TRNS Transcat Inc

As filed with the Securities and Exchange Commission on January 22, 2025

File No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM S-3

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
___________________

TRANSCAT, INC.
(Exact name of registrant as specified in its charter)

Ohio (State or other jurisdiction of incorporation or organization)

16-0874418 (I.R.S. Employer Identification Number)

35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Lee D. Rudow

President and Chief Executive Officer
Transcat, Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777
(Name, address, including zip code and telephone number, including area code, of agent for service)
___________________

COPIES TO:

 

Alexander R. McClean, Esq. Margaret K. Rhoda, Esq. Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, New York 14604 (585) 232-6500

 

Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.   ☐

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.   ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.   ☒

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒				Accelerated filer	☐
Non-accelerated filer	☐				Smaller reporting company	☐
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 7(a)(2)(B) of the Securities Act.   ☐

 

PROSPECTUS

 

Transcat, Inc.

 

96,006 Shares of Common Stock Offered by the Selling Shareholder

This prospectus relates to the offer and resale by the selling shareholder identified herein of up to 96,006 shares of our common stock, par value $0.50 per share (“Common Stock”). This prospectus provides you with a general description of the shares of Common Stock. You should carefully read this prospectus and the documents incorporated by reference before buying any of the shares of Common Stock being offered.

We are registering the offer and sale of the shares of the Common Stock owned by the selling shareholder to satisfy registration rights we have granted to the selling shareholder pursuant to a registration rights agreement dated as of December 10, 2024. We have agreed to bear all of the expenses incurred in connection with the registration of the Common Stock covered by this prospectus. The selling shareholder will pay or assume brokerage commissions and similar charges, if any, incurred in the sale of the shares of Common Stock.

The registration of shares of Common Stock hereunder does not mean that the selling shareholder will actually offer or sell the full number of shares being registered pursuant to this prospectus. The selling shareholder may sell the shares of Common Stock registered hereby from time to time. The shares of Common Stock may be offered and sold by the selling shareholder through public or private transactions, at market prices prevailing at the time of sale or at negotiated prices. The selling shareholder may retain underwriters, dealers or agents from time to time. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution” in this prospectus.

We are not selling any shares of our Common Stock pursuant to this prospectus, and we will not receive any proceeds from any sale by the selling shareholder of the shares of Common Stock covered by this prospectus.

Our Common Stock is traded on the Nasdaq Global Market under the symbol “TRNS.” On January 16, 2025, the last reported sale price of our Common Stock on the Nasdaq Global Market was $103 per share.

Investing in our Common Stock involves risk. You should carefully read the information included and incorporated by reference into this prospectus for a discussion of the factors you should carefully consider in determining whether to invest in our Common Stock, including the discussion of risks described under “Risk Factors” on page 5 of this prospectus.

___________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

___________________

The date of this prospectus is January 22, 2025.

 

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	2
PROSPECTUS SUMMARY	4
RISK FACTORS	5
USE OF PROCEEDS	5
SELLING SHAREHOLDERS	5
DESCRIPTION OF COMMON STOCK	7
PLAN OF DISTRIBUTION	9
WHERE YOU CAN FIND MORE INFORMATION	12
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE	12
LEGAL MATTERS	13
EXPERTS	13

 

ABOUT THIS PROSPECTUS

This prospectus relates to the resale by the Selling Shareholder, as defined in the section of this prospectus entitled “Selling Shareholder,” of up to 96,006 shares of our Common Stock.

This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Selling Shareholder named herein may, from time to time, offer and sell or otherwise dispose of the shares of Common Stock covered by this prospectus. You should rely only on the information contained in, or incorporated by reference into, this prospectus and any applicable prospectus supplement we have authorized for use in connection with this offering. We have not authorized anyone to provide you with additional information or information different from that contained in, or incorporated by reference into, this prospectus and any applicable prospectus supplement. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted. The information contained in this prospectus, any applicable prospectus supplement, and the documents incorporated by reference herein and therein, is accurate only as of their respective dates, regardless of the time of delivery of this prospectus, any applicable prospectus supplement, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since such date.

It is important for you to read and consider all information contained in this prospectus and any prospectus supplement, including the documents incorporated by reference, in making your investment decision. This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the section entitled “Where You Can Find More Information.”

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

Unless the context otherwise requires, references in this prospectus to “Transcat,” the “Company,” “we,” “us,” and “our” refer to Transcat, Inc. and its subsidiaries, unless the context clearly indicates otherwise.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “can,” “focus,” “intends,” “may,” “plan,” “will,” “would,” and other similar words. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or those expressed in such forward-looking statements.

These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this prospectus, any prospectus supplement, and the documents we incorporate by reference, including among others, statements regarding our strategy, future operations, financial objectives, prospects, plans, objectives of management and expected performance levels are forward-looking statements. Factors that might cause such differences include, but are not limited to:

·

general economic conditions applicable to our business, including inflationary impacts and changes in interest rates,

·

the highly competitive nature of the industries in which we compete and in the nature of our two business segments,

·

the concentration of Service segment customers in the life science and other FDA-regulated businesses and industrial manufacturing industries,

·

the significant competition we face in our Distribution segment,

·

any impairment of our goodwill or intangible assets,

·

tariffs and trade relations,

·

our ability to successfully complete and integrate business acquisitions,

·

cybersecurity risks, including the risk of significant disruptions in our information technology systems,

·

our ability to recruit, train and retain quality employees, skilled technicians and senior management,

·

fluctuations in our operating results,

·

our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers,

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the prices we are able to charge for our services in our Service segment,

·

our ability to adapt our technology,

·

reliance on our enterprise resource planning system,

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technology updates, supply chain delays or disruptions,

·

the risks related to current and future indebtedness,

·

foreign currency rate fluctuations,

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risks related to protecting our intellectual property,

·

geopolitical events, adverse weather events or other catastrophes or natural disasters or widespread public health crises,

·

negative publicity and other reputational harm,

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the volatility of our stock price and the relatively low trading volume of our common stock,

·

changes in tax rates, accounting standards, legal requirements and listing standards, and

·

legal and regulatory risks related to our international operations.

 

We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advise that various factors, including those described above, could affect our financial performance and could cause our actual results or circumstances for future periods to differ materially from those anticipated or projected. See “Risk Factors” and also “Risk Factors” in Item IA of Part I of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, which is incorporated herein by reference, for further information. Except as required by law, we do not undertake, and specifically disclaim any obligation to publicly release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

RISK FACTORS

Investing in our Common Stock involves risks. Before making an investment decision, you should carefully consider the specific risks set forth under the caption “Risk Factors” in our filings with the SEC, which are incorporated by reference into this prospectus and any prospectus supplement. See “Where You Can Find More Information.”

USE OF PROCEEDS

 

We will not receive any proceeds from the shares of our Common Stock offered for resale by the Selling Shareholder. We have agreed to bear all of the expenses incurred in connection with the registration of the Common Stock covered by this prospectus and the Selling Shareholder will pay or assume brokerage commissions and similar charges, if any, incurred in the sale of the shares of Common Stock.

SELLING SHAREHOLDER

On December 10, 2024, we entered into a Membership Unit Purchase Agreement (the “Martin Purchase Agreement”) with Martin Holding Inc. (the “Seller”) and Richard L. Brion (the “Selling Shareholder”), pursuant to which we acquired all of the membership units of Martin Calibration LLC (“Martin”), a privately-held Delaware limited liability company. Martin is an ISO-17025 accredited calibration laboratory network and has been a regional Midwest leader in the metrology business for almost 35 years. With its flagship Minneapolis lab, Martin has six additional labs in or near Chicago, Milwaukee, Eau Claire, Tempe, and Los Angeles. Martin serves customers in the highly regulated medical, life science, aerospace, and nuclear sectors providing in-lab and onsite services across a broad range of disciplines.

 

The aggregate purchase price under the Martin Purchase Agreement was $79 million, subject to customary adjustments set forth in the agreement, paid in a combination of (i) $69 million in cash and (ii) approximately $10 million in Common Stock, or 96,006 shares of Common Stock. In connection with the Martin Purchase Agreement, we entered into a registration rights agreement pursuant to which we agreed to register for resale under the Securities Act the shares of Common Stock issued pursuant to the Martin Purchase Agreement. Under the Martin Purchase Agreement, Mr. Brion entered into a customary lock-up agreement with the Company pursuant to which he agreed not to sell or otherwise dispose of the shares of Common Stock until 45 days after the effectiveness under the Securities Act of the registration statement of which this prospectus forms a part.

 

We have agreed to bear all of the expenses incurred in connection with the registration of the Common Stock covered by this prospectus. The Selling Shareholder will pay or assume brokerage commissions and similar charges, if any, incurred in the sale of the shares of Common Stock.

 

This prospectus covers the resale from time to time by the Selling Shareholder identified in the table below of an aggregate of up to 96,006 shares of our Common Stock, subject to any appropriate adjustment as a result of any stock split, stock dividend, or other distribution with respect to, or in an exchange or replacement, or in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event. Other than the transactions contemplated by the Martin Purchase Agreement, as described above, the Selling Shareholder and its affiliates have not held a position or office, or had any material relationship, with us within the last three years.

 

The table below: (i) lists the Selling Shareholder and other information regarding the beneficial ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) of our Common Stock by the Selling Shareholder; (ii) has been prepared based upon

 

information furnished to us by the Selling Shareholder; and (iii) to our knowledge, is accurate as of the date of this prospectus. The Selling Shareholder may sell all, some or none of its securities in this offering. The Selling Shareholder identified in the table below may have sold, transferred or otherwise disposed of some or all of its securities since the date of this prospectus in transactions exempt from or not subject to the registration requirements of the Securities Act. Information concerning the Selling Shareholder may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly and as required.

 

		Shares Beneficially Owned Prior to the Offering (1)				Maximum Number of Shares to be sold in this		Shares Beneficially Owned After the Offering (1)(2)
Selling Shareholder		Number		Percentage		Offering		Number		Percentage
Richard L. Brion		96,206		1.0	%	96,006		200		*
TOTAL		96,206		1.0	%	96,006		200		*

 

*	Less than 1%.
(1)	Percentage ownership for the Selling Shareholder is determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations thereunder and is based on 9,309,257 outstanding shares of our Common Stock as of December 28, 2024.
(2)	The totals reported in this column assume that (a) all of the securities registered by the registration statement of which this prospectus is a part are sold in this offering; (b) the Selling Shareholder does not (i) sell any of the shares of Common Stock, if any, that have been issued to it other than those covered by this prospectus; and (ii) acquire additional shares of our Common Stock after the date of this prospectus and prior to the completion of this offering.

 

DESCRIPTION OF COMMON STOCK

Introduction

 

The following section describes the material features and rights of our Common Stock. The summary does not purport to be exhaustive and is qualified in its entirety by reference to our Articles of Incorporation, as amended (the “Articles”) and our Code of Regulations, as amended (the “Code of Regulations”), each of which is filed as an exhibit to the Registration Statement of which this prospectus is a part, and to applicable sections of the Ohio General Corporation Law (the “OGCL”).

 

General

 

We are authorized to issue up to 30,000,000 shares of Common Stock. Each share of Common Stock entitles the holder to the same rights, and is the same in all respects, as each other share of Common Stock. Holders of Common Stock are entitled to: (i) one vote per share on all matters requiring a shareholder vote; (ii) a ratable distribution of dividends, if and when, declared by the board of directors (the “Board”); and (iii) in the event of a liquidation, dissolution or winding up of us, to share ratably in all assets remaining available for distribution to them after payment of liabilities. Holders of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. The shares of Common Stock being offered by this prospectus will be fully paid and nonassessable.

 

Dividends

 

Our credit agreement, as amended, limits our ability to pay cash dividends to certain levels over the term of the credit agreement and in any fiscal year. We have not declared any cash dividends since our inception and have no current plans to pay any dividends in the foreseeable future.

 

Transfer Agent & Registrar

 

The transfer agent and registrar for our Common Stock is Computershare.

 

Listing

 

Our Common Stock is listed on the Nasdaq Global Market under the trading symbol “TRNS.”

 

Anti-takeover Effects of Certain Provisions in our Articles of Incorporation, Code of Regulations and the OGCL

 

Articles of Incorporation and Code of Regulations

 

Some provisions of our Articles and Code of Regulations may be deemed to have an anti-takeover effect and may collectively operate to delay, defer or prevent a tender offer, a proxy contest or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the shares held by our shareholders. These provisions are intended to discourage certain types of coercive takeover practices and inadequate takeover bids. This also encourages persons seeking to acquire control of us to negotiate with us first. As a result, shareholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of our Board or management more difficult. The following discussion is a summary of certain material provisions of our Articles and Code of Regulations, copies of which are filed as exhibits to the Registration Statement of which this prospectus is a part.

 

Our Articles require the affirmative vote of the holders of at least 75% of the capital stock of the Company entitled to vote in order to authorize: (i) any merger or consolidation of the Company with any other corporation if such transaction would otherwise by law require a vote of the shareholders; (ii) any combination or majority share acquisition with or by any corporation if such transaction would otherwise by law require a vote of the shareholders; or (iii) any lease, sale, exchange, transfer or other disposition of all or substantially all of the assets of the Company to any other person or entity; if, in any such event, such other corporation, person or entity is the beneficial owner of ten percent or more of the outstanding capital stock of the Company entitled to vote thereon. Notwithstanding the forgoing, such restrictions do not apply if the Company’s Board of Directors approves a memorandum of understanding with the other corporation, person or entity prior to the time it becomes the owner of ten percent or more of the outstanding shares of the Company’s capital stock.

 

Additionally, the affirmative vote of the holders of at least 75% of the capital stock of the Company entitled to vote is required to amend, alter or repeal any of the foregoing provisions of our Articles.

 

Finally, the Board is currently divided into three classes. At the 2024 annual meeting of shareholders, our shareholders approved an amendment to the Code of Regulations to declassify the Board of Directors. In effect, all directors elected at the 2025 annual meeting and any later annual meeting of shareholders will be elected for one-year terms. Accordingly, the transition from a classified Board with staggered terms to a declassified Board with all Board members serving one-year terms will not be complete until the 2028 annual meeting, at which point all directors will stand for election for a one-year term. Until the Board is declassified, it would take at least two annual elections to replace a majority of our Board.

 

Ohio General Corporation Law

 

Certain provisions of the OGCL make a change in control of an Ohio corporation more difficult. Below is a summary of the Ohio anti-takeover statutes.

 

Ohio Control Share Acquisition Statute

 

The OGCL provides that certain notice and informational filings, and special shareholder meeting and voting procedures, must occur prior to the acquisition of an issuer’s shares that would entitle the acquirer to exercise or direct the voting power of the issuer in the election of directors within any of the following ranges: (i) one-fifth or more but less than one-third of such voting power, (ii) one-third or more but less than a majority of such voting power; or (iii) a majority or more of such voting power.

 

The Ohio Control Share Acquisition Statute does not apply to a corporation if its articles of incorporation or code of regulations so provide. We have not opted out of the application of the Ohio Control Share Acquisition Statute.

 

Ohio Merger Moratorium Statute

 

Chapter 1704 of the OGCL addresses a range of business combinations and other transactions (including mergers, consolidations, asset sales, loans, disproportionate distributions of property and disproportionate issuances or transfers of shares or rights to acquire shares) between an Ohio corporation and an “Interested Shareholder” which is defined as a shareholder who, alone or with others, may exercise or direct the exercise of at least 10% of the voting power of the corporation in the election of directors. The Ohio Merger Moratorium Statute prohibits such transactions between the corporation and an Interested Shareholder for a period of three years after a person becomes an Interested Shareholder, unless, prior to such date, the

 

directors approved either the business combination or other transaction or approved the acquisition that caused the person to become an Interested Shareholder.

 

After the three-year period, transactions between the corporation and the Interested Shareholder are permitted if:

 

●

the transaction is approved by the holders of shares with at least two-thirds of the voting power of the corporation in the election of directors or the approval of the holders of a majority of the voting shares held by persons other than an Interested Shareholder; or

 

●

the business combination results in shareholders, other than the Interested Shareholder, receiving the higher of the highest amount paid in the past by the Interested Shareholders for the corporation’s shares or the amount that would be due to the shareholders if the corporation were to dissolve.

 

The Ohio Merger Moratorium Statute does not apply to a corporation if its articles of incorporation or code of regulations so provide. We have not opted out of the application of the Ohio Merger Moratorium Statute.

 

Ohio Anti-Greenmail Statute

 

Pursuant to the Ohio Anti-Greenmail Statute, a public corporation formed in Ohio may recover profits that a shareholder makes from the sale of the corporation’s securities within 18 months after making a proposal to acquire control or publicly disclosing the possibility of a proposal to acquire control. The corporation may not, however, recover from a person who proves either: (i) that his sole purpose in making the proposal was to succeed in acquiring control of the corporation and there were reasonable grounds to believe that he would acquire control of the corporation; or (ii) that his purpose was not to increase any profit or decrease any loss in the shares. Also, before the corporation may obtain any recovery, the aggregate amount of the profit realized by such person must exceed $250,000. Any shareholder may bring an action on behalf of the corporation if a corporation refuses to bring an action to recover these profits. The party bringing such an action may recover his attorneys’ fees if the court having jurisdiction over such action orders recovery of any profits.

 

The Ohio Anti-Greenmail Statute does not apply to a corporation if its articles of incorporation or code of regulations so provide. We have not opted out of the application of the Ohio Anti-Greenmail Statute.

PLAN OF DISTRIBUTION

The Selling Shareholder, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of Common Stock or interests in shares of Common Stock received after the date of this prospectus from the Selling Shareholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of its shares of Common Stock covered by this prospectus on any stock exchange, market or trading facility on which the shares of Common Stock are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

The Selling Shareholder may use any one or more of the following methods when disposing of the shares of Common Stock:

·

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·

block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

·

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·

an exchange distribution in accordance with the rules of the applicable exchange;

·

privately negotiated transactions;

·

short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC;

·

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

·

broker-dealers may agree with the Selling Shareholder to sell a specified number of such shares at a stipulated price per share;

·

the in-kind distribution of the shares by an investment fund to its limited partners, members or other equity holders;

·

a combination of any such methods of sale; and

·

any other method permitted by applicable law.

The Selling Shareholder may sell all, some or none of the shares of Common Stock covered by this prospectus. If sold under the registration statement of which this prospectus forms a part, the shares of Common Stock will be freely tradeable in the hands of persons other than our affiliates that acquire such shares.

The Selling Shareholder may, from time to time, pledge or grant a security interest in some or all of the shares of Common Stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Shareholder to include the pledgee, transferee or other successors in interest as a Selling Shareholder under this prospectus. The Selling Shareholder also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of our Common Stock or interests therein, the Selling Shareholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume. To the extent permitted by applicable securities laws, the Selling Shareholder may also sell shares of our Common Stock short and deliver these securities to close out its short positions, or loan or pledge the Common Stock to broker-dealers that in turn may sell these securities. The Selling Shareholder may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares of Common Stock offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The aggregate proceeds to the Selling Shareholder from the sale of the Common Stock offered by the Selling Shareholder will be the purchase price of the Common Stock less discounts or commissions, if any. The Selling Shareholder reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of Common Stock to be made directly or through agents. We will not receive any of the proceeds from this offering.

The Selling Shareholder also may resell all or a portion of the shares of Common Stock in open market transactions in reliance upon Rule 144 under the Securities Act, provided that it meets the criteria and conforms to the requirements of that rule.

The Selling Shareholder and any underwriters, broker-dealers or agents that participate in the sale of the Common Stock or interests therein may be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares of Common Stock covered by this prospectus may be underwriting discounts and commissions under the Securities Act. Any Selling Shareholder who is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

To the extent required, the shares of our Common Stock to be sold, the name of the Selling Shareholder, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

In order to comply with the securities laws of some states, if applicable, the Common Stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the Common Stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

We have advised the Selling Shareholder that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the Selling Shareholder and its affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Shareholder for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The Selling Shareholder may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

We have agreed to indemnify the Selling Shareholder against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

We have agreed with the Selling Shareholder to keep the registration statement of which this prospectus constitutes a part effective until the earliest to occur of (i) the 12-month anniversary of the issuance of the shares of Common Stock, (ii) a Change of Control, and (iii) such time as all the shares of Common Stock covered by this prospectus have been sold by the Selling Shareholder or may be disposed of by the Selling Shareholder in compliance with Rule 144.

For purposes hereof, a “Change of Control” means an event or series of events (i) as a result of which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all Common Stock that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 50% or more of the Common Stock entitled to vote for members of the Company’s board of directors on a fully diluted basis (and taking into account all such Common Stock that such person or group has the right to acquire pursuant to any option right); or (ii) that results in the sale of all or substantially all of the assets or businesses of the Company and its consolidated subsidiaries, taken as a whole; provided, however that such event or events shall not constitute a Change of Control if, following the occurrence thereof, shares of Common Stock continue to be listed for trading on

any market or exchange of The Nasdaq Stock Market LLC, or any other market or exchange on which the shares of Common Stock covered by this prospectus are listed for trading.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our filings with the SEC are available to the public through the SEC's website at www.sec.gov. Our annual, quarterly and current reports and amendments to those reports, if any, are also available via the internet at our website, www.transcat.com, by following the links to “Investor Relations” and “SEC Filings.” The information on, or accessible through, our internet site, or any other internet site described herein, is not a part of, and is not incorporated or deemed to be incorporated by reference in, this prospectus, and you should not consider it to be a part of this prospectus. We will provide to each person, including any beneficial owner, to whom a prospectus is delivered a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus. In addition, you may request copies of our filings with the SEC, including the documents listed below under the heading “Incorporation of Certain Information by Reference,” at no cost, by calling us at (585) 352-7777 or by writing to us at: Transcat, Inc., Attn: Corporate Secretary, 35 Vantage Point Drive, Rochester, New York 14624.

We have filed with the SEC a registration statement under the Securities Act relating to the offering of these securities. The registration statement, including the attached exhibits, contains additional relevant information about us and the Common Stock. This prospectus does not contain all of the information set forth in the registration statement. You may review a copy of the registration statement and the documents incorporated by reference therein through the SEC’s internet web site referred to above.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED IN OR DELIVERED WITH THIS PROSPECTUS. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND IN THE DOCUMENTS THAT WE HAVE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM OR IN ADDITION TO THE INFORMATION CONTAINED IN THIS DOCUMENT AND INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.

The SEC allows us to incorporate by reference into this prospectus certain information we file with it, which means that we can disclose important information by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Because we are incorporating by reference future filings with the SEC, this prospectus is continually updated and those future filings may modify or supersede some of the information included or incorporated in this prospectus. We incorporate by reference all the documents listed below and all documents subsequently filed with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or after (i) the date of the initial registration statement and prior to effectiveness of the registration statement, and (ii) the date of this prospectus and prior to the completion or termination of the offering under this prospectus; provided, however, that we are not incorporating, in each case, any documents or information deemed to have been furnished and not filed in accordance with SEC rules:

·

Our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, filed with the SEC on May 28, 2024, including the information specifically incorporated by reference into the Form 10-K from our definitive proxy statement for the 2024 Annual Meeting of Shareholders filed on July 23, 2024.

·

Our Quarterly Reports on Form 10-Q for the quarters ended June 29, 2024 and September 28, 2024, filed with the SEC on August 7, 2024 and November 6, 2024, respectively.

·

Our Current Reports on Form 8-K filed with the SEC on April 9, 2024 as amended on April 10, 2024, April 15, 2024, May 20, 2024 (Film No. 24964648) as amended on May 22, 2024, May 20, 2024 (Film No. 24964793), September 13, 2024, December 10, 2024, and December 23, 2024.

·

The description of our Common Stock, par value $0.50 per share, contained in Amendment Number 1 to our Registration Statement on Form S-3 (Registration No. 333-42345), filed with the SEC on February 5, 1998, Exhibit 4.1 to our Annual Report on Form 10-K for the fiscal year ended March 30, 2019, filed with the SEC on June 7, 2019, and any amendment or report filed for the purpose of updating such description.

Nothing in this prospectus shall be deemed to incorporate information furnished, but not filed, with the SEC, including pursuant to Item 2.02 or Item 7.01 of Form 8-K and any corresponding information or exhibit furnished under Item 9.01 of Form 8-K.

Information in this prospectus supersedes related information in the documents listed above and information in subsequently filed documents supersedes related information in both this prospectus and the incorporated documents.

To obtain copies of these filings, see “Where You Can Find More Information” in this prospectus.

 

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by Harter Secrest & Emery LLP.

EXPERTS

The consolidated financial statements of Transcat, Inc. as of March 30, 2024 and March 25, 2023, and for each of the years in the three-year period ended March 30, 2024, and the effectiveness of internal control over financial reporting as of March 30, 2024, have been audited by Freed Maxick P.C. (f/k/a Freed Maxick CPAs, P.C.), an independent registered public accounting firm, as stated in their reports thereon, which are incorporated by reference herein, and have been so incorporated in reliance upon such reports of and upon the authority of said firm as experts in accounting and auditing.

Transcat, Inc.

 

 96,006 Shares of Common Stock Offered by the Selling Shareholder

 

Prospectus

 

 

 

 

 

January 22, 2025

 

 

 

 

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares of Common Stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. 

Part II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The expenses (other than underwriting compensation) to be incurred by us in connection with the issuance and distribution of our securities being registered hereby are:

Securities and Exchange Commission filing fee		$	1,509
Accounting fees and expenses*			2,500
Legal fees and expenses*			35,000
Miscellaneous*			5,991
Total expenses		$	45,000*

 

*

Indicates an estimate.

Item 15. Indemnification of Directors and Officers.

We are incorporated under the Ohio General Corporation Law (the “OGCL”). Article VI of our Code of Regulations, as amended, provides that we shall indemnify our directors and officers to the fullest extent authorized by the OGCL. With respect to indemnification of directors and officers, Section 1701.13 of the OGCL provides that a corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe his conduct was unlawful. Under this provision of the OGCL, the termination of any action, suit or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct is unlawful.

Furthermore, the OGCL provides that a corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of: (i) any claim, issue or matter as to which such person is adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless, and only to the extent that, the court of common pleas or the court in which such action or suit was brought

determines, upon application, that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses as the court of common pleas or such other court shall deem proper; or (ii) any action or suit in which the only liability asserted against a director is pursuant to OGCL Section 1701.95 (relating to unlawful loans, dividends, and distributions of assets).

In addition, Section 1701.13(E)(5)(a) requires a corporation to pay any expenses, including attorneys’ fees, of a director in defending an action, suit, or proceeding referred to above as they are incurred, in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director in which he agrees to both (i) repay such amount if it is proved by clear and convincing evidence that his action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the corporation or undertaken with reckless disregard for the best interests of the corporation and (ii) reasonably cooperate with the corporation concerning the action, suit, or proceeding. Section 1701.13(E)(7) and (F)(2) further authorizes a corporation to enter into contracts regarding indemnification and to purchase and maintain insurance on behalf of any director, trustee, officer, employee or agent for any liability asserted against him or arising out of his status as such. The Company presently maintains insurance policies that provide coverage for our directors and officers in certain situations where we cannot directly indemnify such directors or officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.

Item 16. Exhibits.

EXHIBIT INDEX

Exhibit No.		Description
3.1(a)		Articles of Incorporation, as amended, are incorporated herein by reference from Exhibit 4(a) to the Company’s Registration Statement on Form S-8 (Registration No. 33-61665) filed on August 8, 1995.
3.1(b)		Certificate of Amendment to the Articles is incorporated herein by reference from Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
3.1(c)		Certificate of Amendment to the Articles is incorporated herein by reference from Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2012.
3.1(d)		Certificate of Amendment to the Articles is incorporated herein by reference from Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2015.
3.2		Code of Regulations, as amended through September 11, 2024, are incorporated herein by reference from Exhibit 3.1 to the Company's Current Report on Form 8-K filed on September 13, 2024.
5.1*		Opinion of Harter Secrest & Emery LLP.
10.1*^		Membership Unit Purchase Agreement, dated December 10, 2024, by and among Transcat, Inc., Martin Holding Inc., and Richard L. Biron.

 

10.2*^		Registration Rights Agreement, dated December 10, 2024, by and among Transcat, Inc., Martin Holding Inc., and Richard L. Biron.
23.1*		Consent of Freed Maxick P.C. (f/k/a Freed Maxick CPAs, P.C.)
23.2*		Consent of Harter Secrest & Emery LLP (included in Exhibit 5.1 filed herewith).
24.1*		Power of Attorney (included in the signature page of this Registration Statement).
107*		Calculation of Filing Fee Table.

 

*	Filed herewith.
^	Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

Item 17. Undertakings.

(a)

The undersigned registrant hereby undertakes:

 

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

provided, however, that paragraphs (a)(1)(i), (ii) and (iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

 

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

 

(i)

Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

(ii)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

 

(b)

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(c)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rochester, State of New York, on this 22nd day of January 2025.

 

		TRANSCAT, INC.
	By:	/s/ Lee D. Rudow
		Lee D. Rudow
		President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Lee D. Rudow and Thomas L. Barbato, each of them acting individually, as his or her true and lawful attorney-in-fact and agent with full powers of substitution and resubstitution, to act for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments and registration statements filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and otherwise), and any other documents in connection therewith, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents the full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Each of the undersigned has executed this power of attorney as of the date indicated.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures		Title		Date
/s/ Lee D. Rudow		Director, President and Chief Executive Officer		January 22, 2025
Lee D. Rudow		(Principal Executive Officer)
/s/ Thomas L. Barbato		Senior Vice President of Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)		January 22, 2025
Thomas L. Barbato
/s/ Scott D. Deverell		Controller and Principal Accounting Officer		January 22, 2025
Scott D. Deverell		(Principal Accounting Officer)
/s/ Gary J. Haseley		Chairman of the Board of Directors		January 22, 2025
Gary J. Haseley

  

Signatures		Title		Date
/s/ Craig D. Cairns		Director		January 22, 2025
Craig D. Cairns
/s/ Dawn DePerrior		Director		January 22, 2025
Dawn DePerrior
/s/ Oksana S. Dominach		Director		January 22, 2025
Oksana S. Dominach
/s/ Christopher Gillette		Director		January 22, 2025
Christopher Gillette
/s/ Charles P. Hadeed		Director		January 22, 2025
Charles P. Hadeed
/s/ Mbago M. Kaniki		Director		January 22, 2025
Mbago M. Kaniki
/s/ Cynthia Langston		Director		January 22, 2025
Cynthia Langston
/s/ Robert L. Mecca		Director		January 22, 2025
Robert L. Mecca

 

 

Exhibit 5.1

 

 

 

January 22, 2025

 

Transcat, Inc. 35 Vantage Point Drive Rochester, New York 14624

 

Re:

Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to Transcat, Inc., an Ohio corporation (the “Company”), in connection with its filing of a Registration Statement on Form S-3, together with the exhibits thereto (the “Registration Statement”) to be filed on the date hereof, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), registering the resale by the selling shareholder (the “Selling Shareholder”) of 96,006 shares of the Company’s common stock (the “Shares”), par value $0.50 per share, issued by the Company to the Selling Shareholder on December 10, 2024, pursuant to the Membership Unit Purchase Agreement dated December 10, 2024. This opinion is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K in connection with the filing of the Registration Statement.

For purposes of this opinion, we have with your permission made the following assumptions, in each case without independent verification: (i) the due authorization, execution and delivery of all documents by the parties thereto other than the Company; (ii) the genuineness of all signatures on all documents submitted to us; (iii) the authenticity and completeness of all documents, corporate records, certificates and other instruments (the “Records”) submitted to us; (iv) that photocopy, electronic, certified, conformed, facsimile and other copies submitted to us of the Records conform to the original Records; (v) the legal capacity of all individuals executing documents; (vi) that all documents are the valid and binding obligations of each of the parties thereto other than the Company, enforceable against such parties in accordance with their respective terms and that no such documents have been amended or terminated orally or in writing; and (vii) that the statements contained in the certificates and comparable documents of public officials, officers and representatives of the Company and other persons on which we have relied for the purposes of this opinion are true and correct. As to all questions of fact material to this opinion, we have relied (without independent verification) upon certificates or comparable documents of officers and representatives of the Company.

1600 BAUSCH & LOMB PLACE ROCHESTER, NY 14604-2711 PHONE: 585.232.6500 FAX: 585.232.2152

rochester, ny  •  buffalo, ny  •  albany, ny  •  corning, ny  •  new york, ny

 

 

Transcat, Inc.

January 22, 2025

Page 2

Based upon, and subject to and limited by the foregoing, we are of the opinion that the Shares are validly issued, fully paid and non-assessable.

We express no opinion with respect to the effect of any law other than the applicable provisions of the Ohio Revised Code as currently in effect.

This opinion letter has been prepared in accordance with the customary practice of lawyers who regularly give, and lawyers who regularly advise opinion recipients concerning, opinions of the type contained herein.

This opinion letter deals only with the specified legal issues expressly addressed herein, and you should not infer any opinion that is not explicitly addressed herein from any matter stated in this letter.

We consent to the filing of this opinion as an exhibit to the Registration Statement and the reference to this firm under the caption “Legal Matters” in the prospectus contained in the Registration Statement. In giving such consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act and the rules and regulations thereunder. This opinion is rendered to you as of the date hereof and we assume no obligation to advise you or any other person hereafter with regard to any change after the date hereof in the circumstances or the law that may bear on the matters set forth herein even though the change may affect the legal analysis or legal conclusion or other matters in this letter.

Very truly yours,

 

/s/ Harter Secrest & Emery LLP

 

 

Exhibit 10.1

 

 

 

 

 

 

 

 

MEMBERSHIP UNIT PURCHASE AGREEMENT among TRANSCAT, INC., MARTIN HOLDING INC. and RICHARD L. BRION

 

Dated December 10, 2024

Table of Contents

 

Article I. THE TRANSACTION		2
1.1	Purchase Transaction	2
1.2	Purchase Price; Payment	2
1.3	Closing Statement; Adjustment	3
1.4	Payment of Indebtedness and Company Transaction Expenses	5
1.5	Escrow	6
1.6	Transfer of Assets Prior to Closing	6
1.7	Transaction Bonuses	6
Article II. CLOSING		6
2.1	Closing Date	6
2.2	Closing Deliveries	7
Article III. REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES		9
3.1	Authority; Execution and Delivery	9
3.2	Organization	9
3.3	No Conflict; Consents	9
3.4	Capitalization; Title to Company Units	10
3.5	Subsidiaries	11
3.6	Financial Statements; Undisclosed Liabilities	11
3.7	Absence of Certain Changes or Events	11
3.8	Title, Condition and Sufficiency of Assets	12
3.9	Real Property	13
3.10	Accounts Receivable	14
3.11	Intellectual Property	14
3.12	Material Contracts	15
3.13	Litigation	16
3.14	Compliance with Laws; Permits	17
3.15	Environmental Matters	17
3.16	Taxes	17
3.17	Employee Relations	20
3.18	Employee Benefit Matters	21
3.19	Transactions with Related Parties	23
3.20	Insurance	24
3.21	Relationship with Significant Customers	24
3.22	Relationship with Significant Suppliers	25
3.23	Anti-Corruption Laws	25
3.24	Privacy Laws	25
3.25	Product and Service Warranties	26
3.26	Banking Relationships	26
3.27	Inventory	26
3.28	Books and Records	26
3.29	Purchase for Investment	26
3.30	Legend	27

 

3.31	Registration Rights	27
3.32	Sophisticated Investor	27
3.33	Existing Ownership	27
3.34	No General Solicitation	27
3.35	Reliance on Exemptions	27
3.36	Brokers	28
3.37	No Other Representations and Warranties	28
Article IV. REPRESENTATIONS AND WARRANTIES OF BUYER		28
4.1	Organization	28
4.2	Authority	28
4.3	No Conflict	28
4.4	Consents	29
4.5	Litigation	29
4.6	Company Shares	29
4.7	Brokers	29
4.8	Sufficiency of Funds	29
4.9	Investment Intent	30
4.10	Independent Investigation; Acknowledgement	30
4.11	No Other Representations and Warranties	30
Article V. COVENANTS		30
5.1	Confidentiality	30
5.2	Restrictive Covenants	31
5.3	Nondisparagement	32
5.4	Further Assurances	32
5.5	Release	32
5.6	Representation & Warranty Insurance	32
5.7	Termination of 401(k) Plan	33
Article VI. Tax Matters		33
6.1	Tax Indemnification	33
6.2	Straddle Period	33
6.3	Transfer Taxes	33
6.4	Cooperation on Tax Matters	34
6.5	Responsibility for Filing Tax Returns	34
6.6	Refunds and Tax Benefits	34
6.7	Post Closing Actions	35
6.8	Tax-Sharing Agreements	35
6.9	Allocation	35
6.10	Survival	35
Article VII. SURVIVAL AND INDEMNIFICATION		35
7.1	Survival	35
7.2	General Indemnification	36
7.3	Process for Indemnification	38
7.4	Recoupment Against Escrow. The	39
7.5	Payment of Losses to Buyer Indemnified Parties	40
7.6	Remedies Exclusive	40

 

7.7	Tax Treatment	41
Article VIII. MISCELLANEOUS		41
8.1	Interpretive Provisions	41
8.2	Entire Agreement	41
8.3	Successors and Assigns	41
8.4	Headings	42
8.5	Modification and Waiver	42
8.6	Expenses	42
8.7	Notices	42
8.8	Governing Law; Venue	43
8.9	Public Announcements	43
8.10	No Third Party Beneficiaries	44
8.11	Counterparts	44
8.12	Delivery by Email or Electronic Transmission	44
8.13	Representation of Seller Parties and their Affiliates	44
Article IX. CERTAIN DEFINITIONS		45
9.1	Defined Terms	45
9.2	Other Definitions	53

 

Exhibit A	Description of Reorganization Documents
Exhibit B	Form of Registration Rights Agreement
Exhibit C	Net Working Capital Example

 

MEMBERSHIP Unit PURCHASE AGREEMENT

THIS MEMBERSHIP UNIT PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of December 10, 2024, by and among TRANSCAT, INC., an Ohio corporation (“Buyer”), MARTIN HOLDING INC., a Minnesota corporation (“Seller”), and RICHARD L. BRION (“Shareholder” and, together with Seller, each, a “Seller Party” and, collectively, the “Seller Parties”). Buyer and the Seller Parties are referred to herein, individually, as a “Party” and together as the “Parties”.

RECITALS

A.

Prior to the Reorganization (as defined below), Shareholder owned 100 shares of the common stock (the “Predecessor Shares”) of Martin Calibration Inc., a Minnesota corporation (the “Predecessor Company”), which Predecessor Shares constituted all of the issued and outstanding capital stock of the Predecessor Company.

 

B.

On December 4, 2024, Seller was formed as a Minnesota corporation,

 

C.

On the dates indicated, the following transactions occurred (such transactions, collectively, the “Reorganization”), which transactions are intended to be treated as an F reorganization pursuant to Revenue Ruling 2008-18:

 

(i)

On December 5, 2024, pursuant to the terms of a Contribution and Exchange Agreement between Shareholder and Seller, Seller contributed the Predecessor Shares to Seller, in exchange for 100 shares of the common stock of Seller, which shares represent all of the issued and outstanding capital stock of Seller, resulting in the Predecessor Company becoming a wholly-owned subsidiary of Seller.

 

(ii)

On December 5, 2024, Seller caused the Predecessor Company to elect to be taxed as a qualified subchapter S subsidiary under the applicable provisions of Subchapter S of the Code, which election took effect as of December 5, 2024.

 

(iii)

On December 6, 2024, the Predecessor Company converted into Martin Calibration LLC, a Delaware limited liability company (subject to the clarification contained in Section 9.1, the “Company”), and the Company was formed as a limited liability company under the laws of the State of Delaware simultaneously therewith, by the Company’s filing of a Certificate of Conversion and Certificate of Formation for the Company with the Delaware Secretary of State and by the Predecessor Company (as converting entity) filing Articles of Conversion with the Minnesota Secretary of State, with all such filings having occurred on December 6, 2024.

 

(iv)

On December 6, 2024, Seller elected for the Company to be taxed as a disregarded entity.

 

D.

Seller will deliver a copy of all documents that effectuated the formation and corporate organization of Seller, the initial capitalization of Seller, and the Reorganization, as described on Exhibit A attached hereto (such documentation, the “Reorganization Documents”)

 

pursuant to Section 2.2(b)(vi), and for the avoidance of doubt, the Reorganization was completed prior to the date of this Agreement.

 

E.

Following the Reorganization and on the date of this Agreement, (i) Shareholder owns 100% of the issued and outstanding shares of capital stock of Seller, and (ii) Seller owns 100 membership units of the Company (the “Company Units”), which Company Units constitute all of the issued and outstanding membership units of (and a 100% membership interest in) the Company.

 

F.

The Seller Parties desire for Seller to sell to Buyer, and Buyer desires to purchase from Seller, all of the Company Units, in exchange for the consideration set forth herein, on the terms and subject to the conditions contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

Article I.
THE TRANSACTION

1.1

Purchase Transaction. Subject to the terms and conditions of this Agreement, at Closing, Buyer shall purchase from Seller, and Seller shall sell to Buyer, free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws, the Company Units in exchange for the Purchase Price.

1.2

Purchase Price; Payment.

(a)

Purchase Price. Subject to the provisions of this Agreement (including, without limitation, the adjustments set forth in Section 1.3, the total purchase price (the “Purchase Price”) for the Company Units shall be $79,000,000. Subject to adjustment as provided in this Agreement including, without limitation, Section 1.3, Section 1.4 and Section 1.5), the Purchase Price shall be payable to Seller in accordance with the provisions of Section 1.2(b).

(b)

Payments at Closing. Subject to the terms and conditions of this Agreement, in payment of the Purchase Price, at Closing:

(i)

Buyer shall pay to Wilmington Trust, as escrow agent (the “Escrow Agent”), by wire transfer of immediately available funds to the account designated in writing by the Escrow Agent, the sum of $2,000,000 (the “Escrow Amount”), as further described in Section 1.5.

(ii)

Buyer shall pay and deliver to Seller the Estimated Cash Payment, by wire transfer of immediately available funds to an account that has been designated in writing by Seller.

(iii)

Buyer shall deliver to Seller 96,006 Buyer Shares (the “Closing Shares”). The number of Closing Shares to be issued to Seller was determined by dividing the

 

Stock Consideration Amount by the Buyer Share Price, rounded down to the nearest whole share. No fraction of a Buyer Share will be issued in payment of the Purchase Price and, if the calculation of the number of Closing Shares pursuant to this Section would otherwise result in the delivery of a fractional share without such rounding, Buyer will pay the cash value of such fractional share (as determined based on the Buyer Share Price) to Seller at Closing. Notwithstanding the foregoing, Seller hereby authorizes and directs Buyer to issue the Closing Shares in the name of, and to deliver to Closing Shares to, Shareholder, who is the sole shareholder of Seller.

(iv)

Buyer shall pay, or cause to be paid, on behalf of Seller or the Company, the Estimated Closing Indebtedness, in accordance with Section 1.4.

(v)

Buyer shall pay, or cause to be paid, on behalf of Seller or the Company, the Estimated Closing Transaction Expenses, in accordance with Section 1.4.

1.3

Closing Statement; Adjustment.

(a)

Estimated Closing Statement. On the Closing Date, Seller shall deliver to Buyer a written statement (the “Estimated Closing Statement”) in form and substance reasonably satisfactory to Buyer, setting forth Seller’s good faith estimate as of the Closing of, and the components and calculation of, (i) the estimated Closing Cash (“Estimated Closing Cash”), (ii) the Closing Working Capital (the “Estimated Closing Working Capital”), (iii) the Closing Indebtedness (the “Estimated Closing Indebtedness”), (iv) the estimated Tax Gross-Up Payment (the “Estimated Tax Gross-Up Payment”), and (v) the Closing Transaction Expenses (the “Estimated Closing Transaction Expenses”). The Estimated Closing Statement, and the Estimated Closing Cash, Estimated Closing Working Capital, Estimated Closing Indebtedness, Estimated Tax Gross-Up Payment, and Estimated Closing Transaction Expenses shall each be calculated on a basis consistent with this Agreement, and shall be adjusted as necessary on the Closing Date to reflect any adjustments reasonably requested by Buyer and satisfactory to Seller in its reasonable discretion. The Estimated Closing Statement shall set forth the Estimated Cash Payment based on such estimates.

(b)

Delivery of Closing Statement. Within 90 days after the Closing Date, Buyer shall cause to be prepared and shall deliver to Seller a statement (the “Final Closing Statement”) setting forth in reasonable detail (i) Buyer’s calculation of (A) the Closing Cash, (B) the Closing Working Capital, (C) the Closing Indebtedness, (D) the Closing Tax Gross-Up Payment, and (E) the Closing Transaction Expenses, and (ii) the calculation of the Final Cash Payment based thereon. The Final Closing Statement shall be prepared in a manner consistent with the methodology used in preparing the Estimated Closing Statement.

(c)

Cooperation. Buyer and each Seller Party shall, and shall use reasonable efforts to cause their respective Affiliates, agents and representatives to, cooperate and assist in the preparation of the Final Closing Statement and the calculation of the Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment and Closing Transaction Expenses and in the conduct of the reviews and dispute resolution process referred to in this Section 1.3. The Seller Parties will promptly provide all information, including Tax

 

returns, in Seller’s possession reasonably requested by Buyer in connection with its review of the computation of the Tax Gross-Up Payment.

(d)

Review Period. During the 30-day period following Seller’s receipt of the Final Closing Statement, Seller shall be permitted to review the working papers of Buyer relating to the Final Closing Statement. The Final Closing Statement and the calculation of the Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment and Closing Transaction Expenses shall become final and binding upon the Parties for purposes of this Section 1.3 on the 30th day following delivery thereof, unless Seller gives written notice of its disagreement with the Final Closing Statement (“Notice of Disagreement”) to Buyer on or prior to such date, which notice, to be valid, must comply in all material respects with this Section 1.3. Any Notice of Disagreement shall (i) specify in reasonable detail the nature of any disagreement so asserted, and include all supporting schedules, analyses, working papers and other documentation, (ii) include only disagreements based on Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment or Closing Transaction Expenses not being calculated in accordance with this Section 1.3, (iii) specify the line item or items in the calculation of Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment or Closing Transaction Expenses with which Seller disagrees and the amount of each such line item or items as calculated by Seller, and (iv) include Seller’s calculation of the Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment or Closing Transaction Expenses, as applicable. Seller and Buyer shall be deemed to have agreed with all items and amounts included in the calculation of the Closing Cash, Closing Working Capital, Closing Indebtedness, Closing Tax Gross-Up Payment or Closing Transaction Expenses delivered pursuant to Section 1.3(b) except such items that are specifically disputed in the Notice of Disagreement.

(e)

Resolution of Disputes. If Seller delivers, in a timely manner, a Notice of Disagreement pursuant to Section 1.3(d), then the Final Closing Statement (as revised in accordance with this Section 1.3(e)), and the resulting calculation of the Closing Cash, Closing Working Capital, Closing Indebtedness and Closing Transaction Expenses resulting therefrom, shall become final and binding upon the Parties for purposes of this Section 1.3 on the earlier of (i) the date any and all matters specified in the Notice of Disagreement are finally resolved in writing by Seller and Buyer and (ii) the date any and all matters specified in the Notice of Disagreement not resolved by Seller and Buyer are finally resolved in writing by the Independent Accountant. The Final Closing Statement shall be revised to the extent necessary to reflect any resolution by Seller and Buyer and any final resolution made by the Independent Accountant in accordance with this Section 1.3(e). During the 30-day period following the delivery of a timely Notice of Disagreement or such longer period as Seller and Buyer shall mutually agree, Seller and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. If, at the end of such 30-day period (or such longer period as mutually agreed by Seller and Buyer), Seller and Buyer have not so resolved such differences, Seller and Buyer shall submit the dispute for resolution to BDO USA, PC or such other firm of accountants as the Parties shall otherwise agree upon in writing (the “Independent Accountant”) for review and resolution of any and all matters which remain in dispute and which were included in the Notice of Disagreement in accordance with this Section 1.3. The determination of the Independent Accountant shall be based solely on the provisions of this Agreement and shall be final and binding upon the Parties. The Parties shall be entitled to

 

have judgment entered upon the determination of the Independent Accountant in any court having jurisdiction over the Party against which such determination is to be enforced. The fees, costs, and expenses of the Independent Accountant shall be borne by Buyer and Seller in proportion to the manner in which the amount that is subject to dispute is determined in favor of, or adversely to, each Party. Each of Buyer and Seller shall bear all expenses of its own independent accountants incurred in connection with the preparation or review of the Final Closing Statement and any Notice of Disagreement.

(f)

Purchase Price Adjustment.

(i)

If the Final Cash Payment is greater than the Estimated Cash Payment, then within five Business Days of the determination of the Final Closing Statement, Buyer shall pay Seller an amount equal to such excess by wire transfer of immediately available funds to one or more accounts designated in writing by Seller prior to the date when such payment is due.

(ii)

If the Final Cash Payment is less than the Estimated Cash Payment, then within five Business Days of the determination of the Final Closing Statement, the Seller Parties, jointly and severally, shall pay or cause to be paid to Buyer an amount equal to such deficiency by wire transfer of immediately available funds to an account or accounts designated in writing by Buyer prior to the date when such payment is due. If the Seller Parties fail to pay when due any amount due from the Seller Parties pursuant to this Section 1.3(f)(ii), then, in addition to any other rights and remedies available to Buyer, Buyer shall have the right to receive such amount from the Escrow Amount, subject to and in accordance with the terms of this Agreement and the Escrow Agreement (and, upon the request of Buyer, the Seller Parties will sign and deliver joint instructions to the Escrow Agent directing the Escrow Agent to pay such amount to Buyer).

1.4

Payment of Indebtedness and Company Transaction Expenses. Seller shall deliver with the Estimated Closing Statement delivered pursuant to Section 1.3(a): (i) with respect to the Estimated Closing Indebtedness, the name of each Person to which any Estimated Closing Indebtedness is owed and the amount owed to each such Person, and pay-off letters (including wire instructions for payment) in form and substance reasonably satisfactory to Buyer executed at or prior to the Closing by all such Persons, and (ii) with respect to the Estimated Closing Transaction Expenses, the name of each Person to which any payment of any Estimated Closing Transaction Expenses is owed and the amount owed to each such Person, and copies of each invoice reflecting the Estimated Closing Transaction Expenses (including wire instructions for payment). Seller hereby authorizes and directs Buyer to pay at the Closing, on behalf of the Seller Parties and the Company (and apply to the payment of the Purchase Price the amount of), the Estimated Closing Indebtedness and the Estimated Closing Transaction Expenses, in accordance with the payoff statements, invoices and wire instructions so provided by the Seller Parties. The Parties shall cooperate in arranging for the repayment of the Estimated Closing Indebtedness and Estimated Closing Transaction Expenses at the Closing. The Seller Parties shall cause the Company to facilitate such repayment and the release, in connection with such repayment, of any Encumbrances securing the Closing Indebtedness.

 

1.5

Escrow. On the Closing Date, pursuant to Section 1.2(b)(i), Buyer shall pay the Escrow Amount to the Escrow Agent. The Escrow Agent shall hold the Escrow Amount pursuant to an escrow agreement among Buyer, the Seller Parties and the Escrow Agent in a form acceptable to Buyer and the Seller Parties and delivered at the Closing (the “Escrow Agreement”), for the one year period immediately following the Closing Date (or as otherwise set forth in this Agreement or the Escrow Agreement, the “Escrow Period”), as security for the potential adjustments to the Purchase Price set forth in Section 1.3 and for the indemnification obligations of the Seller Parties set forth in this Agreement. Subject to the provisions of Section 7.4, upon termination of the Escrow Period, the balance of the Escrow Amount remaining in escrow shall be distributed to Seller, subject to and in accordance with the terms of the Escrow Agreement and this Agreement.

1.6

Transfer of Assets Prior to Closing. Prior to the Closing, Seller caused the Company to assign and transfer to Seller or Shareholder the assets identified on Schedule 1.6 (the “Excluded Assets”).

1.7

Transaction Bonuses. In connection with the transactions contemplated hereby, the Company and the Seller Parties have agreed to pay transaction bonuses (the “Transaction Bonuses”) to certain employees of the Company (the “Bonus Recipients”), which Transaction Bonuses and Bonus Recipients are set forth on Schedule 1.7. Prior to the payment of a Transaction Bonus to any Bonus Recipient that is identified with an * on Schedule 1.7, the Company will enter into a transaction bonus agreement, in a form acceptable to Buyer (a “Transaction Bonus Agreement”), with such Bonus Recipient. Seller shall deliver a copy of each Transaction Bonus Agreement to Buyer. For the avoidance of doubt, the Transaction Bonuses and the employer’s share of any payroll Taxes attributable to the Transaction Bonuses (the “Transaction Bonus Taxes”) are Transaction Expenses. Notwithstanding the foregoing, if any portion of a Transaction Bonus is payable after the Closing and is conditioned upon a Bonus Recipient remaining employed by the Company or its Affiliates (including Buyer) for a period of time after the Closing, and any Bonus Recipient forfeits his or her right to such portion of the Transaction Bonus (a “Forfeited Amount”) upon termination of his or her employment, then Buyer shall pay to Seller the Forfeited Amount, together with an amount equal to the Transaction Bonus Taxes previously included in Transaction Expenses for purposes of the adjustments in Section 1.3 with respect to the Forfeited Amount. Buyer shall pay such amount (if any) to Seller, by wire transfer of immediately available funds to an account designated in writing by Seller, within 10 Business Days after the first anniversary of the Closing, which payment shall be treated as an adjustment to the Purchase Price for purposes of this Agreement, to the extent permitted under applicable Law and accounting principles.

Article II.
CLOSING

2.1

Closing Date. The closing of the transactions contemplated hereby (the “Closing”) shall take place at such place as is agreed in writing by Buyer and Seller, or via electronic transmittal of documents, on the date of this Agreement (the “Closing Date”). For financial accounting and tax purposes, to the extent permitted by Law, the Closing shall be deemed to have become effective as of 12:01 a.m. on the Closing Date (the “Effective Time”). This Agreement and all other agreements, certificates, documents and instruments furnished in

 

connection with this Agreement or the other agreements, certificates, documents and instruments at the Closing shall be deemed to be delivered simultaneously on the Closing Date and may be delivered by means of an exchange of executed documents by facsimile or an attachment in “pdf” or similar format to an electronic mail message.

2.2

Closing Deliveries.

(a)

Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered the following to Seller or other Persons as specified below:

(i)

the amounts set forth in Section 1.2(b), in accordance therewith;

(ii)

the Escrow Agreement, duly executed by Buyer;

(iii)

a Registration Rights Agreement with respect to the Closing Shares, in substantially the form attached hereto as Exhibit B (the “Registration Rights Agreement”), duly executed by Buyer;

(iv)

evidence that, at the Closing, Buyer has purchased from one or more insurers (collectively, the “R&W Insurer”) a buyer’s representation and warranty insurance policy to be issued by the R&W Insurer for Buyer’s benefit and on terms and conditions and with coverage limits satisfactory to Buyer (the “R&W Insurance Policy”), as described in Section 5.6; and

(v)

new lease agreements for the real property locations set forth on Schedule 2.2(a)(v) (the “New Lease Agreements”), duly executed by Buyer; and

(vi)

such other agreements, certificates and documents as may be reasonably requested by Seller to effectuate or evidence the transactions contemplated hereby.

(b)

Deliveries by Seller Parties. At the Closing, the Seller Parties shall deliver or cause to be delivered the following to Buyer:

(i)

certificates, if any, evidencing the Company Units, duly endorsed by Seller or accompanied by assignments or other instruments of transfer duly executed by Seller for transfer to Buyer, free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws;

(ii)

written tenders of resignation of all managers and officers of the Company;

(iii)

the Escrow Agreement, duly executed by Seller;

(iv)

the Registration Rights Agreement, duly executed by the Seller Parties;

(v)

a lock-up agreement, in a form reasonably acceptable to Buyer, duly executed by Seller, with respect to the Closing Shares;

 

(vi)

a certificate of the Secretary (or equivalent officer) of the Company, dated as of the Closing Date, certifying that attached thereto are true and complete copies of (A) the articles of organization of the Company, and all amendments thereto, as certified by the Secretary of State of Delaware; (B) the operating agreement of the Company, and all amendments thereto; (C) the certificate of incorporation of the Predecessor Company, and all amendments thereto, as in effect at the time of the Reorganization; (D) the by-laws of the Predecessor Company, and all amendments thereto, as in effect at the time of the Reorganization; and (E) the Reorganization Documents;

(vii)

a certificate of the Secretary (or equivalent officer) of Seller, dated as of the Closing Date, (A) attaching resolutions of the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which Seller is a party and the consummation of the transactions contemplated hereby and thereby (including the Reorganization), and (B) certifying that such resolutions have not been amended, terminated or superseded;

(viii)

a certificate of good standing dated not more than 10 days prior to the Closing Date from (A) the Secretary of State of the State of Delaware, attesting to the good standing in Delaware of the Company, and (B) the secretary of state of each other state attesting to the good standing of the Company in each other state where the Company is qualified to do business;

(ix)

a certificate of good standing dated not more than 10 days prior to the Closing Date from the Secretary of State of the State of Minnesota, attesting to the good standing in Minnesota of Seller;

(x)

the Estimated Closing Statement (together with all payoff statements and other documents that Seller is required to deliver pursuant to Section 1.4 with respect to the Estimated Closing Indebtedness and the Estimated Closing Transaction Expenses);

(xi)

the consents from Authorities or other Persons, if any, set forth on Schedule 2.2(b)(xi) in forms reasonably acceptable to Buyer;

(xii)

the original unit ledgers and minute books for the Company and the Predecessor Company;

(xiii)

such lien releases or other written evidence reasonably satisfactory to Buyer, evidencing the release of all Encumbrances on the assets of the Company (including the Predecessor Company) that are not Permitted Encumbrances;

(xiv)

the New Lease Agreements, duly executed by the applicable landlords;

(xv)

written confirmation of the termination, effective immediately prior to the Closing, of the 401(k) Plan, in accordance with Section 5.6;

(xvi)

written evidence of the assignment and transfer of the Excluded Assets;

 

(xvii)

a Transaction Bonus Agreement between the Company and each Bonus Recipient, duly executed by the Company and each Bonus Recipient; and

(xviii)

such other agreements, certificates and documents as may be reasonably requested by Buyer to effectuate or evidence the transactions contemplated hereby.

Article III.
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

The Seller Parties, jointly and severally, make the representations and warranties set forth in this Article III to Buyer.

3.1

Authority; Execution and Delivery. Seller’s execution and delivery of this Agreement and each of the other agreements, certificates, instruments and documents contemplated hereby (collectively, the “Ancillary Agreements”) to which Seller is a party, its compliance with the provisions hereof and thereof and the consummation of all of the transactions contemplated hereby and thereby, have all been duly and validly authorized by all necessary corporate action on the part of Seller. Shareholder has all necessary power and authority, and the full legal capacity, to enter into and deliver this Agreement and each Ancillary Agreement to which Seller is a party, to carry out his obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement and each Ancillary Agreement to which any Seller Party is a party has been duly authorized, executed and delivered by such Seller Party and constitutes a legal, valid and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms and conditions, except as enforcement may be limited by General Enforceability Exceptions.

3.2

Organization. Seller is a corporation duly incorporated and validly existing under the laws of the State of Minnesota. The Company is a limited liability company duly organized and validly existing under the laws of the State of Delaware. The Company has all requisite power and authority to carry on the Business. The Company is duly qualified to do business and is in good standing as a foreign corporation in all jurisdictions where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or licensed can be cured without material cost or expense and will not render any Material Contract of the Company unenforceable. Schedule 3.2 of the Disclosure Schedules delivered by Sellers to Buyer in connection with this Agreement (the “Disclosure Schedules”) sets for a list of (i) all jurisdictions in which the Company is authorized to transact business, and (ii) all managers and officers of the Company. Seller has provided to Buyer true and complete copies of the Organizational Documents of the Company, all as amended to date. On the applicable dates indicated in the Recitals to this Agreement, the Seller Parties, the Company and the Predecessor Company effectuated, consummated and completed the Reorganization pursuant to the terms of the Reorganization Documents and applicable Law.

3.3

No Conflict; Consents. The execution, delivery and performance by each Seller Party of this Agreement and each Ancillary Agreement to which each Seller Party is a party, and the consummation by each Seller Party of the transactions contemplated hereby and thereby does not and will not, with or without the giving of notice or the lapse of time, or both, (a) violate any

 

provision of any Law or Governmental Order to which any Seller Party or the Company is subject, (b) violate any provision of the Organizational Documents of Seller or the Company, or (c) except as set forth on Schedule 3.3 of the Disclosure Schedules, violate or result in a breach of or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default), or require the consent of any third party, under any Material Contract or Permit to which any Seller Party or the Company is a party or by which any Seller Party or the Company may be bound or affected, or result in or permit the termination or amendment of any provision of any such Material Contract or Permit. Except as set forth on Schedule 3.3 of the Disclosure Schedules, no consent, approval, or authorization of, or exemption by, or filing with, any Authority or other Person is required to be obtained or made by any Seller Party or the Company in connection with the execution, delivery, and performance by the Seller Parties of this Agreement or any Ancillary Agreement to which any Seller Party is a party, or the taking by any Seller Party or the Company of any other action contemplated hereby or thereby.

3.4

Capitalization; Title to Company Units.

(a)

All of the Company Units have been duly authorized, are validly issued, fully paid and non-assessable, and Seller is the record and beneficial owner of all Company Units, free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws. The Company Units constitute all of the issued and outstanding membership units of, and a 100% membership interest in, the Company. Upon the consummation of the transactions contemplated herein, Buyer will acquire good and valid legal and beneficial title to the Company Units, free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws.

(b)

Immediately prior to the consummation of the Reorganization, all of the issued and outstanding shares of the capital stock of the Predecessor Company were held of record and beneficially owned by Shareholder, free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws. Since consummation of the Reorganization and continuing until the Closing, (i) all of the issued and outstanding shares of the capital stock of Seller have been held of record and beneficially owned by Shareholder, and (ii) the Company Units, which constitute all of the issued and outstanding membership units of the Company, have been held by Seller, in each case free and clear of all Encumbrances other than restrictions on transfer arising pursuant to federal and state securities laws.

(c)

There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the equity interests of the Company or obligating any Seller Party or the Company to issue or sell any membership units of, or any other interest in, the Company. Except for the profit-sharing arrangements set forth in Schedule 3.4(c), the Company does not have any outstanding or authorized any unit appreciation, phantom units, profit participation or similar rights. There are no voting trusts, buy-sell agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Company Units.

 

3.5

Subsidiaries. Except as set forth on Schedule 3.5, the Company does not (i) directly or indirectly own any stock of, equity interest in, or other investment in any other corporation, joint venture, partnership, trust or other Person or (ii) have any subsidiaries or any predecessors in interest by merger, liquidation, reorganization, acquisition or similar transaction.

3.6

Financial Statements; Undisclosed Liabilities. The books of account and related records of the Company fairly reflect the Company’s assets, Liabilities and transactions. Seller has delivered to Buyer true and current copies of the following financial statements (the “Financial Statements”): (a) the balance sheets of the Company as of December 31, 2023, and December 31, 2022 and the related statements of income and stockholder’s equity and cash flows for the years ended December 31, 2023, and December 31, 2022, and (b) the balance sheet of the Company as of the Interim Balance Sheet Date, and the related statement of income for the nine-month period ended on the Interim Balance Sheet Date (the “Interim Financial Statements”). The Financial Statements (i) fairly present the financial position of the Company and the results of its operations and cash flows as of the respective dates and for the respective periods indicated therein and (ii) except as set forth on Schedule 3.6 of the Disclosure Schedules, have been prepared on a consistent basis and in accordance with GAAP, provided that the Interim Financial Statements are subject to normal year-end adjustments, none of which are expected to be material in amount or nature, and do not include disclosures normally made in footnotes. The Financial Statements have been prepared from and are in accordance with the books and records of the Company. The Company does not have any material Liabilities, except for (a) Liabilities reflected on or accrued and reserved against in the Interim Balance Sheet, or (b) Liabilities incurred in the Ordinary Course of Business after the Interim Balance Sheet Date (none of which is material or results from, arises out of, or relates to any material breach or violation of, or default under, a Contract or requirement of Law).

3.7

Absence of Certain Changes or Events. Except as set forth on Schedule 3.7 of the Disclosure Schedules, since December 31, 2023, the Company has conducted its business only in the Ordinary Course of Business and there has not been a Material Adverse Effect. Without limiting the foregoing, except as set forth on Schedule 3.7 of the Disclosure Schedules, since December 31, 2023, the Company has not (a) except in connection with the Reorganization, issued, purchased or redeemed any of its equity securities, or granted or issued any option, warrant or other right to purchase or acquire any such equity securities, (b) incurred or discharged any Liabilities, except Liabilities incurred or discharged in the Ordinary Course of Business, (c) encumbered any of its properties or assets, tangible or intangible, except for Encumbrances incurred in the Ordinary Course of Business, (d) (i) granted any increase in the salaries (other than normal increases for employees averaging not in excess of five percent per annum made in the Ordinary Course of Business) or other compensation or benefits payable or to become payable to, or any advance (excluding advances for ordinary business expenses consistent with past practice) or loan to, any officer, director, shareholder, member, partner, employee or independent contractor of the Company, (ii) made any payments to any pension, retirement, profit-sharing, bonus or similar plan except payments in the Ordinary Course of Business made pursuant to the Benefit Plans, (iii) granted or made any other payment of any kind to or on behalf of any officer, director, member, partner, shareholder, employee or independent contractor other than payment of base compensation and reimbursement for reasonable expenses in the Ordinary Course of Business, or (iv) except as contemplated by Section 5.6, adopted, amended or terminated any employee benefit plan (including any Benefit

Plan) or any stay bonus, retention bonus, transaction bonus or change in control bonus plan or arrangement, other than, in any case, amendments required by applicable Law, (e) suffered any change or, to the knowledge of the Seller Parties, received any threat of any change in any of its relations with, or any loss or, to the knowledge of the Seller Parties, threat of loss of, any of the suppliers, clients, distributors, customers or employees that are material to the Business, including any loss or change which may result from the transactions contemplated by this Agreement, (f) disposed of or failed to keep in effect any rights in, to or for the use of any Permit material to the Business, (g) changed any method of keeping of its books of account or accounting practices, (h) disposed of or failed to keep in effect any rights in, to or for the use of any of the Intellectual Property material to the Business, (i) sold, transferred or otherwise disposed of any assets, properties or rights of the Business with a value in excess of $25,000, except inventory sold in the Ordinary Course of Business, (j) except pursuant to the Reorganization, entered into any transaction or Contract outside the Ordinary Course of Business or with any partner, shareholder, member, officer, director or other Affiliate of the Company or any Seller Party, (k) made or authorized any single capital expenditure in excess of $25,000, or capital expenditures in excess of $50,000 in the aggregate, (l) changed or modified in any manner its existing credit, collection and payment policies, procedures and practices with respect to accounts receivable and accounts payable, respectively, including acceleration of collections of receivables, failure to make or delay in making collections of receivables (whether or not past due), acceleration of payment of payables or failure to pay or delay in payment of payables, (m) incurred any material damage, destruction, theft, loss or business interruption, (n) made any declaration, payment or setting aside for payment of any distribution (whether in equity or property) with respect to any securities or interests of the Company, (o) except pursuant to the Reorganization, made (except as consistent with past practice) or revoked any Tax election or settled or compromised any material Liability for Taxes with any Taxing Authority, (p) waived or released any material right or claim of the Company or incurred any modifications, amendments or terminations of any Contracts which are in the aggregate materially adverse to the Company or the Business, (q) except pursuant to the Reorganization, amended, modified, restated, or terminated any Organizational Documents of the Company, or (r) instituted any material change in its conduct of the Business or any material change in its accounting practices or methods of cash management.

3.8

Title, Condition and Sufficiency of Assets.

(a)

The Company has good and valid title to, or a valid leasehold interest in, all property and other assets used by it in the operation of its Business, reflected in the Financial Statements or acquired after the Interim Balance Sheet Date, other than properties and assets sold, consumed or otherwise disposed of in the Ordinary Course of Business since the Interim Balance Sheet Date, free and clear of all Encumbrances, except for Permitted Encumbrances. Except as set forth on Schedule 3.8, none of the Seller Parties owns or uses, or has any rights to own or use, any real or personal property, tangible or intangible, or any other assets, used in the operation of the Business.

(b)

The buildings, plants, structures, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company are structurally sound, are in good condition and repair (except for ordinary wear and tear and routine maintenance in the Ordinary Course of Business), are adequate for the purposes for which they are presently used in the

 

conduct of the Business, and comply with all applicable Laws. The buildings, plants, structures, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company currently owned or leased by the Company constitute all of the assets, properties and rights necessary for the operation of the Business by the Company as the Business is currently conducted. Except as set forth on Schedule 3.8, no Person other than the Company owns any assets, properties and rights used in the Business, other than assets owned by third parties and used in the Business pursuant to a Material Contract identified on Schedule 3.12(a) of the Disclosure Schedules.

3.9

Real Property.

(a)

The Company does not own, and has never owned, any real property.

(b)

Schedule 3.9(b) of the Disclosure Schedules sets forth the address of each parcel of real property leased by the Company (collectively, the “Leased Real Property”). All of the Leased Real Property is leased pursuant to valid, binding and enforceable leases listed on Schedule 3.9(b) of the Disclosure Schedules (the “Real Property Leases”). The Leased Real Property comprises all of the real property used by the Company in the operation of the Business. Except as set forth on Schedule 3.9(b) of the Disclosure Schedules, with respect to each parcel of Leased Real Property, (i) there are no pending or, to the knowledge of the Seller Parties, threatened condemnation proceedings or Actions relating to it, (ii) other than the Real Property Leases, there are no other leases, subleases, licenses or concessions, written or oral, granting to any Person the right to use or occupy any portion of the Leased Real Property, (iii) the Company’s possession and quiet enjoyment of the Leased Real Property has not been disturbed and there are no disputes with respect to the Real Property Leases; (iv) no other party to such Real Property Lease is an Affiliate of, or otherwise has any economic interest in, the Company; (v) the Company has not collaterally assigned or granted any Encumbrance (other than Permitted Encumbrances) in such Real Property Lease or any interest therein; (vi) there are no construction liens or similar Encumbrances with respect to the Leased Real Property; and (vii) no security deposit or portion thereof deposited with respect to such Real Property Lease has been applied in respect of a breach of or default under such Real Property Lease that has not been redeposited in full. The Company does not owe, nor will it owe in the future, any brokerage commissions or finder’s fees with respect to any of the Real Property Leases. Schedule 3.9(b) of the Disclosure Schedules lists all amendments, modifications, estoppels, subordination, non-disturbance and attornment agreements and any other agreements or understandings related to the Leased Real Property or the Real Property Leases.

(c)

Neither the Company nor any Seller Party has received written notice of any condemnation, expropriation or other proceeding in eminent domain affecting any parcel of Leased Real Property or any portion thereof or interest therein.

(d)

To the knowledge of the Seller Parties, the Leased Real Property is in compliance with all applicable building, planning, zoning, subdivision, health and safety (including fire regulations), land use and other applicable Laws, and all insurance requirements affecting the Leased Real Property. The Company has not received any written notice of violation of any applicable Law or insurance requirements affecting the Leased Real Property

 

and, to the knowledge of the Seller Parties, there is no basis for the issuance of any such notice or the taking of any action for such violation.

(e)

The current use and occupancy of the Leased Real Property and the operation of the Business of the Company as currently conducted thereon do not violate in any respect any easement, covenant, condition, restriction or similar provision in any instrument of record or, to the knowledge of the Seller Parties, other unrecorded agreements affecting such Leased Real Property.

3.10

Accounts Receivable.

(a)

All of the Company’s accounts and notes receivable reflected on the Interim Balance Sheet and the accounts and notes receivable arising after the Interim Balance Sheet Date (collectively, the “Accounts Receivable”) represent amounts receivable for products actually delivered or services actually provided (or, in the case of non-trade accounts or notes represent amounts receivable in respect of other bona-fide business transactions), have arisen in the Ordinary Course of Business and have been or will be billed and are generally due within 60 days after such billing; provided, however, that the foregoing is not a guarantee of the actual collection of the Accounts Receivable. Except as set forth on Schedule 3.10(a) of the Disclosure Schedules, all of the Accounts Receivable are and will be fully collectible within 60 days after billing, net of the reserves shown on the Interim Balance Sheet (or in the books of the Company, if such Accounts Receivable were created after the Interim Balance Sheet Date). To the knowledge of the Seller Parties, there is no contest, claim, or right of set-off under any Contract with any obligor of a material Account Receivable relating to the amount or validity of such Account Receivable.

(b)

Since December 31, 2023, there have not been any write-offs as uncollectible of the Company’s accounts receivable except for write-offs in the Ordinary Course of Business and not in excess of $10,000 in the aggregate.

3.11

Intellectual Property.

(a)

Schedule 3.11(a)(i) of the Disclosure Schedules contains a true and complete listing of all the material items of Intellectual Property owned by the Company and other material intangible assets and properties owned by the Company, including, without limitation, each patent and registration which has been issued to the Company, and each pending application or application for registration made by the Company, with respect to the Intellectual Property of the Company (collectively, the “Material Owned Intellectual Property”). Schedule 3.11(a)(ii) of the Disclosure Schedules contains a true and complete listing of all material items of Intellectual Property and other material intangible assets and properties owned by a third party which the Company has a right to use pursuant to a license, sublicense, agreement or permission (the “Licensed Intellectual Property”), other than Off-the-Shelf Software. The Material Owned Intellectual Property and the Licensed Intellectual Property constitute all material Intellectual Property and other intangible assets and properties used in connection with the conduct of the Business by the Company

 

(b)

Each item of Intellectual Property owned by the Company, including the Material Owned Intellectual Property, is valid and in full force and effect and is owned by the Company free and clear of all Encumbrances, other than Permitted Encumbrances, and other claims, including any claims of joint ownership or inventorship. All issuance, renewal, maintenance and other payments that are or have become due as of the date hereof with respect to any patents, patent applications or other applications for registration of, or registrations of, Material Owned Intellectual Property have been timely paid by or on behalf of the Company.

(c)

Except as set forth on Schedule 3.11(c) of the Disclosure Schedules: (i) the Company owns or possesses adequate licenses or other valid rights to use all Intellectual Property used by it in the conduct of the Business, (ii) the conduct of the Business of the Company does not infringe, misappropriate, dilute or conflict with, and has not conflicted with any Intellectual Property of any other Person, (iii) neither the Company nor any Seller Party has received any notices alleging that the conduct of the Business, including the marketing, sale and distribution of the products and services of the Business, infringes, dilutes, misappropriates or otherwise violates any Person’s Intellectual Property, (iv) no current or former employee of the Company and no other Person owns or has any proprietary, financial or other interest, direct or indirect, in whole or in part, and including any rights to royalties or other compensation, in any of the Intellectual Property owned or purported to be owned by the Company, (v) there is no agreement or other contractual restriction affecting the use by the Company of any of the Intellectual Property owned or purported to be owned by the Company, and (vi) the Seller Parties do not have any knowledge of any present infringement, dilution, misappropriation or other violation of any of the Intellectual Property owned or purported to be owned by the Company by any Person, and the Company has not asserted or threatened any claim or objection against any Person for any such infringement or misappropriation.

(d)

The information technology systems owned, leased, licensed or otherwise used in the conduct of the Business, including all computer software, hardware, firmware, process automation systems and telecommunications systems used by the Company in the Business (the “IT Systems”) are in good working condition, and are sufficient for the operation of the Company’s business as currently conducted and perform reliably and in material conformance with the documentation and specifications for such systems. In the past three years, there has been no material malfunction, failure, continued substandard performance, denial-of-service, or other cyber incident, including any cyberattack, or other impairment of the IT Systems. The IT Systems do not contain any viruses, “worms,” disabling or malicious code, or other anomalies that would materially impair the functionality of the IT Systems. The Company has taken commercially reasonable steps to provide for the backup, archival and recovery of the critical business data of the Company. The Company has taken commercially reasonable measures to maintain the confidentiality and value of all of its trade secrets.

3.12

Material Contracts.

(a)

Schedule 3.12(a) of the Disclosure Schedules contains a complete and accurate list of all Material Contracts (classified (i) through (xv), as applicable, based on the definition of Material Contracts). As used in this Agreement, “Material Contracts” means all Contracts of the following types to which the Company is a party or by which the Company or any of its properties or assets is bound: (i) any real property leases; (ii) any labor or employment-

 

related agreements; (iii) any joint venture and limited partnership agreements; (iv) mortgages, indentures, loan or credit agreements, security agreements and other agreements and instruments relating to the borrowing of money or extension of credit; (v) agreements for the sale of goods or products or performance of services by or with any vendor or customer (or any group of related vendors or customers) that (A) involve (1) the payment by the Company or delivery of products or services to the Company of cash or other consideration in an amount or having a value in excess of $25,000 annually or (2) the performance of services by the Company having a value in excess of $100,000 annually; (B) was awarded to the Company, or is otherwise subject to, any small business set-aside program or similar program; or (C) involve the performance of services by the Company having a value in excess of $25,000 annually and requires the Company to provide written notice to, or obtain the consent of, the other party in connection with the transactions contemplated by this Agreement; (vi) lease agreements for machinery and equipment, motor vehicles, or furniture and office equipment or other personal property by or with any vendor (or any group of related vendors); (vii) agreements restricting in any manner the right of the Company to compete with any other Person, or restricting the right of the Company to sell to or purchase from any other Person; (viii) agreements between the Company and any of its Affiliates; (ix) guaranties, performance, bid or completion bonds, surety and appeal bonds, return of money bonds, and surety or indemnification agreements; (x) custom bonds and standby letters of credit; (xi) any license agreement or other agreements to which the Company is a party regarding any Intellectual Property of others, excluding any Off-the-Shelf Software; (xii) other agreements, contracts and commitments which (A) cannot be terminated by the Company on notice of 30 days or less or (B) require payment by the Company of $5,000 or more upon termination; (xiii) powers of attorney; (xiv) any agreements or arrangements with any employees, sales representatives, consultants, independent contractors, agents or other representatives of the Company (including sales commission agreements or arrangements); and (xi) each other agreement or contract to which the Company is a party or by which the Company or their respective assets are otherwise bound which is material to its Business, operation, financial condition or prospects.

(b)

Each Material Contract is valid, binding and enforceable against the Company and the other parties thereto in accordance with its terms and is in full force and effect, except as enforcement may be limited by General Enforceability Exceptions. The Company, and, to the knowledge of the Seller Parties, each of the other parties thereto, have performed all obligations required to be performed by them under, and are not in default under, any of such Contracts and to the knowledge of the Seller Parties, no event has occurred which, with notice or lapse of time, or both, would constitute such a default. The Company has not received any written claim from any other party to any Contract that the Company has breached any obligations to be performed by it thereunder, or is otherwise in default or delinquent in performance thereunder. Seller has furnished to Buyer a true and complete copy of each Material Contract required to be disclosed on Schedule 3.12(a) of the Disclosure Schedules.

3.13

Litigation. Except as set forth on Schedule 3.13 of the Disclosure Schedules, there is no, and during the last five years there has not been any, claim, action, suit, proceeding, arbitration, audit or investigation (collectively, “Action”) pending before any Authority or, to the knowledge of the Seller Parties, threatened against the Company, any of its properties or assets or, to the extent the Company may have an obligation to provide indemnification or may otherwise become liable, any of the Company’s shareholders, members, officers, directors or

 

employees. The Company is not a party to or bound by any outstanding Governmental Order with respect to or affecting the properties, assets, personnel or Business of the Company. Seller has provided Buyer with a list setting forth a general description of settlements occurring since January 1, 2019 regarding actual or threatened Action binding on the Company.

3.14

Compliance with Laws; Permits. The Company is, and for the past five years has been, in compliance with all applicable Laws. Set forth on Schedule 3.14 of the Disclosure Schedules are all governmental or other industry permits, registrations, certificates, certifications, exemptions, licenses, franchises, consents, approvals and authorizations (“Permits”) necessary for the conduct of the Business of the Company as presently conducted, each of which the Company validly possesses and is in full force and effect. No notice, citation, summons or order has been issued, no complaint has been filed and served, no penalty has been assessed and notice thereof given, and no investigation or review is pending or, to the knowledge of the Seller Parties, threatened with respect to the Company, by any Authority with respect to any alleged (a) violation in any material respect by the Company of any Law, or (b) failure by the Company to have, or comply with, any Permit required in connection with the conduct of its Business.

3.15

Environmental Matters. The Company is conducting, and for the past five years has conducted, its operations and the Business, and has occupied and operated the Leased Real Property in compliance with all Environmental Laws. The Company holds and is in compliance with all Permits required under Environmental Laws for its operation and the conduct of its Business, and all such Permits are in full force and effect. There is no Action relating to or arising under Environmental Laws that is pending or, to the knowledge of the Seller Parties, threatened against or affecting the Company or any real property currently or, to the knowledge of the Seller Parties, formerly owned, operated or leased by the Company. The Company has not received any written or other notice of, or entered into or assumed by Contract or operation of laws or otherwise, any obligation, Liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Laws, and except as set forth on Schedule 3.15, no facts, circumstances or conditions exist with respect to the Company or any real property currently or formerly owned, operated or leased by the Company that would reasonably be expected to result in the Company incurring Environmental Liabilities. No authorization, notification, recording, filing, consent, waiting period, remediation, or approval is required under any Environmental Laws in order to consummate the transaction contemplated hereby.

3.16

Taxes.

(a)

Except as set forth on Schedule 3.16(a) of the Disclosure Schedules, (i) the Company and the Seller Parties have timely filed or caused to be filed with the appropriate federal, state, local and foreign governmental entity or other authority (individually or collectively, “Taxing Authority”) all Tax Returns required to be filed with respect to the Company, and the Company has timely paid or remitted in full or caused to be paid or remitted in full all Taxes required to be paid with respect to the Company (whether or not shown due on any Tax Return); (ii) all Tax Returns are true, correct and complete; and (iii) there are no liens for Taxes upon the Company or its assets, except liens for current Taxes not yet due and payable. Neither the Company nor any Seller Party has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Taxes with respect to the Company.

 

(b)

There is no Action now pending against the Company or any Seller Party, in respect of any Tax with respect to the Company, and no written notification of an intention to examine, written request for information related to Tax matters or written notice of deficiency or written proposed adjustment for any amount of Tax has been received by the Company or any Seller Party. No Taxing Authority with which the Company or any Seller Party does not file Tax Returns has provided written notice that the Company or any Seller Party is or may be subject to taxation by that Taxing Authority with respect to the Company. Except as set forth on Schedule 3.16(b), since January 1, 2024, the Company has not commenced activities in any jurisdiction that will result in an initial filing of any Tax Return with respect to Taxes imposed by a Taxing Authority that the Company had not previously been required to file in the immediately preceding taxable period.

(c)

The Company has withheld and paid to the proper Taxing Authority all Taxes that it was required to withhold and pay, and has properly completed and timely filed all information returns or reports, including IRS Forms 1099 and W-2, that are required to be filed and has accurately reported all information required to be included on such returns or reports. All Taxes associated with taxable fringe benefits, that the Company is (or was) required by Law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, member or other third party have been duly withheld or collected, and have been timely paid over to the proper Taxing Authority to the extent due and payable.

(d)

There is no Tax sharing or allocation agreement, arrangement or Contract with any Person pursuant to which the Company would have liability for Taxes of another Person following the Closing. The Company (i) has not been a member of an affiliated group under Section 1504(a) of the Code or any similar group defined under a similar provision of state, local, or non-U.S. law, or (ii) does not have any liability for Taxes of another Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision or state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.

(e)

The Company has not been a party to any “listed transaction,” as defined in Section 6707A(c)(2) of the Code and Section 1.6011-4(b)(2) of the Treasury Regulations.

(f)

Except as set forth on Schedule 3.16(f), the Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period (or portion thereof) ending on or prior to the Closing Date; (B) “closing agreement,” as described in Code Section 7121 (or any corresponding provision of state, local, or non-U.S. income Tax law); (C) intercompany transaction, as defined in Section 1.1502-13 of the Treasury Regulations, or any excess loss account, as defined in Section 1.1502-19 of the Treasury Regulations, (or any corresponding provision of state, local or non-U.S. income Tax law); (D) installment sale or open transaction made on or prior to the Closing Date; (E) prepaid amount received on or prior to the Closing Date; or (F) election under Code Section 108(i).

(g)

The Company has collected all sales Tax in the ordinary course of business and remitted such sales Tax amount to the applicable Taxing Authority, or has collected

 

sales tax exemption certificates from all entities from which the Company does not collect sales Tax.

(h)

During the last five years, the Company has not distributed the stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361.

(i)

The Company has never (i) had a permanent establishment (as defined in any applicable treaty or convention between any country and the United States), in any country other than the United States or (ii) except as set forth on Schedule 3.16(i) of the Disclosure Schedules, engaged in activities in any jurisdiction other than the jurisdiction under the Law of which it is organized that would subject it to taxation by such jurisdiction.

(j)

Neither the Company nor any Seller Party has entered into any closing agreement or requested any private letter ruling, technical advice memoranda or similar agreements or rulings relating to Taxes or Tax items with any Taxing Authority with respect to the Company.

(k)

Neither the Company nor any Seller Party is a “foreign person” as that term is used in Treasury Regulation Section 1.1445-2.

(l)

The Company has provided to Buyer all documentation relating to any applicable Tax holidays, exemptions or incentives and is in compliance with the requirements for any applicable Tax holidays, exemptions or incentives. The consummation of the transactions contemplated by this Agreement will not have any adverse effect on such compliance or result in any clawback or forfeiture of any such benefits, exemptions or incentives.

(m)

The Predecessor Company (i) was at all times since its formation until the contribution of its equity to Seller, an “S corporation” (as defined in Section 1361(a) of the Code and any corresponding or similar provision of state, local and foreign income Tax Law applicable to the Predecessor Company) and (ii) was at all times from the contribution of its equity to Seller until its conversion to the Company a “qualified subchapter S subsidiary” of Seller within the meaning of Section 1361(b)(3)(B) of the Code (and any corresponding or similar provision of state, local and foreign income Tax law applicable to the Company).

(n)

The Company (not including, for purposes of this sentence, the Predecessor Company) is, and has been at all times since its formation, disregarded as an entity separate from Seller within the meaning of Treasury Regulation Section 301.7701-3 (and any corresponding or similar provision of state, local and foreign income Tax law applicable to the Company). No actions have been taken by the Company, the Seller Parties or otherwise to cause the Company to cease to so qualify as disregarded as an entity separate from Seller.

(o)

The Company has not acquired any assets in the last five years from a corporation that was taxable as a C corporation in a transaction in which the Company’s Tax basis of the acquired asset is determined, in whole or in part, with reference to the Tax basis of the acquired asset in the hands of a C corporation. The Company has no potential liability for any Tax under Section 1374 of the Code.

 

3.17

Employee Relations.

(a)

Schedule 3.17(a) of the Disclosure Schedules sets forth a true and complete list setting forth the name, position, job location, salary or wage rate, commission status, date of hire, full- or part-time status, active or leave status and “exempt” or “non-exempt” status, for each employee or individual service provider of the Company as of the date hereof (including any individual absent due to short-term disability, family or medical leave, military leave or other approved absence). Except as set forth on Schedule 3.17(a) of the Disclosure Schedules, the Company is not a party to any management, employment, consulting or other agreements or understandings with any individual providing for employment for a defined period of time or on an other than “at-will” basis or for termination or severance benefits.

(b)

The Company is not: (i) a party to or otherwise bound by any collective bargaining or other type of union agreement, (ii) a party to, involved in or, to the knowledge of the Seller Parties, threatened by, any material labor dispute or material unfair labor practice charge, or (iii) currently negotiating any collective bargaining agreement, and the Company has not experienced any work stoppage during the last three years. To the knowledge of the Seller Parties, no organizational effort is presently being made or is currently threatened by or on behalf of any labor union with respect to any group of employees of the Company.

(c)

The Company is, and for the past five years has been, in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, unemployment insurance, workers’ compensation, equal employment opportunity, employment discrimination and immigration control. Except as disclosed on Schedule 3.17(c) of the Disclosure Schedules, there are no outstanding claims against the Company or the Benefit Plans (other than routine claims for benefits under such plans), whether under Law, regulation, Contract, policy or otherwise, asserted or threatened in writing by or on behalf of any present or former employee or job applicant of the Company on account of or for (i) overtime pay, other than overtime pay for work done in the current payroll period, (ii) wages or salary for a period other than the current payroll period, (iii) any amount of vacation pay (including paid time off) or pay in lieu of vacation time off (including paid time off), other than vacation time off or pay (including paid time off) in lieu thereof earned in or in respect of the current fiscal year, (iv) any amount of severance pay or similar benefits, (v) unemployment insurance benefits, (vi) workers’ compensation or disability benefits, (vii) any violation of any Law relating to employment terminations, layoffs, or discipline, (viii) any violation of any Law relating to employee “whistleblower” or “right-to-know” rights and protections, (ix) any violation of any Law relating to the employment obligations of federal contractors or subcontractors, (x) any violation of any Law relating to minimum wages or maximum hours of work, or (xi) unfair labor practices, and the Seller Parties are not aware of any such claims which have not been asserted. No Person (including any Authority) has asserted, or, to the knowledge of the Seller Parties, threatened any claims against the Company or any of its predecessors under or arising out of any regulation relating to equal opportunity employment, discrimination, harassment, or occupational safety in employment or employment practices.

(d)

Except as set forth on Schedule 3.17(d), the Company has properly classified all employees, leased employees, consultants, independent contractors and all other

 

Persons providing services to the Company for all purposes (including, without limitation, for all Tax purposes and for purposes related to eligibility to participate in or accrue a benefit under the Benefit Plans), and has withheld and paid all applicable Taxes and made all appropriate filings in connection with services provided by such Persons to the Company. The Company has properly classified all employees as “exempt” or “non-exempt” under the Fair Labor Standards Act and similar state or local Law.

(e)

The Company has not conducted any mass layoffs or plant closings as defined by the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state or local Law.

3.18

Employee Benefit Matters.

(a)

Schedule 3.18(a) of the Disclosure Schedules lists all “employee benefit plans,” as defined in Section 3(3) of ERISA and all other retirement, pension, profit sharing, stock bonus, stock, restricted stock, stock option, stock purchase, equity-based, profits interest, phantom equity, employment, service, retainer, compensation, consulting, change in control, welfare, health (including medical, dental and vision), life, disability, group insurance, savings, deferred compensation, bonus or incentive compensation, paid time off, severance, salary continuation, retention, indemnification and fringe benefit and perquisite (including but not limited to benefits relating to automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave, and tuition reimbursement) agreements, arrangements, plans, programs, Contracts, policies, or practices maintained, contributed to, or required to be contributed to by the Company or any ERISA Affiliate for the benefit of any current or former employee, officer, director, member, partner or independent contractor of the Company or with respect to which the Company or any ERISA Affiliate may have any Liability, whether contingent or otherwise (the “Benefit Plans”). In the case of each “employee welfare benefit plan” as defined in Section 3(1) of ERISA, Schedule 3.18(a) of the Disclosure Schedules discloses whether such plan is (i) unfunded, (ii) funded through a “welfare benefit fund,” as such term is defined in Code Section 419(e), or other funding mechanism or (iii) insured.

(b)

As applicable, with respect to each Benefit Plan, Seller has delivered or made available to Buyer, where applicable, true and complete copies of (i) all plan documents (including all amendments and modifications thereof) and in the case of an unwritten Benefit Plan, a written description thereof, (ii) the current summary plan description and each summary of material modifications thereto, (iii) the most recent IRS determination, advisory or opinion letter, (iv) all funding and administrative arrangement documents, including trust agreements, insurance contracts, custodial agreements, investment manager agreements and service agreements, (v) for the three most recent years, the filed Form 5500 for each Benefit Plan required to file Form 5500; and (vi) all communications, records, notices and filings received from or sent to the IRS, Department of Labor or Pension Benefit Guaranty Corporation within the past five years.

(c)

Except as set forth on Schedule 3.18(c), the Company and each ERISA Affiliate are in compliance with the provisions of ERISA, the Code and all other Laws applicable to the Benefit Plans (including all applicable aspects of the Patient Protection and Affordable Care Act, as amended, and the Health Insurance Portability and Accountability Act of 1996, as

 

amended). Each Benefit Plan has been maintained, operated and administered in compliance with its terms and any related documents or agreements and the applicable provisions of ERISA, the Code and all other Laws. Neither the Company nor any ERISA Affiliate has incurred and none could reasonably be expected to incur an employer shared responsibility penalty under Section 4980H of the Code. The Company and each ERISA Affiliate have timely and accurately satisfied their reporting obligations under Sections 6055 and 6056 of the Code.

(d)

No Benefit Plan provides for or continues medical or health benefits, or life insurance or other welfare benefits (through insurance or otherwise) for any Person or any dependent or beneficiary of any Person beyond termination of service or retirement other than coverage mandated by Law, and neither the Company nor any ERISA Affiliate has made a written or oral promise, or any communication that could reasonably be expected to promise, to any Person to provide any such benefits.

(e)

No Benefit Plan is (or at any time has been), and neither the Company nor any ERISA Affiliate has ever contributed to, or has been required to contribute to, or has any liability (contingent or otherwise) under or with respect to, and no current or former employees of the Company or any ERISA Affiliate currently participate or ever have participated in (with respect to their employment with the Company or an ERISA Affiliate) any employee benefit plan that is (i) subject to Part 3, Subtitle B of Title I of ERISA, Title IV of ERISA or Code Section 412, (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer plan” as described in Section 413(e) of the Code, (iv) a “voluntary employees’ beneficiary association” (as defined in Section 501(e)(9) of the Code), or (v) a “multiple employer welfare arrangement” (as defined in Section 3(40)(A) of ERISA).

(f)

All Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Code Section 401(a) now meet, and at all times since their inception have met, the requirements for such qualification, and the related trusts are now, and at all times since their inception have been, exempt from taxation under Code Section 501(a). Each Benefit Plan that is intended to be qualified under Code Section 401(a) has received a favorable determination letter (or an opinion or advisory letter on which it is entitled to rely) from the IRS that such Benefit Plan is qualified under Code Section 401(a). No event has occurred that will or could give rise to the revocation of any applicable determination letter or the loss of the right to rely on any applicable opinion or advisory letter, or the disqualification or loss of tax-exempt status of any such Benefit Plan or trust under Code Sections 401(a) or 501(a).

(g)

All contributions (including all employer contributions and employee salary reduction contributions) and premium payments which are or have been due have been paid to or with respect to each Benefit Plan within the time required by Law. All required or discretionary (in accordance with historical practices) payments, premiums, contributions, reimbursements, or accruals for all periods ending prior to or as of the Closing Date shall have been made or properly accrued on the Interim Balance Sheet or will be properly accrued on the books and records of the Company and each ERISA Affiliate as of the Closing Date. None of the Benefit Plans has any unfunded Liabilities which are not reflected on the Interim Balance Sheet. Neither the Company nor any ERISA Affiliate has any assets subject to (or expected to be subject to) a lien for unpaid contributions to any Benefit Plan.

 

(h)

The Seller Parties’ execution of, and performance of the transactions contemplated by, this Agreement will not (either alone or upon the occurrence of any additional or subsequent events) (i) constitute an event under any Benefit Plan or related agreement, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting (other than vesting required due to the termination of tax-qualified retirement plans, which shall not require an additional contribution to such plans), distribution, increase in benefits, or other obligation to fund benefits with respect to any Person or (ii) result in the triggering or imposition or any restrictions or limitations on the right of the Company or any ERISA Affiliate to amend or terminate any Benefit Plan (or result in any adverse consequence for so doing). The execution of this Agreement, and performance of the transactions contemplated hereby, will not (either alone or upon the occurrence of any additional or subsequent events) result in any payment or benefit that will or may be made by the Company that may be characterized as “excess parachute payment,” within the meaning of Section 280G(b)(1) of the Code. The Company does not have any Liability or obligation to make a payment that is not or will not be deductible under Code Section 280G. No Person is entitled to receive any additional payment (including any tax gross-up or other payment) as a result of the imposition of the excise taxes required by Code Section 4999.

(i)

There are no pending or, to the knowledge of the Seller Parties, threatened Actions by or on behalf of any Benefit Plan, any employee or beneficiary covered under any Benefit Plan, any Authority with respect to a Benefit Plan, or otherwise involving any Benefit Plan (other than routine claims for benefits). No Benefit Plan is under audit or investigation by any Authority and, to the knowledge of the Seller Parties, no such audit or investigation is threatened.

(j)

Each of the Benefit Plans can be terminated at any time in the sole discretion of the plan sponsor, without any additional contribution to such Benefit Plan or the payment of any additional compensation or amount or acceleration of any benefits (other than accelerated vesting with respect to tax-qualified retirement plans, which shall not require any additional contribution to be made). Nothing prohibits the prompt distribution of all amounts under any Benefit Plan subject to Section 401(a), 403(a) or 403(b) of the Code, provided that such Benefit Plan is terminated by the plan sponsor prior to Closing.

(k)

Each Benefit Plan that constitutes a “non-qualified deferred compensation plan” within the meaning of Code Section 409A, complies (and has at all relevant times complied) in both form and operation with the requirements of Code Section 409A so that no amount paid pursuant to any such Benefit Plan is or will be subject to tax under Code Section 409A; and neither the Company nor any ERISA Affiliate is or has been required to report any Taxes due as a result of a failure of a Benefit Plan to comply with Code Section 409A. With respect to each Benefit Plan, neither the Company nor any ERISA Affiliate has any indemnity obligation for any Taxes or interest imposed or accelerated under Code Section 409A.

3.19

Transactions with Related Parties. Except as described on Schedule 3.19 of the Disclosure Schedules, since January 1, 2020, no member, stockholder, equityholder, officer, manager or director of the Company, nor any Affiliate of the Company or of any such Person, has or had:

(a)

any contractual or other claims, express or implied, of any kind whatsoever against the Company;

 

(b)

any interest in any property or assets used by the Company;

(c)

any direct or indirect ownership or other interest in any competitor of the Company; or

(d)

engaged in any other material transaction with the Company (other than employment relationships at the salaries disclosed in the Disclosure Schedules to this Agreement).

Except as described on Schedule 3.19 of the Disclosure Schedules, no stockholder, officer or director of the Company, nor any Affiliate of such Person, has outstanding any loan, guarantee or other obligation of borrowed money made to or from the Company.

3.20

Insurance.

(a)

The Company maintains, with financially sound and reputable insurers, insurance with respect to its properties and Business against loss or damages of the kinds customarily insured against by companies engaged in the same or similar businesses as the Company, in such amounts that (i) are commercially reasonable and customarily carried under similar circumstances by such other companies and (ii) satisfy the Company’s obligations to maintain insurance under all Contracts to which the Company is a party.

(b)

Schedule 3.20(b)(i) of the Disclosure Schedules contains a complete and correct list of all policies and Contracts for insurance (including coverage amounts and expiration dates) of which the Company is the owner, insured or beneficiary, or covering the Company’s properties or assets. All such policies are outstanding and in full force and effect. The Company is not in default with respect to any provision contained in any such policy, nor has the Company failed to give any notice or present any claim under any such policy in a timely fashion or in the manner or detail required by the policy. Except as set forth on Schedule 3.20(b)(ii) of the Disclosure Schedules: (i) all of such coverages are provided on a “claims made” (as opposed to “occurrence”) basis; (ii) there are no outstanding claims under such policies; (iii) there are no premiums or claims due under such policies which remain unpaid; (iv) no notice of cancellation or non-renewal with respect to, or disallowance (other than reservation of rights by the insurer) of any material claim under, any such policy has been received; and (v) the Company has not been refused any insurance, nor have any of its coverages been limited by any insurance carrier to which it has applied for insurance or with which has carried insurance.

3.21

Relationship with Significant Customers. The Company has not received any written or, to the knowledge of the Seller Parties, oral communication or notice from any Significant Customer stating that, or otherwise has any reason the believe that, any Significant Customer (a) has ceased, or will cease, to use the products or services of the Company, (b) has substantially reduced, or will substantially reduce, the use of such products or services at any time, or (c) will otherwise materially and adversely modify its business relationship with the Company (whether as a result of the consummation of the transactions contemplated hereby or otherwise). “Significant Customer” means, with respect to the Company, the top 20 customers

 

of the Company, as applicable, by dollar volume of sales, for the nine-month period ended on September 30, 2024 and the fiscal year ended December 31, 2023, as set forth on Schedule 3.21 of the Disclosure Schedules.

3.22

Relationship with Significant Suppliers. The Company has not received any written or, to the knowledge of the Seller Parties, oral communication or notice from any Significant Supplier stating that, or otherwise has any reason the believe that, any Significant Supplier, (a) will stop, materially decrease the rate of, or materially and adversely change the terms (whether related to payment, price or otherwise) with respect to, supplying materials, products or services to the Company (whether as a result of the consummation of the transactions contemplated hereby or otherwise) or (b) will otherwise materially and adversely modify its business relationship with the Company. “Significant Supplier” means, with respect to the Company, the top 20 suppliers to the Company, as applicable, by dollar volume of purchase, for the nine-month period ended on September 30, 2024 and for the fiscal year ended December 31, 2023, as set forth on Schedule 3.22 of the Disclosure Schedules.

3.23

Anti-Corruption Laws. Without limiting the generality of Section 3.14, since January 1, 2019, none of the Seller Parties, the Company or, to the knowledge of the Seller Parties, anyone acting on the Company’s behalf has: (i) violated, or engaged in any activity, practice or conduct which would violate, any Anti-Corruption Law; (ii) used corporate funds or assets for any unlawful contribution, gift, entertainment or other unlawful expense, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (iii) directly, or indirectly through its agents, representatives or any other Person authorized to act on its behalf, offered, promised, paid, given, or authorized the payment or giving of money or anything else of value; in each case, to any Government Official or Person while knowing or having reason to believe that some portion or all of the payment or thing of value will be offered, promised, or given, directly or indirectly, to a Government Official or another Person; for the purpose of (x) influencing any act or decision of such Government Official or such Person in his, her or its official capacity, including a decision to do or omit to do any act in violation of his, her or its lawful duties or proper performance of functions, (y) inducing such Government Official or such person or entity to use his, her or its influence or position with any Governmental Authority or other person or entity to influence any act or decision, or (z) in order to obtain or retain business for, direct business to, or secure an improper advantage for, the Company.

3.24

Privacy Laws. Without conflicting with Section 3.14, the Company has for the past five years complied in all material respects with all applicable Privacy Laws. There are no restrictions on the collection, use, disclosure and retention of Personal Information by the Company except as provided by Privacy Laws. There are no Actions, whether statutory or otherwise, pending, ongoing, or to the knowledge of the Seller Parties, threatened with respect to the collection, use, disclosure or retention of Personal Information by the Company, and there are no facts or circumstances that could reasonably be expected to give rise to any such Action. No decision, judgment, order or award, whether statutory or otherwise is pending or has been made and no notice has been given pursuant to any Privacy Laws requiring the Company to take or refrain from taking any action with respect to Personal Information. In the past three years, the Company has not experienced any actual or suspected data breach or other security incident involving Personal Information in its possession or control.

 

3.25

Product and Service Warranties. Except as set forth on Schedule 3.25 of the Disclosure Schedules and except for warranties arising under applicable Law (if any), (a) there are no warranties, express or implied, written or oral, with respect to the products and services of the Company, and (b) there are no pending or, to the knowledge of the Seller Parties, threatened claims with respect to any such warranties.

3.26

Banking Relationships. Schedule 3.26 of the Disclosure Schedules sets forth (a) a list of each account, lock box or safe deposit box of the Company (including any necessary identifying information), and (b) the name of each Person authorized to draw thereon or to have access thereto and the name of each Person or entity, if any, holding powers of attorney with respect thereto or any other powers of attorney.

3.27

Inventory. All inventory of the Company, whether or not reflected in the Interim 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, other than Permitted 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.

3.28

Books and Records. The minute books and membership unit record books of the Company, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Company contain accurate and complete records of all meetings, and actions taken by written consent of, the members, the board of managers and any committees of the board of managers of the Company. At the Closing, all of those books and records will be in the possession of the Company.

3.29

Purchase for Investment. Each Seller Party acknowledges that the Closing Shares that will be issued pursuant to this Agreement are “restricted securities” and have not been registered under the Securities Act or under any state securities laws. With respect to any Closing Shares delivered to any Seller Party pursuant to this Agreement, each Seller Party (a) is acquiring the Closing Shares pursuant to an exemption from registration under the Securities Act for his own account solely for investment with no present intention or plan to distribute any of the Closing Shares to any Person nor with a view to or for sale in connection with any distribution thereof, in each case in violation of the Securities Act; (b) will not sell or otherwise dispose of any of the Closing Shares, except in compliance with Rule 144 promulgated under the Securities Act (the “Rule”) or pursuant to his rights under the Registration Rights Agreement; (c) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act); and (d) is not a registered broker-dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity engaged in the business of being a broker-dealer. Neither the Seller Parties nor any of their respective Affiliates are affiliated with any broker-dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity engaged in the business of being a broker-dealer.

 

3.30

Legend. Each Seller Party acknowledges that all certificates, including book-entry representations of certificates, or other instruments representing Closing Shares issued hereunder will bear legends substantially to the following effect (in addition to any legend required under applicable federal, state, local or non-United States law):

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. ANY ATTEMPT TO TRANSFER, SELL, OFFER TO SELL, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS INSTRUMENT IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.”

3.31

Registration Rights. Each Seller Party acknowledges and understands that, except as provided in the Registration Rights Agreement, Buyer is under no obligation to register the Closing Shares for public sale in the future, that any sales made publicly under the Rule must be made in accordance with the procedures of that Rule, and that any other resale of the Closing Shares may require compliance with some other exemption from registration under the Securities Act. Each Seller Party further acknowledges that if an exemption from registration under the Securities Act is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Closing Shares, and requirements relating to Buyer which are outside of such Seller Party’s control, and which Buyer is under no obligation and may not be able to satisfy.

3.32

Sophisticated Investor. Each Seller Party is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the issuance of the Closing Shares, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to evaluate the merits and risks of acquiring the Closing Shares, and can bear the economic risk and complete loss of its investment in the Closing Shares.

3.33

Existing Ownership. Except as set forth on Schedule 3.33, no Seller Party legally or beneficially owns or controls, directly or indirectly, any shares, convertible debt or any securities convertible into or exercisable or exchangeable for, or any rights, warrants or options to acquire, any shares or convertible debt in Buyer, or has any agreement, understanding or arrangement to acquire any of the foregoing, except with respect to Closing Shares as to be issued to Seller Parties pursuant to the transactions contemplated herein.

3.34

No General Solicitation. The Seller Parties did not learn of the transactions contemplated by this Agreement, including the issuance of the Closing Shares, as a result of any general solicitation or general advertising.

3.35

Reliance on Exemptions. Each Seller Party understands that the Closing Shares are offered and sold to the Seller Parties in reliance on specific exemptions from the registration

 

requirements of U.S. federal and state securities laws and that Buyer is relying in part upon the truth and accuracy of, and each Seller Party’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Seller Party set forth in this Agreement in order to determine the availability of such exemptions and the eligibility of the Seller Parties to acquire the Closing Shares.

3.36

Brokers. None of the Company, the Predecessor Company or any Seller Party has retained, nor is the Company or any Seller Party obligated for any commission, fee or expense to, any broker, finder or investment banking firm in connection with the transactions contemplated by this Agreement or the Ancillary Agreements and, to the knowledge of the Seller Parties, no other Person is entitled to receive any brokerage commission, finder’s fee or other similar compensation in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

3.37

No Other Representations and Warranties. Except for the representations and warranties set forth in Article III (including the related portions of the Disclosure Schedules), none of the Seller Parties or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Seller Parties or the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Company furnished or made available to Buyer and its representatives (including any information, documents or material made available to Buyer, management presentations or in any other form in expectation of the transaction) or as to the future revenue, profitability or success of the Company, or any representation or warranty arising from statute or otherwise in law.

 

Article IV.
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer makes the representations and warranties set forth in this Article IV to the Seller Parties:

4.1

Organization. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio, and has all requisite corporate power and authority to carry on its business as it is now being conducted, and to execute, deliver, and perform this Agreement and each Ancillary Agreement to which it is a party, and to consummate the transactions contemplated hereby and thereby.

4.2

Authority. The execution, delivery, and performance by Buyer of this Agreement and each Ancillary Agreement to which Buyer is a party, and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement and each Ancillary Agreement to which Buyer is a party has been duly and validly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with their respective terms, except as enforcement may be limited by General Enforceability Exceptions.

4.3

No Conflict. The execution, delivery, and performance by Buyer of this Agreement and each Ancillary Agreement to which Buyer is a party, and the consummation by

Buyer of the transactions contemplated hereby and thereby, does not and will not, with or without the giving of notice or the lapse of time, or both, (a) violate any provision of Law to which Buyer is subject, (b) violate any provision of the Organizational Documents of Buyer, or (c) violate or result in a breach of or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default) under, or require the consent of any third party under, or result in or permit the termination or amendment of any provision of, or result in or permit the acceleration of the maturity or cancellation of performance of any obligation under, or result in the creation or imposition of any Encumbrance of any nature whatsoever upon any assets or property or give to others any interests or rights therein under any indenture, deed of trust, mortgage, loan or credit agreement, license, Permit, Contract, lease, or other agreement, instrument or commitment to which Buyer is a party or by which either may be bound or affected; except, in each case, for violations, breaches, defaults, required consents, terminations, accelerations, Encumbrances or rights that in the aggregate would not materially hinder or impair the ability of Buyer to perform its obligations hereunder or the consummation of the transactions contemplated hereby.

4.4

Consents. No consent, approval, or authorization of, or exemption by, or filing with, any Authority is required to be obtained or made by Buyer in connection with the execution, delivery and performance by Buyer of this Agreement or any Ancillary Agreement to which Buyer is a party or the taking by Buyer of any other action contemplated hereby or thereby.

4.5

Litigation. There is no Action pending or, to the knowledge of Buyer, threatened (a) against Buyer which, if adversely determined, would have a material adverse effect on the assets, business or financial condition of Buyer or (b) which seeks to prohibit, restrict or delay consummation of the transactions contemplated by this Agreement. There is no Governmental Order outstanding or, to the knowledge of Buyer, threatened (i) against Buyer or its assets or business, or (ii) which seeks to prohibit, restrict or delay consummation of the transactions contemplated by this Agreement.

4.6

Company Shares. The Company Shares that will be issued pursuant to this Agreement have been duly authorized and, upon issuance pursuant to this Agreement, will be validly issued, fully paid and non-assessable, will be issued in compliance with all applicable federal and state securities laws, and will be issued free of any preemptive rights, liens or restrictions other than those imposed pursuant to the Securities Act.

4.7

Brokers. Buyer has not retained, nor is Buyer obligated for any commission, fee or expense to, any broker, finder or investment banking firm in connection with the transactions contemplated by this Agreement or the Ancillary Agreements and, to the knowledge of Buyer, no other Person is entitled to receive any brokerage commission, finder’s fee or other similar compensation in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

4.8

Sufficiency of Funds. Buyer (a) has sufficient internal funds (without giving effect to any unfunded financing regardless of whether any such financing is committed) available to consummate the transactions contemplated by this Agreement and the Ancillary Agreements on the terms and subject to the conditions set forth in this Agreement and the

Ancillary Agreements and to pay the amounts required to be paid pursuant to this Agreement and the Ancillary Agreements and any expenses incurred by Buyer in connection with the transaction; (b) has the resources and capabilities (financial or otherwise) to perform its obligations hereunder; and (c) has not incurred any obligation, commitment, restriction or liability of any kind, which would impair or adversely affect such resources and capabilities.

4.9

Investment Intent. The Company Units being acquired by Buyer hereunder are being purchased for Buyer’s own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act. Buyer understands that the Company Units have not been registered under the Securities Act or any applicable state Laws by reason of their issuance or contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act and such Laws, and that the reliance of the Company and the Seller Parties upon this exemption is predicated in part upon this representation and warranty. Buyer further understands that the Company Units may not be transferred or resold without (a) registration under the Securities Act and any applicable state securities laws; or (b) an exemption from the requirements of the Securities Act and applicable state securities laws.

4.10

Independent Investigation; Acknowledgement. Buyer has conducted its own independent investigation, review and analysis of the Company, and the results of operations, financial condition, and assets of the Company. Buyer acknowledges and agrees that: (a) 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 the Seller Parties set forth in Article III of this Agreement (including the related portions of the Disclosure Schedules); and (b) none of the Seller Parties, the Company or any other Person has made any representation or warranty as to the Seller Parties or the Company, except as expressly set forth in Article III of this Agreement (including the related Disclosure Schedules).

4.11

No Other Representations and Warranties. Except for the representations and warranties set forth in Article IV (including the related portions of the Disclosure Schedules), neither Buyer nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer, and Buyer hereby disclaims any such other representations or warranties.

 

Article V.
COVENANTS

5.1

Confidentiality. Each Seller Party shall keep confidential and not disclose to any other Person or use for his own benefit or the benefit of any other Person any confidential or proprietary information, technology, know-how, trade secrets (including all results of research and development), product formulas, industrial designs, franchises, inventions or other intellectual property regarding Buyer, the Company, or any of their respective businesses and operations including, without limitation, any such information regarding the Business (“Confidential Information”) in its or his possession or control. The obligations of each Seller Party under this Section 5.1 shall not apply to Confidential Information which (i) is or becomes generally available to the public without breach of the commitment provided for in this Section;

 

or (ii) is required to be disclosed by Law; provided, however, that, in any such case, the applicable Seller shall notify Buyer as early as reasonably practicable prior to disclosure to allow Buyer to take appropriate measures to preserve the confidentiality of such Confidential Information.

5.2

Restrictive Covenants.

(a)

During the period beginning on the Closing Date and ending on the fifth anniversary of the Closing Date (the “Restricted Period”), each Seller Party covenants and agrees not to, and shall cause his or its Affiliates not to, directly or indirectly and anywhere in the Restricted Territory, conduct, manage, operate, engage in, or have an ownership interest in any business or enterprise engaged in (i) the Business, or (ii) any activities that are otherwise similar to, or competitive with, the Business. Notwithstanding the provisions of this Section 5.2(a), the beneficial ownership of less than five percent of the shares of stock or other equity interests of any corporation or other entity having a class of equity securities actively traded on a national securities exchange or over-the-counter market and not formed for the purpose of circumventing this Agreement shall not be deemed to violate the provisions of this Section 5.2(a).

(b)

During the Restricted Period, each Seller Party covenants and agrees not to, and shall cause his or its Affiliates not to, directly or indirectly, call-on, solicit or induce, or attempt to solicit or induce, any Person which is or was a past, present or prospective customer or other business relation of the Company as of the Closing Date for the provision of products or services related to the Business or in any other manner that would otherwise interfere with business relationships between Buyer and such customers and other business relations.

(c)

During the Restricted Period, each Seller Party covenants and agrees not to, and shall cause his or its Affiliates not to, directly or indirectly, call-on, solicit or induce, or attempt to solicit or induce, any Person who was employed or engaged as an independent contractor by the Company on or at any time before the Closing Date, to leave the employ or engagement of the Company or its Affiliates (including Buyer) for any reason whatsoever, nor shall any Seller Party offer or provide employment (whether such employment is for a Seller Party or any other Person), either on a full-time basis or part-time or consulting basis, to any such Person.

(d)

The Seller Parties acknowledge and agree that the provisions of this Section 5.2 are reasonable and necessary to protect the legitimate business interests of Buyer and its acquisition of the Company Units. None of the Seller Parties shall contest that Buyer’s remedies at law for any breach or threat of breach by any Seller Party or any of their respective Affiliates of the provisions of this Section 5.2 may be inadequate, and that Buyer shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Section 5.2 and to enforce specifically such terms and provisions, in addition to any other remedy to which Buyer may be entitled at law or equity. The restrictive covenants contained in this Section 5.2 are covenants independent of any other provision of this Agreement or any other agreement between the Parties hereunder and the existence of any claim which any Seller Party may allege against Buyer under any other provision of the Agreement or any other agreement will not prevent the enforcement of these covenants.

 

(e)

If any of the provisions contained in this Section 5.2 shall for any reason be held to be excessively broad as to duration, scope, activity or subject, then such provision shall be construed by limiting and reducing it, so as to be valid and enforceable to the extent compatible with the applicable Law or the determination by a court of competent jurisdiction.

5.3

Nondisparagement. Each Party agrees that it shall not, and shall cause each of its Affiliates not to, at any time, in any written or oral communications with the press or other media, any customer, client, stakeholder, investor or supplier of the other Party, or its Affiliate, or any other Person, criticize, ridicule, or make or encourage any other Person to make any statement that disparages, is derogatory of, or is negative toward the personal or business reputation, conduct or practices of the other Party, any of its Affiliates, or any of their then current or former respective officers, directors, employees, representatives, agents or attorneys.

5.4

Further Assurances. From time to time after the Closing, Buyer shall, at the request of Seller, execute and deliver any further instruments or documents and take all such further action as Seller may reasonably request in order to evidence the consummation of the transactions contemplated hereby. From time to time after the Closing, each Seller Party shall, at the request of Buyer, execute and deliver any further instruments or documents and take all such further action as Buyer may reasonably request in order to evidence the consummation of the transactions contemplated hereby.

5.5

Release. Effective as of the Closing, each Seller Party, on behalf of such Seller Party and his or its Affiliates and their respective past, present or future predecessors or successors (each, a “Releasing Party”), hereby irrevocably waives, releases, remises, and forever discharges each of the Company, Buyer and their respective Affiliates and their respective past, present or future shareholders, partners, members and representatives and each of their respective successors from any and all actions, promises, agreements, rights to payment, rights to any equitable remedy, rights to any equitable subordination, demands, debts, Liabilities, express or implied contractual obligations, obligations of payment or performance, rights of offset or recoupment, accounts, Losses or expenses (including, without limitation, attorneys’ fees and other professional fees and expenses), whether known or unknown, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or contingent, direct or derivative, which such Releasing Party or any of its Affiliates may have against such party as of the date hereof (collectively, the “Claims”), other than claims arising under this Agreement or the other Ancillary Agreements. Each Seller Party understands that the released Claims include not only Claims presently known to such Seller Party, but also include all unknown or unanticipated Claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released Claims as described above. Each Seller Party understands that such Seller Party may hereafter discover facts different from what it now believes to be true, which if known, could have materially affected this release, but it nevertheless waives any Claims or rights based on different or additional facts

5.6

Representation & Warranty Insurance. Prior to the Closing, Buyer has purchased the R&W Insurance Policy issued through the R&W Insurer; provided, however, that Seller shall be responsible for 50% of all costs and expenses (including the premium, underwriting costs, brokerage commissions, taxes, and other fees and expenses) related to the issuance of the R&W

Insurance Policy (the “Seller R&W Insurance Expense”). The Seller R&W Insurance Expense shall be characterized and treated as a Transaction Expense.

5.7

Termination of 401(k) Plan. Effective immediately prior to the Closing, the Seller Parties shall cause the Company to terminate the Company’s 401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), subject to and in accordance with the terms of the 401(k) Plan.

Article VI.
Tax Matters

6.1

Tax Indemnification. Notwithstanding anything to the contrary contained in this Agreement, the Seller Parties, jointly and severally, shall indemnify, defend and hold harmless the Company and Buyer from and against the entirety of any Losses the Company or Buyer may suffer resulting from, arising out of, relating to, in the nature of or caused by each and all of the following: (a) any and all Taxes (or the non-payment thereof) of the Company for all taxable periods ending on or before the Closing Date, and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date (the “Pre-Closing Tax Period”), (b) any and 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, including pursuant to Section 1.1502-6 of the Treasury Regulations or any analogous or similar state, local or foreign Law or regulation, and (c) any and all Taxes of any Person (other than the Company) imposed on the Company as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before Closing; provided, however, that in the case of clauses (a), (b) and (c) above, the Seller Parties shall be liable only to the extent that such Taxes are in excess of the amount, if any, taken into account in determining the Final Cash Payment.

6.2

Straddle Period. In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income or receipts of the Company for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity in which the Company holds a beneficial interest shall be deemed to terminate at such time), and the amount of other Taxes of the Company for a Straddle Period that relates to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period

6.3

Transfer Taxes. Each of Seller and Buyer shall be responsible for and timely pay 50% of all sales taxes, transfer taxes, stamp taxes, conveyance taxes, intangible taxes, documentary recording taxes, license and registration fees, recording fees and any similar taxes or fees incurred in connection with the consummation of the transactions contemplated by this Agreement (the “Transfer Taxes”). If Buyer is responsible for the Tax under applicable Law, Seller shall promptly upon demand pay its portion of such Taxes payable by Buyer, and vice versa. Seller shall timely file any Tax Return or other document with respect to such Taxes or fees, and Buyer will join in the execution of any such Tax Returns or other documentation.

Buyer and the Seller Parties shall cooperate with each other in any mutually agreeable, reasonable and lawful arrangement designed to minimize any applicable Transfer Taxes.

6.4

Cooperation on Tax Matters. Buyer and the Seller Parties agree to furnish or cause to be furnished to each other, upon request, as promptly as is practicable, such information and assistance relating to the Company (including without limitation access to books and records) as is reasonably necessary for the filing of all Tax Returns, the making of any election relating to Taxes, the preparation for any audit by any Taxing Authority, and the prosecution or defense of any claim, suit or proceeding relating to any Tax. Buyer and the Seller Parties shall retain all books and records with respect to Taxes (including income related Taxes) for any period up to and including the Closing Date, pertaining to the Company, for at least six years following the Closing Date. At the end of such period, each Party shall provide the others with at least 30 days prior written notice before destroying such books and records, during which period the Party receiving such notice can elect to take possession, at its own expense, of such books and records. Buyer and the Seller Parties further agree, upon request, to use their best efforts to obtain any certificate or other document from any Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). Buyer and the Seller Parties further agree, upon request, to provide the other with all information that either may be required to report pursuant to Code §6043, or Code §6043A, or Treasury Regulations promulgated thereunder.

6.5

Responsibility for Filing Tax Returns. The Parties acknowledge that by virtue of the Reorganization, Seller is the income Tax successor to the “S corporation” status of the Company pursuant to Revenue Ruling 2008-18 and Seller’s taxable year will not end on the Closing Date. The Seller Parties shall, at the cost and expense of the Seller Parties, prepare or cause to be prepared all Tax Returns for the Company for all taxable periods ending on or prior to the Closing Date that are due after the Closing Date (such returns, “Pre-Closing Tax Returns”). All Pre-Closing Tax Returns shall be prepared and filed in a manner that is consistent with the prior practice of the Company, except as required by applicable Law. The Seller Parties shall deliver drafts of any such Pre-Closing Period Returns to Buyer for its review and comment at least 30 days prior to the due date of any such Pre-Closing Period Return and the Seller Parties shall make such revisions to such Pre-Closing Tax Returns as are reasonably requested by Buyer. Except for the Pre-Closing Tax Returns, Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company that are filed after the Closing Date and shall permit the Seller Parties to review and comment on each such Tax Return relating to a Straddle Period and shall make such revisions to such Tax Returns as are reasonably requested by the Seller Parties.

6.6

Refunds and Tax Benefits. Any income Tax refunds with respect to the Company that are received by Buyer or the Company, and any amounts credited against income Tax with respect to the Company to which Buyer or the Company becomes entitled, that relate to income Tax periods or portions thereof ending on or before the Closing Date shall be for the account of Seller, and Buyer shall pay over to Seller any such refund or the amount of any such credit (net of any income Taxes of Buyer or the Company attributable to such refund or credit) within 30 days after receipt or entitlement thereto; provided, however, Buyer shall not be required to pay

 

over to Seller any such refund or the amount of any such credit up to the amount of any Tax asset taken into account in determining the adjustments set forth in Section 1.3.

6.7

Post Closing Actions. Buyer shall not, and shall not cause or permit the Company to (i) make or change any Tax election with respect to the Company that has any retroactive effect to any taxable period or portion thereof ending on or prior to the Closing Date, (ii) refile, revoke, amend or cause to be amended any Tax Return of the Company for any taxable period or portion thereof ending on or prior to the Closing Date, (iii) extend or waive any statute of limitations or other period for the assessment of any Tax or deficiency related to a Tax Return of or with respect to the Company for any taxable period or portion thereof ending on or prior to the Closing Date, (iv) file any Tax Return for the Company for a taxable period ending on or prior to the Closing Date in a jurisdiction in which the Company did not file such type of Tax Return prior to the Closing, (v) initiate or otherwise approach any Taxing authority regarding any voluntary disclosure (or similar) agreement or procedure with respect to Taxes payable by or with respect to the Company for any taxable period or portion thereof ending on or prior to the Closing Date, or (vi) cause or permit the change or adoption of any accounting method or convention or Tax position that shifts taxable income of the Company from a taxable period (or portion thereof) beginning after the Closing Date to a taxable period (or portion therefore) ending on or before the Closing Date or that shifts deductions or losses from a taxable period (or portion thereof) ending on or before the Closing Date to a taxable period (or portion thereof) beginning after the Closing Date, in each such case without the prior written consent of Seller, such consent not to be unreasonably withheld.

6.8

Tax-Sharing Agreements. All tax-sharing agreements or similar agreements with respect to or involving the Company shall be terminated as of the Closing Date and, after the Closing Date, the Company shall not be bound thereby or have any liability thereunder.

6.9

Allocation. The Parties agree that the Purchase Price shall be allocated for income Tax purposes among the assets of the Company in accordance with the allocation set forth on Schedule 6.9 (the “Allocation”). No Party shall take any position for Tax purposes inconsistent with the Allocation as finally determined (subject to amendment for adjustments to the Purchase Price) unless otherwise required by applicable Law.

6.10

Survival. The covenants and agreements contained in this Article VI shall survive the Closing.

 

Article VII.
SURVIVAL AND INDEMNIFICATION

7.1

Survival. The covenants and agreements in this Agreement or in any Ancillary Agreement shall survive the Closing. The representations and warranties under this Agreement or in any Ancillary Agreement shall survive until the first anniversary of the Closing Date; provided, however, that (i) the following representations and warranties (collectively, the “Fundamental Representations”): (A) Section 3.1 (Authority; Execution and Delivery), Section 3.2 (Organization), clause (b) of Section 3.3 (No Conflict – Organizational Documents), Section 3.4 (Capitalization; Title to Company Units), Section 3.8(a) (Title to Assets), Section 3.16

(Taxes), Section 3.36 (Brokers); and (B) Section 4.1 (Organization), Section 4.2 (Authority), clause (b) of Section 4.3 (No Conflict – Organizational Documents), Section 4.6 (Company Shares), Section 4.7 (Brokers), and Section 4.10 (Independent Investigation; Acknowledgment) shall survive the Closing for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days; and (ii) the representations and warranties set forth in Section 3.15 (Environmental Matters) and Section 3.18 (Employee Benefit Matters) shall survive the Closing until the third anniversary of the Closing Date. No action or claim for Losses resulting from any breach of, or inaccuracy in, any representation and warranty shall be brought or made after the expiration of the survival period applicable to such representation or warranty (as provided in this Section), except that such time limitation shall not apply to (1) claims which have been asserted and which are the subject of a written notice from the Seller Parties to Buyer or from Buyer to the Seller Parties, as may be applicable, prior to the expiration of such survival period, or (2) to any claims arising from any Fraud by a Party. The time limits set forth in this shall apply to any Warranty Claim which arises or is delayed as a result of Fraud.

7.2

General Indemnification.

(a)

Subject to the provisions of this Article VII, the Seller Parties, jointly and severally, shall indemnify, defend and hold harmless Buyer and its directors, officers, Affiliates, employees, agents and representatives (collectively, the “Buyer Indemnified Parties”), from and against all Losses that are incurred or suffered by any of them in connection with or resulting from any of the following:

(i)

any breach of, or inaccuracy in, any representation or warranty made by any Seller Party in this Agreement;

(ii)

any breach of any covenant made by any Seller Party in this Agreement;

(iii)

any Closing Indebtedness, to the extent not taken into account in determining the Final Cash Payment;

(iv)

any Transaction Expense, to the extent not taken into account in determining the Final Cash Payment;

(v)

any matter identified on Schedule 3.13;

(vi)

the Excluded Assets; or

(vii)

any matter identified on Schedule 7.2(a)(vii).

(b)

Subject to the provisions of this Article VII, Buyer shall indemnify, defend and hold harmless the Seller Parties and their respective agents and representatives (collectively, the “Seller Indemnified Parties”) from and against all Losses that are incurred or suffered by any of them in connection with or resulting from any of the following:

(i)

any breach of, or inaccuracy in, any representation or warranty made by Buyer in this Agreement; or

 

(ii)

any breach of any covenant made by Buyer in this Agreement.

(c)

Subject to the provisions of Section 7.2(d), (i) the Seller Parties shall have no obligation to indemnify Buyer Indemnified Parties for any Losses pursuant to claims for breaches of, or inaccuracies in, representations and warranties (other than Fundamental Representations) under Section 7.2(a)(i) unless and until the total amount of Losses incurred by Buyer Indemnified Parties with respect to breaches of, or inaccuracies in, representations and warranties exceeds $197,500 (the “Threshold”), in which case the Seller Parties will be liable for all such Losses in excess of the Threshold; and (ii) the maximum aggregate obligation of the Seller Parties for Losses pursuant to claims for breaches of, or inaccuracies in, representations and warranties (other than Fundamental Representations) under Section 7.2(a)(i) shall not exceed an amount equal to $197,500 (the “Seller Cap”). Subject to the provisions of Section 7.2(d), (i) Buyer shall have no obligation to indemnify Seller Indemnified Parties for any Losses pursuant to claims for breaches of, or inaccuracies in, representations and warranties (other than Fundamental Representations) under Section 7.2(b)(i) unless and until the total amount of Losses incurred by Seller Indemnified Parties with respect to breaches of, or inaccuracies in, representations and warranties exceeds the Threshold, in which case Buyer will be liable for all such Losses in excess of the Threshold; and (ii) the maximum aggregate obligation of Buyer for Losses pursuant to claims for breaches of, or inaccuracies in, representations and warranties (other than Fundamental Representations) under Section 7.2(b)(i) shall not exceed an amount equal to $2,000,000 (the “Buyer Cap”). Except for Fraud, the maximum aggregate liability of the Seller Parties for indemnification pursuant to Section 7.2(a), inclusive of Fundamental Representations, shall not exceed an amount equal to the Purchase Price.

(d)

Notwithstanding the provisions of Section 7.2(c), none of the Threshold, the Seller Cap, or the Buyer Cap shall apply to Losses suffered or incurred by any Indemnified Party as a result of, or arising out of, (A) inaccuracies in, or breach of, any Fundamental Representation, (B) the matters set forth in Sections 7.2(a)(ii) through 7.2(a)(vii), Section 7.2(b)(ii), or Section 6.1, or (C) any Fraud by a Party. The limitations in Section 7.2(c) shall not affect or otherwise limit any claim made or available under the R&W Insurance Policy.

(e)

For purposes of this Article VII (including for purposes of determining the existence of any inaccuracy in, or breach of, any representation or warranty and for calculating the amount of any Losses with respect thereto), any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification (including, for the avoidance of doubt, the phrase “in all material respects”) contained in or otherwise applicable to such representation or warranty (other than Fundamental Representations).

(f)

Each Indemnified Party shall use commercially reasonable efforts to mitigate any Losses that are indemnifiable or recoverable hereunder by the Indemnified Parties, if and to the extent required by Law.

 

(g)

In calculating the amount of Losses recoverable from an Indemnifying Party, the amount of such Losses shall be reduced by the amount of any insurance proceeds (other than R&W Insurance Policy proceeds) actually received by the Indemnified Party in respect of the Losses, net of (i) any deductible amounts and any reasonable costs and expenses actually incurred by the Indemnified Party in collecting such insurance proceeds, including reasonable attorneys’ fees, and (ii) any increase in insurance premiums (including retroactive adjustments) reasonably attributable to insurance proceeds paid in respect of such Losses.

7.3

Process for Indemnification.

(a)

A Party seeking indemnification hereunder is referred to as an “Indemnified Party.” A Party from whom indemnification is sought is referred to as an “Indemnifying Party.” As soon as is reasonable after an Indemnified Party either (i) receives notice of any claim or the commencement of any Action by any third party which such Indemnified Party reasonably believes may give rise to a claim for indemnification from an Indemnifying Party hereunder (a “Third Party Claim”) or (ii) sustains any Loss not involving a Third Party Claim or action which such Indemnified Party reasonably believes may give rise to a claim for indemnification from an Indemnifying Party hereunder, such Indemnified Party shall, if a claim in respect thereof is to be made against an Indemnifying Party under this Article VII, notify such Indemnifying Party in writing of such claim, action or Loss, as the case may be; provided, however, that failure to notify Indemnifying Party shall not relieve such Indemnifying Party of its indemnity obligation, except to the extent such Indemnifying Party is actually prejudiced in its defense of the Action by such failure. Any such notification must be in writing and must state in reasonable detail the nature and basis of the claim, Action or Loss, to the extent known. Except as provided in this Section 7.3, the Indemnifying Party shall have the right, using counsel acceptable to the Indemnified Party, which acceptance shall not be unreasonably withheld, to contest, defend, litigate or settle any such Third Party Claim which involves (and continues to involve) solely monetary damages; provided that the Indemnifying Party shall have notified the Indemnified Party in writing of its intention to do so within 15 days of the Indemnified Party having given notice of the Third Party Claim to the Indemnifying Party; provided, further, that (1) the Indemnifying Party expressly agrees in such notice to the Indemnified Party that, as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be solely obligated to fully satisfy and discharge the Third Party Claim subject to the limitations with respect to indemnification included in this Agreement; (2) if reasonably requested to do so by the Indemnified Party, the Indemnifying Party shall have made reasonably adequate provision to ensure the Indemnified Party of the financial ability of the Indemnifying Party to satisfy the full amount of any adverse monetary judgment that may result from such Third Party Claim; (3) assumption by the Indemnifying Party of such Third Party Claim would not reasonably be expected to cause a material adverse effect on the Indemnified Party’s business; and (4) the Indemnifying Party shall diligently contest the Third Party Claim (the conditions set forth in clauses (1), (2), (3) and (4) being collectively referred to as the “Litigation Conditions”). The Indemnified Party shall have the right to participate in, and to be represented by counsel (at its own expense) in any such contest, defense, litigation or settlement conducted by the Indemnifying Party; provided, that the Indemnified Party shall be entitled to reimbursement therefor if the Indemnifying Party shall lose its right to contest, defend, litigate and settle the Third Party Claim or if representation of the Indemnifying Party and the Indemnified Party by the same counsel would, in the reasonable opinion of such counsel,

constitute a conflict of interest under applicable standards of professional conduct. The Indemnifying Party shall not be entitled, and shall lose its right, to contest, defend, litigate and settle the Third Party Claim if the Indemnified Party shall give written notice to the Indemnifying Party of any objection thereto based upon the Litigation Conditions.

(b)

The Indemnifying Party, if it shall have assumed the defense of any Third Party Claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, enter into any compromise or settlement which commits the Indemnified Party to take, or to forbear to take, any action or which does not provide for a complete release by such third party of the Indemnified Party. The Indemnified Party shall have the sole and exclusive right to settle any Third Party Claim, on such terms and conditions as it deems reasonably appropriate, to the extent such Third Party Claim involves equitable or other non-monetary relief. All expenses (including attorneys’ fees) incurred by the Indemnifying Party in connection with the foregoing shall be paid by the Indemnifying Party. No failure by an Indemnifying Party to acknowledge in writing its indemnification obligations under this Article VII shall relieve it of such obligations to the extent such obligations exist.

(c)

If an Indemnified Party is entitled to indemnification against a Third Party Claim, and the Indemnifying Party fails to accept a tender of, or assume the defense of, a Third Party Claim pursuant to this Section 7.3, the Indemnifying Party shall not be entitled, and shall lose its right, to contest, defend, litigate and settle such a Third Party Claim, and the Indemnified Party shall have the right, without prejudice to its right of indemnification hereunder, in its discretion exercised in good faith, to contest, defend and litigate such Third Party Claim, and may settle such Third Party Claim either before or after the initiation of litigation, at such time and upon fair and reasonable terms, provided that at least 10 days prior to any such settlement, written notice of its intention to settle is given to the Indemnifying Party.

7.4

Recoupment Against Escrow. The Seller Parties agree that Buyer shall be entitled to receive payment from the Escrow Agent, from the Escrow Amount, any amount necessary to satisfy (a) the Seller Parties’ indemnification obligations with respect to any Claim for Loses required to be paid by the Seller Parties pursuant to this Article VII; (b) the Seller Parties’ indemnification obligations pursuant to Article VI; and (c) any obligation of Seller to pay any amounts that may become due to Buyer pursuant to Section 1.3 with respect to the reductions to the Purchase Price, which right may be exercised at any time after such payments become due. Promptly, and in any event within five Business Days, after Buyer becomes entitled to any payment from the Escrow Amount pursuant to this Agreement, Buyer and the Seller Parties shall jointly sign and deliver to the Escrow Agent a written direction authorizing such payment to Buyer, in accordance with the terms of the Escrow Agreement. Promptly, and in any event within five Business Days, after expiration of the Escrow Period, Buyer and the Seller Parties shall sign and deliver to the Escrow Agent, in accordance with the Escrow Agreement, a written direction authorizing the payment of the remaining Escrow Amount, if any, to Seller. Notwithstanding the foregoing or the provisions of Section 1.5, if, at the expiration of the Escrow Period there is one or more pending Claims by a Buyer Indemnified Party against the Seller Parties for indemnification pursuant to Article VI or Article VII, but there has not been a final

resolution of such Claim, then Buyer and the Seller Parties shall execute and deliver to the Escrow Agent, within five Business Days after expiration of the Escrow Period, written direction authorizing the Escrow Agent to continue to hold in escrow the portion of the Escrow Amount that Buyer reasonably determines is necessary to fully satisfy such Claim (up to the full remaining amount of the Escrow Amount then held in escrow), until such time as there is a final resolution of such Claim or Claims (and Buyer and the Seller Parties shall jointly sign and deliver to the Escrow Agent, within five Business Days after such final resolution, a written direction authorizing payment to Buyer or Seller, as appropriate, in accordance with the terms of the Escrow Agreement).

7.5

Payment of Losses to Buyer Indemnified Parties.

(a)

Any Losses payable to a Buyer Indemnified Party with respect to claims for breaches of, or inaccuracies in, representations and warranties pursuant to Section 7.2(a)(i), but subject to Section 7.2(c), shall be satisfied: (i) first, from the Escrow Amount (until the satisfaction of any remaining retention amount under the R&W Insurance Policy ), pursuant to Section 7.4 and the Escrow Agreement; (ii) second, to the extent such Losses are covered by the R&W Insurance Policy (after the satisfaction of the full retention amount thereunder), by recovery under the R&W Insurance Policy in accordance with the terms thereof (except for claims arising with respect to inaccuracies in, or breach of, any Fundamental Representation, which shall be satisfied from the Escrow Amount, to the extent funds are available, or by the Seller Parties, jointly and severally, if such Escrow Amount funds are not available); (iii) third, from the Escrow Amount, pursuant to Section 7.4 and the Escrow Agreement; and (iv) fourth, to the extent such Losses exceed the then available Escrow Amount and are not covered by the R&W Insurance Policy for any reason (including the coverage limit being exceeded or the coverage being denied), by the Seller Parties, jointly and severally.

(b)

Any Losses payable to a Buyer Indemnified Party pursuant to Section 7.2(a)(ii) through Section 7.2(a)(viii), but subject to Section 7.2(c), shall be satisfied: (i) first, from the Escrow Amount, pursuant to Section 7.4 and the Escrow Agreement; and (ii) second, to the extent the amount of Losses exceeds the then available Escrow Amount, from the Seller Parties, jointly and severally.

7.6

Remedies Exclusive. The remedies provided in this Article VII shall be the sole and exclusive remedies of any Indemnified Party related to any and all Losses incurred because of or resulting from or arising out of this Agreement and the transactions contemplated hereby and the Buyer Indemnified Parties and the Seller Indemnified Parties hereby waive any statutory, equitable, or common law rights or remedies that otherwise may be asserted from and after the Closing, whether sounding in contract or tort, or whether at law or in equity, or otherwise, for a breach of this Agreement or in connection with the transactions contemplated by this Agreement; provided, however, that nothing contained in this Article VII shall be deemed to limit or restrict in any manner (a) any rights or remedies which any Indemnified Party has, or might have, at law or in equity based on Fraud, or (b) any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled. Notwithstanding anything to the contrary contained herein, no limitations (including any survival limitations and other limitations set forth in this Article VII), qualifications or procedures in this Agreement shall be deemed to limit or modify the ability of Buyer to make claims under or recover under the R&W Insurance Policy; it being

understood that any matter for which there is coverage available under the R&W Insurance Policy shall be subject to the terms, conditions and limitations, if any, set forth in the R&W Insurance Policy.

7.7

Tax Treatment. Any indemnification payments under this Article VII shall be treated for Tax purposes as adjustments to the Purchase Price to the extent permitted by applicable Law.

Article VIII.
MISCELLANEOUS

8.1

Interpretive Provisions.

(a)

Whenever used in this Agreement, (i) “including” (or any variation thereof) means including without limitation and (ii) any reference to gender shall include all genders. The term “or” has the inclusive meaning represented by the phrase “and/or.” Reference to a particular Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement. Reference to a particular agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof. The terms “dollars” and “$” mean United States Dollars. Unless Business Days are specified, all references to “days” hereunder shall mean calendar days. The Exhibits and Schedules identified in this Agreement are incorporated into this Agreement by reference and made a part hereof.

(b)

The Parties acknowledge and agree that (i) each Party and its counsel have reviewed the terms and provisions of this Agreement and have contributed to its drafting, (ii) the normal rule of construction, to the effect that any ambiguities are resolved against the drafting Party, shall not be employed in the interpretation of it, and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

8.2

Entire Agreement. This Agreement (including the Disclosure Schedules and the exhibits attached hereto) together with the Ancillary Agreements constitute the sole understanding and agreement of the Parties with respect to the subject matter hereof. The Parties agree and acknowledge that as of the Closing Date, the mutual confidentiality agreement, dated May 22, 2024, between Buyer and the Company is terminated.

8.3

Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties; provided however, that this Agreement may not be assigned by any Seller Party without the prior written consent of Buyer or be assigned by Buyer without the prior written consent of the Seller Parties, except that (i) Buyer may, at its election and provided it remains liable for its obligations hereunder, assign this Agreement to any Affiliate of Buyer, and (ii) Buyer or any such assignee may make a collateral assignment of its rights (but not its obligations) under this Agreement to any lender providing financing to Buyer in connection with the Closing.

 

8.4

Headings. The headings of the Articles, Sections, and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

8.5

Modification and Waiver. No amendment, modification, or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Parties, except that any of the terms or provisions of this Agreement may be waived in writing at any time by the Party that is entitled to the benefits of such waived terms or provisions. No single waiver of any of the provisions of this Agreement shall be deemed to or shall constitute, absent an express statement otherwise, a continuous waiver of such provision or a waiver of any other provision hereof (whether or not similar). No delay on the part of any Party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof.

8.6

Expenses. Except as otherwise expressly provided herein, each of the Parties shall bear the expenses incurred by that Party incident to this Agreement and the transactions contemplated hereby, including all fees and disbursements of counsel and accountants retained by such Party, whether or not the transactions contemplated hereby shall be consummated.

8.7

Notices. Any notice, request, instruction, or other document to be given hereunder by any Party to any other Party shall be in writing and shall be given by delivery in person, by electronic mail, by overnight courier or by registered or certified mail, postage prepaid (and shall be deemed given when delivered if delivered by hand, when delivered if delivered by electronic mail, one Business Day after deposited with an overnight courier service if delivered by overnight courier and three days after mailing if mailed), as follows:

	to a Seller or Shareholder:   Richard L. Brion #### Email: ####
	in each case, with a copy to:   Koley Jessen P.C., L.L.O. 1125 S. 103rd St., Suite 800 Omaha, NE 68124 Attention: David Winkler Email: ####

	to Buyer to:   Transcat, Inc. 35 Vantage Point Drive Rochester, NY 14624 Attn: Thomas Barbato, Chief Financial Officer Email: ####
	with a copy to:   Harter Secrest & Emery LLP 50 Fountain Plaza, Suite 1000 Buffalo, NY 14202 Attention: Phillip A. Delmont Email: ####

or at such other address for a Party as shall be specified by like notice.

8.8

Governing Law; Venue.

(a)

This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware applicable to agreements made and to be performed wholly within that jurisdiction.

(b)

Any Action relating to this Agreement or to the enforcement of any provision of this Agreement (whether arising in contract, tort, equity or otherwise) may be brought or otherwise commenced in the Court of Chancery of the State of Delaware, any state appellate court therefrom within the State of Delaware or any federal court located within the State of Delaware. The Parties: (i) expressly and irrevocably consent and submit to the jurisdiction of any such court in connection with any such Action; (ii) agree that service of any process, summons, notice or document by U.S. mail addressed as set forth in Section 8.7 shall constitute effective service of such process, summons, notice or document for purposes of any such Action; (iii) agree that the courts of the State of Delaware, as described above, shall be deemed to be a convenient forum; (iv) agree not to assert (by way of motion, as a defense or otherwise), in such court, any claim that such party is not subject personally to the jurisdiction of such court, that such Action has been brought in an inconvenient forum, that the venue of such action or proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court; and (v) that a judgment in such Action may be enforced in other competent jurisdictions by suit on the judgment or in any other manner provided by applicable Laws.

8.9

Public Announcements. Neither the Seller Parties nor Buyer shall make any public statements, including any press releases, with respect to this Agreement and the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld) except as may be required by Law or the applicable rules of any securities exchange. If a public statement is required to be made by Law or any

securities exchange, the Parties shall consult with each other in advance as to the contents and timing thereof.

8.10

No Third Party Beneficiaries. This Agreement is intended and agreed to be solely for the benefit of the Parties and their permitted successors and assigns, and no other Party shall be entitled to rely on this Agreement or accrue any benefit, claim, or right of any kind whatsoever pursuant to, under, by, or through this Agreement.

8.11

Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

8.12

Delivery by Email or Electronic Transmission. This Agreement and any of the Ancillary Agreements, along with any amendments hereto or thereto, to the extent signed and delivered by means of E mail, DocuSign or other means of electronic transmission in portable document format (.pdf), shall be treated in all manner and respects and for all purposes as an original signature, agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No Party shall raise the use of such electronic transmission to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of electronic mail or other electronic transmission as a defense to the formation or enforceability of this Agreement and each such Party forever waives any such defense.

8.13

Representation of Seller Parties and their Affiliates.

(a)

Buyer agrees, on its own behalf and on behalf of its Affiliates, that (i) one or more of the Company or Seller Parties have retained Koley Jessen PC, LLO (“Koley Jessen”), to act as their counsel in connection with the transactions contemplated by this Agreement as well as other past matters, (ii) Koley Jessen has not acted as counsel for any other Person in connection with the transactions contemplated by this Agreement and no Person other than the Company and the Seller Parties has the status of a Koley Jessen client for conflict of interest or any other purpose as a result thereof, and (iii) following the Closing, Koley Jessen may serve as counsel to the Seller Parties and their Affiliates in connection with any matters related to this Agreement and the transactions contemplated hereby, including any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement. notwithstanding any representation of the Company by Koley Jessen prior to the Closing. Buyer (on behalf of itself and its Affiliates including, after the Closing, the Company) hereby (i) waives any claim it has or may have that Koley Jessen has a conflict of interest or is otherwise prohibited from engaging in such representation and (ii) agrees that, in the event that a dispute arises after the Closing between Buyer or the Company and the Seller Parties or any of their Affiliates, Koley Jessen may represent the Seller Parties or any of their Affiliates in such dispute even though the interests of such Persons may be directly adverse to Buyer or the Company and even though Koley Jessen may have represented the Company or other Persons in a matter substantially related to such dispute. Buyer represents that Buyer’s own attorney has explained and helped Buyer evaluate the implications and risks of waiving the right to assert a future conflict against Koley Jessen, and Buyer’s consent with respect to this waiver is fully informed.

 

(b)

Buyer (on behalf of itself and its Affiliates including, after the Closing, the Company) also further agrees that, as to all communications occurring on or prior to the Closing Date among Koley Jessen, on the one hand, and the Company, the Seller Parties or their Affiliates and representatives, on the other hand, that (i) relate in any way to the transactions contemplated by this Agreement, and (ii) were privileged upon the occurrence of such communications or as of the Closing Date (collectively, the “Privileged Communications”), from and after the Closing the attorney client privilege and the expectation of client confidence belongs to the Seller Parties and may be controlled by the Seller Parties and will not pass to or be claimed by Buyer or the Company. In furtherance of the foregoing, Buyer acknowledges that it would be impractical to remove all Privileged Communications from the records (including emails and other electronic files) of the Company and that any possession of Buyer of any Privileged Communications will not affect or alter the ownership of such Privileged Communications.

(c)

In addition, following the Closing, all of the client files and records in the possession of Koley Jessen related to this Agreement and the transactions contemplated hereby will continue to be property of (and be controlled by) the Seller Parties, and will not pass to or be claimed by Buyer, the Company or any Affiliates thereof.

(d)

Notwithstanding the foregoing, in the event that a dispute arises between Buyer or the Company and a third party other than a party to this Agreement (or an Affiliate thereof) after the Closing, the Company may assert the attorney client privilege to prevent disclosure of confidential communications by Koley Jessen to such third party; provided, however, that the Company may not waive such privilege without the prior written consent of the Seller Parties.

Article IX.
CERTAIN DEFINITIONS

9.1

Defined Terms. The following terms shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

“Ancillary Agreement” means the Escrow Agreement, the Registration Rights Agreement, the Reorganization Documents, the New Lease Agreements, and any other agreement, exhibit, schedule, written statement, document or certificate executed or delivered at the Closing in accordance with, in connection with or required by this Agreement, and any other agreement or certificate specifically identified as an Ancillary Agreement for purposes of this Agreement.

“Anti-Corruption Laws” means the US Foreign Corrupt Practices Act and any other applicable anti-corruption Laws.

“Authority” means the United States of America or any other nation, any state or other political subdivision thereof, or any entity, agency, court or authority (foreign, federal, state

or local) exercising executive, legislative, judicial, regulatory or administrative functions of government.

“Business” means the business of (i) providing calibration and certification for test and measurement instrumentation including, without limitation, dimensional calibration, electronic calibration, physical calibration, thermal calibration, flow calibration, and pipette calibration, and (ii) selling test and measurement instrumentation.

“Business Day” means any day other than a day on which banks in New York, New York are required or authorized to be closed.

“Buyer Share” means a share of Buyer’s common stock, par value $0.50 per share.

“Buyer Share Price” means $104.16, which is the volume weighted (based on the number of Buyer Shares traded on each day that the closing price is used in this calculation) average of the closing sale prices of Buyer Shares on the Nasdaq Stock Market for the 30 consecutive trading days ending on December 6, 2024 (which is the date that is two trading days prior to the Closing Date).

“Cash Consideration Amount” means $69,000,000.

“Cash on Hand” means all cash and cash equivalents of the Company, calculated as of the Effective Time (and prior to giving effect to any transactions contemplated by this Agreement), determined in accordance with GAAP, and subject to the next sentence (which, for the avoidance of doubt, may be a negative number). For the avoidance of doubt, Cash on Hand shall be calculated (i) net of (A) all issued but uncleared checks and drafts, ACH transactions and other wire transfers issued by the Company to the extent such checks, drafts, ACH transactions or other wire transfers have not yet cleared and are not included as current liabilities in the calculation of Closing Working Capital as finally determined pursuant to Section 1.3(b), (B) any cash and cash equivalents of the Company that is distributed or otherwise paid to any Seller Party or any Seller Party’s Affiliates prior to the Effective Time and (C) investment securities (including equity securities and certificates of deposit); and (ii) shall include all checks, ACH transactions and other wire transfers and drafts deposited or received by the Company and available for deposit for the account of the Company, and to the extent not included as current assets in the calculation of Closing Working Capital as finally determined pursuant to Section 1.3(b).

“Closing Cash” means the amount of Cash on Hand as of the Effective Time.

“Closing Indebtedness” means the amount of Indebtedness of the Company outstanding as of immediately prior to the Closing (without giving effect to the transactions contemplated herein), as determined in accordance with GAAP.

“Closing Tax-Gross Up Payment Capital” means the amount of the Tax Gross-Up Payment, as determined in accordance with the terms and conditions of, and subject to the adjustments described in, Section 1.3.

“Closing Transaction Expenses” means, to the extent not paid by Seller, the Company or otherwise prior to the Closing Date, the amount of Transaction Expenses accrued or outstanding as of the Effective Time (without giving effect to the transactions contemplated herein), as determined in accordance with GAAP.

“Closing Working Capital” means the value, as of the Effective Time, of the current assets of the Company, less the aggregate amount of current Liabilities of the Company, all as determined in accordance with GAAP and the accounting principles used to calculate the example calculation on Exhibit C, and in accordance with the terms and conditions of, and subject to the adjustments described in, Section 1.3.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” “has the meaning set forth in the Recitals to this Agreement, provided, that for the avoidance of doubt, the Parties agree that, except as set forth in the Recitals or as the context otherwise requires (for purposes of distinguishing between the Company and the Predecessor Company), “Company” shall be deemed to reference, collectively, the Company and any predecessor thereof (including the Predecessor Company).

“Contract” means any written or oral contract, lease, license, loan or credit agreement, bond, debenture, note, mortgage, indenture, supply agreement, sale or purchase order, or any other binding agreement, commitment, arrangement or understanding.

“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise.

“Encumbrances” means all liens, charges, mortgages, pledges, security interests or other encumbrances of any kind.

“Environmental Laws” means all, federal, state and local laws, rules, regulations, ordinances, codes, common law, judgments, orders, consent agreements and legally-binding requirements, work practices, and standards relating to (i) the protection of the environment (including air, surface and subsurface water, drinking water supplies, surface and subsurface land, the interior of any building or building component, soil and natural resources) or human health (including without limitation occupational health and safety) or (ii) Hazardous Substances, as such Laws are enacted and in effect on or prior to the Closing Date.

“Environmental Liabilities” shall mean, with respect to any Person, all Liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred, based upon, related to, or arising under or pursuant to any Environmental Laws, or which relates to any environmental, health or safety condition.

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

“ERISA Affiliate” means any Person, trade or business (whether or not incorporated) that is a member of a “controlled group of corporations” with, or is under “common control” with, or is a member of the same “affiliated service group” with the Company, as defined in Section 414 of the Code, or is otherwise required to be aggregated with the Company under Section 414(o) of the Code.

“Estimated Cash Payment” means an amount equal to the total of (a) the Cash Consideration Amount, minus (b) the Escrow Amount, plus (c) the Estimated Closing Cash, minus (d) the amount, if any, by which Estimated Closing Working Capital is less than Target Closing Working Capital Floor, plus (e) the amount, if any, by which Estimated Closing Working Capital is greater than Target Closing Working Capital Ceiling, minus (f) the Estimated Closing Indebtedness, plus (g) the Estimated Tax Gross-Up Payment, minus (h) the Estimated Closing Transaction Expenses.

“Final Cash Payment” means an amount equal to the total of (a) the Cash Consideration Amount, minus (b) the Escrow Amount, plus (c) the Final Closing Cash, minus (d) the amount, if any, by which Final Closing Working Capital is less than Target Closing Working Capital Floor, plus (e) the amount, if any, by which Final Closing Working Capital is greater than Target Closing Working Capital Ceiling, minus (f) the Final Closing Indebtedness, plus (g) the Estimated Tax Gross-Up Payment, minus (h) the Final Closing Transaction Expenses.

“Final Closing Cash” means the Closing Cash set forth in the Final Closing Statement, as finally determined pursuant to Section 1.3.

“Final Closing Indebtedness” means the Closing Indebtedness set forth in the Final Closing Statement, as finally determined pursuant to Section 1.3.

“Final Tax Gross-Up Payment” means the Closing Tax Gross-Up Payment set forth in the Final Closing Statement, as finally determined pursuant to Section 1.3.

“Final Closing Transaction Expenses” means the Closing Transaction Expenses set forth in the Final Closing Statement, as finally determined pursuant to Section 1.3.

“Final Closing Working Capital” means the Closing Working Capital set forth in the Final Closing Statement, as finally determined pursuant to Section 1.3.

“Fraud” means the making of a representation, warranty or covenant set forth in this Agreement by a Party with a specific intent to deceive another Party or to induce such other Party to enter into this Agreement, and requires that at the time such representation, warranty, or covenant was made or given (i) in the case of a representation, such representation was inaccurate, (ii) such Party making or giving the representation, warranty, or covenant had actual knowledge of the inaccuracy of such representation, (iii) such Party had the intent to induce such other Party to whom such representation, warranty, or covenant was made or given to act or refrain from acting in reliance upon it and (iv) such other Party to whom such representation,

warranty or covenant was made or given acted in reliance on such inaccurate representation, warranty, or covenant and suffered injury as a result of such inaccuracy. For the avoidance of doubt, (x) the term “Fraud” does not include any claim for equitable fraud, promissory fraud, unfair dealings fraud, or any torts (including a claim for fraud) based on negligence or recklessness, and (y) only the Party hereto who committed a Fraud shall be responsible for such Fraud and only to the Party alleged to have suffered from such alleged Fraud.

“GAAP” means United States generally accepted accounting principles consistently applied throughout the relevant periods.

“General Enforceability Exceptions” means general principles of equity and by bankruptcy, insolvency or similar Laws and general equitable principles affecting the rights of creditors generally.

“Government Official” means (i) any director, officer, employee, agent or representative (including anyone elected, nominated, or appointed to be an officer, employee, or representative) of any Authority, or anyone otherwise acting in an official capacity on behalf of an Authority; (ii) any candidate for public or political office; (iii) any royal or ruling family member; or (iv) any agent or representative of any of those Persons listed in subcategories (i) through (iii).

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

“Hazardous Substances” means any and all hazardous or toxic substances, materials, and wastes, solid wastes, industrial wastes, pollutants, contaminants, polychlorinated biphenyls, asbestos, volatile and semi-volatile organic compounds, oil, petroleum products and fractions thereof, radioactive materials and wastes, and any and all other chemicals, substances, materials and wastes defined under Environmental Law.

“Indebtedness” means all principal, interest, premiums, penalties or other Liabilities related to (a) all indebtedness for borrowed money, (b) all obligations (contingent or otherwise) for the deferred purchase price of property or services (other than trade accounts payable in the Ordinary Course of Business) (including notes payable to the sellers of such property or services), (c) all other obligations evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired, (e) all obligations as lessee or lessees under leases that have been or should be, in accordance with GAAP, recorded as capital leases, excluding real property leases, (f) all obligations, contingent or otherwise, under acceptance, letter of credit or similar facilities, (g) all obligations owing pursuant to factoring agreements for accounts receivable, (h) all obligations in respect of unfunded pensions, (i) all obligations of the type referred to in clauses (a) through (h) above guaranteed directly or indirectly in any manner by the Company, or in effect guaranteed directly or indirectly by the Company through an agreement (1) to pay or purchase such obligations or to advance or supply funds for the payment or purchase of such obligations, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such obligations or to assure the holder of such obligations against loss, (3) to supply funds to or

in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss; provided, that such Indebtedness referred under this clause (i) is of the type that would be reflected as debt on a balance sheet prepared in accordance with GAAP, (j) all Indebtedness of the type referred to in clauses (a) through (i) above secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any lien on property (including accounts and Contract rights) owned by the Company, even though such Person has not assumed, become liable for or guaranteed the payment of such Indebtedness, (k) all Liabilities of under or in connection with any accrued bonuses and deferred compensation bonuses (including all related Taxes, including the employers share of any payroll Taxes attributable to such amounts and any amounts payable pursuant to Section 280G of the Code (or any corresponding provision of Law) or to offset or gross-up any Person for any excise Taxes, income Taxes or other Taxes related to such amounts), and (l) all accrued but unpaid interest (or interest equivalent) to the date of determination, and all prepayment premiums or penalties payable upon repayment of any items of Indebtedness of the type referred to in clauses (a) through (i) above.

“Interim Balance Sheet” means the balance sheet of the Company as of the Interim Balance Sheet Date, as set forth in the Financial Statements.

“Interim Balance Sheet Date” means September 30, 2024.

“Interim Financial Statement” has the meaning set forth in Section 3.6.

“Intellectual Property^” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including source code, executable code, data, databases, and related documentation), (g) all material advertising and promotional materials, (h) all industrial designs and integrated circuit topography rights, (i) all other proprietary rights, and (j) all copies and tangible embodiments thereof (in whatever form or medium).

“IRS” means the Internal Revenue Service.

“knowledge”, “to the knowledge” or “known” and words of similar import means the actual knowledge of a natural person or, with respect to a Person that is not a natural person, the actual knowledge of the directors and officers of such Person, in each case after due inquiry.

“Laws” means any federal, state or local law (including, without limitation, principles of common law), statute, ordinance, regulation, Permit, certificate, judgment, order, award or other legally enforceable determination, decision or requirement of any Authority.

“Liabilities” means 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.

“Losses” means any and all losses, Liabilities, damages, penalties, obligations, awards, fines, deficiencies, demands, interest, claims (including third party claims whether or not meritorious), costs and expenses whatsoever (including reasonable attorneys’, consultants’ and other professional fees and disbursements of every kind, nature and description) resulting from, arising out of or incident to any matter for which indemnification is provided under this Agreement, but excluding special or punitive damages, except in connection with (i) claims based upon Fraud or (ii) damages or losses awarded to a third party against an Indemnified Party in connection with Losses indemnified under this Agreement.

“Material Adverse Effect” means any circumstance or event which is material and adverse to the business, properties, operations, condition (financial or otherwise), or results of operations of the Company. For purposes of this definition of Material Adverse Effect, the effect of any matter as to any past period shall be determined based on its actual effect.

“Off-the-Shelf Software” means unmodified commercially-available, off-the-shelf, click-wrap, shrink-wrap or similar software obtained from a Person (a) on general commercial terms and which is generally available on similar commercial terms, and (b) which is not distributed as “open source software” or “free software” or under a similar licensing or distribution model.

“Ordinary Course of Business” means, with respect to the Company, the ordinary course of business consistent with the Company’s past custom and practice (including with respect to quantity and frequency).

“Organizational Documents” means, for any entity, its constituent or organizational documents, including, in the case of a corporation, its articles or certificates of incorporation and its bylaws and, in the case of a limited liability company, its articles of organization or certificate of formation (or similar document) and its operating agreement or limited liability company agreement.

“Permitted Encumbrances” means (i) statutory liens for Taxes not yet due and payable or the validity or amount of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Interim Financial Statements in accordance with GAAP; (ii) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the Ordinary Course of Business and securing sums that are not yet due and payable or the validity or amount of which is being contested in good faith by

appropriate proceedings, and for which adequate reserves have been established on the Interim Financial Statements in accordance with GAAP and do not otherwise constitute a breach of or an event of default under any Lease.

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

“Personal Information” means, in addition to any information described as Personal Information by applicable Privacy Law, any information that is maintained by the Company that identifies or is reasonably capable of identifying a natural person.

“Privacy Laws” means all applicable, federal, state or municipal laws governing the collection, use, disclosure and/or retention of Personal Information.

“Restricted Territory” means North America.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Stock Consideration Amount” means $10,000,000.

“Target Closing Working Capital Ceiling” means $2,730,213.

“Target Closing Working Capital Floor” means $2,530,213.

“Tax” means (i) any federal, state, local or non-U.S. income, gross receipts, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, property taxes (real or personal), including unpaid property taxes, premium, windfall profits, environmental assessments, alternative or add-on minimum, custom duties, capital stock, profits, social security (or similar), unemployment, disability, estimated, or any other tax of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, whether disputed or not, and (ii) any obligation to indemnify or otherwise assume or succeed to any Liability described in clause (i) hereof of any other Person whether by Contract or under common law doctrine of de facto merger and successor liability or otherwise.

“Tax Gross-Up Payment” means the amount that causes (i) the net after-Tax proceeds to the Seller Parties resulting from the sale of the Company Units (and the deemed asset sale) to Buyer following the Reorganization to be equal to (ii) the net after-Tax proceeds that Shareholder would have received had he sold the Predecessor Shares to Buyer without the Reorganization (assuming the Reorganization did not occur), taking into account any increase or change in the character of the Seller Parties’ income, the Allocation, any Taxes imposed on the Tax Gross-Up Payment, and all appropriate state, federal and local Tax implications.

“Tax Return” means any return, report, information return or other document (including any related or supporting information or any amended return) filed or required to be filed with any Taxing Authority in connection with the determination, assessment, or collection

of any Tax paid or payable by or with respect to the Company or the administration of any laws, regulations, or administrative requirements relating to any such Tax.

“Transaction Expenses” means (without duplication), (i) the collective amount payable by the Company, or Liabilities of the Company that were incurred by the Company or the Seller Parties to, outside legal counsel, accountants, advisors, brokers and other Persons in connection with the transactions contemplated by this Agreement or otherwise arising by consummation of the transactions contemplated hereby, including 100% of the costs and expenses of obtaining any third party consents (including customer consents), 100% of the filing fees incurred by the Company in connection with any filing by the Company with an Authority, 100% of the costs and expenses relating to the Reorganization, and 100% of the costs and expenses (including Taxes) arising in connection with the transfer of the Excluded Assets; (ii) the Seller R&W Insurance Expense, (iii) 50% of the costs and expenses of the Escrow Agent payable under the Escrow Agreement; and (iv) all Liabilities of the Company under or in connection with any severance arrangements, stay bonuses, incentive bonuses, transaction bonuses (including the Transaction Bonuses), termination and change of control arrangements, and similar obligations that are triggered in whole or in part by the consummation of the transactions contemplated by this Agreement (including all related Taxes, including the employer’s share of any payroll Taxes attributable to such amounts (including the Transaction Bonus Taxes) and any amounts payable pursuant to Section 280G of the Code (or any corresponding provision of Law) or to offset or gross-up any Person for any excise Taxes, income Taxes or other Taxes related to the foregoing items).

9.2

Other Definitions. Each of the following terms is defined in the Section set forth opposite such term:

“401(k) Plans”	5.6
“Accounts Receivable”	3.10(a)
“Action”	3.13
“Ancillary Agreements”	3.1
“Agreement”	Preamble
“Benefit Plans”	3.18(a)
“Buyer”	Preamble
“Buyer Cap”	7.2(c)
“Buyer Indemnified Parties”	7.2(a)
“Closing”	2.1
“Closing Date”	2.1
“Closing Shares”	1.2(b)(iii)
“Company”	Preamble
“Company Units”	Recitals
“Confidential Information”	5.1
“Effective Time”	2.1
“Escrow Agent”	1.2(b)(i)
“Escrow Agreement”	1.5
“Escrow Amount”	1.2(b)(i)
“Escrow Period”	1.5

“Estimated Closing Indebtedness”	1.3(a)
“Estimated Closing Statement”	1.3(a)
“Estimated Closing Transaction Expenses”	1.3(a)
“Estimated Closing Working Capital”	1.3(a)
“Excluded Assets”	1.6
“Financial Statements”	3.6
“Final Closing Statement”	1.3(b)
“Fundamental Representations”	7.1
“Indemnified Party”	7.3(a)
“Indemnifying Party”	7.3(a)
“Independent Accountant”	1.3(e)
“Interim Financial Statements”	3.6
“IT Systems”	3.11(d)
“New Lease Agreements”	2.2(a)(v)
“Leased Real Property”	3.9(b)
“Licensed Intellectual Property”	3.11(a)
“Litigation Conditions”	7.3(a)
“Material Contracts”	3.12(a)
“Material Owned Intellectual Property”	3.11(a)
“Notice of Disagreement”	1.3(d)
“Party”	Preamble
“Parties”	Preamble
“Permits”	3.14
“Pre-Closing Tax Period”	6.1
“Predecessor Company”	Recitals
“Purchase Price”	1.2(a)
“R&W Insurer”	2.2(a)(iv)
“R&W Insurance Policy”	2.2(a)(iv)
“Real Property Leases”	3.9(b)
“Releasing Party”	5.5
“Registration Rights Agreement”	2.2(a)(iii)
“Reorganization”	Recitals
“Reorganization Documents”	Recitals
“Restricted Period”	5.2(a)
“Seller Indemnified Parties”	7.2(b)
“Seller”	Preambles
“Seller Cap”	7.2(c)
“Seller Parties”	Recitals
“Seller R&W Insurance Expense”	5.6
“Shareholder”	Preamble
“Significant Customer”	3.21
“Significant Supplier”	3.22
“Straddle Period”	6.2
“Taxing Authority”	3.16(a)

“Third Party Claim”	7.3(a)
“Threshold”	7.2(c)
“Transaction Bonuses”	1.7
“Transaction Bonus Taxes”	1.7
“Transfer Taxes”	6.3

 

 

[Signature page follows.]

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf as of the date first above written.

 

	BUYER:
	TRANSCAT, INC.
	By:	/s/ Thomas Barbato
	Name:	Thomas Barbato
	Title:	Chief Financial Officer
	SELLER:
	martin holding inc.
	By:	/s/ Richard L. Brion
	Name:	Richard L. Brion
	Title:	Chief Executive Officer
	SHAREHOLDER:
	/s/ Richard L. Brion
	Richard L. Brion

 

[Signature Page to Membership Unit Purchase Agreement]

 

Exhibit A

Description of Reorganization Documents

 

 

Exhibit B

Registration Rights Agreement

 

 

Exhibit C

Net Working Capital

 

 

 

 

 

 

Exhibit 10.2

TRANSCAT, INC.
REGISTRATION RIGHTS AGREEMENT

THIS Registration Rights Agreement (this “Agreement”) is made as of December 10, 2024 (the “Effective Date”), by and among TRANSCAT, INC., an Ohio corporation (the “Company”), and MARTIN HOLDING INC. and RICHARD L. BRION (each individually, a “Holder” and, collectively, the “Holders”).

RECITALS

A.       

Pursuant to a Membership Unit Purchase Agreement, dated as of the Effective Date, by and among the Company and the Holders (the “Purchase Agreement”), the Company has issued and delivered to each Holder the number of shares of Common Stock (as defined below) as is set forth opposite such Holder’s name on Schedule A hereto (collectively, the “Initial Shares”).

B.       

In connection with the execution and delivery of the Purchase Agreement and the consummation of the transactions contemplated thereby, including the issuance of the Initial Shares to the Holders, the Company has agreed to grant certain registration rights as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Article I
Definitions

1.1      

Definitions. Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings ascribed to them in the Purchase Agreement. As used in this Agreement, the following terms shall have the meanings set forth below:

(a)       

“Additional Shares” means any shares of Common Stock issued to the Holders pursuant to a stock split, stock dividend or other distribution with respect to, or in exchange or in replacement of, the Initial Shares, or in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event.

(b)       

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

(c)       

“Business Day” means any day, excluding Saturday, Sunday and any day which is a legal holiday in the City of New York or is a day on which banking institutions located in the City of New York are authorized or required by law or other governmental action to close.

(d)       

“Change of Control” means an event or series of events (i) as a result of which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of

all Common Stock that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 50% or more of the Common Stock entitled to vote for members of the Company’s Board of Directors on a fully diluted basis (and taking into account all such Common Stock that such person or group has the right to acquire pursuant to any option right); or (ii) that results in the sale of all or substantially all of the assets or businesses of the Company and its consolidated subsidiaries, taken as a whole; provided, however that such event or events shall not constitute a Change of Control if, following the occurrence thereof, shares of Common Stock continue to be listed for trading on a Trading Market.

(e)       

“Common Stock” means shares of the common stock of the Company, par value $0.50 per share.

(f)       

“Company” has the meaning set forth in the Preamble.

(g)       

“Company Indemnified Party” has the meaning set forth in Section 2.4(b).

(h)       

“Effectiveness Deadline” means the Shelf Effectiveness Deadline and the Subsequent Shelf Effectiveness Deadline.

(i)       

“End of Suspension Notice” has the meaning set forth in Section 2.2(c).

(j)       

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

(k)       

“Holder” has the meaning set forth in the Preamble.

(l)       

“Holder Indemnified Parties” has the meaning set forth in Section 2.4(a).

(m)       

“Indemnified Party” has the meaning set forth in Section 2.4(c).

(n)       

“Losses” has the meaning set forth in Section 2.4(a).

(o)       

“Person” means any person, individual, corporation, limited liability company, partnership, trust or other nongovernmental entity or any governmental agency, court, authority or other body (whether foreign, federal, state, local or otherwise).

(p)       

“Prospectus” means the prospectus or prospectuses (whether preliminary or final) included in any Registration Statement and relating to Registrable Shares, as amended or supplemented and including all material incorporated by reference in such prospectus or prospectuses.

(q)       

“register,” “registered” and “registration” refer to a registration effected by filing with the SEC a registration statement in compliance with the Securities Act, and the declaration or ordering by the SEC of the effectiveness of such registration statement.

(r)       

“Registrable Shares” means (i) the Initial Shares, and (ii) any Additional Shares; provided, however, that Initial Shares or Additional Shares shall cease to be treated as Registrable Shares on the earliest to occur of (A) the date such securities have been disposed of pursuant to an effective registration statement, (B) the date on which such securities are sold pursuant to Rule 144, and (C) the date on which the Holder thereof is able to dispose of its Registrable Shares in compliance with Rule 144 (or any successor rule).

(s)       

“Registration Expenses” means any and all expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation: (i) all SEC and other registration and filing fees, (ii) all fees and expenses associated with filings to be made with, or the listing of any Registrable Shares on, any securities exchange or over-the-counter trading market on which the Registrable Shares are to be listed or quoted, (iii) all fees and expenses with respect to filings required to be made with an exchange or any securities industry self-regulatory body, (iv) all fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel for the Company in connection therewith), (v) all transfer agent’s and registrar’s fees, (vi) all fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company, (vii) securities acts liability insurance, if the Company so desires, (viii) all internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (ix) the expense of any annual audit, and (x) the fees and expenses of any Person, including special experts, retained by the Company. For the avoidance of doubt, “Registration Expenses” shall not include underwriting discounts or commissions attributable to the sale of the Registrable Shares or (except as otherwise set forth in this Agreement) any legal fees and expenses of counsel to the Holders.

(t)       

“Registration Statement” means any registration statement of the Company under the Securities Act which covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the Prospectus, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all documents incorporated by reference in such Registration Statement.

(u)       

“Rule 144” means Rule 144 under the Securities Act.

(v)       

“SEC” means the U.S. Securities and Exchange Commission.

(w)       

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

(x)       

“Shelf Effectiveness Deadline” has the meaning set forth in Section 2.1(b).

(y)       

“Shelf Registration” has the meaning set forth in Section 2.1(a).

(z)       

“Shelf Registration Statement” has the meaning set forth in Section 2.1(a).

(aa)     

“Subsequent Shelf Effectiveness Deadline” has the meaning set forth in Section 2.1(b).

(bb)     

“Subsequent Shelf Registration Statement” has the meaning set forth in Section 2.1(b).

(cc)     

“Suspension Event” has the meaning set forth in Section 2.2(b).

(dd)     

“Suspension Notice” has the meaning set forth in Section 2.2(c).

(ee)     

“Termination Date” has the meaning set forth in Section 2.1(b).

(ff)     

"Trading Day” means a day on which the Common Stock is traded on a Trading Market or, if the Common Stock is not traded on a Trading Market, then on the principal securities exchange or securities market on which the Common Stock is then traded.

(gg)     

“Trading Market” means any market or exchange of The Nasdaq Stock Market LLC, or any other market or exchange on which the Registrable Shares are listed for trading.

Article II
Registration Rights

2.1       

Shelf Registration.

(a)       

Filing. Within 45 calendar days following the Effective Date, the Company shall file with the SEC a Registration Statement on Form S-3 (unless the Company is ineligible to register for resale the Registrable Shares on Form S-3, in which case such registration shall be on another appropriate form) or the then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Registration Statement”) pursuant to which all of the applicable Registrable Shares shall be included (on the initial filing or by supplement or amendment thereto) to enable the public resale of such Registrable Shares on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Registration”). If permitted under the Securities Act, such Shelf Registration Statement shall be an “automatic shelf registration statement” as defined in Rule 405 under the Securities Act.

(b)       

Effectiveness. The Company shall use its reasonable best efforts to (i) cause any Shelf Registration Statement filed pursuant to Section 2.1(a) to be declared effective by the SEC as soon as reasonably practicable, and in any event within five Trading Days after the date the Company receives written notification from the SEC that the applicable Shelf Registration will not be reviewed or will not be subject to further review (the “Shelf Effectiveness Deadline”) and (ii) maintain the effectiveness of such Shelf Registration Statement, including by filing any necessary post-effective amendments and Prospectus supplements and by filing one or more replacement or renewal Shelf Registration Statements (each, a “Subsequent Shelf Registration Statement”) upon the expiration of such Shelf Registration Statement, as required by Rule 415 under the Securities Act, continuously until the earliest to occur of (1) the 12-month anniversary of the Effective Date, (2) a Change of Control, and (3) such time as there are no Registrable Shares remaining (the “Termination Date”). If a Subsequent Shelf Registration Statement is filed, the Company shall use its reasonable best efforts to (i) cause such Subsequent Shelf Registration Statement to be declared effective by the

SEC as soon as reasonably practicable after such filing (the “Subsequent Shelf Effectiveness Deadline”), and (ii) keep such Subsequent Shelf Registration Statement (or another Subsequent Shelf Registration Statement) continuously effective until the Termination Date. Any Subsequent Shelf Registration Statement shall be a Shelf Registration Statement.

2.2       

Provisions Relating to Registration.

(a)       

If and whenever the Company is required to effect the registration of any Registrable Shares pursuant to this Agreement, the Company shall use its reasonable best efforts to effect and facilitate the registration of such Registrable Shares as promptly as is practicable and, pursuant thereto, the Company shall as expeditiously as possible and as applicable:

(i)       

prepare and file with the SEC a Registration Statement with respect to such Registrable Shares, make all required filings required in connection therewith and (if the Registration Statement is not automatically effective upon filing) use its reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable;

(ii)       

furnish to each Holder participating in the registration, without charge, such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits thereto and all documents incorporated by reference therein) and such other documents as such Holder may reasonably request, including in order to facilitate the disposition of the Registrable Shares owned by such Holder;

(iii)       

notwithstanding any other provisions of this Agreement to the contrary, cause (A) any Registration Statement (as of the effective date of the Registration Statement), any amendment thereof (as of the effective date thereof) or supplement thereto (as of its date), (1) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the SEC and (2) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (B) any related Prospectus, preliminary Prospectus and any amendment thereof or supplement thereto (as of its date), (1) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the SEC, and (2) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, the Company shall have no such obligations or liabilities with respect to any written information pertaining to a Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; provided further, that each Holder of Registrable Shares, upon receipt of any notice from the Company of any event of the kind described in this Section 2.2(a)(iii), shall immediately discontinue disposition of Registrable Shares pursuant to the Registration Statement covering such Registrable Shares until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by this Section 2.2(a)(iii);

(iv)       

as promptly as practicable, notify the Holders: (A) when the Registration Statement, any pre-effective amendment thereto, the Prospectus or any Prospectus supplement or any post-effective amendment thereto has been filed with the SEC and when the Registration Statement or any post-effective amendment thereto has become effective, and (B) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceedings for that purpose and of any other action, event or failure to act that would cause the Registration Statement not to remain effective;

(v)       

in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, any order suspending or preventing the use of any related Prospectus or any suspension of the qualification or exemption from qualification of any Registrable Shares for sale in any jurisdiction, use its reasonable best efforts to promptly obtain the withdrawal or lifting of any such order or suspension, and each Holder of Registrable Shares, upon receipt of any notice from the Company of any event of the kind described in this Section 2.2(a)(v), shall immediately discontinue disposition of Registrable Shares pursuant to the Registration Statement covering such Registrable Shares until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus, if applicable;

(vi)       

not file or make any amendment to any Registration Statement with respect to any Registrable Shares, or any amendment of or supplement to the Prospectus used in connection therewith, that refers to any Holder covered thereby by name or otherwise identifies such Holder as the holder of any securities of the Company without the consent of such Holder (which consent shall not be unreasonably withheld, conditioned or delayed), unless and to the extent such disclosure is required by law; provided, that (A) each Holder shall furnish to the Company in writing such information regarding itself and the distribution proposed by it as the Company may reasonably request for use in connection with a Registration Statement or Prospectus and (B) each Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished to the Company by such Holder or of the occurrence of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact regarding such Holder or the distribution of such Registrable Shares or to omit to state any material fact regarding such Holder or the distribution of such Registrable Shares required to be stated therein or necessary to make the statements made therein not misleading in light of the circumstances under which they were made and to furnish to the Company, as promptly as practicable, any additional information required to correct and update the information previously furnished by such Holder such that such Prospectus shall not contain any untrue statement of a material fact regarding such Holder or the distribution of such Registrable Shares or omit to state a material fact regarding such Holder or the distribution of such Registrable Shares necessary to make the statements therein not misleading in light of the circumstances under which they were made;

(vii)       

cause such Registrable Shares to be listed on each securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on any

securities exchange, use its reasonable best efforts to cause such Registrable Shares to be listed on a national securities exchange selected by the Company after consultation with the Holders participating in such registration;

(viii)       

provide a transfer agent and registrar (which may be the same Person) for all such Registrable Shares not later than the effective date of such Registration Statement and, within a reasonable time prior to any proposed sale of Registrable Shares pursuant to a Registration Statement, provide the transfer agent if reasonably required by the transfer agent, an opinion of counsel as to the effectiveness of the Registration Statement, together with any other authorizations, certificates and directions required by the transfer agent which authorize and direct the transfer agent to issue such Registrable Shares without legend upon sale by the Holder of such Registrable Shares under the Registration Statement, subject to the provisions of Section 3.1;

(ix)       

otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its shareholders, as soon as reasonably practicable, if required, an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) covering the period of at least 12 months beginning with the first day of the Company’s first full fiscal quarter after the effective date of the applicable Registration Statement, which requirement shall be deemed satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto;

(x)       

(A) furnish to each Holder all legal opinions of outside counsel to the Company required to be included in the Registration Statement, which provision shall be satisfied by filing with the SEC any such opinion as an exhibit to the Registration Statement, and (B) obtain all consents of independent public accountants required to be included in the Registration Statement;

(xi)       

cooperate with the Holders of the Registrable Shares to facilitate the timely preparation and delivery of certificates representing the Registrable Shares to be sold pursuant to such Registration Statement free of any restrictive legends and representing such number of shares of Common Stock and registered in such names as the Holders of the Registrable Shares may reasonably request a reasonable period of time prior to sales of Registrable Shares pursuant to such Registration Statement; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System; and

(xii)       

otherwise use its reasonable best efforts to take or cause to be taken all other actions necessary or reasonably advisable to effect the registration of such Registrable Shares contemplated by this Agreement.

(b)       

As promptly as practicable after becoming aware of such event, the Company shall notify the Holders of the happening of any event (a “Suspension Event”), of

which the Company has knowledge, as a result of which the Prospectus included in a Registration Statement as then in effect includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and as promptly as practicable, the Company shall prepare and file with the SEC a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to the Holders as the Holders may reasonably request so that, as thereafter delivered to the purchasers of such Registrable Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; provided, however, that, for not more than 60 consecutive days (or a total of not more than 120 Trading Days in any 12-month period), the Company may delay or suspend the filing, effectiveness or use of a Registration Statement or Prospectus, to the extent permitted by and in a manner not in violation of applicable securities laws, if the board of directors of the Company determines in good faith, based on the advice of counsel, that (i) proceeding with the filing, effectiveness or use of such Registration Statement or Prospectus would reasonably be expected to require the Company to disclose any information the disclosure of which would have a material adverse effect on the Company and that the Company would not otherwise be required to disclose at such time or (ii) the registration or offering proposed to be delayed or suspended would reasonably be expected to, if not delayed or suspended, have a material adverse effect on any pending negotiation or plan of the Company to effect a merger, acquisition, disposition, financing, reorganization, recapitalization or similar transaction, in each case that, if consummated, would be material to the Company.

(c)       

Upon a Suspension Event, the Company shall promptly give written notice (a “Suspension Notice”) to the Holders to suspend sales of the affected Registrable Shares, and such notice shall state that such suspension shall continue only for so long as the Suspension Event or its effect is continuing and the Company is pursuing with reasonable diligence the completion of the matter giving rise to the Suspension Event or otherwise taking all reasonable steps to terminate suspension of the effectiveness or use of the Registration Statement. In no event shall the Company, without the prior written consent of the Holders, disclose to the Holders any of the facts or circumstances giving rise to the Suspension Event. The Holders may resume effecting sales of the Registrable Shares under the Registration Statement (or such filings), following further notice to such effect (an “End of Suspension Notice”) from the Company. The Holders shall not effect any sales of the Registrable Shares pursuant to the Registration Statement (or such filings), at any time after they have received a Suspension Notice and prior to receipt of an End of Suspension Notice. This End of Suspension Notice shall be given by the Company to the Holders in the manner described above promptly following the conclusion of any Suspension Event and its effect. For the avoidance of doubt, a Suspension Notice shall not affect or otherwise limit sales of affected Registrable Shares under Rule 144 or otherwise outside of the Registration Statement.

(d)       

Notwithstanding any provision herein to the contrary, if the Company gives a Suspension Notice pursuant to Section 2.2(c) with respect to any Registration Statement, the Company shall extend the period during which the Registration Statement shall be maintained effective under this Agreement by the number of days during the period from the date of the giving of the Suspension Notice to and including the date when the Holders shall

have received the End of Suspension Notice and copies of the supplemented or amended Prospectus necessary to resume sales.

(e)       

Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be required to include Registrable Shares in any Registration Statement unless the Holder owning the Registrable Shares to be registered on the Registration Statement, following reasonable advance written request by the Company, furnishes to the Company, at least ten Business Days prior to the scheduled filing date of the Registration Statement, an executed shareholder questionnaire in the form attached hereto as Exhibit A (the “Selling Shareholder Questionnaire”).

2.3       

Registration Expenses.

(a)       

The Company shall bear all Registration Expenses.

(b)       

The obligation of the Company to bear and pay the Registration Expenses shall apply irrespective of whether a registration becomes effective or is withdrawn or suspended; provided, that the Registration Expenses for any Registration Statement withdrawn solely at the request of one or more Holder(s) (unless withdrawn following commencement of a Suspension Event) shall be borne by such Holder(s).

2.4       

Indemnification.

(a)       

The Company shall, to the fullest extent permitted by law, indemnify and hold harmless each Holder (collectively, the “Holder Indemnified Parties”) from and against any losses, claims, damages, liabilities or expenses, joint or several, or any actions in respect thereof (collectively, “Losses”) to which each Holder Indemnified Party may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws, insofar as such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in or incorporated by reference in any Registration Statement or in any amendment thereof, in each case at the time such became effective under the Securities Act, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to any action or inaction required of the Company in connection with any registration of securities; provided, however, that the Company shall not be liable in any such case to the extent that such Losses arise out of or is based upon (A) any untrue statement or omission made or incorporated by reference in any such Registration Statement, any Prospectus or in any amendment thereof or supplement thereto in reliance upon and in conformity with written information pertaining to a Holder and furnished to the Company by or on behalf of such Holder or such Holder Indemnified Party specifically for inclusion therein or (B) the failure of such Holder to comply with the covenants and agreements contained in this Agreement respecting sales of Registrable Shares; provided further that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus that is corrected or remedied in all respects in the amended prospectus on file with the SEC at the time any Registration Statement becomes

effective or in an amended prospectus filed with the SEC pursuant to Rule 424(b) which meets the requirements of Section 10(a) of the Securities Act (each, a “Final Prospectus”), such indemnity shall not inure to the benefit of any such Holder if a copy of a Final Prospectus furnished by the Company to the Holder for delivery was not furnished to the Person asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act and a Final Prospectus would have cured the defect giving rise to such Losses.

(b)       

In connection with any registration in which a Holder of Registrable Shares is participating, each such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus, including the information requested in the Selling Shareholder Questionnaire, and shall, severally and not jointly, to the fullest extent permitted by law, indemnify and hold harmless the Company, its directors and officers, employees and agents (a “Company Indemnified Party”) from and against any Losses to which a Company Indemnified Party may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws, any equivalent non-U.S. securities laws or otherwise, insofar as such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or in any amendment thereof, in each case at the time such became effective under the Securities Act, or in any Prospectus or in any amendment thereof or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading, but in each of clauses (i) and (ii), only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information in the Selling Shareholder Questionnaire pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein.

(c)       

Promptly after receipt by a Holder Indemnified Party or a Company Indemnified Party (each, an “Indemnified Party”) of notice of the commencement of any action or proceeding (including a governmental investigation), such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 2.4, notify the indemnifying party of the commencement thereof; provided, that the omission to so notify the indemnifying party will not relieve the indemnifying party from liability under Sections 2.4(a) or 2.4(b) unless and to the extent it did not otherwise learn of such action and the indemnifying party has been materially prejudiced by such failure. In case any such action is brought against any Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof at the indemnifying party’s expense, with counsel reasonably satisfactory to such Indemnified Party (who shall not, except with the consent of the Indemnified Party, be counsel to the indemnifying party); provided, that any Indemnified Party shall continue to be entitled to participate in the defense of such claim or action, with counsel of its own choice, but the indemnifying party shall not be obligated to reimburse such Indemnified Party for any fees, costs and expenses subsequently incurred by the Indemnified Party in connection with such defense unless (i) the indemnifying party has agreed in writing to pay such fees, costs and expenses, (ii) the indemnifying party has failed to assume the defense of such claim or action within a reasonable time after receipt of notice of such claim or action, (iii) having assumed the defense of such

claim or action, the indemnifying party fails to employ counsel reasonably acceptable to the Indemnified Party or to pursue the defense of such claim or action in a reasonably vigorous manner, (iv) the use of counsel chosen by the indemnifying party to represent the Indemnified Party would present such counsel with a conflict of interest or (v) the Indemnified Party has reasonably concluded that there may be one or more legal or equitable defenses available to it and/or any other Indemnified Party which are different from or additional to those available to the indemnifying party. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (together with appropriate local counsel) at any time for any Indemnified Party in connection with any one action or separate but substantially similar or related actions arising in the same jurisdiction out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened action in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party unless such settlement (i) includes an unconditional release of such Indemnified Party from all liability on any claims that are the subject matter of such action, in form and substance reasonably satisfactory to such Indemnified Party, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

(d)       

If the indemnification provided for in this Section 2.4 is unavailable or insufficient to hold harmless an Indemnified Party under Sections 2.4(a) or 2.4(b), then each indemnifying party shall contribute to the amount paid or payable by such Indemnified Party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in Sections 2.4(a) or 2.4(b) in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the Indemnified Party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or a Holder or Holder Indemnified Party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contributions were determined by pro rata allocation (even if a Holder was treated as one Person for such purpose) or any other method of allocation that does not take account of the equitable considerations referred to above. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e)       

The agreements contained in this Section 2.4 shall survive the sale of the Registrable Shares pursuant to the Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any Indemnified Party.

Article III
Transfer Restrictions

3.1       

Transfer Restrictions. Each Holder acknowledges and agrees that the following legend shall be imprinted on any certificate or book-entry security entitlement evidencing any of the Registrable Shares to the extent that at the time of issuance such Registrable Shares are not covered by an effective Registration Statement:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. ANY ATTEMPT TO TRANSFER, SELL, OFFER TO SELL, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS INSTRUMENT IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.

This legend shall be removed by the Company from any certificate or book-entry security entitlement evidencing the Registrable Shares upon delivery by the holder thereof to the Company of a written request to that effect if at the time of such written request (a) a registration statement under the Securities Act is at that time in effect with respect to the legended security, or (b) the legended security can be transferred in a transaction in compliance with Rule 144, and, in the case of (b), upon the request and in the reasonable discretion of the Company’s transfer agent, the Holder of such Registrable Shares executes and delivers a representation letter that includes customary representations regarding the holding requirements and whether such Holder is an “affiliate” for purposes of Rule 144. The Company represents and warrants to the Holders that the Company is not currently a shell company (as defined in Rule 405 promulgated under the Securities Act).

3.2       

Rule 144 Compliance. With a view to making available to the Holders of Registrable Shares the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration until such date on which the Holders no longer hold any Registrable Shares, the Company shall:

(a)       

make and keep public information available, as those terms are understood and defined in Rule 144;

(b)       

use reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)       

furnish to any Holder of Registrable Shares, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act.

Article IV
Miscellaneous.

4.1       

Remedies; Specific Performance. In the event of a breach or a threatened breach by any party to this Agreement of its obligations under this Agreement, any party injured or to be injured by such breach shall be entitled to specific performance of its rights under this Agreement or to injunctive relief, in addition to being entitled to exercise all rights provided in this Agreement and granted by law, it being agreed by the parties that the remedy at law, including monetary damages, for breach of any such provision will be inadequate compensation for any loss and that any defense or objection in any action for specific performance or injunctive relief for which a remedy at law would be adequate is hereby waived.

4.2       

No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

4.3       

Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

4.4       

Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or e-mail as follows:

If to the Company:

Transcat, Inc.

35 Vantage Point Drive

Rochester, New York 14624

Attn: Thomas Barbato, Chief Financial Officer

Email: ####

With a copy (which shall not constitute notice) to:

Harter Secrest & Emery LLP
50 Fountain Plaza, Suite 1000
Buffalo, New York 14202
Attention: Phillip A. Delmont
Email: ####

If to a Holder:

Richard L. Brion

####

Email: ####

With a copy (which shall not constitute notice) to:

Koley Jessen P.C., L.L.O.

1125 S. 103rd St., Suite 800
Omaha, NE 68124
Attention: David Winkler

Email: ####

Notices or communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received, notices or communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient) and notices or communications sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement) (except that, if not given during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient).

4.5       Headings. Section headings herein are included for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

4.6       Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

4.7       Governing Law; Disputes.

(a)       Governing Law. This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of New York.

(b)       Jurisdiction. Each party hereto hereby irremovably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, against such other party in any way relating to this Agreement or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in Monroe County, and of the United States

District Court of the Western District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(c)       Waiver of Venue. Each party hereto irrevocably waives to the fullest extent permitted by law any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement and hereby further irrevocably waives to the fullest extent permitted by law any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment (in respect of which time for all appeals has elapsed) in any such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which such party is or may be subject, by suit upon judgment.

(d)       Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.7.

(e)       Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 4.4.

4.8       Successors and Assigns. This Agreement and the rights and obligations evidenced hereby shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Holder may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.

4.9       Amendments. No provision of this Agreement may be amended, waived or modified other than by an instrument in writing signed by the Company and the Holders.

4.10       Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

4.11       Termination. This Agreement shall terminate with respect to any Holder upon such time as such Holder ceases to hold or beneficially own any remaining Registrable Shares or upon the dissolution, liquidation or winding up of the Company or a Change of Control; provided that Section 2.3, Section 2.4 of this Agreement and this Article IV shall survive such termination.

4.12       Third Party Beneficiaries. This Agreement is intended for the sole benefit of the parties hereto and their respective permitted successors and assigns and transferees, and is not for the benefit of, nor may any provision hereof be enforced by, any other person; provided, however, that the parties hereto hereby acknowledge that the Persons set forth in Section 2.4 shall be express third-party beneficiaries of the obligations of the parties hereto set forth in Section 2.4.

[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have duly executed this Registration Rights Agreement as of the date first written above.

	COMPANY:
	Transcat, Inc.
	By:	/s/ Thomas Barbato
		Name: Thomas Barbato
		Title: Chief Financial Officer

IN WITNESS WHEREOF, the parties hereto have duly executed this Registration Rights Agreement as of the date first written above.

	HOLDERS:
	martin holding inc.
	/s/ Richard L. Brion
	Name:	Richard L. Brion
	Title:	Chief Executive Officer
	/s/ Richard L. Brion
	Richard L. Brion

Schedule A

Holder	Initial Shares
Martin Holding Inc.	0
Richard L. Brion	96,006
TOTAL	96,006

Pursuant to the Purchase Agreement, Martin Holding Inc. directed that all of the Initial Shares that were to be issued to it under the Purchase Agreement be issued in the name of Richard L. Brion.

Exhibit A
Form of Selling Shareholder Questionnaire

 

Exhibit 23.1 

 

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in this Registration Statement on Form S-3 and related prospectus of Transcat, Inc. (“the Company”) of our report dated May 28, 2024 relating to the consolidated financial statements and the effectiveness of internal controls over financial reporting of Transcat, Inc. appearing in the Annual Report on Form 10-K of Transcat, Inc. for the year ended March 30, 2024.

 

We also consent to the reference to our firm under the caption “Experts”.

 

/s/ Freed Maxick P.C. (f/k/a Freed Maxick CPAs, P.C.)

Rochester, New York

January 22, 2025

 

 

Exhibit 107

Calculation of Filing Fee Tables

 

Form S-3

(Form Type)

 

Transcat, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered Securities

 

Security Type	Security Class Title	Fee Calculation or Carry Forward  Rule	Amount Registered (1)	Proposed Maximum Offering Price Per Unit (2)	Maximum Aggregate Offering Price	Fee Rate	Amount of Registration Fee
Equity	Common Stock, $0.50 par value per share	Other	96,006	$102.69	$9,858,856	$0.0001531	$1,509
Total Offering Amounts					$9,858,856		$1,509
Total Fees Previously Paid							--
Total Fee Offsets							--
Net Fee Due							$1,509

 

(1)	Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
(2)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low prices for a share of the Registrant’s common stock as reported on the Nasdaq Global Market on January 16, 2025, which date is a date within five business days of the filing of this registration statement.

 

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