UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 28, 2022
Live Ventures Incorporated
(Exact Name of Registrant as Specified in Charter)
Nevada |
001-33937 |
85-0206668 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
325 E. Warm Springs Road, Suite 102 Las Vegas, NV 89119 |
(Address of Principal Executive Offices and Zip Code) |
Registrant’s telephone number, including area code: 702-997-5968
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.001 par value per share |
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LIVE |
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The NASDAQ Stock Market LLC (The NASDAQ Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry into a Material Definitive Agreement.
Acquisition of KINETIC
Precision Industries, Inc., a Pennsylvania corporation (the “Purchaser”) and a wholly owned subsidiary of Live Ventures Incorporated (the “Company”), acquired 100% of the issued and outstanding shares of common stock, no par value per share (the “Purchased Shares”), of The Kinetic Co., Inc. (“Kinetic”), a Wisconsin corporation. The acquisition was accomplished through a Purchase Agreement (the “Purchase Agreement”) with an effective date of June 28, 2022 (the “Effective Date”). The parties to the Purchase Agreement were Cash L. Masters Revocable Trust dated October 19, 2005 (the “Seller”) and Cash L. Masters (“Mr. Masters”, an individual residing in the State of Wisconsin, who joined with the Seller in providing certain representations and warranties, covenants, and indemnification in favor of the Purchaser). The purchase price for the Shares (the “Share Purchase Price”) was approximately $18.9 million (subject to adjustment), plus the real estate purchase of $4.5 million, both paid as set forth below. Under certain conditions, the Share Purchase Price may be increased by up to two additional contingent purchase price payments, each in the amount of $1 million.
On June 27, 2022, and in connection with the closing of the acquisition of the Shares, the Purchaser entered into a Real Estate Purchase Agreement (the “B-6 Real Estate Agreement”) with Plan B-6, LLC (the “Real Estate Seller”), an affiliate of Kinetic, pursuant to which the Purchaser all of Kinetic’s right, title, and interest in and to the land and improvements (collectively, the “Real Estate”) that Kinetic uses in its operations. The transactions contemplated by the B-6 Real Estate Agreement also included the assignment by the Real Estate Seller to the Purchaser of all of the Real Estate Seller’s rights (as landlord) under that certain lease with Kinetic (as tenant), dated December 1, 2021. The purchase price for the Real Estate was $4.5 million. On an overnight basis, the Company provided the Purchaser with the funds (the “Overnight Funding”) required to consummate the transactions contemplated by the B-6 Real Estate Agreement through an advance of an equal amount to the Company by Isaac Capital Group LLC (“ICG”) under its unsecured $6 million revolving line of credit promissory note that ICG had provided to the Company (the “Unsecured Revolving Credit Facility”)2.
As of the Effective Date, the Purchaser and the Moss Family Trust (“Moss”) consummated a Purchase Agreement (the “Moss Real Estate Purchase Agreement”), pursuant to which the Purchaser sold the Real Estate to Moss. The sale price of the Real Estate under the Moss Real Estate Purchase Agreement was approximately $8.9 million. Of such gross sale amount, the Purchaser (i) repaid the Company the $4.5 million Overnight Funding and the Company repaid its equivalent advance to ICG and (ii) utilized the $4.4 million balance (the “Moss Balance”) as a portion of the Purchase Price.
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1 The Note bears interest at the rate of 7% per annum. Interest accrues as of the date of the Note and is payable quarterly in arrears on the first business day of each of July, October, January, and April. The principal and all then-accrued and unpaid interest is due in full on September 27, 2025. Further, in the event of a change in control of Kinetic or of the Purchaser, the then-entire unpaid principal balance owed under the Note, together with all accrued interest and any other amounts owed thereunder, shall be due and payable in full.
2 The maximum availability of the Unsecured Revolving Credit Facility was temporarily increased from one million dollars to six million dollars for the purpose of funding the Share Purchase Price.
On the Execution Date, Moss, as lessor, and Kinetic and the Purchaser, as lessees, entered into a 20-year Lease Agreement (the “Lease Agreement”) for the Real Estate. The Lease provides the lessees with two five-year options to renew. The base rent under the Lease Agreement is $50,000 per month for the first year of the term of the Lease Agreement with a 2% per annum escalator. The Lease Agreement is a “net lease,” such that the lessees are also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the Real Property incurred by Moss. Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that each of the two five-year options will be exercised.
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On the Execution Date, Kinetic agreed to the continued employment with Mr. Masters (as Head of Equipment Operations), Rocky Sperka (as Chief Administrative Officer), and Jay Judkins (as Chief Executive Officer). Each employment agreement (or, in the case of Mr. Sperka, an amendment to his current employment agreement; collectively, the “Employment Agreements”) provides that each of Messrs. Masters, Sperka, and Judkins will be entitled to, among other items, an annual base salary, a performance-based bonus, and, under certain circumstances, severance benefits contingent upon the execution of a general release of claims in favor of Kinetic following their termination of employment. Each Employment Agreement contains confidentiality, non-competition, non-solicitation, and non-disparagement provisions.
The Purchase Agreement contains customary representations, warranties, covenants, and agreements of the Purchaser, the Seller, and Mr. Masters, including indemnification rights in favor of the Purchaser.
The foregoing brief summary descriptions of certain terms and provisions of the Purchase Agreement, the B-6 Real Estate Agreement, Moss Real Estate Purchase Agreement, the Lease Agreement, and the Employment Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of (i) the Purchase Agreement, a copy of which is attached as Exhibit 10.97 to this Current Report on Form 8-K, (ii) the B-6 Real Estate Agreement, a copy of which is attached as Exhibit 10.98 to this Current Report on Form 8-K, (iii) the Moss Real Estate Purchase Agreement, a copy of which is attached as Exhibit 10.99 to this Current Report on Form 8-K, (iv) the Lease Agreement, a copy of which is attached as Exhibit 10.100 to this Current Report on Form 8-K, and (v) the Employment Agreements, a copy of which is attached as Exhibits 10.101, 10.102, and 10.103, respectively, to this Current Report on Form 8-K.
The Purchase Agreement, the B-6 Real Estate Agreement, Moss Real Estate Purchase Agreement, the Lease Agreement, and the Employment Agreements (collectively, the “June Agreements”) and the descriptions above have been included to provide investors and securityholders with certain information regarding the terms of each agreement. They are not intended to provide any other factual information about the Company, the Purchaser, Kinetic, or their respective subsidiaries, affiliates, or stockholders or the terms and conditions of the June Agreements. The representations, warranties, and covenants contained in the June Agreements were made only for purposes of the June Agreements as of their specific dates; were solely for the benefit of the parties to the respective June Agreement; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each party to the other for the purposes of allocating contractual risk between or among them that differs from those applicable to investors or securityholders. Investors and securityholders should be aware that the representations, warranties, and covenants or any description thereof may not reflect the actual state of facts or condition of the Company, the Purchaser, Kinetic, or any of their respective subsidiaries, affiliates, businesses, or securityholders. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the Effective Date. Accordingly, investors and securityholders should read the representations and warranties in the referenced agreements not in isolation but only in conjunction with the other information about the Company and its subsidiaries that the Company includes in reports, statements, and other filings it makes with the SEC.
Item 8.01. Other Events.
On June 30, 2022, Live Ventures issued a press release announcing the acquisition of Kinetic. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit Number |
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Description |
10.97 |
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10.98 |
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Real Estate Purchase Agreement by Plant B-6, LLC and Precision Industries, Inc., dated June 27, 2022 |
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10.99 |
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Real Estate Sales Agreement by Precision Industries, Inc. and Moss Family Trust, dated June 28, 2022 |
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10.100 |
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10.101 |
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Employment Agreement by and between The Kinetic Co., Inc. and Cash L. Masters |
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10.102 |
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First Amendment to Employment Agreement by and between The Kinetic Co., Inc. and Rocky Sperka |
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10.103 |
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Employment Agreement by and between The Kinetic Co., Inc. and Jay Judkins |
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LIVE VENTURES INCORPORATED |
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By: |
/s/ Jon Isaac |
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Name: Jon Isaac |
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Title: Chief Executive Officer |
Dated: July 5, 2022
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Exhibit 10.97
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
TABLE OF CONTENTS
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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
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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
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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
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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
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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 Rocky Sperka Exhibit A-3 – Employment Agreement with Jay Judkins
Exhibit B – Escrow Agreement Exhibit C – Promissory Note
Exhibit D – Estimated Closing Working Capital
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “Agreement”), dated as of June 28, 2022, is entered into by and among Cash L. Masters Revocable Trust dated October 19, 2005, Cash L. Masters, Trustee (“Seller”), Cash L. Masters, 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 6775 W. Loomis Road, Greendale, Wisconsin 53129;
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.
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“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 Frazier & Deeter, 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).
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“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 sue, 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.
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“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 6775 W. Loomis Road, Greendale, Wisconsin 53129, 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.
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“Earn-Out Payments” has the meaning set forth in Annex A hereto.
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“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 Jay Judkins and the First Amendment to Employment Agreement with Rocky Sperka, respectively, substantially in the forms of Exhibit A-1, Exhibit A-2 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.
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“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.
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“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, petty 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”);
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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,
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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
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Three Million Dollars ($3,000,000.00) made by Buyer in favor of Seller in substantially the form of Exhibit C hereto.
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“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.
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“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).
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“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.
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Buyer:
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Seller;
executed by the applicable directors and officers;
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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.
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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.
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manner that does not unreasonably interfere with the normal business operations of Buyer or the Company.
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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.
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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.
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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.
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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:
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(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.
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Section 3.10 Title to Assets; Real Property.
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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.
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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.
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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
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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
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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.
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or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.
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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.
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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.
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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.
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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.
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(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.
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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.
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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
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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
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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.
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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 Burch & 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.
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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.
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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.
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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
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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.
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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.
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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
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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
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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.
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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
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one or more of the Ancillary Documents, or the transactions contemplated hereby and
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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:
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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).
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(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”.
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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.
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Section 7.06 Payments.
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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
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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
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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 Burch 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 L. Masters Revocable Trust, dated October 19, 2005 Attn: Cash L. Masters, Trustee 6285 Parkview Rd. Greendale, WI 53129 E-mail: popeofgrinding@icloud.com |
with a copy (which shall not constitute notice) to: |
Davis & Kuelthau, s.c 111 E. Kilbourn Avenue, Ste 1400 Milwaukee, Wisconsin 53202 E-mail: gsell@dkattorneys.com or sfiducci@dkattorneys.com Attention: Gregory J. Sell or Scott E. Fiducci |
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If to Buyer: |
Precision Industries, Inc. c/o Live Ventures Incorporated 325 E. Warm Springs Road, Suite #102 Las Vegas, Nevada 89119 E-mail: tsedlak@pmsteel.com ealthofer@liveventures.com Attention: Tom Sedlak, Chief Executive Officer Eric Althofer, Chief Operating Officer and Managing Director (Finance) |
with a copy (which shall not constitute notice) to: |
Greenberg Traurig, LLP 10845 Griffith Peak Drive, Suite 600 Las Vegas, Nevada 89135 E-mail: shalmym@gtlaw.com Attention: Mike Shalmy |
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.
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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.
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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
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means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized, if applicable.
SELLER:
CASH L. MASTERS REVOCABLE TRUST, DATED OCTOBER 19, 2005
By: .._
Cash L. Masters, Trust e
BUYER:
PRECISION INDUSTRIES, INC.
By: _ Name: Tom Sedlak
Title: Chief Executive Officer
SELLER INDIVIDUAL:
Cash L. Masters
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 L. MASTERS REVOCABLE TRUST, DATED OCTOBER 19, 2005
By: Cash L. Masters, Trustee
BUYER:
PRECISION INDUSTRIES, INC.
By: Name: Tom Sedlak
Title: Chief Executive Officer
SELLER INDIVIDUAL:
Cash L. Masters
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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.
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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.
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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.
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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).
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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 L. Masters, 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 L. Masters Revocable Trust dated October 19, 2005, Cash L. Masters, 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.
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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;
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(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.
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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 L. Masters |
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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 Marshall 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 Rocky Sperka
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 ROCKY SPERKA, 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: Tom Sedlak, CEO Rocky Sperka
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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 L. Masters, and the Cash L. Masters 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 Jay Judkins
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 Jay Judkins, 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.”
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(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;
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(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.
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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.
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(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.
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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.
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Agreement. Each provision of this Agreement is separable from every other provision and constitutes a separate and distinct covenant.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first set forth above.
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EMPLOYER:
The Kinetic Co., Inc.
By: Name: Title:
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EMPLOYEE:
Jay Judkins
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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 Marshall 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 L. MASTERS REVOCABLE TRUST dated October 19, 2005, CASH L. MASTERS, 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 Moody’s (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: Eric Althofer, Chief Operating Officer and Managing Director (Finance)
325 E. Warm Springs Road, Suite #102 Las Vegas, Nevada 89119
E-mail: ealthofer@liveventures.com
and to:
Greenberg Traurig LLP Attn: Mike Shalmy
10845 Griffith Peak Drive, Suite 600 Las Vegas, Nevada 89135
If to Seller, at:
Cash L. Masters Revocable Trust,
Dated October 19, 2005 c/o Cash L. Masters 6285 Parkview Road
Greendale, Wisconsin 53129
E-mail: popeofgrinding@icloud.com
12
and to:
Davis & Kuelthau, s.c.
Attn: Gregory J. Sell or Scott E. Fiducci 111 East Kilbourn Avenue, Ste 1400
Milwaukee, Wisconsin 53202 Email: gsell@dkattorneys.com
sfiducci@dkattorneys.com
If to Escrow Agent, at: U.S. Bank National Association, as Escrow Agent
ATTN: Thomas Maple
Global Corporate Trust Services 60 Livingston Avenue
EP-MN-WS3C
St. Paul, MN 55107
Telephone: 651-466-6304
E-mail: tom.maple1@usbank.com and to:
U.S. Bank National Association ATTN: Melanie Xiong Product Operations
60 Livingston Avenue EP-MN-WS3T
St. Paul, MN 55107
Telephone: 651-466-6102
Facsimile: 866-691-4161
E-mail: melanie.xiong@usbank.com tfmcorporateescrowshared@usbank.com
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.
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 DODD-FRANK WALL 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 L. Masters |
|
|
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 L. Masters Revocable Trust, dated October 19, 2005, Cash
L. Masters, 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 L. MASTERS REVOCABLE
TRUST, dated October 19, 2005
By: Name:
By: Cash L. Masters, 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 L. MASTERS REVOCABLE TRUST, dated October 19, 2005, Cash L. Masters, Trustee ("Payee"), or its assigns, at 6285 Parkview Road, Greendale, Wisconsin 53029, 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, Inc.in favor of the Cash L. Masters 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, Inc.in favor of the Cash L. Masters 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, Inc.in favor of the Cash L. Masters 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, Inc.in favor of the Cash L. Masters 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) (254) 250 250 250 431 250 (181)
Employee Owned Tooling In/Out 63 63 63 63 63 97 210 (88) (25) 141 274 367 108 367 259
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 - - - - - - - - 293 375 366 342 115 342 228
Mass. Withholding Tax Payable 205 212 284 213 229 179 220 370 193 240 230 221 233 221 (12)
Arizona (prevCO) Withholding Tax Payable 252 198 316 219 222 259 224 401 428 233 243 291 274 291 17
Georgia Withholding Tax Payable 414 481 599 433 439 414 423 600 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 - - - - - - - - 447 447 447 - 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) (0) 323 378 378 364 120 364 244
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
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
EXECUTION COPY
Exhibit 10.98
REAL ESTATE PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT (this “Agreement”) is made and entered into this 27th day of June, 2022 (the “Effective Date”), by and between PRECISION INDUSTRIES, INC,, a Pennsylvania corporation (“Purchaser”), and PLANT B-6, LLC (“Seller”), a Wisconsin limited liability company.
RECITALS
NOW, THEREFORE, in consideration of the Recitals, the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
QB\68651263.4
limitation, all equipment, machinery, furnishings and supplies used in connection with the operation, ownership or management of the Real Property (the “Personal Property”).
2
3
of any Hazardous Substance except for Hazardous Substances used, generated, treated, stored and/or disposed of in the ordinary course of the business of the tenant conducted at the Property in compliance with Environmental Laws; and (vi) there are no underground or above ground storage tanks for storage of flammable, combustible or hazardous materials including, but not limited to, gasoline and heating oil, which are currently or which were previously located on or in the Real Property.
4
PURCHASER HEREBY AGREES THAT, IN CONNECTION WITH PURCHASING THE REAL PROPERTY, OTHER THAN SUCH WARRANTIES, PROMISES, GUARANTEES AND REPRESENTATIONS AS ARE EXPRESSLY SET FORTH HEREIN, PURCHASER IS NOT RELYING UPON ANY WARRANTIES, PROMISES, GUARANTEES OR REPRESENTATIONS REGARDING THE PHYSICAL CONDITION OF THE REAL PROPERTY, ITS SUITABILITY FOR ANY PARTICULAR PURPOSE, OR ITS COMPLIANCE WITH ANY ZONING OR OTHER LAWS OR ORDINANCES REGULATING THE USE OF THE REAL PROPERTY, WHETHER MADE BY SELLER OR ANYONE ACTING OR CLAIMING TO ACT ON BEHALF OF SELLER IN PURCHASING THE REAL PROPERTY, AND THAT PURCHASER IS PURCHASING THE REAL PROPERTY ON AN “AS IS,” “WHERE IS” BASIS WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WHATSOEVER BEING MADE BY SELLER. IN THE EVENT ANY EXPRESS OR IMPLIED WARRANTIES HAVE BEEN MADE REGARDING THE REAL PROPERTY OR THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT, SELLER HEREBY DISCLAIMS AND DENIES SUCH REPRESENTATIONS OR WARRANTIES.
5
Settlement Statement.
6
(A) first, to Seller to the extent of third party expenses incurred by Seller in protesting and obtaining such Tax Refund, (B) second, to Purchaser to the extent that such Tax Refund is required to be paid to (or credited against other amounts payable by) the tenant under the Lease, and (C) third, (x) to Seller if such Tax Refund is for any tax period which ends before the Closing, (y) to Purchaser if such Tax Refund relates to any tax period which commences after the Closing, and
(z) with respect to any Tax Refund for any tax period in which the Closing occurs, to Seller and Purchaser, prorated on a per diem basis. If Seller or Purchaser receives any Tax Refund, then each shall retain or pay such amounts (or portions thereof) in order that such payments are applied in the manner set forth in this Subsection.
7
8
misrepresentation or breach of warranty by Seller in this Agreement or in any document, certificate, or exhibit given or delivered by Seller at the Closing.
9
If to Purchaser: Precision Industries, Inc.
c/o Live Ventures Incorporated
325 E. Warm Springs Road, Suite #102 Las Vegas, Nevada 89119
E-mail: tsedlak@pmsteel.com ealthofer@liveventures.com
Attention: Tom Sedlak, Chief Executive Officer Eric Althofer, Chief Operating Officer and Managing Director (Finance)
10
With a copy to: Greenberg Traurig, LLP
10845 Griffith Peak Drive, Suite 600 Las Vegas, Nevada 89135
Attn: Mike Shalmy
E-mail: shalmym@gtlaw.com
If to Seller: Plant B-6, LLC 6285 Parkview Road
Greendale, WI 53129 Attn: Cash L. Masters
E-mail: popeofgrinding@icloud.com
With a copy to: Davis & Kuelthau, s.c.
111 East Kilbourn Avenue, Suite 1400
Milwaukee, WI 53202
Attn: Scott E. Fiducci, Esq. or Gregory J. Sell, Esq.
Email: sfiducci@dkattorneys.com gsell@dkattorneys.com
Any address fixed pursuant to the foregoing may be changed by the addressee by notice given pursuant to this Section 9.9.
11
[Signature Page Follows]
12
DATED as of the day and year first above written.
PURCHASER:
PRECISION INDUSTRIES, INC.
SELLER:
PLANT B-6, LLC
By: Cash L. Masters Revocable Trust, dated October 19, 2005, Sole Member
By: _ Tom Sedlak, CEO
By: ---=--- -+ '
Cash L. Masters, Truste
Dated: June 27, 2022 Dated: June 27, 2022
EXHIBIT A
LEGAL DESCRIPTION
All that part of the Northeast 1/4 of Section 3, Township 5 North, Range 21 East, in the Village of Greendale, Milwaukee County, Wisconsin, bounded and described as follows:
Commencing at the Southwest corner of said Northeast 1/4 of Section 3; thence South 86°23'00" East along the South line of said Northeast 1/4 of Section 3, 60.00 feet to the place of beginning of the lands herein described; thence continue South 86°23'00" East along the South line of said Northeast 1/4 of Section 3, 601.00 feet to a point which is 279.00 feet West of the intersection of the South line of the park heretofore granted to Milwaukee County, recorded July 6, 1937, in Milwaukee County Recorder's Office as Document No. 2137727 in Volume 1476 of Deeds, page 305, and the South line of said Northeast 1/4 of Section 3; thence North 3°37'00" East, 588.77 feet to a point which is on the South line of said park; thence Northwesterly along said park line 95.38 feet along the arc of a curve, the center of which is to the Southwest, the radius of which is 997.38 feet, and the chord of which bears North 36°55'18" West, 95.34 feet; thence North 39°39'40" West (recorded North 42° 26'39" West) along said park line 267.20 feet to a point which is on the Southeasterly line of Wisconsin State Trunk Highway 36 (Loomis Road); thence Southwesterly along the Southeasterly line of Highway 36, 509.18 feet along the arc of a curve, the center of which is to the Northeast, the radius of which is 4,074.28 feet and the chord of which bears South 47°39'20'; West, 508.84 feet to a point which is 60.00 feet East of the West line of said Northeast 1/4 of said Section 3; thence South 3°52'00" West along a line which is parallel to and 60.00 feet East of the West line of said Northeast 1/4 of said Section 3, 489.97 feet to the place of beginning.
Parcel No. 710-9996-000
Address per tax roll: 6775 W Loomis Road
A-1
EXHIBIT B LEASE
B-1
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is
entered into as of the 27th day of June, 2022, between PLANT B-6, LLC, a Wisconsin limited liability company (“Assignor”), and PRECISION INDUSTRIES, INC., a Pennsylvania corporation (“Assignee”).
RECITALS:
NOW, THEREFORE, for and in consideration of the foregoing recitals, which are incorporated herein, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, Assignor and Assignee hereby agree as follows:
C-1
[Signature Page Follows]
C-2
IN WITNESS WHEREOF, Assignor and Assignee have each caused this Assignment to be executed by its duly authorized signatory as of the day and year first above written.
ASSIGNEE:
PRECISION INDUSTRIES, INC.
By: Tom Sedlak, CEO
Dated: June 27, 2022 |
ASSIGNOR:
PLANT B-6, LLC
By: Cash L. Masters Revocable Trust, dated October 19, 2005, Sole Member
By: Cash L. Masters, Trustee
Dated: June 27, 2022 |
C-3
N:\DOCS\91661\00003\15048263
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
Exhibit 10.99
PURCHASE AGREEMENT
THIS DOCUMENT IS MORE THAN A RECEIPT FOR MONEY. IT IS INTENDED TO BE A LEGALLY BINDING AGREEMENT. READ IT CAREFULLY.
Marcus & Millichap Real Estate Investment Services (“Agent”), as agent for SELLING ENTITY (“Seller”), has received from Moss Family Trust (“Buyer”) the sum of one hundred thousand dollars ($ 100,000) in the form of wire transfer . This sum is a deposit (“Deposit”) to be applied to the purchase price of that certain real property (referred to as the “Property”) located in the City of Greendale , County of Milwaukee , State of Wisconsin , and more particularly described as follows:
Site Address 6775 W LOOMIS RD GREENDALE, WI 53129 Parcel No. (APN) 710-9996-000
TERMS AND CONDITIONS
Seller agrees to sell the Property, and Buyer agrees to purchase the Property, on the following terms and conditions:
Seller shall convey by grant deed to Buyer (or to such other person or entity as Buyer may specify) marketable fee title subject only to the exceptions approved by Buyer in accordance with this Agreement. Title shall be insured by a standard Wisconsin Land Title Association owner's policy of title insurance issued by the Title Company in the amount of the purchase price with premium paid by Seller .
MI Purch |
1 of 9 |
Buyer's Initials |
|
Seller's Initials |
|
Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
NO FINANCING CONTINGENCY ALL CASH. Buyer may encumber the property with debt but it will not be a contingency to closing.
. BOOKS AND RECORDS
Buyer shall acknowledge receipt of these items in writing. Buyer shall have thirty ( 30 ) calendar days following receipt thereof to review and approve in writing each of these items. If Buyer fails to approve these items within the specified time, this Agreement shall be rendered null and void, Buyer's entire deposit shall be returned, and Buyer and Seller shall have no further obligations hereunder.
. PHYSICAL INSPECTION
STATE AND LOCAL LAWS
TENANT FINANCIAL INFORMATION (Leased Properties)
MI Purch |
2 of 9 |
Buyer's Initials |
|
Seller's Initials |
|
Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
. OTHER INSPECTION
11a. Standard
11b. ESTOPPEL CERTIFICATES NOT APPLICABLE
Buyer's Initials |
|
Seller's Initials |
|
MI Purch |
3 of 9 |
Buyer's Initials |
|
Seller's Initials |
|
Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
Buyer's Initials |
|
Seller's Initials |
|
20a. License disclosure 20b. License disclosure
22b. DUAL AGENCY
MI Purch |
4 of 9 |
Buyer's Initials |
|
Seller's Initials |
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Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
Buyer agrees that investigation and analysis of the foregoing matters is Buyer's sole responsibility and that Buyer shall not hold Agent responsible therefor. Buyer further agrees to reaffirm its acknowledgment of this disclaimer at close of escrow and to confirm that it has relied upon no representations of Agent in connection with its acquisition of the Property.
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( ) 1. Seller warrants that the Property was constructed after 1978.
( ) 2. Seller is not sure when the Property was constructed and/or has reason to believe that lead-based paint hazards may be present (Attach “LEAD-BASED PAINT DISCLOSURE ADDENDUM TO PURCHASE AGREEMENT”).
Buyer is advised to consider engaging the services of an environmental or industrial hygienist (or similar, qualified professional) to inspect and test for the presence of harmful mold, fungi, and botanical allergens and substances as part of Buyer’s physical condition inspection of the Property, and Buyer is further advised to obtain from such qualified professionals information regarding the level of health-related risk involved, if any, and the advisability and feasibility of eradication and abatement, if any.
Buyer is expressly cautioned that Agent has no expertise in this area and is, therefore, incapable of conducting any level of inspection of the Property for the possible presence of mold and botanical allergens. Buyer acknowledges that Agent has not made any investigation, determination, warranty or representation with respect to the possible presence of mold or other botanical allergens, and Buyer agrees that the investigation and analysis of the foregoing matters is Buyer’s sole responsibility and that Buyer shall not hold Agent responsible therefore.
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Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
The arbitration will proceed in the county where Agent’s office is located and be conducted by the American Arbitration Association (“AAA”), or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s then-applicable Commercial Arbitration Rules (the “Rules”). Any party who fails or refuses to submit to arbitration following a demand by the other party shall bear all costs and expenses, including attorneys’ fees, incurred by such other party in compelling arbitration.
Any arbitration will be decided by a single arbitrator selected according to the Rules. The arbitrator will decide any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication and may grant any remedy or relief that a court could order or grant on similar motions. The arbitrator shall apply the provisions of this Purchase Agreement without varying therefrom, and shall not have the power to add to, modify, or change any of the provisions hereof.
In any arbitration proceeding discovery will be permitted only in accordance with the terms of this paragraph. Discovery by each party shall be limited to: (i) a maximum number of five (5) depositions limited to four hours each;
(ii) requests for production of documents; (iii) two interrogatories: one inquiring into the amount of damages sought by the other party and another into the calculation of those damages; and (iv) subpoenas upon third parties for production of documents, depositions, and to appear at a hearing. The scope of discovery may be expanded only upon the mutual consent of the parties. Discovery not set forth in this paragraph shall not be permitted.
The Parties understand and agree that they are entering into this arbitration agreement voluntarily, and that by doing so they are waiving their rights to a jury trial or to have their claims otherwise litigated in court.
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Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
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Copyright Marcus & Millichap |
DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
SELLER UNDERSTANDS AND ACKNOWLEGES THAT BROKER IS NOT QUALIFIED TO PROVIDE, AND HAS NOT BEEN CONTRACTED TO PROVIDE, LEGAL, FINANCIAL OR TAX ADVICE, AND THAT ANY SUCH ADVICE MUST BE OBTAINED FROM SELLER’S ATTORNEY, ACCOUNTANT OR TAX PROFESSIONAL
The undersigned Buyer hereby offers and agrees to purchase the above described Property for the price and upon the terms and conditions herein stated.
This offer is made by Buyer to Seller on this day of , 20 . The undersigned Buyer hereby acknowledges receipt of an executed copy of this Agreement, including the Agency Disclosure contained in Paragraph 22, above.
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3/14/2022 | 09:11:34 PDT |
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SELLER'S ACCEPTANCE AND AGREEMENT TO PAY COMMISSION
The undersigned Seller accepts the foregoing offer and agrees to sell the Property to Buyer for the price and on the terms and conditions stated herein. Seller acknowledges receipt of an executed copy of this Agreement and authorizes Agent to deliver an executed copy to Buyer.
Seller reaffirms its agreement to pay to Agent a real estate brokerage commission pursuant to the terms of that certain Representation Agreement between Agent and Seller dated , 20 , which shall remain in full force and effect. Said commission is payable in full on the Closing Date and shall be paid in cash through escrow. Escrow Holder is directed to make such payment to Agent from Seller's proceeds of sale. The provisions of this paragraph may not be amended or modified without the written consent of Agent.
Seller acknowledges and agrees that payment of said commission is not contingent upon the closing of the transaction contemplated by this Agreement, and that, in the event completion of the sale is prevented by default of Seller, then Seller shall immediately be obligated to pay to Agent the entire commission. Seller agrees that in the event completion of the sale is prevented by default of Buyer, then Seller shall be obligated to pay to Agent an amount equal to one half of any damages or other monetary compensation (including liquidated damages) collected from Buyer by suit or otherwise as a consequence of Buyer's default, if and when such damages or other monetary compensation are collected; provided, however, that the total amount paid to Agent by Seller shall not in any case exceed the brokerage commission hereinabove set forth. Seller acknowledges and agrees that the existence of any direct claim which Agent may have against Buyer in the event of Buyer's default shall not alter or in any way limit the obligations of Seller to Agent as set forth herein.
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DocuSign Envelope ID: 7307CDC8-1724-49C3-8CEF-A897D6A7CF66
DocuSign Envelope ID: 6062340F-019D-43F5-B371-265B6F6A577E
Agent accepts and agrees to the foregoing.
AGENT: MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES
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Copyright Marcus & Millichap |
Exhibit 10.100
LEASE
BETWEEN MOSS FAMILY TRUST
LESSOR
AND
THE KINETIC CO., INC. & PRECISION INDUSTRIES, INC. LESSEE
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LEASE
THIS LEASE AGREEMENT (this "Lease") is dated as of the 28th day of June, 2022 (the “Effective date”) by and between The Kinetic Co., Inc. a Wisconsin corporation & Precision Industries, Inc., d/b/a Precision Marshall Steel Company, a Pennsylvania corporation (“Lessee”), and Moss Family Trust, a California Trust ("Lessor").
WITNESSETH:
WHEREAS, Lessee desires to lease the entire property, including the building(s) thereon, consisting of approximately 74,295 square feet, located at 6775 W Loomis Road, Greendale, WI 53129 (the “Demised Premises”) and Lessor agrees to lease the Demised Premises to Lessee.
NOW, THEREFORE, in consideration of the Demised Premises, mutual covenants contained in this Lease, and each act to be performed hereunder by the parties, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee covenant and agree as follows:
ARTICLE I. DEMISED PREMISES
Section 1.1 Lessor leases to Lessee, and Lessee leases and accepts from Lessor, the Demised Premises (designated as Milwaukee County tax parcels 710-9996-000), which Demised Premises include the structure, buildings, and improvements located thereon (the structures, buildings, and improvements on the Demised Premises are hereinafter called the “Improvements”).
Section 1.2 Acceptance of Demised Premises In As-Is Condition. LESSEE ACKNOWLEDGES THAT IT IS FAMILIAR WITH THE DEMISED PREMISES AND THE LEGALLY PERMISSIBLE USES THEREON. ACCORDINGLY, LESSEE ACCEPTS POSSESSION OF THE DEMISED PREMISES IN ITS "AS IS" CONDITION AS OF THE LEASE COMMENCEMENT DATE (as defined in Section 2.1). LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE DEMISED PREMISES, EITHER AS TO ITS FITNESS FOR USE, ITS DESIGN OR CONDITION, OR ANY PARTICULAR USE OR PURPOSE TO WHICH THE DEMISED PREMISES MAY BE PUT, OR OTHERWISE, OR THE EXISTENCE OF ANY DEFECTS, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE BORNE BY LESSEE.
ARTICLE II. TERM AND RENT
Section 2.1 Term. Lessee’s obligation to pay rent and occupy the Demised Premises in accordance with this Lease shall be for a term of twenty (20) years (the “Term”), commencing on the Effective Date (“Lease Commencement Date”) and ending on the last day of the month twenty (20) years following the Commencement Date, unless terminated at an earlier date for any reason set forth in this Lease.
Section 2.2 Renewal Periods. Lessee shall have and is hereby granted two (2) successive separate options to renew and extend the Term of this Lease from the date or dates upon which it would otherwise expire, for each separate successive renewal period, which shall
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be for a period of five (5) years each (each such period being called a “Renewal Period”). Each such Renewal Period shall follow consecutively upon the expiration of the initial term as or upon the expiration of the prior Renewal Period, as the case may be, and each such Renewal Period shall, upon commencement thereof, be deemed included in references to “the term of this Lease” and “the full term of this Lease”. Lessee’s option with respect to each Renewal Period shall be exercised by Lessee by giving written notice to Lessor of Lessee’s exercise of same not later than one hundred and eighty (180) days prior to the expiration date of the initial term or the then current Renewal Period, as the case may be. No option shall be deemed validly exercised unless the option affecting the preceding Renewal Period shall have been validly exercised. If Lessee elects to exercise any one or more of such options, the full term of this Lease shall be automatically extended for the Renewal Period or Periods covered by the option or options so exercised without execution of an extension or renewal lease. Each Renewal Period shall be on all of the same terms and conditions as are in effect hereunder immediately preceding the commencement date of such Renewal Period, except that the Basic Annual Rent during the Renewal Periods shall be fair market value. Lessee shall have no further right or option to renew after expiration of the final Renewal Period.
Section 2.3 Holdover. If Lessee (or anyone claiming through Lessee) does not immediately surrender the Demised Premises or any portion thereof upon the expiration or earlier termination of the Term, then the Basic Rent (as hereinafter defined) payable by Lessee hereunder shall be increased to equal one hundred fifty percent (150%) of the Basic Rent in addition to all other sums that would have been payable pursuant to the provisions of this Lease if the Term had continued during such holdover period. During such holding over period, Lessee’s tenancy shall be from month to month in accordance with all the terms and conditions of this Lease.
Section 2.4 Statement of Commencement Date. The parties hereto shall, at the request of either party after the Lease Commencement Date has occurred, execute an instrument stating the Lease Commencement Date.
Section 2.5 Memorandum of Lease. As soon as practicable after execution of this Lease, upon request by either party, Lessor and Lessee shall execute, in recordable form, a Memorandum of Lease in the form annexed to this Lease as Exhibit A, and Lessee shall have the right to record the Memorandum of Lease in the appropriate recording office at Lessee’s cost.
Section 2.6 Rent. Commencing on the Lease Commencement Date, and during the initial lease year of the Term the annual rent payable by Lessee shall be Six Hundred Thousand dollars ($600,000), payable in monthly installments of Fifty Thousand Dollars ($50,000) per month (the “Basic Rent”). Thereafter, on each anniversary of the Lease Commencement Date, including during each Renewal Period, Basic Rent shall increase by two percent (2.0%). If this Lease shall commence on a date other than the first day of the month, then on the Lease Commencement Date the Lessee shall pay that portion of the Basic Rent which represent the amount due for the balance of the month together with the first full monthly payment of Basic Rent. Thereafter, all payments of Basic Rent shall be due and payable on the first (1st) day of each month during the Term.
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Section 2.7 Payments. Rent shall be made payable to Lessor and mailed to the address (if by check) or delivered by wire or ACH transfer, as directed in writing by Lessor. Lessor may, from time to time, change the method or address for delivery of rent in a written notice delivered to Lessee at least ten (10) days prior to the effective date of such change.
Section 2.8 Late Payment. Notwithstanding anything to the contrary contained herein, in the event that payment of rent is not received by Lessor within five (5) days of the due date, then Lessee shall pay, as additional rent, a sum equal to five (5%) percent of the unpaid rent as the late payment. In addition, Lessee shall be obligated to pay five percent (5%) of the unpaid rent from the date that such rent is due until paid in full.
Section 2.9 Net Lease. This Lease shall be an absolute net lease, so that this Lease shall yield all Basic Rent payable hereunder as an absolutely net return to Lessor. Accordingly, with the exception of Lessor's Income Taxes and as otherwise expressly set forth in this Lease, Lessee shall pay all taxes, insurance, assessments, and other costs, expenses and obligations of every kind and nature whatsoever relating to the ownership, including a management fee, with annual increases matching the lease term, and operation of the Demised Premises, such as taxes, assessments, insurance premiums and maintenance, repair and compliance costs, which accrue with respect to the Demised Premises prior to, on and after the Lease Commencement Date and prior to the expiration of the Term. Lessee's obligation to pay all amounts described in this Section 2.9 shall survive the expiration or earlier termination of this Lease. Lessee will pay property taxes directly to taxing authority.
Section 2.10 Impositions.
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Lessee's use thereof. Impositions shall not include any federal, state, or local tax imposed on Lessor that is based upon Lessor's income or profits ("Lessor’s Income Taxes").
Section 2.11 Security Deposit. As security for performance of its obligations hereunder, upon execution of this Lease, Lessee shall pay to Lessor on even date hereof a security deposit in the amount of Fifty Thousand Dollars ($50,000.00)
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(the “Security Deposit”). Upon the occurrence of any Event of Default (as hereinafter defined) by Lessee, Lessor may from time to time and without prejudice to any other remedy, use the Security Deposit to the extent necessary to make good any arrears of Basic Rent or any other amount payable hereunder, or any other damage, injury, expense or liability caused to the Lessor by such Event of Default. The remaining balance of such Security Deposit shall be returned by Lessor to Lessee promptly (within thirty (30) days) after termination of this Lease; provided, however, Lessor shall not be obligated to return the remaining balance of such Security Deposit until all payments due from Lessee to Lessor pursuant to this Lease shall have been made in full. The Security Deposit shall not be considered an advance payment of rent or measure of the Lessor’s damages in case of default by Lessee. Lessor may commingle such Security Deposit with other monies of the Lessor. Lessee shall receive no interest on such Security Deposit. Lessee shall be obligated to deposit with Lessor the amount necessary to restore the Security Deposit to its original amount within five (5) business days of Lessor’s notice to Lessee of any depletion of the Security Deposit. In the event of the sale or transfer of Lessor’s interest in the Premises, Lessor shall have the right to transfer the Security Deposit to the purchaser or transferee and upon such transfer Lessee shall look only to the new Lessor for the return of the Security Deposit and the Lessor shall thereupon be released from all liability to Lessee for the return of or accounting for such Security Deposit.
ARTICLE III. USE OF IMPROVEMENTS, ALTERATIONS, BUSINESS CONDUCT.
Section 3.1 Use. Lessee shall use and occupy the Demised Premises for no purpose except (a) purposes related to those for which the Demised Premises is being used as of the Effective Date and/or (b) other lawful purposes consistent with the industrial nature of the Demised Premises. Lessee shall not use or occupy the Demised Premises for any unlawful purpose, or in any manner that will violate the certificate of occupancy for the Demised Premises. Lessee shall, at Lessee's expense, comply with all present and future laws (including, without limitation, the Americans with Disabilities Act), ordinances (including without limitation, zoning ordinances and land use requirements), regulations, orders, recommendations, decisions, and decrees now or hereafter promulgated (including, without limitation, those made by any public or private agency), as any of the same may be amended from time to time (collectively, "Laws", and individually, ''Law") applicable to Lessee, the use, occupancy and condition of the Demised Premises and the business being conducted thereon, and all machinery, equipment, furnishings, fixtures and improvements on or used in connection with the Demised Premises. If any Law requires any occupancy or use permit or license for the Demised Premises or the operation of the business conducted therein, then Lessee shall obtain and keep current all such permits or licenses at Lessee's expense. Lessee shall deliver to Lessor, promptly upon request, copies of all such licenses and permits. If any Law requires any modification to the Demised Premises, Lessee shall perform such alterations, at its sole cost and expense, in accordance with the applicable terms and conditions of Section 3.2 below. Use of the Demised Premises is subject to all covenants, conditions, easements and restrictions of record, and Lessee shall comply with the same (but not with any of Lessor's obligations for and relating to borrowed money except as provided in this Lease or agreed by Lessee with Lessor’s lender). Lessee shall conduct its business in the Demised Premises in a reputable manner. Lessee shall have the right to erect and maintain directional or Lessee identification signs (but no third party signage such as, by
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way of example and not limitation, advertisements, political advocacy, or position statements) in or on the Demised Premises at such place or places as Lessee may choose, subject to all applicable Laws and ordinances.
Section 3.2 Alterations by Lessee. Except as otherwise provided in this Lease, any alterations and additions to the Demised Premises that Lessee may deem desirable during the Term may be made by Lessee, at Lessee’s sole cost and expense, but Lessor’s prior written consent (not to be unreasonably withheld, conditioned, or delayed) shall be required for any exterior alterations in excess of $200,000 at any one time, reductions or increase in size of the Demised Premises. Lessor shall promptly sign and execute such documents or otherwise evidence its approval, consent or grant of authority, as required by any public authorities having jurisdiction, to facilitate issuance to Lessee of necessary licenses or to permit Lessee to make or perform any permissible alteration or addition.
Section 3.3 Conduct of Business. Lessee shall not cause injury or waste to the Demised Premises, reasonable wear and tear excepted. Lessee shall keep the Demised Premises clean and free from rubbish, trash and garbage, and, at Lessee own expense, arrange for removal of same. Lessee shall store all such rubbish, trash and garbage within the Demised Premises.
Section 3.4 Hazardous Materials.
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would adversely affect or impair the value or marketability of the Demised Premises. "Environmental Law" means any present and future Laws, and other requirements or guidelines of governmental authorities applicable to the Demised Premises and relating to the environment and environmental conditions, industrial hygiene, public health or safety, or to any Hazardous Material (including, without limitation, CERCLA 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C, § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 33 U,S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq,, the Safe Drinking Water Act, 42 U.S,C. § 300f et seq., the Emergency Planning and Community Right-To-Know Act, 42 U,S.C. § 1101 et seq., the Occupational Safety and Health Act, 29 U.S,C. § 651 et seq., and any so-called "Super Fund" or "Super Lien" law, any Law requiring the filing of reports and notices relating to Hazardous Materials, environmental laws administered by the Environmental Protection Agency, and any similar state and local Laws).
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for (a) purposes related to those for which the Premises is being used as of the Effective Date and/or (b) other lawful purposes consistent with the industrial nature of the Premises.
(ii) to cure the same, at Lessee's sole cost and expense, in which event Lessee shall pay the reasonable costs thereof to Lessor as additional rent. Lessor shall use commercially reasonable efforts to ensure that any audit conducted pursuant to this Section 3.4(c) does not unreasonably interfere with Lessee's operations at the Demised Premises.
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Hazardous Materials at the Demised Premises.
ARTICLE IV. MAINTENANCE.
Section 4.1 Maintenance of Demised Premises. Except with respect to damage caused by the negligence or other acts of Lessor and/or Lessor’s agents, vendors, contractors, members, officers, directors, shareholders and employees (collectively, “Lessor’s Agents”) Lessee, at Lessee’s sole cost and expense, shall keep the Demised Premises, including all portions of the building, landscaping and equipment, in good condition and repair throughout the Term, reasonable wear and tear and the effects of time excepted; provided, however, that Lessee’s liability for any item of maintenance, repair or replacement shall be limited as set forth in Article VIII of this Lease. Lessor, at Lessor’s sole cost and expense, shall be responsible to repair or remedy damage caused by the negligence or other acts of Lessor and Lessor’s agents, contractors, vendors, invitees, and employees. In the event Lessor fails to remedy such damage as required above within twenty (20) days’ after receipt of notice form Lessee or in the event of an emergency, Lessee may make such repairs and Lessor will reimburse Lessee for such costs within thirty (30) days’ after receipt of the bill and if Lessor fails to reimburse Lessee, Lessee within such thirty (30) days, Lessee may deduct the cost from the next due Basic Rent payment. Notwithstanding anything in this Lease to the contrary, Lessor shall have the right, but not the obligation, to take such actions as are reasonably necessary to prevent or mitigate damages or injury to persons or property arising out of the need for Lessee to make repairs or maintain the Demised Premises but only where (a) an emergency exists, or (b) any delay or further delay in taking action would likely result in irreparable harm and/or cause, increase or compound damages or injury to persons or property. Lessor shall promptly give notice to the Lessee of its exercise of the foregoing right. Lessee shall reimburse Lessor the actual costs and expenses incurred in taking such actions within thirty (30) days after receipt of a statement therefore. Any such amounts due will be deemed additional rent. Lessee further agrees to replace (with systems of equal usable years remaining from lease commencement) all systems, after the termination of this Lease, including the roof, HVAC, parking lot and exterior of the building.
Lessee also agrees, within twenty-four (24) months after the Lease Commencement Date, to make necessary repairs using contractors selected by Lessee presented to Lessee as “Immediate Repairs & Deferred Maintenance Cost Opinion” on April 13, 2020.
ARTICLE V. LAWS AND GOVERNMENTAL REGULATIONS.
Section 5.1 Compliance with Laws. Lessee shall promptly comply with all laws and ordinance, and all orders, rules, regulations, and requirements of federal, state, and municipal governments and appropriate departments, commissions, boards, and officers of these governments (“Legal Requirements”) applicable to the Demised Premises and the business conducted by Lessee thereon throughout the term of this Lease at the Demised Premises, and without cost to Lessor. Lessee shall promptly comply with these Legal Requirements whether they are foreseen or unforeseen, or ordinary or extraordinary. Lessor shall promptly comply with
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any Legal Requirements affecting any common areas or any portion of the Demised Premises under Lessor’s control, if any.
ARTICLE VI. LIENS AND ENCUMBRANCES.
Section 6.1 Liens. Lessee shall not create, permit, or suffer any mechanic’s or other lien or encumbrance on or affecting the Demised Premises or the leasehold interest of Lessor or the fee estate or reversion of the Lessor except as specifically permitted in this Lease.
Section 6.2 Construction Liens. Lessee shall not permit the creation of any lien against the Demised Premises on account of labor or materials furnished in connection with any construction, maintenance, repairs, or alterations Lessee shall undertake. If any such lien is filed against the Demised Premises, Lessee, as the party contracting for such work, shall cause such lien to be released within sixty (60) days after actual notice of the filing thereof or shall furnish to Lessor a bond or other security reasonably satisfactory to Lessor, conditioned to indemnify Lessor against the foreclosure of such lien. Lessee shall have the right, after notice to Lessor, to contest in good faith and with all due diligence any such lien and shall not be required to pay any claim secured by such lien; provided that (a) such lien would not impair the rights or be satisfied out of the interest of Lessor in the Demised Premises by reason of such delay, and (b) Lessee will, at its expense, defend Lessor pay all cost reasonably incurred by the other relating to the contest if Lessor is joined in any suit pertaining thereto or if any such lien is placed upon the Lessor’s interest in the Demised Premises.
Section 6.3 No Lessor Liability. Lessor shall not be liable for any labor, services, or materials furnished or to be furnished to Lessee or to any sublessee in connection with any work performed on or at the Demised Premises, and no mechanic's lien or other lien or encumbrance for any labor, services or materials shall attach to or affect the Lessor’s leasehold interest or the Lessor’s fee estate or reversion in the Demised Premises.
Section 6.4 Lessee’s Furniture, Fixtures and Equipment. Any and all movable or removable fixtures, equipment and personally purchased by, belonging to or leased from third parties by Lessee and installed on the Demised Premises (whether or not affixed), including, without limitation, Lessee lamps, decor items, fans, office and business equipment, software, signs and other personal property are hereinafter referred to as Lessee’s “Furniture, Fixtures and Equipment.” Lessee shall own all Lessee’s Furniture, Fixtures and Equipment to the exclusion of Lessor. Lessee shall have the right to remove all of Lessee’s Furniture, Fixtures and Equipment from the Demised Premises. Lessee’s Furniture, Fixtures and Equipment not so removed by the termination of this Lease within ten (10) days following the termination hereof shall be deemed abandoned by Lessee and the property of Lessor.
Section 6.5 Lessee’s Equipment Financing; Subordination of Lessor’s Lien. Lessee may, from time to time, enter into equipment leases covering Lessee’s Furniture, Fixtures and Equipment or secure financing or general credit lines and grant the lessors or lenders as security therefore a security interest in Lessee’s Furniture, Fixtures and Equipment. Provided Lessee notifies Lessor in writing of the name and address off any such lessor or lender, Lessor agrees that it will grant a lender the same rights to notice and cure with respect to any default of Lessee
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as are given to Lessee hereunder. Any Lessor’s lien covering Lessee’s Furniture, Fixtures and Equipment shall be and hereby is made subordinate to the rights of any and all of Lessee’s lender(s), including, without limitation, any equipment lease or security interest and Lessor shall, within ten (10) days of a request by Lessee, execute and deliver to Lessee any documents that may reasonably be required in order to effect such subordination.
ARTICLE VII. INSURANCE AND INDEMNITY.
Section 7.1 Casualty Insurance. At all times during the Term of this Lease, Lessee shall maintain, at its sole cost and expense, insurance covering the Demised Premises and the Improvements, and including, without limitation, all Improvements now located on the Demised Premises or that may be erected on the Demised Premises, against loss or damage by fire, vandalism, malicious mischief, windstorm, hail, smoke, explosion, riot, civil commotion, vehicles, aircraft, flood or earthquake (if required due to the location of the Demised Premises), together with such other insurance as Lessor may reasonably require from time to time. This insurance shall be carried by insurance companies authorized to transact business in the Commonwealth of Pennsylvania and, selected by Lessee. In addition, the following conditions shall be met:
Section 7.2 Liability Insurance. At all times during the term of this Lease, Lessee shall maintain, at its sole cost and expense, comprehensive broad-form general public liability
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insurance against claims and liability for personal injury, death, and property damage in an amount not less than $2,000,000.00. The insurance shall be carried by insurance companies authorized to transact business in the Commonwealth of Pennsylvania, selected by Lessee. In addition, the following conditions shall be met:
Section 7.3 Certificate of Insurance. Lessee shall furnish Lessor with certificates of all insurance required by this Article VII. Lessee agrees that if Lessee does not keep this insurance in full force and effect, Lessor may notify Lessee of this failure, and if Lessee does not deliver to Lessor certificates showing all such insurance to be in full force and effect with no gap in coverage, within ten (10) days after this notice, Lessor may, at its option, take out and/or pay the premiums on the insurance needed to fulfill Lessee’s obligations under the provisions of this Article VII. On demand from Lessor, Lessee shall reimburse Lessor the full amount of any insurance premiums paid by Lessor, with interest equal to the prime rate charged by Bank of America, plus three (3) percent, from the date of Lessor’s demand until reimbursement by Lessee.
Section 7.4 Lessee Waiver of Claims. Lessor shall not be liable for any loss, damage, or injury of any kind or character to any person or property arising from any use of the Demised Premises or Improvements, or caused by any defect in any building, structure, equipment, facility or other improvement on the Demised Premises, or caused by or arising from any act or omission of Lessee, or any of its agents, employees, licensees or invitees, or by or from any accident, fire or other casualty on the land, or occasioned by the failure of Lessee to maintain the Demised Premises in safe condition. Lessee waives all claims and demands on Lessee’s behalf against Lessor for any loss, damage, or injury, and agrees to indemnify and hold Lessor entirely free and harmless from all liability for any loss, damage, costs or injury of other persons, and from all costs and expenses arising from any claims or demands of other persons concerning any loss, damage or injury, caused on or about the Demised Premises.
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Section 7.5 Mutual Waiver of Subrogation. Lessor and Lessee and their successors in interest hereby waive any legal rights each may later acquire against the other party during the Term for the loss of or damage to their respective property or to property in which they may have an interest, which loss or damage is caused by an insured hazard arising out of or in connection with the Demised Premises.
ARTICLE VIII. DAMAGE OR DESTRUCTION OF IMPROVEMENTS.
Section 8.1 Damage to Demised Premises.
ARTICLE IX. EMINENT DOMAIN.
Section 9.1 Condemnation. If the Demised Premises and Improvements or any part thereof is taken for public or quasi-public purposes by condemnation in any action or proceeding in eminent domain, or are transferred in lieu of condemnation to any authority entitled to exercise the power of eminent domain, the interests of Lessor and Lessee in the award or consideration for the taking or transfer and the effect of the taking or transfer on this Lease shall be governed by this Article IX.
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Section 9.2 Taking
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Section 9.3 Temporary Taking. If the period of taking shall be less than three (3) months, this Lease shall continue in full force and effect, the Basic Rent and other charges shall abate during such period of taking, and all awards for damages shall belong solely to Lessee.
Section 9.4 More Than One Taking. If more than one taking occurs during the Term, the right of the parties, as provided in this Article, shall be determined as if all such takings had all occurred at the time of the last taking, and the effect of all such takings shall be considered cumulatively.
ARTICLE X. Intentionally Omitted
ARTICLE XI. DEFAULT.
Section 11.1 Lessee’s Default.
Section 11.2 Lessor Rights.
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Section 11.3 Lessor’s Obligation to Mitigate.
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DocuSign Envelope ID: 835310B7-7674-411C-8F32-7ED0C1E168B5
Section 11.4 Confession of Judgment. In addition to, and not in lieu of any of the foregoing rights granted to Lessor:
THE FOLLOWING PARAGRAPHS SET FORTH WARRANTS OF AUTHORITY FOR AN ATTORNEY TO CONFESS JUDGMENTS AGAINST LESSEE. IN GRANTING THESE WARRANTS OF ATTORNEY TO CONFESS JUDGMENTS AGAINST LESSEE, LESSEE HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY, AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS LESSEE HAS OR MAY HAVE WITH RESPECT TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA AND THE COMMONWEALTH OF PENNSYLVANIA. WITHOUT LIMITATION OF THE FOREGOING, LESSEE HEREBY SPECIFICALLY WAIVES ALL RIGHTS LESSEE HAS OR MAY HAVE TO NOTICE AND AN OPPORTUNITY FOR A HEARING PRIOR TO EXECUTION UPON ANY JUDGMENT ENTERED AGAINST LESSEE PURSUANT TO THE TERMS HEREOF.
UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT BY LESSEE UNDER THIS LEASE, IT SHALL BE LAWFUL FOR ANY PROTHONOTARY OR ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR LESSEE AS WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER LESSEE, AND, WITH OR WITHOUT ONE OR MORE COMPLAINTS FILED, CONFESS A JUDGMENT OR JUDGMENTS AGAINST LESSEE FOR BASIC RENT IN ARREARS OR TREATED AS IF IN ARREARS (INCLUDING THE EXTENSION TERM IF SO EXERCISED AS OF THE DATE OF THE EVENT OF DEFAULT) AND CHARGES, WHETHER OR NOT PAYABLE AS RENT AND FOR INTEREST AT THE LEASE INTEREST RATE AND COSTS, TOGETHER WITH AN ATTORNEYS’ COMMISSION OF FIVE PERCENT (5.00%) OF THE BALANCE OF RENT AND OTHER CHARGES DUE THROUGH THE END OF THE TERM OF THE LEASE, (INCLUDING THE EXTENSION TERM IF SO EXERCISED AS OF THE DATE OF THE EVENT OF DEFAULT) AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED AS IF SUCH RENT AND CHARGES HAD BEEN ACCELERATED, BUT IN NO EVENT LESS THAN TEN THOUSAND DOLLARS ($10,000) WITHOUT ANY LIABILITY ON THE PART OF SAID ATTORNEY, AND FOR WHICH THIS LEASE AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, OR A TRUE AND CORRECT COPY THEREOF SHALL BE A SUFFICIENT WARRANT. SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ONE EXERCISE THEREOF, BUT JUDGMENT MAY BE CONFESSED FROM TIME TO TIME AS OFTEN AS ANY RENT OR CHARGES IN ARREARS OR RENT OR CHARGES TREATED AS IF IN ARREARS OR CHARGES BECOME DUE AND ARE NOT PAID. SUCH POWERS MAY BE EXERCISED DURING, AS WELL AS AFTER, THE EXPIRATION OR TERMINATION OF THE ORIGINAL TERM AND DURING, AND AT ANY TIME, AFTER ANY EXTENSION OR RENEWAL OF THE TERM.
LESSEE SIGNATURE By: , its CEO
CEO
UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT OR UPON THE TERMINATION OF THIS LEASE, THE ORIGINAL TERM HEREOF OR ANY RENEWAL OR EXTENSION THEREOF ON ACCOUNT OF ANY EVENT OF DEFAULT BY LESSEE HEREUNDER, OR UPON THE EXPIRATION OF THE TERM
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DocuSign Envelope ID: 835310B7-7674-411C-8F32-7ED0C1E168B5
OF THIS LEASE OR ANY RENEWAL OR EXTENSION THEREOF, AS THE SAME MAY BE MODIFIED OR AMENDED, IT SHALL BE LAWFUL FOR ANY PROTHONOTARY OR ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR LESSEE AS WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER LESSEE, AND, WITH OR WITHOUT ONE OR MORE COMPLAINTS FILED, CONFESS A JUDGMENT OR JUDGMENTS FOR THE RECOVERY OF POSSESSION OF THE DEMISED PREMISES, TOGETHER WITH AN ATTORNEYS' COMMISSION OF FIVE PERCENT (5.00%) OF THE BALANCE OF RENT AND OTHER CHARGES DUE THROUGH THE END OF THE TERM OF THE LEASE (INCLUDING THE EXTENSION TERM IF SO EXERCISED AS OF THE DATE OF THE EVENT OF DEFAULT), AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, AS IF SUCH RENT AND CHARGES HAD BEEN ACCELERATED, BUT IN NO EVENT LESS THAN TEN THOUSAND DOLLARS ($10,000.00), WITHOUT ANY LIABILITY ON THE PART OF THE SAID ATTORNEY, AND FOR WHICH THIS LEASE, AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, OR A TRUE AND CORRECT COPY THEREOF SHALL BE A SUFFICIENT WARRANT; WHEREUPON, IF LESSOR SO DESIRES, A WRIT OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS WHATSOEVER. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED, THE SAME SHALL BE DETERMINED AND THE POSSESSION OF THE DEMISED PREMISES REMAIN IN OR BE RESTORED TO LESSEE, LESSOR SHALL HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT, OR UPON THE TERMINATION OR EXPIRATION OF THIS LEASE, AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, OR OF LESSEE’S RIGHT OF POSSESSION, TO BRING ONE OR MORE FURTHER ACTIONS IN THE MANNER AND FORM HEREIN SET FORTH TO RECOVER POSSESSION OF THE DEMISED PREMISES. NO SUCH DETERMINATION OF THIS LEASE, AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, NO TAKING, NOR RECOVERING POSSESSION OF THE DEMISED PREMISES SHALL DEPRIVE LESSOR OF ANY REMEDIES OR ACTION AGAINST LESSEE FOR RENT OR FOR DAMAGES DUE OR TO BECOME DUE FOR AN EVENT OF DEFAULT UNDER THIS LEASE, AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, NOR SHALL THE BRINGING OF ANY SUCH ACTION FOR RENT OR BREACH OF COVENANT OR CONDITION, NOR THE RESORT TO ANY OTHER REMEDY HEREIN PROVIDED FOR THE RECOVERY OF RENT OR DAMAGES FOR SUCH BREACH, BE CONSTRUED AS A WAIVER OF THE RIGHT TO INSIST UPON THE FORFEITURE AND TO OBTAIN POSSESSION IN THE MANNER HEREIN PROVIDED.
IN ANY ACTION TO CONFESS JUDGMENT FOR POSSESSION OF THE DEMISED PREMISES, LESSOR SHALL FIRST CAUSE TO BE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY IT OR SOMEONE ACTING FOR IT SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF JUDGMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE CONCLUSIVE EVIDENCE, AND IF A TRUE COPY OF THIS LEASE (AND OF THE TRUTH OF THE COPY SUCH AFFIDAVIT SHALL BE SUFFICIENT EVIDENCE) BE FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF ATTORNEY, ANY RULE OF COURT, CUSTOM OR PRACTICE TO THE CONTRARY NOTWITHSTANDING.
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DocuSign Envelope ID: 835310B7-7674-411C-8F32-7ED0C1E168B5
LESSEE ACKNOWLEDGES AND AGREES THAT (A) THE WARRANT OF ATTORNEY TO CONFESS JUDGMENTS CONTAINED ABOVE IS BEING EXECUTED IN CONNECTION WITH A COMMERCIAL TRANSACTION, (B) LESSOR’S CONFESSION OF JUDGMENT FOLLOWING AN EVENT OF DEFAULT OR EXPIRATION OF THE LEASE AND IN ACCORDANCE WITH THE FOREGOING WARRANTS OF ATTORNEY WOULD BE IN ACCORDANCE WITH LESSEE’S REASONABLE EXPECTATIONS, (C) IN VIEW OF THE COMMERCIAL NATURE OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO THERE IS NO EXPECTATION THAT LESSOR SHALL HAVE ANY DUTY UNDER ANY PROVISION OF § 5601.3 OF CHAPTER 56 OF THE PENNSYLVANIA PROBATE, ESTATES AND FIDUCIARIES CODE (20 PA.C.S.A. §5601.3) TO ACT IN THE BEST INTEREST OF ANY PRINCIPAL THEREUNDER AND IT IS AGREED THAT LESSOR SHALL HAVE NO SUCH DUTY, AND (D) LESSOR DOES NOT AND, IN REGARD TO THIS LEASE, SHALL NOT HAVE ANY OF THE DUTIES TO LESSEE SET FORTH IN 20 PA.C.S.A. §5601.3(B), AND THE SAME ARE HEREBY IRREVOCABLY WAIVED BY LESSEE.
LESSEE ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS LEASE (OR WAIVED SUCH LEGAL ASSISTANCE), AS THE SAME MAY BE MODIFIED, AMENDED OR RENEWED, AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING CONFESSIONS OF JUDGMENTS HAVE BEEN FULLY EXPLAINED TO LESSEE BY SUCH COUNSEL, AND AS EVIDENCE OF SUCH FACT AN AUTHORIZED OFFICER OF LESSEE SIGNS HIS INITIALS BELOW.
CEO
LESSEE SIGNATURE By: , its
CEO
Section 11.5 Remedies Cumulative. All remedies available to Lessor hereunder and otherwise available at law or in equity shall be cumulative and concurrent. No determination of this Lease nor taking or recovering possession of the Demised Premises shall deprive Lessor of any remedies or actions against Lessee for rent, for charges, or for damages for the breach of any term, covenant or condition herein contained, nor shall the bringing of any such action for rent, charges or breach of term, covenant or condition, nor the resort to any other remedy or right for the recovery of rent, charges or damages for such breach be construed as a waiver or release of the right to insist upon the forfeiture and to obtain possession. The failure of Lessor to insist upon strict and/or prompt performance of the terms, agreements, covenants and conditions of this Lease or any of them, and/or the acceptance of such performance thereafter shall not constitute or be construed as a waiver of Lessor’s right to thereafter enforce the same strictly according to the tenor thereof in the event of a continuing or subsequent Event of Default.
Section 11.6 Method of Calculation. In determining the amount of any future payments due Lessor due to increases in Taxes, Insurance, Basic Rent, additional rent or other charges due hereunder, Lessor may make such determination based upon the amount of such Taxes, Insurance, Basic Rent, additional rent and other charges due by Lessee for the calendar year immediately prior to such Event of Default.
Section 11.7 Expenses of Enforcement. Lessee shall pay to Lessor upon demand all of Lessor’s documented costs, charges and expenses, including the fees and out-of-pocket expenses
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of counsel, agents and others retained by Lessor incurred in enforcing Lessee’s obligations hereunder or incurred by Lessor in any litigation, negotiation or transaction in which the Lessee causes the Lessor to become involved or concerned.
ARTICLE XII. EXPIRATION OF TERM.
Section 12.1 Expiration of Term. On the expiration date of this Lease as set forth in Article 2, or the termination of the Lessee’s possession under this Lease pursuant to Article XI, or any entry or possession of the Demised Premises and Improvements by Lessor pursuant to Section 11.4 (collectively referred to as the “Expiration Date”), Lessee shall promptly quit and surrender the Demised Premises and Improvements, and deliver to Lessor actual possession and ownership of the Demised Premises and Improvements in good order, condition, and repair.
Section 12.2 Removal of Equipment. Lessee shall have the right to remove from the Demised Premises and Improvements all of Lessee’s Furniture, Fixtures and Equipment used or procured for use in connection with the operation of its business on or before the Expiration Date, provided that Lessee shall promptly repair, or cause to be repaired, any damage resulting to the Demised Premises or Improvements by reason of this removal. Any of Lessee’s Furniture, Fixtures and Equipment that remain at or on the Demised Premises after the Expiration Date shall be deemed to have been abandoned by Lessee, and may either be retained by Lessor as its property or disposed of by the Lessor without accountability to Lessee for the value of such Furniture, Fixtures and Equipment, or any proceeds derived from the sale of these items, (subject to the rights of any equipment lenders).
ARTICLE XIII. GENERAL PROVISIONS.
Section 13.1 Non-enforcement. The failure of Lessor to seek redress for violation of, or to insist on the strict performance of any covenant, agreement, term, provision, or condition of this Lease shall not constitute a waiver of the covenant, agreement, term, provision, or condition. The receipt by Lessor of rent with knowledge of the breach of any covenant, agreement, term, provision, or condition of this Lease shall not be deemed a waiver of that breach.
Section 13.2 Waivers. No provision of this Lease shall be deemed to have been waived unless the waiver is in writing and signed by the party against whom enforcement is sought. No payment by Lessee or receipt by Lessor of a lesser amount than the rent stipulated in this Lease shall be deemed to be other than for the payment of rent or other charge owing by Lessee, as Lessor shall elect. No endorsement or statement on any check or any letter accompanying any check or payment as rent shall be deemed binding on Lessor or deemed on accord and satisfaction, and Lessor may accept a check or payment from Lessee without prejudice to Lessor’s right to recover the balance of the rent or other charges owing by Lessee, and without limitation on Lessor’s right to pursue each and every remedy in this Lease or provided by law. Each right and remedy of Lessor provided for in this Lease shall be cumulative and in addition to every other right or remedy provided for in this Lease, or now or later existing at law, in equity, by statute, or otherwise.
Section 13.3 Exhibits. This Lease and the Exhibits annexed to this Lease contain the entire agreement between Lessor and Lessee, and any agreement made after the execution of this
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Lease between Lessor and Lessee shall be ineffective to change, modify, waive, release, discharge, terminate, or effect a surrender or abandonment of this Lease, in whole or in part, unless that agreement is in writing and signed by the party against whom enforcement is sought.
Section 13.4 Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing addressed to the parties as provided below (or at such other address as may hereafter be substituted by notice in writing thereof) and shall be deemed to have been duly given upon delivery by hand (including by a nationally recognized overnight carrier), by confirmed facsimile transmission, or if sent by email, on the business day sent so long as such email notice is sent within business hours and in such event, such email shall be followed by written notice sent by certified or registered mail postmarked no later than the following business
day.
Section 13.6 Invalidity. If any term, covenant or condition of this Lease shall be invalid or unenforceable to any extent, the remainder of the terms, covenants and conditions of this Lease shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
Section 13.7 Terms. The term “Lessor”, as used in this Lease in relation to the Lessor’s covenants and agreements under this Lease, shall be limited to mean and include only the owner or owners of fee estate to the Demised Premises at the time in question. In the event of any conveyance of this fee estate, Lessor named in this Lease and each subsequent grantor shall be automatically relieved, at the date of conveyance, of all liability in respect to the performance of any of Lessor’s covenants and agreements remaining to be performed after the date of conveyance, and each grantee shall be bound by all of the covenants and agreements remaining to be performed under the Lease during the time of grantee’s ownership of the leasehold interest.
Section 13.8 Non-Recourse. Anything contained in this Lease to the contrary notwithstanding, Lessee agrees to look solely to the Demised Premises and Lessor’s interest in the Demised Premises for the collection and satisfaction of any judgment that Lessee may obtain against Lessor because of the Lessor’s failure to observe or perform any of its covenants or obligations under this Lease, including, but not limited to, the breach of the covenant of quiet enjoyment, whether express or implied. If Lessee receives any judgment resulting from the Lessor’s failure to observe or perform any of its covenants or obligations under this Lease, Lessee further agrees not to collect or execute, or attempt to collect or execute, that judgment out of or against any other assets or properties of Lessor.
Section 13.9 Successors and Assigns. This Lease shall inure to the benefit of and be binding on Lessor and Lessee and their respective distributees, personal representatives, executors, successors, and assigns except as otherwise provided in this Lease. Any references in this Lease to Lessor and Lessee shall be deemed to include their respective successors and assigns.
Section 13.10 Quiet Enjoyment. Lessor covenants and agrees that Lessee, on payment of rent and other charges provided for in this Lease and fulfillment of the obligations under the covenants, agreements and conditions of this Lease, shall lawfully and quietly hold, occupy and
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enjoy the Demised Premises during the term of this Lease without any interference from anyone claiming through or under Lessor.
Section 13.11 Relationship of Parties. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent, partnership, joint venture, or any relationship between the parties hereto other than that of Lessor and Lessee.
Section 13.12 Consent. Whenever it is necessary under the terms of this Lease for either party to obtain the consent or approval of the other party, such consent or approval shall, unless otherwise specified in this Lease, not be unreasonably withheld or delayed.
Section 13.13 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the Commonwealth in which the Demised Premises is located.
Section 13.14 Disputes. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other or any work to be performed by either of them under the provisions hereof, the party against whom the obligation to pay or to perform is asserted shall have the right, but not the obligation, to make payment or perform such work and pay the cost thereof “under protest,” and such payment or performance shall not be regarded as a voluntary payment or performance and the right of such party to institute suit to recover the amount paid “under protest” shall survive. If it shall be adjudged or mutually agreed by Lessor and Lessee that there was no legal obligation on the part of such party to pay such sum or any part thereof or that such party was not legally obligated to perform, such party shall be entitled to recover the amount paid “under protest” or so much thereof as it was not legally required to pay under the provisions of this Lease, plus interest thereon at the Interest Rate specified in Section 16.13 hereof, from the date on which such payment was made until the date on which reimbursement is received.
Section 13.15 Counterparts. This Lease may be executed in several counterparts, including counterparts transmitted by facsimile or electronic mail, each of which shall be deemed an original, but all of which together shall constitute one and the same Lease. Signatures to this Agreement transmitted by facsimile, sent by email (including “.pdf”), or delivered by other electronic means shall be valid and effective to bind the Party so signing. Each Party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other Party upon request, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each Party to this Agreement shall be bound by its own facsimile or other electronic signature and shall likewise accept the facsimile or other electronic signature of the other Party.
Section 13.16 Modification. This Lease may not be modified except by a written agreement signed by both Lessor and Lessee.
Section 13.17 Brokers. Lessor and Lessee represent and warrant that they have not dealt with any real estate agent or broker in connection with this transaction other than Institutional Property Advisors/ Marcus & Millichap and Ben Tashakorian. Lessor and Lessee shall each
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indemnify and save other harmless from and against all liability, damage, loss, cost and expense incurred by reason of the indemnitor’s breach of such representation and warranty.
ARTICLE XIV. ESTOPPEL CERTIFICATE; DOCUMENTATION AND RECORDING OF LEASE.
Section 14.1 Estoppel Certificates. Lessor or Lessee shall have the right to request the other party to provide an estoppel certificate, as described below, without charge, at any time on or after ten (10) days after the requesting party sends written notice. This estoppel certificate shall consist of a written statement certifying the following information to the requesting party or to any person specified by that party:
ARTICLE XV. ASSIGNMENT AND SUBLETTING
Section 15.1 Assignment. Except as provided otherwise herein, Lessee covenants and agrees not to assign this Lease or to sublease the whole or any part of the Demised Premises or to permit any other persons to occupy same without the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed. Lessee may assign this Lease or sublease the Demised Premises, without Lessor’s consent, to (a) any parent, subsidiary or affiliate entity of Lessee; or (b) an entity resulting from the consolidation or merger of Lessee into or with any other entity; or (c) the sale of all or substantially all of the assets of the Lessee in the state in which the Demised Premises is located;. As used herein, the phrase “affiliate entity” means a person or business entity, corporate or otherwise, that, through one or more intermediaries, controls or is controlled by, or is under common control with Lessee.
Lessor’s consent to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting. The acceptance of rent from any other person shall not be deemed to be a waiver of any of the provisions of this Lease or to be consent to the assignment of this Lease or subletting of the Demised Premises.
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Any transfer of an ownership interest in Lessee by merger, consolidation, sale of stock, membership interests, other capital reorganization or liquidation shall constitute an assignment or sublet for the purpose of this Lease and shall therefore require the consent of Lessor. In such event, if consent is given, the surviving entity specifically shall assume in writing Lessee’s obligations under this Lease.
Section 15.2 Lessor’s Right to Assign. Lessor shall have the right to assign this Lease to any third party other than a competitor of Lessee, provided that Lessor gives notice to Lessee of such assignment.
ARTICLE XVI. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT OF FEE MORTGAGES.
Section 16.1 Non-Disturbance Agreement. If Lessee is not in default hereunder, Lessor shall cause:
Section 16.2 Subordination. If Lessor is not in default under the terms of this Lease, Lessee shall subordinate this Lease to an existing or future first deed of trust or mortgage covering the Demised Premises by executing and delivering an agreement in the form attached hereto as Exhibit C within thirty (30) days of Lessee’s receipt of a copy of such agreement duly executed and acknowledged by Lessor and Lessor’s lender with respect to the mortgage or deed of trust to which this Lease is to be subordinate. Except as set forth in this Section, this Lease shall at all times be and remain prior and paramount to the lien and charge of all leases and deeds of trust or mortgages.
Section 16.3 Attornment. Lessee agrees that if the mortgagee, beneficiary or any other person claiming under a mortgage or deed of trust to which Lessee has subordinated shall succeed to Lessor’s interest in this Lease, Lessee will recognize such mortgagee, beneficiary or person as its Lessor under the provisions of this Lease, provided that such mortgagee, beneficiary or other person, during the period in which it shall be in possession of the Demised Premises, and thereafter its successor in interest, shall assume all of the obligations of Lessor hereunder and shall have executed and delivered the non-disturbance, subordination and attornment agreement referred to in Section 16.2 above. Any purchaser taking title to the property by reason of such foreclosure or sale shall take title subject to this provision and shall be bound by any approvals or consents made or given by Lessor pursuant to this Lease prior to the date on which title to the Demised Premises was transferred.
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Section 16.4 Mortgage Protection. Lessee shall give any mortgagees of the Demised Premises by registered or certified mail, return receipt requested, or overnight delivery service, requiring a signed delivery receipt, a copy of any notice of default sent to Lessor by Lessee, provided that, prior to such notice, Lessee has been notified, in writing (by way or notice of assignment of rents and lease or otherwise), of the address of such mortgagees. If Lessor shall have failed to cure such default within the time provided for in this Lease, then the mortgagees shall have thirty (30) days within which to cure such default or, if such default cannot be cured within that time, then such additional time as may be necessary if, within such thirty (30) days, any mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure).
ARTICLE XVII. TENANT FINANCIAL INFORMATION
Section 17.1 Tenant Financial Information. Tenant agrees to provide Landlord with company specific financials annually. Currently, Precision is reported a separate line item on the financials of the parent company, Live Industries. If Live Industries does not report the individual financials, than Precision shall produce financials to Landlord.
ARTICLE XVIII GUARANTY
Section 18.1 Guaranty. Both Kinetic and Precision agree to guarantee the lease for either
party.
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DocuSign Envelope ID: 2FDA8057-C729-40FE-A57D-9297E7EF6E27
IN WITNESS WHEREOF, Lessor and Lessee, intending to be legally bound hereby, have executed this Lease under seal as of the Effective Date.
Lessee:
Precision Industries, Inc.
By:
Tom Sedlak
Lessee:
The Kinetic Co., Inc.
Tom Sedlak By:
Lessor:
Moss Family Trust
By:
Gerry Moss
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EXHIBIT A
MEMORANDUM OF LEASE
Prepared by:
MEMORANDUM OF LEASE
Notice is hereby given of the following Lease:
Live Ventures Incorporated
325 E. Warm Springs Road, Suite 102 Las Vegas, Nevada 89119
Attn: Kent Randall, Esq., General Counsel Facsimile: (702) 997-5968
Email: krandall@liveventures.com
This instrument, being a Memorandum of Lease, is intended by the parties hereto to give constructive notice of such Lease. It is not intended to affect, in any way, the rights and obligations of the parties to such Lease. All capitalized terms used in this Memorandum are as defined in the Lease unless otherwise defined herein.
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IN WITNESS WHEREOF, the parties hereto, and to such Lease, have either set, or caused to be set, their respective hands and seals, and, if a corporation or limited liability company, such is done by a duly authorized officer or member thereof, all as of the day of 2020.
Attest: LESSOR:
By:
Witness: LESSEE:
By:
STATE OF )
) SS.
COUNTY OF )
Before me, the undersigned, a Notary Public in and for the State and County aforesaid, an officer duly authorized to take acknowledgements, personally appeared
known to me to be the person described in and who executed the foregoing instrument; and who acknowledged before me that he or she executed this instrument for the purposes stated therein and of his or her own free will.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, this
day of , 2020, in this State and County.
My commission expires: Notary Public
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EXHIBIT B
ESTOPPEL AND CONSENT AGREEMENT
ESTOPPEL CERTIFICATE AND CONSENT
RE: Demised Premises: Lease:
Lessor:
Lessee:
The undersigned Lessor/Sub Lessor under the Lease/Sublease described above certifies to
a , in connection with the placing of a leasehold mortgage the following:
All above rental amounts under the Lease have been paid in full by Lessee through , 2020. The amount of rent prepaid, if any, is $0, and the security deposit made, if any, is $50,000.00.
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LESSOR:
By: Date: , 2019
Name: Title:
STATE OF )
) SS.
COUNTY OF )
Before me, the undersigned, a Notary Public in and for the State and County aforesaid, an officer duly authorized to take acknowledgements, personally appeared
known to me to be the person described in and who executed the foregoing instrument; and who acknowledged before me that he or she executed this instrument for the purposes stated therein and of his or her own free will.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, this
day of , 2020, in this State and County.
My commission expires: Notary Public
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EXHIBIT C
SUBORDINATION, NON-DISTURBANCE AND ATTONMENT AGREEMENT
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
This SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
AGREEMENT (this “Agreement”), is made as of the day of , 20 , among
, a , and its successors and
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assigns (“Lender”), , a
(“Lessee”).
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(“Lessor”), and
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WHEREAS, Lender has made a loan to Lessor which was secured by a Deed of Trust, Security Agreement and Assignment of Leases and Rents (the “Deed of Trust”)
recorded with the Office of the Register of Deeds of County,
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in Book
36
, page
37
and covered Lessor’s interest in
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certain real property located at and more particularly described in Exhibit A attached hereto (the “Property”); and
WHEREAS, Lessee has entered into a certain , as the same may have
been amended, modified or supplemented (the “Lease”) dated , ,
with Lessor, covering a certain portion of the Property (the “Demised Premises”); and
WHEREAS, a notice or memorandum of the Lease was recorded with the Office of the Register of Deeds of County, in Deed Book , at Page ; and
WHEREAS, Lender, Lessor and Lessee desire to confirm their understanding, with respect to the Lease and the Deed of Trust;
NOW, THEREFORE, in consideration of the promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
Subordination. Subject to the provisions hereof, Lessee agrees that the Lease shall in all respects be, and is hereby expressly made, subject and subordinate at all times to the lien of the Deed of Trust and to all of the terms, conditions and provisions thereof and to all advances and/or payments made or to be made thereunder, as the same may hereafter be amended from time to time. Nothing contained in this Agreement shall in any way impair or affect the lien created by the Deed of Trust. Notwithstanding the foregoing, Lender agrees that all proceeds of property insurance maintained under the Lease and all eminent domain damages will be disbursed in accordance with the provisions of the Lease and will be made available to Lessor or Lessee for restoration of the building and other improvements on the Property to the extent required by the Lease, subject only to reasonable regulation regarding the disbursement thereof.
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Attornment.
In the event that Lender acquires or succeeds to the interests of Lessor under the Lease by reason of a foreclosure of the Deed of Trust, deed in lieu of foreclosure or otherwise (collectively, a “Foreclosure”), Lessee shall be bound to Lender under all of the terms, covenants and conditions of the Lease, except as provided in this Agreement, for the balance of the term thereof remaining, with the same force and effect as if Lender were Lessor. Lessee hereby agrees in such event to (i) attorn to Lender as its Lessor on such terms, (ii) affirm its obligations under the Lease, and (iii) make payments of all sums thereafter becoming due under the Lease to Lender. Said attornment, affirmation and agreement is to be effective and self-operative without the execution of any further instruments upon Lender succeeding to the interests of Lessor under the Lease.
Lessee agrees to execute and deliver at any time and from time to time, upon the request of Lessor or Lender, any instrument or certificate deemed to be necessary or appropriate to evidence such attornment.
From and after such attornment, Lender shall be bound to Lessee under all the terms, covenants and conditions of the Lease with the same force and effect as if originally entered between said parties; provided, however, Lender shall not be:
except as provided in Section 2(d) below, obligated to cure any defaults under the Lease of any prior Lessor which occurred prior to the date Lender obtained title to or possession of the Property, provided, however, that the foregoing shall not limit Lender’s obligation to correct any conditions that existed as of the date of attornment which violate Lender’s obligations as Lessor under the Lease;
except as provided in Section 2(d) below, subject to any offsets or defenses which Lessee might have against any prior Lessor (including Lessor), provided, however, that the foregoing shall not limit Lessee’s right to exercise against Lender any right of Lessee to any offset or defense otherwise available to Lessee because of events occurring after the date of attornment;
bound by any payment of fixed rent, percentage rent or additional rent that Lessee may have made to any prior Lessor (including Lessor) more than thirty (30) days in advance of the date such rent was first due and payable under the Lease;
bound by any modification or amendment of the Lease which increases the obligations or responsibilities of Lessor thereunder or changes the rent or the term thereof and is made without Lender’s written consent; or
bound by any consensual or negotiated surrender of the Demised Demised Premises or termination of the Lease, in whole or in part, agreed upon between any prior Lessor (including Lessor) and Lessee, unless effected unilaterally by Lessee pursuant to the express terms of the Lease.
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Notwithstanding anything to the contrary contained in Paragraph 2(c) above, if the Lessor under the Lease commits an act or omission which, with the giving of notice and/or the passage of time, would constitute a default in the performance of Lessor's obligations under the Lease, Lender or any purchaser or grantee pursuant to a Foreclosure shall be subject to any and all claims, offsets or defenses of Lessee arising from such act or omission, provided that Lender received notice of such act or omission and an opportunity to cure same as required by the Lease or this Agreement.
Non-Disturbance. Provided Lessee is not in default under the terms of the Lease and complies with this Agreement, Lender agrees that in the event Lender takes possession of the Property pursuant to any provision of the Deed of Trust or Lender acquires title to the Property by reason of a Foreclosure, Lessee’s possession and occupancy of the Demised Premises and Lessee’s rights and privileges under the Lease during the term thereof (including any renewal term) shall not be disturbed or affected in any manner, and Lender shall recognize the Lease and Lessee’s rights thereunder. If Lessee is not in default in the payment of rent or additional rent or in the performance of the terms, covenants and conditions of the Lease on Lessee’s part to be performed, Lender will not join Lessee as a party defendant in any action or proceeding for the purpose of terminating Lessee’s interest and estate under the Lease, except to terminate an option to purchase, if any, because of any default under the Deed of Trust. Subject to the limitations and conditions contained herein, Lender upon Foreclosure shall be deemed to be Lessor and shall assume the obligations of Lessor under the Lease thereafter arising or accruing.
Payment of Rent to Lender. From and after Lessee’s receipt of written notice from Lender (“Rent Payment Notice”), Lessee shall pay all rent to Lender or as Lender shall direct in writing, until such time as Lender directs otherwise in writing. Lessee shall comply with any Rent Payment Notice notwithstanding any contrary instruction, direction or assertion from Lessor. Lender’s delivery to Lessee of a Rent Payment Notice, or Lessee’s compliance therewith, shall not be deemed to: (a) cause Lender to succeed to or to assume any obligations or responsibilities as Lessor under the Lease, all of which shall continue to be performed and discharged solely by Lessor unless and until any attornment has occurred pursuant to this Agreement; or (b) relieve Lessor of any obligations under the Lease. Lessor irrevocably directs Lessee to comply with any Rent Payment Notice, notwithstanding any contrary direction, instruction, or assertion by Lessor. Lessee shall be entitled to rely on any Rent Payment Notice. Lessee shall be under no duty to controvert or challenge any Rent Payment Notice. Lessee’s compliance with a Rent Payment Notice shall not be deemed to violate the Lease. Lessor hereby releases Lessee from, and shall indemnify and hold Lessee harmless from and against, any and all loss, claim, damage, liability, cost or expense (including payment of reasonable attorneys’ fees and disbursements) arising from any claim based upon Lessee’s compliance with any Rent Payment Notice. Lessor shall look solely to Lender with respect to any claims Lessor may have on account of an incorrect or wrongful Rent Payment Notice. Lessee shall be entitled to full credit under the Lease for any rent paid to Lender pursuant to a Rent Payment Notice to the same extent as if such rent were paid directly to Lessor.
Notices.
All notices, demands and requests (collectively the “Notices”) required or permitted to be given under this Agreement must be in writing and shall be deemed to have been given if personally delivered or delivered by reliable overnight courier or mailed, first class postage
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prepaid and shall be deemed delivered as of the date of such Notice if (i) delivered to the party intended; (ii) delivered to the then current address of the party intended, or (iii) rejected at the then current address of the party intended, provided such Notice was sent prepaid. The addresses of the parties are:
If to Lender:
If to Lessee:
If to Lessor:
Upon at least ten (10) days prior written Notice, each party shall have the right to change its address to any other address within the United States of America.
Miscellaneous. This Agreement (i) contains the entire agreement with respect to the subject matter hereof; (ii) may not be modified or terminated, nor may any provision hereof be waived, orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors, administrators and assigns; and (iii) shall inure to the benefit of, and be binding upon, the parties hereto, and their successors and assigns (including, without limitation, (a) Lessee’s permitted assignees, (b) any subsequent holder of the Deed of Trust, and (c) any purchaser or grantee of the Property pursuant to a Foreclosure).
Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the state in which the Property is located.
IN WITNESS WHEREOF, Lender, Lessor and Lessee have executed this Agreement under seal effective as of the day and year first above written.
LENDER
[ ] By: Name:
Title:
LESSEE LESSOR
By: By:
Title:
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STATE OF COUNTY OF
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On this
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day of
45
, 2020, before me, the undersigned notary public,
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personally appeared proved to me through satisfactory evidence of
identification, which was , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that (he/she) signed it voluntarily as for , a for its stated purpose.
Notary Public
My Commission Expires:
STATE OF COUNTY OF
On this day of , 2020, before me, the undersigned notary public,
personally appeared proved to me through satisfactory evidence of
identification, which was , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that (he/she) signed it voluntarily as for , a for its stated purpose.
Notary Public
My Commission Expires:
STATE OF COUNTY OF
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On this
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day of
49
, 2020, before me, the undersigned notary public,
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personally appeared proved to me through satisfactory evidence of
identification, which was , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that (he/she) signed it voluntarily as for , a for its stated purpose.
Notary Public
My Commission Expires:
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Exhibit 10.101
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 L. Masters, 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 L. Masters Revocable Trust dated October 19, 2005, Cash L. Masters, 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.
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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;
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(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.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first set forth above.
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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 Marshall 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 day of
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Exhibit 10.102
EXHIBIT A-2
First Amendment to Employment Agreement with Rocky Sperka
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 ROCKY SPERKA, 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,
doubt, the provisions of this subparagraph (f) shall not preclude the Company or Executive from exercising any other 1ight under Section 3 of this Agreement.
"(g) Upon the expiration or tennination of this Agreement for any reason, Executive shall be entitled to retain the mobile phone he uses for Company business and the c01Tesponding mobile phone number, provided that the mobile phone does not contain any Company software or applications or any confidential infmmation 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.
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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 L. Masters, and the Cash L. Masters 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 10.103
EXHIBIT A-3
Employment Agreement with Jay Judkins
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 Jay Judkins, 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.”
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(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;
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(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.
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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.
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(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.
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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.
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Agreement. Each provision of this Agreement is separable from every other provision and constitutes a separate and distinct covenant.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first set forth above.
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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 Marshall 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 day of
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Exhibit 99.1
Live Ventures Announces Acquisition of The Kinetic Co., Inc.
LAS VEGAS, June 30, 2022 -- Live Ventures Incorporated (Nasdaq: LIVE), (“Live Ventures” or the “Company”), a diversified holding company, today announced that through its existing subsidiary, Precision Marshall, it has acquired all of the outstanding stock of The Kinetic Co., Inc. (“Kinetic”), a 74-year-old, Wisconsin-based company. The transaction, valued at approximately $26 million, was financed with a combination of third-party bank and seller debt, a sale-leaseback of real estate, and cash from Live Ventures.
Kinetic is a highly recognizable and regarded brand name in the production of industrial knives and hardened wear products for the tissue, metals, and wood industries and is known as a one-stop shop for in-house grinding, machining, and heat-treating. Kinetic was founded by the Masters family in 1948 and is headquartered in Greendale, Wisconsin. Kinetic manufactures more than 90 types of knives and numerous associated parts with modifications and customizations available to each. Kinetic employs approximately 100 non-union employees. The company’s website is www.knifemaker.com.
“We are excited to add the Kinetic platform to our growing steel manufacturing segment,” said Jon Isaac, President and CEO of Live Ventures. “We believe Kinetic’s long-tenured family history and culture, combined with its recognized brand name and manufacturing footprint, are a great fit within the Live Ventures model. We look forward to continuing the rich legacy of Kinetic and maintaining its reputation, which comes from 70 plus years of commitment to its customers, employees, and community. We welcome all of the Kinetic employees to the Live Ventures family.”
“We are enthusiastic about this transaction and believe it will be a positive move for our partners and customers and most importantly, for our employees. By joining with Precision Marshall, we expect to accelerate the growth of our business,” commented Cash Masters, President of the Kinetic Co. “We look forward to joining the Live Ventures and Precision Marshall team.”
The acquisition of Kinetic is expected to increase the Company’s steel manufacturing segment’s annual revenues by approximately $20 Million. Kinetic will continue to operate as a standalone business as it has been since 1948.
Taureau Group, LLC and Davis & Kuelthau, s.c. represented The Kinetic Co., Inc. in the transaction.
About Live Ventures
Live Ventures is a growing, diversified holding company with a strategic focus on value-oriented acquisitions of domestic middle-market companies. Live Ventures’ acquisition strategy is sector agnostic and focuses on well-run, closely held businesses with a demonstrated track record of earnings growth and cash flow generation. The Company looks for opportunities to partner with management teams of its acquired businesses to build
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increased stockholder value through a disciplined buy-build-hold long-term focused strategy. Live Ventures was founded in 1968. In late 2011 Jon Isaac, CEO and strategic investor took over the company and in 2015, refocused it into a diversified holding company. The Company’s current portfolio of diversified operating subsidiaries includes companies in the textile, flooring, tools, steel, entertainment, and financial services industries.
Forward-Looking and Cautionary Statements
The use of the word “company” or “Company” refers to Live Ventures Incorporated and its wholly-owned subsidiaries. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the safe harbor provisions of this Act, statements contained herein that look forward in time that include everything other than historical information, involve risks and uncertainties that may affect the company’s actual results, including statements relating to a potential roll-up strategy and increases in the company’s consolidated revenues. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Live Ventures may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) on Forms 10-K and 10-Q, Current Reports on Form 8-K, in its annual report to stockholders, in press releases and other written materials, and in oral statements made by its officers, directors or employees to third parties. There can be no assurance that such statements will prove to be accurate and there are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by the company, including, but not limited to, plans and objectives of management for future operations or products, the market acceptance or future success of our products, and our future financial performance. The company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (available at http://www.sec.gov). Live Ventures undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events, or otherwise.
Contact:
Live Ventures Incorporated
Greg Powell, Director of Investor Relations
725.500.5597
gpowell@liveventures.com
www.liveventures.com
Source: Live Ventures Incorporated
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