELLER:

CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST, DATED OCTOBER 19, 2005

 

By: .._

Cash ▇. ▇▇▇▇▇▇▇, Trust e

 

---

BUYER:

PRECISION INDUSTRIES, INC.

 

 

 

By: _ Name: ▇▇▇ ▇▇▇▇▇▇

Title: Chief Executive Officer

 

 

---

 

 

 

 

 

 

 

SELLER INDIVIDUAL:

 

 

 

Cash ▇. ▇▇▇▇▇▇▇

 

 

---

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized, if applicable.

 

 

 

 

---

SELLER:

CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST, DATED OCTOBER 19, 2005

 

By: Cash ▇. ▇▇▇▇▇▇▇, Trustee

 

---

BUYER:

PRECISION INDUSTRIES, INC.

 

By: Name: ▇▇▇ ▇▇▇▇▇▇

Title: Chief Executive Officer

 

 

---

 

 

 

SELLER INDIVIDUAL:

 

 

 

Cash ▇. ▇▇▇▇▇▇▇

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

---

ANNEX A

Earn-Outs

This Annex A sets forth the agreement and understanding of the parties with respect to additional contingent purchase price payments as part of the total Purchase Price to be paid to Seller, subject to the terms and conditions of this Agreement and this Annex A. The terms and conditions of the Agreement are incorporated into this Annex A in all respects.

 

 

 

 

 

 

1 For the avoidance of doubt, this limitation related to compensation and benefit costs applicable to the CEO and/or the President of the Company applies only with respect to the computation of Company EBITDA (for purposes of computing any Earn-Out Payments) and is not intended to limit actual compensation or benefits paid or provided to the CEO or the President.

 

 

Page 1 of 4

---

order that would have generated $10,000.00 of Organic EBITDA, then Organic EBITDA for the applicable Earn-Out period shall be increased by $10,000.00 to account for the lost Organic EBITDA. Also, for avoidance of doubt, if after Closing the Company acquires another entity (“TargetCo”), which has at the time of the closing of that transaction, $3.0 Million of EBITDA, then going forward, on a consolidated basis, the $3.0 Million of acquired EBITDA will be removed from the calculation of Organic EBITDA for the purposes of the Earn-Outs so that only incremental EBITDA as a result of the Acquisition will be included in the calculation of Organic EBITDA. For example, one year after the acquisition of TargetCo, if TargetCo EBITDA is calculated as $3.5 Million, then only the incremental $500,000.00 will count towards the computation of Organic EBITDA.

 

 

Page 2 of 4

---

Buyer shall deliver to Seller a statement setting forth in reasonable detail a calculation of the Company’s Organic EBITDA, together with reasonable supporting documentation therefor, for the applicable periods set forth in Section 2 (the “Statement”). The Statement shall become final and binding upon the parties on the fifteenth (15th) Business Day following delivery thereof to Seller and shall be used in computing the amount of the Earn-Out Payments, unless Seller delivers written notice of its disagreement with the Statement (“Notice of Earn-Out Disagreement”) to Buyer within fifteen (15) Business Days of the date of Seller’s receipt of the Statement, which Notice of Earn-Out Disagreement shall specify in reasonable detail Seller’s specific objections (including specific amounts, to the extent known) to the Statement together with reasonable supporting documentation therefor, including alternative calculations, schedules and spreadsheets.

 

 

Page 3 of 4

---

faith with the sole and express intention of reducing the value of the Earn-Out Payments. Seller Parties further acknowledge and agree that the amount of the Earn-Out Payments is contingent on the performance of the business of the Company and there is no guaranteed minimum Earn-Out Payment under the Agreement or this Annex A. Seller and Seller Individual hereby agree that Buyer does not make any representation and expresses no opinion as to the value of the potential Earn- Out Payments, if any, and all warranties (whether written or oral, express or implied) with respect to or relating to the Earn-Out Payments are expressly excluded. Notwithstanding the other terms of this Annex A or the Agreement, nothing contained in this Annex A or the Agreement shall be deemed to preclude Seller Parties from (i) enforcing the terms of this Section 3(d) and/or (ii) submitting a Notice of Earn-Out Disagreement based on a breach by Buyer of this Section 3(d).

 

 

Page 4 of 4

---

SCHEDULE I

Purchase Price Allocation

 

 

 

Asset	Method of Allocation	Asset Class	Order of Allocation
(a) Cash	Book value per Closing Working Capital, if any. Estimated at gross Purchase Price calculation to be zero.	I	1st
(b) Accounts Receivable	Book value per Closing Working Capital. Estimated at gross Purchase Price calculation to be $3,843,280.	III	2nd
(c) Prepaid Expenses	Book value per Closing Working Capital, if any. Estimated at gross Purchase Price calculation to be $2,092,110.	III	3rd
(d) Inventory	Book value per Closing Working Capital. Estimated at gross Purchase Price calculation to be $5,793,657.	IV	4th
(e) Machinery and Equipment; Vehicles; Furniture and Fixtures and Other Equipment	Estimated at gross Purchase Price calculation to be $4,500,000.	V	5th
(f) Goodwill	An amount determined by the following: (i) Purchase Price plus Assumed Liabilities minus amounts allocated to items (a) through (e) above. Estimated at gross Purchase Price calculation to be $6,509,116.	VII	6th

 

 

---

EXHIBIT A-1

 

Employment Agreement with Seller Individual

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of this 28th day of June, 2022 (the “Effective Date”) by and between The Kinetic Co., Inc., a Wisconsin corporation (“Employer”) (“Employer”), and Cash ▇. ▇▇▇▇▇▇▇, an individual resident of the State of Wisconsin (“Employee”).

 

WHEREAS, the parties hereto desire to enter into this Agreement to define and set forth the terms and conditions of the employment of Employee by Employer.

 

WHEREAS, reference is made to that certain Stock Purchase Agreement, dated June 28, 2022 (the “Purchase Agreement”), by and among Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust dated October 19, 2005, Cash ▇. ▇▇▇▇▇▇▇, Trustee, as “Seller”, Employee, as “Seller Individual”, and Precision Industries, Inc., as “Buyer”, pursuant to which Buyer purchased all of the issued and outstanding equity interests of Employer.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby covenanted and agreed by Employer and Employee as follows:

 

 

 

 

 

 

 

---

travel on Employer business during the Term. Employee may work remotely from time-to-time so long as Employee can reasonably perform his employment duties while working remotely.

 

 

 

 

 

 

 

 

 

 

2

---

the other party at least thirty (30) days advance written notice of any termination of Employee’s employment. Upon termination of Employee’ employment, Employee shall be entitled to the compensation and benefits described in this Section 4 and shall have no further rights to any compensation or any other benefits from Employer or any of its affiliates.

 

 

 

(1) times Employee’s Salary in effect for the year that includes the date of Employee’s termination, which shall begin within thirty (30) days following the date of Employee’s termination; provided that, the first installment payment shall include all amounts that would otherwise have been paid to Employee during the period beginning on the date of Employee’s termination and ending on the first payment date if no delay had been imposed;

 

 

 

 

 

3

---

 

 

(ii) Employee’s failure to comply with any valid and legal directive of Employer that reasonably relates to Employee’s employment duties hereunder; (iii) Employee’s engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially injurious to Employer or its affiliates; (iv) Employee’s embezzlement, misappropriation, or fraud, whether or not related to Employee’s employment with Employer; (v) Employee’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent); (vi) Employee’s violation of Employer Policies or codes of conduct, including written policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct; or (vii) Employee’s material breach of any other obligation under this Agreement or any other written agreement between Employee and Employer. In the event of Cause arising under clauses (ii) through (vii) of the preceding sentence, Employer may immediately terminate Employee’s employment, provided that, except for a failure, breach, or refusal which by its nature cannot reasonably be expected to be cured, Employee shall have ten (10) business days from the delivery of written notice by Employer within which to cure any acts constituting Cause.

 

 

 

4

---

 

 

 

 

 

 

 

 

 

 

5

---

 

 

 

 

 

 

 

6

---

 

 

 

 

 

 

 

 

7

---

 

 

 

 

 

 

 

8

---

 

 

 

 

 

 

 

 

 

 

 

 

 

9

---

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first set forth above.

 

EMPLOYER:   The Kinetic Co., Inc.     By: Name:  Title:	EMPLOYEE:     Cash ▇. ▇▇▇▇▇▇▇

 

 

10

---

EXHIBIT A GENERAL RELEASE

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of The Kinetic Co., Inc., a Wisconsin corporation (the “Company”) and each of its partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, and employees, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasees’ right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, and the Americans With Disabilities Act. Notwithstanding the foregoing, this general release (this “Release”) shall not operate to release any rights or Claims of the undersigned (i) to payments or benefits under Sections 1(c), 3(a), (b), and (d), 4, and 13 through 26 of that certain Employment Agreement, dated June 28, 2022, between the Company and the undersigned (the “Employment Agreement”), (ii) to accrued or vested benefits the undersigned may have, if any, as of the date hereof under any applicable plan, policy, practice, program, contract or agreement with the Company, (iii) for indemnification and/or advancement of expenses, arising under the bylaws, certificate of incorporation of other similar governing document of the Company or under applicable law, (iv) for unemployment or workers’ compensation, (v) arising under the Purchase Agreement (as defined in the Employment Agreement) or any agreement or instrument executed and delivered by Precision ▇▇▇▇▇▇▇▇ Inc. or Employer in connection therewith, or (vi) which cannot be waived by an employee under applicable law.

 

IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:

 

 

 

 

The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any Claim which the undersigned may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against the undersigned under this indemnity.

 

 

---

The undersigned agrees that if the undersigned hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.

 

The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned.

 

 

 

---

IN WITNESS WHEREOF, the undersigned has executed this Release this

, 20 .

 

 

---

day of

 

 

---

EXHIBIT A-2

 

First Amendment to Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered

into this 28th day of June, 2022, by and between THE KINETIC CO., INC., a Wisconsin corporation (the “Company”), and ▇▇▇▇▇ ▇▇▇▇▇▇, an adult resident of the State of Wisconsin (“Executive”).

 

R E C I T A L S

 

 

 

NOW, THEREFORE, in consideration of the recitals and the mutual covenants and agreements set forth herein, the parties hereto hereby amend the Employment Agreement as follows:

 

 

 

 

 

“(f) Notwithstanding the other provisions of this Agreement, between December 20, 2022 and December 31, 2022, the Company and Executive will meet and discuss in good faith the future employment role, title and responsibilities of Executive with the Company. If, by December 31, 2022, the parties are unable to reach agreement as to the role, title and responsibilities applicable to Executive’s future employment by the Company, then on or before December 31, 2022 either party may elect to terminate this Agreement upon written notice to the other party, and in such event Executive shall be entitled to the termination benefits stated in

 

---

Section 4(a) of this Agreement,

 

 

---

provided that such termination benefits shall terminate if and when Executive accepts employment with another employer in a senior executive position.” For avoidance of

 

 

doubt, the provisions of this subparagraph (f) shall not preclude the Company or Executive from exercising any other right under Section 3 of this Agreement.

 

 

“(g) Upon the expiration or termination of this Agreement for any reason, Executive shall be entitled to retain the mobile phone he uses for Company business and the corresponding mobile phone number, provided that the mobile phone does not contain any Company software or applications or any confidential information or trade secrets of the Company.”

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Employment Agreement as of the day and year first above written.

 

COMPANY: EXECUTIVE:

 

THE KINETIC CO., INC.

 

 

By: ▇▇▇ ▇▇▇▇▇▇, CEO ▇▇▇▇▇ ▇▇▇▇▇▇

 

 

 

 

 

 

 

 

 

 

 

 

 

- 2 -

 

 

---

EXHIBIT A

 

Incentive Compensation Plan

 

Executive shall be eligible to receive a bonus in an amount up to twenty-five percent (25%) of Executive’s annual base salary (the “Bonus”) during each calendar year during which Executive is employed by the Company if the Company’s annual EBITDA (as defined below) during the applicable calendar year is at least Three Million Four Hundred Thousand Dollars ($3,400,000.00). Any Bonus shall be paid within thirty (30) days of the date of the determination of achievement of the EBITDA threshold for the applicable calendar year, provided that, notwithstanding the preceding, Executive shall be entitled to a Bonus of not less than Fifty Thousand Dollars ($50,000.00) for calendar year 2022 unless Executive’s employment is terminated for “Cause”, or Executive resigns without Good Reason, prior to December 20, 2022.

 

As used herein, “EBITDA” means the earnings before interest, taxes, depreciation and amortization of the Company, determined in the same manner as EBITDA is determined for purposes of computing the Earn-Out Payments to be made pursuant to, and as described in, the Stock Purchase Agreement (including Annex A thereto), dated June 28, 2022, among Precision Industries, Inc. (“PII”), Cash ▇. ▇▇▇▇▇▇▇, and the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005, applicable to the purchase by PII of all of the issued and outstanding shares of the capital stock of the Company.

 

 

---

EXHIBIT A-3

 

Employment Agreement with ▇▇▇ ▇▇▇▇▇▇▇

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of this 28th day of June, 2022 (the “Effective Date”) by and between The Kinetic Co., Inc., a Wisconsin corporation (“Employer”), and ▇▇▇ ▇▇▇▇▇▇▇, an individual resident of the State of Wisconsin (“Employee”).

 

WHEREAS, the parties hereto desire to enter into this Agreement to define and set forth the terms and conditions of the employment of Employee by Employer.

 

WHEREAS, prior to the Effective Date, Employee served as Chief Financial Officer of Employer.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby covenanted and agreed by Employer and Employee as follows:

 

 

 

 

 

 

 

 

---

not to extend the term at least one hundred twenty (120) days prior to the end of the Initial Term or any extension thereof. The period during which Employee is employed by Employer hereunder is referred to herein as the “Employment Term.”

 

 

 

 

 

 

 

 

 

 

2

---

 

 

(1) times Employee’s Salary for the year that includes the date of Employee’s termination, which shall begin within thirty (30) days following the date of Employee’s termination; provided that, the first installment payment shall include all amounts that would otherwise have been paid to Employee during the period beginning on the date of Employee’s termination and ending on the first payment date if no delay had been imposed;

 

 

 

 

3

---

 

 

 

 

(ii) Employee’s failure to comply with any valid and legal directive of Employer that reasonably relates to Employee’s employment duties hereunder; (iii) Employee’s engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially injurious to Employer or its affiliates; (iv) Employee’s embezzlement, misappropriation, or fraud, whether or not related to Employee’s employment with Employer; (v) Employee’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent); (vi) Employee’s violation of Employer Policies or codes of conduct, including written policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct; or (vii) Employee’s material breach of any other obligation under this Agreement or any other written agreement between Employee and Employer. In the event of Cause arising under clauses (ii) through (vii) of the preceding sentence, Employer may immediately terminate Employee’s employment, provided that, except for a failure, breach, or refusal which by its nature cannot reasonably be expected to be cured, Employee shall have ten (10) business days from the delivery of written notice by Employer within which to cure any acts constituting Cause.

 

 

 

4

---

If Employee does not terminate Employee’s employment for Good Reason within thirty (30) days after Employee first becomes aware of the applicable grounds, then Employee will be deemed to have waived Employee’s right to terminate for Good Reason with respect to such grounds.

 

 

 

 

 

 

 

 

 

 

 

 

5

---

 

 

 

 

(2) year period immediately preceding the date of Employee’s contact or solicitation and with respect to whom: (i) Employee sold products or services or attempted to sell such products or services on behalf of Employer, and/or (iii) Employee acquired any confidential information as a result of his employment with Employer.

 

 

 

6

---

 

 

 

 

 

 

 

 

 

7

---

compensation payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, Employer makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall Employer be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Employee on account of non-compliance with Section 409A. If any provision of this Agreement, or any payment, distribution or other benefit provided to Employee pursuant to this Agreement, would fail to satisfy the requirements of Section 409A, Employer agrees to reasonably cooperate with Employee to amend this Agreement and/or restructure such payment, distribution or other benefit such that this Agreement and/or payment, distribution or other benefit shall comply with Section 409A and so that Employee shall, to the extent possible, derive the value of such payment or benefit intended hereunder.

 

 

 

 

 

 

 

 

8

---

Agreement. Each provision of this Agreement is separable from every other provision and constitutes a separate and distinct covenant.

 

 

 

 

 

 

 

 

 

 

[Signature Page Follows]

 

 

9

---

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first set forth above.

 

 

 

10

---

EMPLOYER:

 

The Kinetic Co., Inc.

 

 

By: Name: Title:

 

11

---

EMPLOYEE:

 

 

 

▇▇▇ ▇▇▇▇▇▇▇

 

 

12

---

EXHIBIT A GENERAL RELEASE

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of The Kinetic Co., Inc., a Wisconsin corporation (the “Company”) and each of its partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, and employees, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasees’ right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, and the Americans With Disabilities Act. Notwithstanding the foregoing, this general release (this “Release”) shall not operate to release any rights or Claims of the undersigned (i) to payments or benefits under Sections 1(c), 3(a), (b), and (d), 4, and 13 through 26 of that certain Employment Agreement, dated June 28, 2022, between the Company and the undersigned (the “Employment Agreement”), (ii) to accrued or vested benefits the undersigned may have, if any, as of the date hereof under any applicable plan, policy, practice, program, contract or agreement with the Company, (iii) for indemnification and/or advancement of expenses, arising under the bylaws, certificate of incorporation of other similar governing document of the Company or under applicable law, (iv) for unemployment or workers’ compensation, (v) arising under the Purchase Agreement (as defined in the Employment Agreement) or any agreement or instrument executed and delivered by Precision ▇▇▇▇▇▇▇▇ Inc. or Employer in connection therewith, or (vi) which cannot be waived by an employee under applicable law.

 

IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:

 

 

 

 

The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any Claim which the undersigned may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against the undersigned under this indemnity.

 

 

---

The undersigned agrees that if the undersigned hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.

 

The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned.

 

 

 

---

IN WITNESS WHEREOF, the undersigned has executed this Release this

, 20 .

 

 

---

day of

 

 

---

EXHIBIT B

 

Escrow Agreement

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT, dated effective as of June 28, 2022 (this “Agreement”), is entered into by and among PRECISION INDUSTRIES, INC., a Pennsylvania corporation (“Purchaser”), the CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST dated October 19, 2005, CASH ▇. ▇▇▇▇▇▇▇, Trustee (“Seller”), and U.S. BANK NATIONAL ASSOCIATION, a

national banking association, as escrow agent hereunder (“Escrow Agent”).

 

BACKGROUND

 

 

 

 

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

 

herein:

 

“Business Day” means any day, other than a Saturday, Sunday or legal holiday, on which Escrow Agent at its location identified in Section 15 is open to the public for general banking purposes.

 

“Claim Notice” has the meaning set forth in Section 6(a).

 

“Escrow Funds” means the Indemnity Escrow Funds and the SALT Escrow Funds

 

 

---

deposited with Escrow Agent pursuant to Section 3 of this Agreement, together with any interest and other income thereon.

 

“Escrow Period” means, with respect to the Indemnity Escrow Funds, the 18-month period commencing on the date hereof and ending at the close of Escrow Agent’s Business Day on the 18-month anniversary date of the date hereof, unless earlier terminated pursuant to this Agreement, and, with respect to the SALT Escrow Funds, the 36-month period commencing on the date hereof and ending at the close of Escrow Agent’s Business Day on the 36-month anniversary date of the date hereof, unless earlier terminated pursuant to this Agreement.

 

“Final Order” means a final and non-appealable judgment, order, award or final determination of a court of competent jurisdiction (an “Order”), which Order is delivered to Escrow Agent accompanied by a written instruction from Purchaser or Seller (and Purchaser or Seller, as applicable, simultaneously delivering a copy of such Order and instruction to the other party) given to effectuate such Order and confirming that such Order is final, non-appealable and issued by a court of competent jurisdiction, and Escrow Agent shall be entitled to conclusively rely upon any such confirmation and instruction and shall have no responsibility to review the Order to which such confirmation and instruction refers.

 

“Indemnity Escrow Funds” means the sum of One Million Dollars ($1,000,000.00) deposited with Escrow Agent pursuant to Section 3 of this Agreement, together with any interest and other income thereon.

 

“Indemnity Escrow Period” means, with respect to the Indemnity Escrow Funds, the 18- month period commencing on the date hereof and ending at the close of Escrow Agent’s Business Day on the 18-month anniversary date of the date hereof, unless earlier terminated pursuant to this Agreement.

 

“Indemnified Party” has the meaning set forth in Section 11.

 

“Indemnity Claim” has the meaning set forth in Section 6(a).

 

“Joint Written Direction” means a written direction executed by a Purchaser Representative and a Seller Representative, delivered to Escrow Agent in accordance with Section 15 and directing Escrow Agent to disburse all or a portion of the Escrow Funds or to take or refrain from taking any other action pursuant to this Agreement.

 

“Losses” shall have the meaning set forth in Section 10(a).

 

“Person” means any individual or any general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust business trust, cooperative or association or any foreign trust or foreign business organization, and the heirs, executors, administrators, legal representatives, successors and assigns of such “Person” where the context so permits.

 

“Purchaser Representative” means the person(s) so designated on Schedule C hereto or any other person designated in a writing signed by Purchaser and delivered to Escrow Agent and a

 

 

2

---

Seller in accordance with the notice provisions of this Agreement, to act as its representative under this Agreement.

 

“Representatives” means a Purchaser Representative and a Seller Representative.

 

“SALT Escrow Funds” means the sum of Four Hundred Fifty Thousand Dollars ($450,000.00) deposited with Escrow Agent pursuant to Section 3 of this Agreement, together with any interest and other income thereon.

 

“SALT Escrow Period” means, with respect to the SALT Escrow Funds, the 36-month period commencing on the date hereof and ending at the close of Escrow Agent’s Business Day on the 36-month anniversary date of the date hereof, unless earlier terminated pursuant to this Agreement.

 

“Seller Representative” means the person(s) so designated on Schedule C hereto or any other person designated in a writing signed by Seller and delivered to Escrow Agent and a Purchaser Representative in accordance with the notice provisions of this Agreement, to act as its representative under this Agreement.

 

 

 

 

 

 

 

3

---

 

Bank Name: Bank Address: ABA No.:

Account Name: Account No.:

 

 

 

 

 

 

 

4

---

court costs and reasonable attorneys’ fees) payable to or incurred by Escrow Agent in connection with the performance of its duties and the exercise of its rights hereunder, the payment of which shall be a joint and several obligation of Purchaser and Seller. Purchaser, on the one hand, and Seller, on the other hand, agree between themselves that each will be responsible for one-half of the fees and expenses (including court costs and reasonable attorneys’ fees) incurred by Escrow Agent pursuant to this paragraph.

 

Absent gross negligence or willful misconduct, Escrow Agent shall have no liability to Purchaser or Seller for any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of the Escrow Funds or any delay in or with respect to any other action required or requested of Escrow Agent.

 

 

 

 

 

 

 

 

 

5

---

the investment of the Escrow Funds, upon which direction Escrow Agent may conclusively rely without inquiry or investigation; provided, however, that Purchaser and Seller warrant that no investment or reinvestment direction will be given except in the following: (a) direct obligations of the United States of America or obligations the principal of and the interest on which are unconditionally guaranteed by the United States of America; (b) U.S. dollar denominated deposit accounts and certificates of deposit issued by any bank, bank and trust company, or national banking association (including Escrow Agent and its affiliates), which are either (i) insured by the Federal Deposit Insurance Corporation (“FDIC”) up to FDIC limits, or (ii) with domestic commercial banks which have a rating on their short-term certificates of deposit on the date of purchase of at least “A-1” by S&P or “P-1” by ▇▇▇▇▇’▇ (ratings on holding companies are not considered as the rating of the bank); or (c) money market funds, including funds managed by Escrow Agent or any of its affiliates; provided further, however, that Escrow Agent will not be directed to invest in investments that Escrow Agent determines are not consistent with Escrow Agent’s policies or practices.

 

Purchaser and Seller recognize and agree that Escrow Agent will not provide supervision, recommendations or advice relating to either the investment of Escrow Funds or the purchase or disposition of any investment and the Escrow Agent will not have any liability for any loss in an investment made pursuant to the terms of this Agreement. Escrow Agent has no responsibility whatsoever to determine the market or other value of any investment and makes no representation or warranty as to the accuracy of any such valuations. To the extent applicable regulations grant rights to receive brokerage confirmations for certain security transactions, Purchaser and Seller waive receipt of such confirmations.

 

All investments will be made in the name of Escrow Agent. Escrow Agent may, without notice to Purchaser and Seller, sell or liquidate any of the foregoing investments at any time for any disbursement of Escrow Funds permitted or required hereunder and will not be liable for any loss, cost or penalty resulting from any sale or liquidation of any such investment. All investment earnings will become part of the Escrow Funds and investment losses will be charged against the Escrow Funds. With respect to any Escrow Funds or investment instruction received by Escrow Agent after 11:00 a.m., U.S. Central Time, Escrow Agent will not be required to invest applicable funds until the next Business Day. Receipt of the Escrow Funds and investment and reinvestment of the Escrow Funds will be confirmed by Escrow Agent by an account statement. Failure to inform Escrow Agent in writing of any error or omission in any such account statement within ninety (90) days after receipt will conclusively be deemed confirmation and approval by Purchaser and Seller of such account statement.

 

 

 

6

---

Revenue Code Section 6045 and Form 1099 and Form 1042-S reporting with respect to investment income earned on the Escrow Funds, if any. Escrow Agent shall have no responsibility for Form 1099-MISC reporting with respect to disbursements that Escrow Agent makes in an administrative or ministerial function to vendors or other service providers and shall have no tax reporting or withholding duties with respect to the Foreign Investment in Real Property Tax Act (FIRPTA).

 

 

 

 

 

 

 

7

---

liability under and no duty to inquire as to the provisions of any document other than this Agreement, including without limitation any other agreement between any or all of the parties hereto or any other persons even though reference thereto may be made herein and whether or not a copy of such document has been provided to Escrow Agent. Escrow Agent’s sole responsibility is to hold the Escrow Funds in accordance with Escrow Agent’s customary practices and disbursement thereof in accordance with the terms of this Agreement. Escrow Agent shall not be responsible for or have any duty to make any calculations under this Agreement, or to determine when any calculation required under the provisions of this Agreement should be made, how it should be made or what it should be, or to confirm or verify any such calculation. Escrow Agent will not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. This Agreement will terminate upon the distribution of all the Escrow Funds pursuant to any applicable provision of this Agreement, and Escrow Agent will thereafter have no further obligation or liability whatsoever with respect to this Agreement or the Escrow Funds.

 

 

 

 

 

8

---

 

 

 

 

 

9

---

to be any such officer. Purchaser and Seller agree that Escrow Agent may at its option record any telephone calls made pursuant to this Section. Escrow Agent in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by Purchaser or Seller to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank, even when its use may result in a transfer of funds to a person other than the intended beneficiary or to a bank other than the intended beneficiary’s bank or intermediary bank. Purchaser and Seller acknowledge that these optional security procedures are commercially reasonable.

 

 

 

 

 

 

 

10

---

against the Escrow Funds with respect to any compensation or reimbursement due any of them hereunder (including any claim for indemnification hereunder). If for any reason the Escrow Funds are insufficient to cover such compensation and reimbursement, Purchaser and Seller shall promptly pay such amounts upon receipt of an itemized invoice. Purchaser, on the one hand, and Seller, on the other hand, agree between themselves that each will be responsible for one-half of the fees and expenses incurred by Escrow Agent pursuant to this Section.

 

 

 

 

 

 

 

 

 

11

---

regulation to which Escrow Agent is subject, in a timely manner. Escrow Agent’s appointment and acceptance of its duties under this Agreement is contingent upon verification of all regulatory requirements applicable to Purchaser, Seller and any of their permitted assigns, including successful completion of a final background check. These conditions include, without limitation, requirements under the USA PATRIOT Act, the USA FREEDOM Act, the Bank Secrecy Act, and the U.S. Department of the Treasury Office of Foreign Assets Control. If these conditions are not met, Escrow Agent may at its option promptly terminate this Agreement in whole or in part and refuse any otherwise permitted assignment by Purchaser or Seller, without any liability or incurring any additional costs.

 

 

If to Purchaser or Purchaser Representative, at:

 

Precision Industries, Inc.

c/o Live Ventures Incorporated

Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Operating Officer and Managing Director (Finance)

▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ #▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

E-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

and to:

 

▇▇▇▇▇▇▇▇▇ Traurig LLP Attn: ▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

 

 

If to Seller, at:

 

Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust,

Dated October 19, 2005 c/o Cash ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

 

 

12

---

and to:

 

▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, s.c.

Attn: ▇▇▇▇▇▇▇ ▇. Sell or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

 

If to Escrow Agent, at: U.S. Bank National Association, as Escrow Agent

ATTN: ▇▇▇▇▇▇ Maple

Global Corporate Trust Services ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇-▇▇-▇▇▇▇

▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇

Telephone: ▇▇▇-▇▇▇-▇▇▇▇

E-mail: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ and to:

U.S. Bank National Association ATTN: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Product Operations

▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇-▇▇▇▇

▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇

Telephone: ▇▇▇-▇▇▇-▇▇▇▇

Facsimile: ▇▇▇-▇▇▇-▇▇▇▇

E-mail: ▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

 

or to such other address as each party may designate for itself by like notice and unless otherwise provided herein will be deemed to have been given on the date received. Escrow Agent shall not have any duty to confirm that the person sending any Notice by electronic transmission (including by e-mail, facsimile transmission, web portal or other electronic methods) is, in fact, a person authorized to do so. Electronic signatures believed by Escrow Agent to comply with the ESIGN Act of 2000 or other applicable law (including electronic images of handwritten signatures and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other digital signature provider acceptable to Escrow Agent) shall be deemed original signatures for all purposes. Notwithstanding the foregoing, Escrow Agent may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to Escrow Agent in lieu of, or in addition to, any such electronic Notice. Purchaser and Seller agree to assume all risks arising out of the use of electronic signatures and electronic methods to submit instructions and directions to Escrow Agent, including without limitation the risk of Escrow Agent acting on unauthorized instructions, and the risk of interception and misuse by third parties.

 

 

13

---

 

 

 

[signature page follows]

 

 

14

---

The parties hereto have caused this Agreement to be executed effective as of the date first above written.

 

PURCHASER:   PRECISION INDUSTRIES, INC.     By:  Name:  Title:	SELLER:   CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST, dated October 19, 2005   By:  Cash ▇. ▇▇▇▇▇▇▇, Trustee
ESCROW AGENT:   U.S. BANK NATIONAL ASSOCIATION as Escrow Agent   By:  Name:  Title:

 

 

15

---

SCHEDULE A

 

U.S. BANK NATIONAL ASSOCIATION

Investment Authorization Form

 

U.S. BANK MONEY MARKET DEPOSIT ACCOUNT

 

Description and Terms

 

 

The U.S. Bank Money Market Deposit Account is a U.S. Bank National Association (“U.S. Bank”) interest-bearing money market deposit account designed to meet the needs of U.S. Bank’s Corporate Trust Services Escrow Group and other corporate trust customers of U.S. Bank. Selection of this investment includes authorization to place funds on deposit and invest with U.S. Bank.

 

U.S. Bank uses the daily balance method to calculate interest on this account (actual/365 or 366). This method applies a daily periodic rate to the principal balance in the account each day. Interest is accrued daily and credited monthly to the account. Interest rates are determined at U.S. Bank’s discretion and may be tiered by customer deposit amount.

 

The owner of the account is U.S. Bank as agent for its corporate trust customers. U.S. Bank’s Corporate Trust Services Escrow Group performs all account deposits and withdrawals. Deposit accounts are FDIC insured per depositor, as determined under FDIC Regulations, up to applicable FDIC limits.

 

U.S. BANK IS NOT REQUIRED TO REGISTER AS A MUNICIPAL ADVISOR WITH THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF COMPLYING WITH THE ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇ STREET REFORM & CONSUMER PROTECTION ACT. INVESTMENT ADVICE, IF NEEDED, SHOULD BE OBTAINED FROM YOUR FINANCIAL ADVISOR.

 

 

Automatic Authorization

 

In the absence of specific written direction to the contrary to the extent and as authorized in the applicable escrow agreement, U.S. Bank is hereby directed to invest and reinvest proceeds and other available moneys in the U.S. Bank Money Market Deposit Account. The customer(s) confirm that the U.S. Bank Money Market Deposit Account is a permitted investment under the operative documents and this authorization is the permanent direction for investment of the moneys until notified in writing of permissible alternate instructions.

 

 

---

SCHEDULE B

 

Schedule of Fees for Services as Escrow Agent

 

One-time fee for the routine duties of the Escrow Agent associated with the administration of the account. Administration fees are payable in advance. In the event that the Agreement is not terminated within two years, then an additional administrative fee of

$1,000 shall be due for each year or part thereof. This assumes that the Escrow Agent will be directed to invest in an automated sweep vehicle available through the Escrow Agent’s trust accounting system.

 

 

Reimbursement of expenses associated with the performance of Escrow Agent’s duties, including but not limited to fees and expenses of legal counsel, accountants and other agents, tax preparation, reporting and filing, publications, and filing fees.

 

Extraordinary Administration Services ("EAS") are duties, responsibilities or activities not expected to be provided by the escrow agent at the outset of the transaction, not routine or customary, and/or not incurred in the ordinary course of business, and may require analysis or interpretation. Billing for fees and expenses related to EAS is appropriate in instances where particular inquiries, events or developments are unexpected, even if the possibility of such circumstances could have been identified at the inception of the transaction, or as changes in law, procedures, or the cost of doing business demand. At our option, EAS may be charged on an hourly (time expended multiplied by current hourly rate), flat or special fee basis at such rates or in such amounts in effect at the time of such services, which may be modified by us in our sole and reasonable discretion from time to time. In addition, all fees and expenses incurred by the escrow agent, in connection with the escrow agent's EAS and ordinary administration services and including without limitation the fees and expenses of legal counsel, financial advisors and other professionals, charges for wire transfers, checks, internal transfers and securities transactions, travel expenses, communication costs, postage (including express mail and overnight delivery charges), copying charges and the like will be payable, at cost, to the escrow agent. EAS fees are due and payable in addition to annual or ordinary administration fees. Failure to pay for EAS owed to U.S. Bank when due may result in interest being charged on amounts owed to U.S. Bank for extraordinary administration services fees and expenses at the prevailing market rate.

 

General. Your obligation to pay under this Fee Schedule shall govern the matters described herein and shall not be superseded or modified by the terms of the governing documents, and survive any termination of the transaction or governing documents and the resignation or removal of the escrow agent. This Fee Schedule shall be construed and interpreted in accordance with the laws of the state identified in the governing documents without giving effect to the conflict of laws principles thereof. You agree to the sole and exclusive jurisdiction of the state and federal courts of the state identified in the governing documents over any proceeding relating to or arising regarding the matters described herein. Payment of fees constitutes acceptance of the terms and conditions described herein.

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

 

 

---

SCHEDULE C

 

Each of the following person(s) is a Purchaser Representative authorized to execute documents and direct Escrow Agent as to all matters, including fund transfers, address changes and contact information changes, on Purchaser’s behalf (only one representative required):

 

 

Name			Specimen signature		Telephone No.
Name			Specimen signature		Telephone No.
Name			Specimen signature		Telephone No.

 

If only one person is identified above, the following person is authorized for call-back confirmations:

 

 

Name Telephone Number

 

 

Each of the following person(s) is a Seller authorized to execute documents and direct Escrow Agent as to all matters, including fund transfers, address changes and contact information changes, on Seller’s behalf (only one representative required):

 

Cash ▇. ▇▇▇▇▇▇▇			414-425-8221
Name	Specimen signature		Telephone No.
Name	Specimen signature		Telephone No.
Name	Specimen signature		Telephone No.

 

If only one person is identified above, the following person is authorized for call-back confirmations:

 

 

Name Telephone Number

 

 

---

ATTACHMENT 1

 

FORM OF JOINT WRITTEN DIRECTION

 

[To be completed on closing]

 

 

U.S. Bank National Association, as Escrow Agent ATTN: Global Corporate Trust Services Address:

 

 

RE: ESCROW AGREEMENT made and entered into as of June 28, 2022, by and among Precision Industries, Inc. (“Purchaser”), the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005, Cash

▇. ▇▇▇▇▇▇▇, Trustee (“Seller”) and U.S. Bank National Association, in its capacity as escrow agent (the “Escrow Agent”).

 

Pursuant to Section 4 of the above-referenced Escrow Agreement, Purchaser and Seller hereby instruct Escrow Agent to disburse the amount of [$ ] from the Escrow Account to [Purchaser][Seller], as provided below:

 

Purchaser Seller

 

Bank Name: Bank Name: Bank Address: Bank Address: ABA No.: ABA No.

Account Name: Account Name: Account No.: Account No.:

 

 

PURCHASER: SELLER:

 

 

PRECISION INDUSTRIES, INC. CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE

TRUST, dated October 19, 2005

 

 

 

 

---

By: Name:

 

---

By: Cash ▇. ▇▇▇▇▇▇▇, Trustee

 

 

---

 

Date: , 202 Date: , 2022

 

 

---

EXHIBIT C

 

Promissory Note

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

THIS INSTRUMENT, AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY, ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT, DATED THE DATE HEREOF, BY AND AMONG FIFTH THIRD BANK, NATIONAL ASSOCIATION, PAYEE AND MAKER (THE "SUBORDINATION AGREEMENT").

 

SUBORDINATED PROMISSORY NOTE

 

$3,000,000.00 June 28, 2022

 

FOR VALUE RECEIVED, the undersigned PRECISION INDUSTRIES, INC., a

Pennsylvania corporation ("Maker"), promises to pay to the order of the CASH ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST, dated October 19, 2005, Cash ▇. ▇▇▇▇▇▇▇, Trustee ("Payee"), or its assigns, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as Payee shall, from time to time, designate in writing to Maker, the principal sum of Three Million Dollars ($3,000,000.00), in lawful money of the United States of America. Capitalized terms used, but not defined, herein shall have the meanings given to such terms in the Credit Agreement, dated the date hereof, between Maker and Senior Lender (as defined in Section 8, below) (the "Senior Credit Agreement"), or in the Subordination Agreement, as applicable.

 

 

 

 

 

 

---

due, but no partial prepayment shall relieve Maker of Maker’s obligations to make the regularly scheduled payments hereunder until all principal and interest is paid in full.

 

In addition, within 30 days after Maker’s receipt of audited financial statements that include the operations of The Kinetic Co., Inc., a Wisconsin corporation (the "Company"), for the period commencing on October 1, 2023 and ending September 30, 2024 and subject to the terms of the remainder of this paragraph, Maker shall make a prepayment (the "EBITDA-Based Prepayment") in an amount up to one-half of the outstanding principal balance of this Note, in the event that both (a) the EBITDA of the Company (as defined in the Purchase Agreement) for the period commencing on October 1, 2023 and ending on September 30, 2024 exceeds Three Million Five Hundred Thousand Dollars ($3,500,000.00), and (b) the Senior Lender has approved such prepayment in writing.

 

Further, the entire unpaid principal balance owed under this Note, together with all accrued interest and any other amounts owed under this Note, shall be due and payable in full concurrent with a "Change in Control" of the Company. For purposes of this Note, a "Change in Control" of the Company shall mean: (i) the Company adopts any plan of liquidation providing for the distribution of all or substantially of its assets; (ii) all or substantially all of the assets or business of the Company or Maker is disposed of pursuant to a sale of assets, merger, consolidation or other transaction (unless the shareholders of the Company or Maker, as applicable, immediately prior to such sale of assets, merger, consolidation or other transaction beneficially own, directly or indirectly, all of the voting stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company or Maker); (iii) a sale of more than fifty percent (50%) of the outstanding shares of the capital stock of the Company or Maker that hold voting rights to any party other than Live Ventures, Inc.; or (iv) the Company or Maker combines with another company and is the surviving entity but, immediately after the combination, the shareholders of the Company or Maker, as applicable, immediately prior to the combination hold, directly or indirectly, fifty percent (50%) or less of the voting stock of the combined company.

 

 

 

 

 

 

Page 2 of a Subordinated Promissory Note, in the original principal amount of

$3,000,000.00, dated June 28, 2022,

issued by Precision Industries, ▇▇▇.▇▇ favor of the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005.

---

income tax liability applicable to their pro rata shares of any flow through taxable income of Maker or the Company, and (ii) the Company may pay dividends or distributions to Maker so long as one-half (1/2) of such dividends or distributions are immediately paid by Maker to Payee to reduce the amounts owed under this Note.

 

 

 

 

(vi) apply to a court for the appointment of a receiver or custodian for any of its assets or properties, (vii) have a receiver or custodian appointed for any of its assets or properties, with or without consent, and such receiver shall not be discharged within sixty (60) days after his appointment, or (viii) take any action for the purpose of effecting any of the foregoing;

 

 

 

No waiver of a default shall constitute a continuing waiver of such default or a waiver of any subsequent default. Upon an Event of Default hereunder, and only for so long as such Event of Default remains uncured, or upon the exercise by Senior Lender of its rights under the Subordination Agreement to prohibit payments on this Note, and only for so long as such prohibition of payments remains in effect, the outstanding principal balance of this Note shall

 

 

Page 3 of a Subordinated Promissory Note, in the original principal amount of

$3,000,000.00, dated June 28, 2022,

issued by Precision Industries, ▇▇▇.▇▇ favor of the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005.

---

accrue interest at a default rate equal to nine percent (9.0%) per year. Maker shall pay all costs of collection, including reasonable attorneys’ fees.

 

 

 

 

This Note shall be governed by and construed and interpreted in accordance with the internal laws of the State of Delaware, excluding any choice of law rules that may direct the application of the laws of another jurisdiction. To the extent permitted by law, Maker waives any right to a trial by jury in any action brought under this Note. Maker consents to the personal jurisdiction and venue of the state and federal courts located in (or having jurisdiction over) Waukesha County, Wisconsin, and agrees that any and all lawsuits or other proceedings applicable to this Note, or any controversy or dispute arising under this Note, may be brought in the state or federal courts located in (or having jurisdiction over) Waukesha County, Wisconsin.

 

 

Page 4 of a Subordinated Promissory Note, in the original principal amount of

$3,000,000.00, dated June 28, 2022,

issued by Precision Industries, ▇▇▇.▇▇ favor of the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005.

---

Maker acknowledges receipt of an exact copy of this Note.

 

PRECISION INDUSTRIES, INC.

 

 

By: Name: Title:

 

Date: June 28, 2022

 

 

Page 5 of a Subordinated Promissory Note, in the original principal amount of

$3,000,000.00, dated June 28, 2022,

issued by Precision Industries, ▇▇▇.▇▇ favor of the Cash ▇. ▇▇▇▇▇▇▇ Revocable Trust, dated October 19, 2005.

---

EXHIBIT D

Estimated Closing Working Capital

 

[See Spreadsheet on Attached Page]

 

 

---

Worksheet Key
1	Accounts to be included in Target Working Capital Accounts to be excluded in Target Working Capital
2

 

 

 

 

Difference

Estimated Closing Working Capital

 

Target Working Capital

Accounts Receivable - Trade 3,069,042 3,042,968 3,042,923 3,238,908 4,178,285 3,766,067 3,159,562 2,929,425 2,774,391 2,919,390 3,258,933 4,041,602 3,285,125 3,443,975 ⁽⁵⁾ 158,850

 

1

1

 

 

 

Current Assets 5/31/2021 6/30/2021 7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021 1/31/2022 2/28/2022 3/31/2022 4/30/2022Reserve For Doubtful A/Cs (213,886) (228,886) (243,886) (258,886) (273,886) (288,886) (123,886) (138,886) (153,886) (168,886) (183,886) (198,323) (206,339) (198,323) 8,017

 

AT Trade accounts receivable 2,855,156 2,814,082 2,799,037 2,980,022 3,904,398 3,477,181 3,035,676 2,790,539 2,620,505 2,750,503 3,075,046 3,843,280 3,078,785 3,245,652 166,867

 

2 Sec 444 Tax Escrow⁽¹⁾ 70,421		70,421	70,421	70,421	70,421	70,421	30,388	30,388	30,388	30,388	30,388	30,388	- 30,388 30,388
AT Other receivables 203,847		216,747	216,747	217,024	205,861	205,861	137,477	137,815	153,606	151,783	152,178	159,595	- 30,388 30,388
1 Raw Material Inventory	1,345,193	1,307,194	1,276,757	1,268,045	1,322,230	1,423,596	1,363,611	1,379,954	1,264,590	1,261,600	1,205,801	1,327,839	1,312,201	1,327,839	15,639
1 Orbital Saw Inventory	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
1 Work In Process Inventory - Material	346,236	379,993	315,253	263,387	362,111	341,318	268,953	300,959	332,789	455,074	450,614	371,062	348,979	371,062	22,083
1 Work in Process Inventory - Labor	131,437	136,813	154,272	122,778	102,584	119,507	119,803	136,687	167,473	146,660	141,873	122,339	133,519	122,339	(11,180)
1 Work in Process Inventory - Overhead	332,201	336,928	358,544	290,644	243,615	280,296	283,916	317,523	391,136	347,353	353,707	376,171	326,003	376,171	50,169
1 Work in Process Inventory - Outside	111,591	121,227	120,052	83,130	90,579	103,610	111,391	113,107	136,571	113,965	129,385	118,805	112,784	118,805	6,021
1 Semi-finished Goods Inventory - Material	240,584	240,583	228,258	208,227	196,104	201,791	174,741	167,628	148,312	149,542	203,061	184,720	195,296	184,720	(10,576)
1 Semi-finished Goods Inventory - Labor	81,413	79,894	80,960	80,609	79,894	76,863	73,179	71,091	66,177	69,429	68,105	69,926	74,795	69,926	(4,869)
1 Semi-finished Goods Inventory - Overhead	231,154	228,299	228,084	225,534	221,904	218,151	202,989	197,238	182,237	193,179	193,175	198,436	210,032	198,436	(11,596)
1 Semi-finished Goods Inventory - Outside	35,266	28,275	24,839	22,627	21,014	31,599	25,058	25,001	26,353	23,688	18,983	29,002	25,975	29,002	3,027
1 Finished Goods Inventory - Material	1,600,765	1,674,175	1,655,356	1,520,467	1,665,297	1,808,845	1,796,125	1,757,887	1,953,205	1,952,162	2,017,489	2,021,818	1,785,299	2,021,818	236,519
1 Finished Goods Inventory - Labor	274,978	292,499	268,331	270,064	267,097	257,442	244,102	234,695	221,163	234,812	252,167	243,268	255,051	243,268	(11,783)
1 Finished Goods Inventory - Overhead	725,452	771,958	714,424	718,590	700,143	678,813	648,020	632,409	596,352	628,659	652,174	661,349	677,362	661,349	(16,013)
1 Finished Goods Inventory - Outside	204,592	197,506	205,007	207,181	196,649	187,629	177,110	174,394	162,255	153,285	157,159	164,976	182,312	164,976	(17,336)
1 Miscellaneous Inventory	(3,867)	(58,608)	-	(27,816)	(10,917)	13,895	33,223	41,644	7,550	(40,943)	(33,384)	(96,054)	(14,606)	(96,054)	(81,448)
1 LIFO Inventory Reserve	1,419,626	1,419,626	1,419,626	1,419,626	1,419,626	1,419,626	1,050,807	1,050,807	1,050,807	1,050,807	1,050,807	1,050,807	1,235,217	1,050,807	(184,409)
1 Section 481A Adjustment	(3,376,195)	(3,376,195)	(3,376,195)	(3,376,195)	(3,376,195)	(3,376,195)	(3,573,239)	(3,573,239)	(3,573,239)	(3,573,239)	(3,573,239)	(3,573,239)	(3,474,717)	(3,573,239)	(98,522)
1 Reserve for Obsolete Inventory (60,000)		(70,000)	(80,000)	(90,000)	(100,000)	(110,000)	-	(10,000)	(20,000)	(30,000)	(40,000)	(50,000)	(55,000) (50,000) 5,000
AT Inventory 3,640,427		3,710,167	3,593,568	3,206,900	3,401,735	3,676,785	2,999,789	3,017,782	3,113,730	3,136,034	3,247,879	3,221,225	3,330,502 3,221,225 (109,277)

 

2 User Fee Deposit- Lambeau Field⁽²⁾ 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 10,800 - 10,800 10,800

2 Security Deposit- Leased Space⁽³⁾ 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 - 14,000 14,000

AT Security Deposits 46,400 46,400 46,400 46,400 46,400 46,400 46,400 46,400 46,400 46,400 46,400 24,800 - 24,800 24,800

 

 

1Prepaid Expenses 924,411 732,217 879,235 927,492 905,351 881,252 1,024,157 1,170,729 1,397,234 1,620,764 1,894,701 2,092,110 1,204,138 2,092,110 887,972

 

AT Prepaid expenses 924,411 732,217 879,235 927,492 905,351 881,252 1,024,157 1,170,729 1,397,234 1,620,764 1,894,701 2,092,110 1,204,138 2,092,110 887,972

 

Total Current Assets 10,342,414 9,957,772 9,788,813 9,047,433 9,384,939 9,296,484 8,915,212 7,559,630 7,955,797 8,235,833 8,850,353 9,613,294 7,613,425 8,614,175 1,000,751

 

 

 

 

 

Difference

Estimated Closing Working Capital

 

Target Working Capital

Accounts Payable - Vendor 205,359 245,641 405,288 229,994 442,373 267,756 119,590 173,327 288,360 351,354 341,276 242,773 276,091 242,773 (33,318)

 

1

1

1

1

1

 

 

 

Current Liabilities 5/31/2021 6/30/2021 7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021 1/31/2022 2/28/2022 3/31/2022 4/30/2022Accounts Payable - Dummy (4,559) (6,172) (5,316) (5,316) - - - - 4 4,333 4 4 (1,418) 4 1,422

Employee Garnishment In/Out 1,396 221 1,396 1,395 891 387 (504) (504) (▇▇▇) ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ (181)

Employee Owned Tooling In/Out 63 63 63 63 63 97 210 (88) (▇▇) ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ 259

Vouchers Payable 1,059,157 974,883 983,889 1,029,072 1,169,189 1,158,832 1,451,696 1,593,196 2,054,572 2,116,847 2,200,276 2,573,898 1,530,459 2,573,898 1,043,439

LT Total Accounts Payable 1,261,417 1,214,636 1,385,321 1,255,209 1,612,517 1,427,072 1,570,992 1,765,930 2,342,658 2,472,925 2,542,080 2,817,292 1,805,671 2,817,292 1,011,621

 

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1Illinois Withholding Tax Payable - - - - - - - - ▇▇▇ ▇▇▇ ▇▇▇ 342 115 342 228

Mass. Withholding Tax Payable ▇▇▇ ▇▇▇ ▇▇▇ 213 229 179 220 370 193 240 230 221 233 221 (12)

Arizona (prevCO) Withholding Tax Payable ▇▇▇ ▇▇▇ ▇▇▇ 219 222 259 224 401 428 233 243 291 274 291 17

Georgia Withholding Tax Payable ▇▇▇ ▇▇▇ ▇▇▇ 433 439 414 423 600 1,520 435 474 486 560 486 (74)

Wis. Unemployment Taxes Payable 2,255 2,640 621 889 1,124 338 706 1,226 4,250 7,710 10,051 (2,909) 2,408 (2,909) (5,317)

Ill. Unemployment Taxes Payable - - - - - - - - 208 457 457 - 94 - (94) Massachusetts Unemployment Taxes - - - - - - - - 104 169 226 47 45 47 1

Arizona (prev WA) Unemployment Taxes - - - - - - - - ▇▇▇ ▇▇▇ ▇▇▇ - 112 - (112) Georgia (prev CO) Unemployment Taxes (6) (6) (6) (6) (6) (6) (6) (6) 3 3 3 (6) (4) (6) (2)

Federal Unemployment Taxes Payable 251 364 156 223 280 149 294 408 2,715 4,016 4,359 4,499 1,476 4,499 3,023

Florida (prev Ca) Unemployment Taxes (0) (0) (0) (0) (0) (0) (0) (▇) ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ 364 244

Kansas Unemployment Taxes 182 182 182 182 182 182 182 182 182 182 182 182 182 182 - Wisc. Sales Tax Payable 18 - - - 315 315 - - - - - - 54 - (54) Wash. Sales Tax Payable 0 0 155 254 254 1,531 4,363 4,363 4,363 400 571 928 1,432 928 (504)

California Sales Tax Withheld 1,536 600 1,600 3,427 3,694 7,228 3,626 4,618 8,857 1,956 1,581 5,150 3,656 5,150 1,493

LT Taxes Payable 5,107 4,671 3,907 5,834 6,733 10,590 10,031 12,162 23,885 17,002 19,568 9,595 10,757 9,595 (1,163)

 

 

1

1

1

1

1

1Insurance (Prop. & Lia.) Payable 68,738 92,076 71,340 94,442 73,695 98,695 - (20,736) 4,264 28,473 10,435 35,435 46,405 35,435 (10,970)

Vacation Wages Payable 152,976 162,370 134,805 141,480 144,719 156,844 135,549 114,317 98,819 105,812 108,498 121,799 131,499 121,799 (9,700)

Holiday Wages Payable 19,474 15,488 11,484 29,484 25,064 43,064 45,905 (4,942) (56,352) (38,352) (20,352) (2,352) 5,635 (2,352) (7,986)

FFCRA Wages Payable (37,141) (37,217) (12,640) (12,640) (14,531) (16,478) (4,220) (4,220) (4,220) (1,947) (1,947) - (12,267) - 12,267

Personal Property Taxes Payable 9,900 11,550 13,200 14,850 16,500 18,150 12,175 1,200 2,400 3,600 4,800 6,000 9,527 6,000 (3,527)

Real Estate Taxes Payable 36,000 42,000 48,000 54,000 60,000 66,000 61,053 67,053 12,000 18,000 24,000 30,000 43,175 30,000 (13,175)

 

LT Other Payables 249,948 286,266 266,189 321,616 305,448 366,275 250,463 152,672 56,911 115,586 125,434 190,882 223,974 190,882 (33,093)

 

 

---

 

1

1

1Accrued Payroll - Production Wages 89,367 116,203 49,793 64,488 77,867 87,082 83,511 13,561 60,483 59,691 83,666 90,578 73,024 90,578 17,554

Accrued Payroll - Indirect Wages 21,381 27,269 10,811 16,300 23,105 25,508 23,760 3,418 14,834 15,392 23,539 28,246 19,464 28,246 8,783

Accrued Payroll - Office Wages 107,299 140,293 55,450 77,641 98,029 111,605 103,246 19,579 70,421 61,954 100,023 107,561 87,758 107,561 19,802

 

1 Accrued Bonuses - LT Accrued Payroll 218,046		- 283,764	- 116,054	- 158,429	- 199,002	- 224,194	55,000 265,516	5,000 41,558	- 145,738	- 137,037	- 207,227	- 226,385
1 Accrued Medical Expenses 240,809 246,025 211,854 194,089 101,835 132,240 179,806 50,581 57,898 (147,197) (198,090) (77,566) 1 Accrued Dental Expenses 17,661 17,967 17,665 18,629 18,355 14,198 7,467 6,028 4,536 2,558 338 (533) 1 Accrued Expenses- Misc. 13,000 2,500 5,000 2,516 10,000 52,399 56,024 24,823 55,167 13,878 16,878 19,878 1 Accrued Legal & Accounting Fees 36,445 43,642 46,002 25,691 25,716 24,861 - 10,000 14,820 21,892 31,892 41,892
1	Accrued Sales Promotions 89,603	92,603	95,603	113,603	131,603	149,603	167,603	175,936	86,919	95,253	103,586	111,919
LT	Accrued Expenses 397,518	402,737	376,123	354,528	287,509	373,300	410,899	267,369	219,340	(13,616)	(45,396)	95,589
	Total Current Liabilities 2,732,035	2,192,074	2,147,595	2,095,618	2,411,208	2,401,431	2,507,901	2,361,220	2,788,531	2,875,894	3,240,959	3,622,585

5,000 - (5,000)

 

185,246 226,385 41,139

 

82,690 (77,566) (160,257)

10,406 (533) (10,939)

22,672 19,878 (2,794)

26,904 41,892 14,987

117,819 111,919 (5,900)

260,492 95,589 (164,903)

 

2,486,140 3,339,742 853,603

 

Acquired Working Capital

 

 

 

 

Difference

Estimated Closing Working Capital

 

Target Working Capital

 

---

 

1

1

 

 

 

Net Working Capital 5/31/2021 6/30/2021 7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021 1/31/2022 2/28/2022 3/31/2022 4/30/2022Current Assets 7,419,994 7,256,466 7,271,839 7,114,414 8,211,484 8,035,217 7,059,622 6,979,050 7,131,469 7,507,301 8,217,626 9,156,615 7,613,425 8,614,175 1,000,751

Current Liabilities 2,132,035 2,192,074 2,147,595 2,095,618 2,411,208 2,401,431 2,507,901 2,239,692 2,788,531 2,728,934 2,848,913 3,339,742 2,486,140 3,339,742 853,603

 

Net Working Capital (Monthly 5,287,958 5,064,392 5,124,245 5,018,796 5,800,276 5,633,785 4,551,721 4,739,359 4,342,938 4,778,367 5,368,712 5,816,873 5,127,285 5,274,433 147,148

 

Net Working Capital (TTM) 5,492,311 5,492,989 5,495,809 5,511,181 5,593,558 5,538,525 5,421,479 5,319,241 5,210,339 5,116,524 5,090,018 5,127,285

 

 

Target Working Capital Adjustments

Normalized accrued expenses 71,243 82,824 94,404 105,985 111,160 122,740 - 11,839 23,678 34,618 46,457 58,296 63,604 58,296 (5,308)

Allowance for doubtful accounts 213,886 228,886 243,886 258,886 273,886 288,886 123,886 138,886 153,886 168,886 183,886 198,323 206,339 198,323 (8,017)

LIFO inventory reserve 1,956,569 1,956,569 1,956,569 1,956,569 1,956,569 1,956,569 2,522,432 2,522,432 2,522,432 2,522,432 2,522,432 2,522,432 2,239,500 2,522,432 282,932

Reserve for obsolete inventory 60,000 70,000 80,000 90,000 100,000 110,000 - 10,000 20,000 30,000 40,000 50,000 55,000 50,000 (5,000)

Management salary adjustments 24,328 24,328 38,174 33,559 33,559 36,059 33,559 29,000 29,000 29,000 29,000 29,000 30,714 29,000 (1,714)

Non-operating/aged accounts payable 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 30,963 -

Accrued Medical Expense Adjustmen⁽t⁴⁾ - (110,185) 110,185

 

 

Net Working Capital	5/31/2021	6/30/2021	7/31/2021	8/31/2021	9/30/2021	10/31/2021	11/30/2021	12/31/2021	1/31/2022	2/28/2022	3/31/2022	4/30/2022
Current Assets	9,650,449	9,511,921	9,552,294	9,419,869	10,541,939	10,390,672	9,705,940	9,650,369	9,827,787	10,228,619	10,963,944	11,927,369
Current Liabilities	2,005,501	2,053,959	1,984,054	1,925,111	2,235,526	2,211,670	2,443,380	2,167,890	2,704,890	2,634,353	2,742,494	3,221,484
Adjusted Net Working Capita	7,644,948	7,457,962	7,568,241	7,494,758	8,306,413	8,179,002	7,262,561	7,482,479	7,122,897	7,594,266	8,221,450	8,705,886
Net Working Capital (TTM)	7,942,623	7,921,667	7,907,055	7,907,658	7,977,781	7,913,751	7,811,561	7,756,390	7,694,823	7,648,214	7,668,935	7,753,405

Target Working Capital Analysis

 

 

 

 

Difference

Estimated Closing Working Capital

 

Target Working Capital

10,114,264 11,384,930 1,270,665

2,360,859 3,331,669 970,809

7,753,405 8,053,261 299,856

 

 

---

 

 

Notes:

 

---

Target Working Capital 7,753,405

 

Target Net Working Capital

Valuation Range

 

 

---

 

---