CRAWA Crawford United Corporation (PK)

 

Effective May 1, 2022, Knitting Machinery Company of America LLC, a Delaware limited liability company (“Knitting Machinery”) and indirect wholly-owned subsidiary of Crawford United Corporation (the “Company”), completed the acquisition (the “Transaction”) of substantially all the assets of KMC Corp. dba Knitting Machinery Corp. (KMC Corp.), a Delaware corporation and specialist in the manufacture of hose reinforcement machinery for the plastic, rubber and silicone industries (“KMC”), pursuant to an Asset Purchase Agreement (the “Asset Purchase Agreement”) entered into as of May 1, 2022 by and among Knitting Machinery, KMC, and Edward F. Crawford, Trustee of the Edward F. Crawford Second Restatement of Trust Dated March 2, 2001 (the “Equityholder,” and with KMC, each, a “Seller Party” and together, the “Seller Parties”).

 

Knitting Machinery acquired the assets of KMC on a debt-free basis in exchange for $250,000 in cash (the “Cash Payment”) and the issuance by the Company on behalf of Knitting Machinery of a total of 38,462 of its Class A Common Shares (the “Shares”) at an implied price of $26.00 per share to the Equityholder. The Cash Payment is subject to a total or partial refund to the extent KMC’s earnings before interest, tax, depreciation and amortization (EBITDA) is not equal to or greater than the amount of the Cash Payment for the twelve-month period following the closing date of the Transaction.

 

Edward F. Crawford is the trustee of the Equityholder and serves on the Boards of Directors of KMC and of the Company. Matthew V. Crawford serves on the Boards of Directors of KMC and of the Company. Each of Edward F. Crawford and Matthew V. Crawford is a beneficial owner of more than 5% of the Company’s outstanding common shares.

 

The Asset Purchase Agreement contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties and covenants, and certain other specified matters, which are subject to certain exceptions, terms and limitations described further in the Asset Purchase Agreement. The Asset Purchase Agreement contains certain customary post-closing covenants of the parties.

 

The parties to the Transaction have made customary representations, warranties and covenants in the Asset Purchase Agreement. The representations, warranties and covenants set forth in the Asset Purchase Agreement have been made only for the purposes of such agreement and were solely for the benefit of the parties to the Asset Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures, may have been made for the purposes of allocating contractual risk between the parties to the Asset Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the Asset Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Transaction, and not to provide investors with any other factual information regarding the parties or their respective businesses and should be read in conjunction with the disclosures in the Company's periodic reports and other filings with the Securities and Exchange Commission.

 

A copy of the Asset Purchase Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated in this Item 1.01 by reference. The foregoing description of the Asset Purchase Agreement is a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement.