10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38894

Mayville Engineering Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

Wisconsin	39-0944729
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
715 South Street Mayville, Wisconsin	53050
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (920) 387-4500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	MEC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 30, 2020, the registrant had 20,059,390 shares of common stock, no par value per share, outstanding.

Table of Contents

		Page
PART  I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Cash Flows	7
	Condensed Consolidated Statements of Shareholders Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Items 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	35
Signatures		36

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements related to future events, business strategy, future performance, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions or their negative. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. Mayville Engineering Company, Inc. (MEC, the Company, we, our, us or similar terms) believes the expectations reflected in the forward-looking statements contained in this Quarterly Report on Form 10-Q are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking statements should not be unduly relied upon.

Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the SEC) on March 2, 2020, as such were previously supplemented and amended in Part II, Item 1A of our Quarterly Report on Form 10-Q filed with the SEC on May 6, 2020 and which may be further amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this report), and the following:

• the negative impacts the coronavirus (COVID-19) has had and will continue to have on our business, financial condition, cash flows and results of operations (including future uncertain impacts);

• failure to compete successfully in our markets;

• risks relating to developments in the industries in which our customers operate;

• our ability to maintain our manufacturing, engineering and technological expertise;

• the loss of any of our large customers or the loss of their respective market shares;

• risks related to scheduling production accurately and maximizing efficiency;

• our ability to realize net sales represented by our awarded business;

• our ability to successfully identify or integrate acquisitions;

• risks related to entering new markets;

• our ability to develop new and innovative processes and gain customer acceptance of such processes;

• our ability to recruit and retain our key executive officers, managers and trade-skilled personnel;

• risks related to our information technology systems and infrastructure;

• manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements;

• political and economic developments, including foreign trade relations and associated tariffs;

• volatility in the prices or availability of raw materials critical to our business;

• results of legal disputes, including product liability, intellectual property infringement and other claims;

• risks associated with our capital-intensive industry;

• risks related to our treatment as an S Corporation prior to the consummation of our initial public offering of common stock (IPO);

• risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and

• our ability to remediate the material weakness in internal control over financial reporting identified in preparing our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, and to subsequently maintain effective internal control over financial reporting.

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no

3

obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

	September 30, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	110		$	1
Receivables, net of allowances for doubtful accounts of $1,293 at September 30, 2020    and $526 at December 31, 2019		48,654			40,188
Inventories, net		37,964			45,692
Tooling in progress		3,642			1,589
Prepaid expenses and other current assets		2,717			3,007
Total current assets		93,087			90,477
Property, plant and equipment, net		107,887			125,063
Assets held for sale		3,552			—
Goodwill		71,535			71,535
Intangible assets-net		64,143			72,173
Capital lease, net		2,742			3,227
Other long-term assets		1,003			1,107
Total	$	343,949		$	363,582
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	27,606		$	32,173
Current portion of capital lease obligation		619			598
Accrued liabilities:
Salaries, wages, and payroll taxes		10,529			5,752
Profit sharing and bonus		1,310			6,229
Other current liabilities		4,526			3,439
Total current liabilities		44,590			48,191
Bank revolving credit notes		59,986			72,572
Capital lease obligation, less current maturities		2,220			2,687
Deferred compensation and long-term incentive, less current portion		25,183			24,949
Deferred income tax liability		12,998			14,188
Other long-term liabilities		100			100
Total liabilities		145,077			162,687
Common shares, no par value, 75,000,000 authorized, 21,093,035 shares issued at    September 30, 2020 and 20,845,693 at December 31, 2019		—			—
Additional paid-in-capital		189,780			183,687
Retained earnings		14,026			22,090
Treasury shares at cost, 1,033,645 shares at September 30, 2020 and 1,213,482 at    December 31, 2019		(4,934	)		(4,882	)
Total shareholders’ equity		198,872			200,895
Total	$	343,949		$	363,582

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except share amounts and per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net sales	$	91,075		$	128,511		$	262,262		$	417,373
Cost of sales		81,340			113,941			241,838			362,689
Amortization of intangibles		2,677			2,677			8,030			8,030
Profit sharing, bonuses, and deferred compensation		2,288			678			4,807			25,258
Employee stock ownership plan expense		—			1,500			—			4,500
Other selling, general and administrative expenses		4,490			6,068			14,642			20,296
Contingent consideration revaluation		—			(9,598	)		—			(6,054	)
Income (loss) from operations		280			13,245			(7,055	)		2,655
Interest expense		(647	)		(987	)		(2,110	)		(5,811	)
Loss on extinguishment of debt		—			—			—			(154	)
Income (loss) before taxes		(367	)		12,258			(9,165	)		(3,310	)
Income tax expense (benefit)		733			2,512			(1,101	)		(231	)
Net income (loss) and comprehensive income (loss)	$	(1,100	)	$	9,746		$	(8,064	)	$	(3,079	)
Earnings (loss) per share
Net income (loss) available to shareholders	$	(1,100	)	$	9,746		$	(8,064	)	$	(3,079	)
Basic and diluted earnings (loss) per share	$	(0.05	)	$	0.49		$	(0.41	)	$	(0.18	)
Basic and diluted weighted average shares outstanding		20,077,039			19,740,296			19,838,701			16,684,337
Tax-adjusted pro forma information
Net income (loss) available to shareholders	$	(1,100	)	$	9,746		$	(8,064	)	$	(3,079	)
Pro forma provision for income taxes		—			—			—			173
Pro forma net income (loss)	$	(1,100	)	$	9,746		$	(8,064	)	$	(3,252	)
Pro forma basic and diluted earnings (loss) per share	$	(0.05	)	$	0.49		$	(0.41	)	$	(0.19	)
Basic and diluted weighted average shares outstanding		20,077,039			19,740,296			19,838,701			16,684,337

Weighted average shares in 2019 give effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the IPO, as if the IPO occurred at the beginning of 2019.

Tax adjusted pro forma amounts reflect income tax adjustments as if the Company was a taxable entity as of the beginning of 2019 using a 26% effective tax rate.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,064	)	$	(3,079	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		16,304			16,622
Amortization		8,030			8,030
Stock-based compensation expense		3,719			2,135
Allowance for doubtful accounts		767			(271	)
Inventory excess and obsolescence reserve		279			165
Costs recognized on step-up of acquired inventory		—			395
Contingent consideration revaluation		—			(6,054	)
Loss (gain) on disposal of property, plant and equipment		688			(74	)
Deferred compensation and long-term incentive		234			11,392
Gain on extinguishment or forgiveness of debt		—			(367	)
Other non-cash adjustments		262			1,892
Changes in operating assets and liabilities – net of effects of acquisition:
Accounts receivable		(9,233	)		(9,524	)
Inventories		7,449			3,700
Tooling in progress		(2,053	)		826
Prepaids and other current assets		338			(1,633	)
Accounts payable		(4,016	)		(1,175	)
Deferred income taxes		(1,189	)		(4,266	)
Accrued liabilities, excluding long-term incentive		5,776			(2,290	)
Net cash provided by operating activities		19,291			16,424
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(5,354	)		(22,820	)
Proceeds from sale of property, plant and equipment		1,920			76
Non-cash adjustments		—			(1,656	)
Acquisitions, net of cash acquired		—			(2,368	)
Net cash used in investing activities		(3,434	)		(26,768	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes		209,857			367,364
Payments on bank revolving credit notes		(222,443	)		(339,993	)
Repayments of other long-term debt		—			(119,963	)
Deferred financing costs		(206	)		—
Proceeds from IPO, net		—			101,763
Purchase of treasury stock		(2,510	)		(1,592	)
Payments on capital leases		(446	)		(323	)
Net cash provided (used in) by financing activities		(15,748	)		7,256
Net increase (decrease) in cash and cash equivalents		109			(3,088	)
Cash and cash equivalents at beginning of period		1			3,089
Cash and cash equivalents at end of period	$	110		$	1
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,366		$	6,288
Cash paid for taxes	$	351		$	538
Non-cash construction in progress in accounts payable	$	201		$	1,238

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands)

(unaudited)  

	Shareholder’s Equity
	Additional Paid-in-Capital			Treasury Shares			Retained Earnings			Total
Balance as of December 31, 2019	$	183,687		$	(4,882	)	$	22,090		$	200,895
Net income		—			—			50			50
Purchase of treasury stock		—			(2,435	)		—			(2,435	)
ESOP contribution		2,374			2,457			—			4,831
Stock-based compensation		1,582			—			—			1,582
Balance as of March 31, 2020		187,643			(4,860	)		22,140			204,923
Net loss		—			—			(7,014	)		(7,014	)
Purchase of treasury stock		—			(74	)		—			(74	)
Stock-based compensation		1,159			—			—			1,159
Balance as of June 30, 2020		188,802			(4,934	)		15,126			198,994
Net loss		—			—			(1,100	)		(1,100	)
Stock-based compensation		978			—			—			978
Balance as of September 30, 2020	$	189,780		$	(4,934	)	$	14,026		$	198,872
	Shareholder’s Equity
	Additional Paid-in-Capital			Treasury Shares			Retained Earnings			Total
Balance as of December 31, 2018	$	—		$	—		$	—		$	—
Balance as of March 31, 2019		—			—			—			—
Transfer from temporary equity (see Note 17)		133,806			(57,659	)		29,698			105,845
Net loss post IPO		—			—			(15,681	)		(15,681	)
Share issuance - IPO		101,763			—			—			101,763
Stock-based compensation		797			—			—			797
Share repurchases		—			(1,592	)		—			(1,592	)
Cancellation of treasury stock		(55,369	)		55,369			—			—
Balance as of June 30, 2019		180,997			(3,882	)		14,017			191,132
Net income		—			—			9,746			9,746
Stock-based compensation		1,338			—			—			1,338
Balance as of September 30, 2019	$	182,335		$	(3,882	)	$	23,763		$	202,216

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

8

Mayville Engineering Company, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands except share amounts, per share data, years and ratios)

(unaudited)

Note 1. Basis of presentation

The interim unaudited consolidated financial statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2019 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements.

Nature of Operations

MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 19 facilities across seven states. These facilities make it possible to offer conventional and computer numerical control (CNC) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.

In May 2019, we completed our initial public offering (IPO). In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

COVID-19 has had and will continue to have a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts).

9

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, creating Topic 842, which requires lessees to record the assets and liabilities arising from all leases in the statement of financial position. Under ASU 2016-02, lessees will recognize a liability for lease payments and a right-of-use asset. When measuring assets and liabilities, a lessee should include amounts related to option terms, such as the option of extending or terminating the lease or purchasing the underlying asset, that are reasonably certain to be exercised. For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election to not recognize lease assets and liabilities. This guidance retains the distinction between finance leases and operating leases and the classification criteria remains similar to existing guidance. For financing leases, a lessee will recognize the interest on a lease liability separate from amortization of the right-of-use asset. In addition, repayments of principal will be presented within financing activities, and interest payments will be presented within operating activities in the statement of cash flows. For operating leases, a lessee will recognize a single lease cost on a straight-line basis and classify all cash payments within operating activities in the statement of cash flows. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For as long as the Company remains an “emerging growth company” (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, this guidance is effective for annual or any interim goodwill impairment test in annual reporting periods beginning after December 15, 2018. For as long as the Company remains an EGC, the new guidance is effective for any annual or interim goodwill impairment test in annual reporting periods beginning after December 15, 2021. During the period ended March 31, 2020, the Company elected to early adopt this guidance. This adoption had no impact on the financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes, creating Topic 740, which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2020. For as long as the Company remains an EGC, the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

A summary of the Company’s evaluation of other recent accounting pronouncements is included in the Company’s 2019 financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019.

Note 2. IPO

The IPO of shares of the Company’s common stock was completed in May 2019. In connection with the offering, the Company initially sold 6,250,000 shares of common stock at $17 per share generating proceeds of $99,344, net of underwriting discounts and commissions. Additional shares were also sold under an option granted to the underwriters that same month, resulting in a sale of an additional 152,209 shares of common stock at $17 per share, generating additional proceeds of $2,419, net of underwriting discounts and commissions. IPO proceeds were used to pay down certain indebtedness.

In conjunction with the IPO, the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1, resulting in the conversion of 10,075 shares in our Employee Stock Ownership Plan to 13,443,484 shares.

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Note 3. Select balance sheet data

Inventory

Inventories as of September 30, 2020 and December 31, 2019 consist of:

	September 30, 2020		December 31, 2019
Finished goods and purchased parts	$	23,525	$	28,664
Raw materials		8,634		10,834
Work-in-process		5,805		6,194
Total	$	37,964	$	45,692

Property, plant and equipment

Property, plant and equipment as of September 30, 2020 and December 31, 2019 consist of:

	Useful Lives Years*	September 30, 2020		December 31, 2019
Land	Indefinite	$	1,033	$	1,264
Land improvements	15-39		3,169		3,169
Building and building improvements	15-39		55,022		58,021
Machinery, equipment and tooling	3-10		198,951		204,248
Vehicles	5		3,712		3,738
Office furniture and fixtures	3-7		16,243		15,469
Construction in progress	N/A		1,677		3,154
Total property, plant and equipment, gross			279,807		289,063
Less accumulated depreciation			171,920		164,000
Total property, plant and equipment, net		$	107,887	$	125,063

Additionally, the Company completed the closure of its Greenwood, SC manufacturing facility during the quarter. The net amount of property, plant and equipment associated with the facility was $3,552, which is classified in assets held for sale on the Condensed Consolidated Balance Sheets as of September 30, 2020.

Goodwill

Changes in goodwill between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	71,535
Impairment		—
Balance as of September 30, 2020	$	71,535

 Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2020 and December 31, 2019:

	Useful Lives Years	September 30, 2020			December 31, 2019
Amortizable intangible assets:
Customer relationships and contracts	9-12	$	78,340		$	78,340
Trade name	10		14,780			14,780
Non-compete agreements	5		8,800			8,800
Patents	19		24			24
Accumulated amortization			(41,612	)		(33,582	)
Total amortizable intangible assets, net			60,332			68,362
Non-amortizable brand name			3,811			3,811
Total intangible assets, net		$	64,143		$	72,173

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Non-amortizable brand name is tested annually for impairment.

Changes in intangible assets between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	72,173
Amortization expense		(8,030	)
Balance as of September 30, 2020	$	64,143

Amortization expense was $2,677 for the three months ended September 30, 2020 and 2019, and $8,030 for the nine months ended September 30, 2020 and 2019.

Future amortization expense is expected to be as followed:

Year ending December 31,
2020 (remainder)	$	2,676
2021	$	10,706
2022	$	6,952
2023	$	6,866
2024	$	5,192
Thereafter	$	27,940

Note 4. Bank revolving credit notes

On September 26, 2019, and as last amended as of June 30, 2020, we entered into an amended and restated credit agreement (Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent. The Credit Agreement provides for a $200,000  revolving credit facility (the Revolving Loan), with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of debt capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00 as well as a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions.

In order to provide a means of insurance against future macroeconomic events, we entered into an amendment (Second Amendment) to the Credit Agreement on June 30, 2020. The Second Amendment provides the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, or such earlier date as the Company may elect (Covenant Relief Period), in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which takes effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% – 2.75%, along with the commitment fee ranging from 20 to 50 basis points.

During the Covenant Relief Period, the required ceiling on the Company’s total leverage ratio will be 4.25 to 1.00 for quarters ending June 30, 2020 through and including December 31, 2020, and will decline in quarterly increments to 3.25 to 1.00 through the quarter ending December 31, 2021.

At September 30, 2020, our consolidated total leverage ratio was 2.16 to 1.00 as compared to a covenant maximum of 4.25 to 1.00 in accordance with the Second Amendment of the Credit Agreement.

At September 30, 2020, our interest coverage ratio was 7.44 to 1.00 as compared to a covenant minimum of 3.00 to 1.00 under the Credit Agreement.

Under the Credit Agreement, interest is payable quarterly at the adjusted LIBOR plus an applicable margin based on the current funded indebtedness to adjusted EBITDA ratio. The interest rate was 2.50% and 3.25% as of September 30, 2020 and December 31,

12

2019, respectively. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.20% as of September 30, 2020andDecember 31, 2019.

The Company was in compliance with all financial covenants of its credit agreements as of September 30, 2020 and December 31, 2019. The amount borrowed on the revolving credit notes was $59,986 and $72,572 as of September 30, 2020 and December 31, 2019, respectively.

Note 5. Capital lease obligation

Capital leases consist of equipment with a capitalized cost of $3,825 at September 30, 2020 and December 31, 2019, and accumulated depreciation of $1,084 and $598 at September 30, 2020 and December 31, 2019, respectively. Depreciation of $161 and $483 was recognized on the capital lease assets during the three and nine months ended September 30, 2020, respectively, and $196 and $342 during the three and nine months ended September 30, 2019, respectively. Non-cash capital lease transactions amounted to zero forthe three and nine months ended September 30, 2020. Future minimum lease payments required under the lease are as follows:

Year ending December 31,
2020 (remainder)	$	184
2021		734
2022		734
2023		734
2024		514
Thereafter		226
Total		3,126
Less payment amount allocated to interest		287
Present value of capital lease obligation	$	2,839
Current portion of capital lease obligation		619
Long-term portion of capital lease obligation		2,220
Total capital lease obligation	$	2,839

Note 6. Operating lease obligation

Operating leases relate to property, plant and equipment. Future minimum lease payments required under the leases are as follows:

Year ending December 31,
2020 (remainder)	$	877
2021		3,112
2022		2,300
2023		2,260
2024		1,473
Thereafter		2,981
Total	$	13,003

The Company leases certain office space, warehousing facilities, equipment and vehicles under operating lease arrangements with third-party lessors. These lease arrangements expire at various time through December 2028. Total rent expense under the arrangements was approximately $1,128 and $1,223 for the three months ended September 30, 2020 and 2019, respectively, and $3,283 and $3,624 for the nine months ended September 30, 2020 and 2019, respectively.

Note 7. Employee stock ownership plan

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company can make annual contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company. Prior to December 31, 2019, the annual contribution was discretionary except that it must have been at least 3% of the compensation for all safe harbor participants for the plan year. Beginning on January 1, 2020, all contributions are discretionary. For the three months ended September 30, 2020 and 2019, the Company’s ESOP expense amounted to zero and $1,500, respectively. For the nine months ended September 30, 2020 and 2019, the Company’s ESOP expense amounted to zero and $4,500, respectively.

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At various times following death, disability, retirement or termination of employment, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP. Prior to the IPO, all distributions were paid to participants in cash.

As of September 30, 2020, and December 31, 2019, the ESOP shares consisted of 10,032,641 and 11,790,113 in allocated shares, respectively. Prior to its IPO, the Company was obligated to repurchase shares in the trust that were not distributed to ESOP participants as determined by the ESOP trustees, and thus the shares were mandatorily redeemable. Subsequent to the IPO, shares are sold in the public market.

Note 8. Retirement plans

The Mayville Engineering Company Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to 50% of their eligible compensation plan to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code.

The 401(k) Plan also provides for employer discretionary profit-sharing contributions and the Board of Directors may authorize discretionary profit-sharing contributions (which are usually approved at the end of each calendar year).

Note 9. Income taxes

On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.

For the nine months ended September 30, 2020 our annual effective tax rate (EFT) is 26.80%, excluding discrete items. Income tax expense (benefit) was $733 and ($1,101), and the effective tax rate (ETR) from continuing operations was -199.82% and 12.17%for the three and nine months ended September 30, 2020, respectively. The following caused the ETR to be different from our expected annual ETR at statutory tax rates:

• For the three and nine months ended September 30, 2020, we recorded a discrete tax expense of zero and $483, respectively, as a result of the removal of a deferred tax asset related to loan fee amortization.

• For the three and nine months ended September 30, 2020, we recorded a discrete tax expense of $853 for both periods due to the vesting of certain stock-based compensation awards and the change in stock price. The Company expects to have discrete adjustments in the future as long as it continues to issue and have outstanding stock-based compensation awards.

For the nine months ended September 30, 2019, our annual EFT was 23.35% excluding discrete items. Income tax expense (benefit) was estimated at $2,512 and ($231) and the ETR from continuing operations was 19.60% and 3.50% for the three and nine months ended September 30, 2019, respectively.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in these jurisdictions. Accounting Standards Codification (ASC) Topic 740, Income Taxes, states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits.

Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements for the three and nine months ended September 30, 2020 and 2019.

Prior to the Company’s IPO, the Company’s legacy business was an S Corporation, where substantially all taxes were passed to the shareholders and the Company did not pay federal or state corporate income taxes on its taxable income. In connection with the IPO, the Company’s legacy business converted to a C Corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward. Upon the Company’s conversion from a non-taxable entity to a taxable entity, we established an opening deferred tax asset of $784 as a result of evaluating estimated temporary differences that existed on this date.

The Company’s policy for recording interest and penalties associated with potential income tax audits is to record such expense as a component of income tax expense. There were no amounts for penalties or interest recorded as of September 30, 2020. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions.

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Note 10. Contingencies

From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the consolidated financial statements.

Note 11. Deferred compensation

The Mayville Engineering Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. Eligible employees may elect to defer a portion of his or her compensation for any plan year and the deferral cannot exceed 50% of the participant’s base salary and may include the participant’s annual short-term cash incentive up to 100%. The participant’s election must be made prior to the first day of the plan year.

 An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company.

Prior to the IPO, all deferrals were deemed to have been invested in the Company’s common stock at a price equal to the share value on the date of deferral and the value of the account increased or decreased with the change in the value of the stock. Individual accounts are maintained for each participant. Each participant’s account is credited with the participant’s deferred compensation and investment income or loss, reduced for charges, if any.

For the period subsequent to the IPO, deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock).

The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation.

The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three months ended September 30, 2020 and 2019, eligible employees elected to defer compensation of $10 for both periods.During the nine months ended September 30, 2020 and 2019, eligible employees elected to defer compensation of $51 and $1,064, respectively. As of September 30, 2020, and December 31, 2019, the total amount accrued for all benefit years under this plan was $25,183 and $24,949, respectively, which is included within the deferred compensation and long-term incentive on the Condensed Consolidated Balance Sheets. These amounts include the initial deferral of compensation as adjusted for (a) subsequent changes in the share value of the Company stock pursuant to the IPO or (b) following the IPO in the investment options chosen by the participants. Total expense for the deferred compensation plan for the three months ended September 30, 2020 and 2019 amounted to $310 and $141, respectively. Total expense for the deferred compensation plan for the nine months ended September 30, 2020 and 2019 amounted to $289 and $10,405, respectively. These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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Note 12. Long-Term incentive plan

Prior to the IPO,the Company’s long-term incentive plan (LTIP) was available for any employee who had been designated to be eligible to participate by the Compensation Committee of the Board of Directors. Annually, the LTIP provided for long-term cash incentive awards to eligible participants based on the Company’s performance over a three-year performance period.

The LTIP was non-funded and each participant in the plan was considered a general unsecured creditor of the Company and each agreement constituted a promise by the Company to make benefit payments if the future conditions were met, or if discretion is exercised in favor of a benefit payment.

The qualifying conditions for each award granted under the plan included a minimum increase in the aggregate fair value of the Company of 12% during the three-year performance period and the eligible participants must have been employed by the Company on the date of the cash payment or have retired after attaining age 65, died or become disabled during the period from the beginning of the performance period to the date of payment. If the qualifying conditions were not attained, discretionary payments were made, up to a maximum amount specified in each award agreement. Discretionary payments were determined by the Compensation Committee of the Board of Directors (for payment to the Chief Executive Officer of the Company) and by the Chief Executive Officer (for payments to other participants in the plan).

If a participant was not employed throughout the performance period due to retirement, death or disability, their maximum benefit was prorated based on the number of days employed by the Company during the performance periods.

The LTIP was terminated in May 2019 in conjunction with the IPO. Total expense for the long-term incentive plan for the three and nine months ended September 30, 2019 amounted to zero and $10,000, respectively. These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

Note 13. Self-Funded insurance

The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees, and estimated unpaid claims. As of March 31, 2020, the Company has consolidated benefit plans with no specific stop loss and an aggregate stop loss to limit risk. Expense related to this contract is approximately $4,757 and $4,709 for the three months ended September 30, 2020 and 2019, respectively, and $16,072 and $14,875 for the nine months ended September 30, 2020 and 2019, respectively. An estimated accrued liability of approximately $1,567 and $1,316 was recorded as of September 30, 2020 and December 31, 2019, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

Note 14. Segments

The Company applies the provisions of ASC Topic 280, Segment Reporting. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined it has one operating segment. The Company does not earn revenues or have long-lived assets located in foreign countries.

Note 15. Fair value of financial instruments

Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input.

• Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability.

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The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy:

			Fair Value Measurements at Report Date Using
	Balance at September 30, 2020		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	25,183	$	4,542	$	20,641	$	—
Total	$	25,183	$	4,542	$	20,641	$	—

			Fair Value Measurements at Report Date Using
	Balance at December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,949	$	2,470	$	22,479	$	—
Total	$	24,949	$	2,470	$	22,479	$	—

Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets.

Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the financial statements at cost and approximate fair value.

Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the majority of the balance as Level 2. The change in fair value is recorded in the Profit sharing, bonuses, and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income (Loss). The balance due to participants is reflected on the Deferred compensation and long-term incentive line item on the Condensed Consolidated Balance Sheets.

The Company’s non-financial assets such as intangible assets and property, plant, and equipment are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized.

Note 16. Common Equity

On May 13, 2019 the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1. The share dividend was accounted for as a 1,334.34-for-1 stock split and is retroactively reflected in these consolidated financial statements. All share redemption provisions were removed effective with the IPO.

Note 17. Temporary Equity

Prior to our IPO in May 2019, our common stock was considered redeemable under GAAP because of certain repurchase obligations related to the ESOP. As a result, all common shares were recorded as temporary equity (redeemable common shares) on the Condensed Consolidated Balance Sheets at their redemption values as of the respective balance sheet dates.

All contractual redemption features were removed at the time of the IPO. As a consequence, all outstanding shares of common stock ceased to be considered temporary equity and were reclassified to Shareholders’ Equity, including the associated balances of retained earnings. As the common shares have no par value, the amounts recorded in temporary equity for the share redemption value were recorded to additional paid-in capital within Shareholders’ Equity upon the transfer.

The following table shows all changes to temporary equity during the nine months ended September 30, 2019.

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	Temporary Equity
	Redeemable Common Shares			Treasury Shares			Retained Earnings
Balance as of January 1, 2019	$	133,806		$	(57,659	)	$	26,842
Net income		—			—			2,459
Balance as of March 31, 2019		133,806			(57,659	)		29,301
Net income pre IPO								397
Transfer from temporary equity to common equity		(133,806	)		57,659			(29,698	)
Balance as of June 30, 2019		—			—			—
Balance as of September 30, 2019	$	—		$	—		$	—

Note 18. Revenue Recognition

Contract Assets and Contract Liabilities

The Company has contract assets and contract liabilities, which are included in other current assets and other current liabilities on the Condensed Consolidated Balance Sheet, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of payment is contingent upon delivery. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process (PPAP). At this time, the tool is placed into service and the cost to build the tooling is released from the balance sheet and included in cost of goods sold.

The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2020.

(in thousands)	Contract Assets		Contract Liabilities
As of January 1, 2020	$	1,589	$	914
Net Activity		2,053		840
As of September 30, 2020	$	3,642	$	1,754

Disaggregated Revenue

The following table represents a disaggregation of revenue by product category:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Outdoor sports	$	1,898		$	1,869		$	5,260		$	5,839
Fabrication		56,658			84,814			169,674			267,516
Performance structures		18,543			18,010			42,334			57,086
Tube		12,772			16,484			37,047			57,196
Tank		4,316			8,747			13,399			33,452
Total		94,187			129,924			267,714			421,089
Intercompany sales elimination		(3,112	)		(1,413	)		(5,452	)		(3,716	)
Total, net sales	$	91,075		$	128,511		$	262,262		$	417,373

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Note 19. Concentration of major customers

The following customers accounted for 10% or greater of the Company’s recorded net sales and net trade receivables:

	Net Sales								Accounts Receivable
	Three Months Ended September 30,				Nine Months Ended September 30,				As of		As of
	2020		2019		2020		2019		September 30, 2020		December 31, 2019
Customer
A	13.3	%	13.6	%	15.6	%	15.4	%	10.4	%	<10	%
B	10.5	%	12.4	%	10.1	%	13.8	%	<10	%	<10	%
C	13.3	%	13.9	%	11.3	%	12.7	%	<10	%	<10	%
D	<10	%	<10	%	<10	%	<10	%	<10	%	10.4	%
E	<10	%	<10	%	<10	%	<10	%	<10	%	13.5	%
F	15.7	%	10.1	%	11.7	%	<10	%	12.3	%	<10	%

Note 20. Stock based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to two million shares.

The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC Topic 718, Compensation – Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument. For units, fair value is equivalent to the stock price at the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options.

Cancellations and forfeitures are accounted for as incurred.

Stock awards were granted on May 12, 2020, February 27, 2020, and May 8, 2019. There were no stock awards granted prior to this.

During the nine months ended September 30, 2020, 264,991 units vested. For the same period, 125,414 options vested with a strike price of $17.00. There was no vesting for the three months ended September 30, 2020.

As of September 30, 2020, 843,942 options remained outstanding with a weighted average strike price of $9.97 and a weighted average contractual life of 9.31 years remaining.

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
One-time IPO unit awards	$	—	$	725	$	1,029	$	1,146
Unit awards		586		412		1,670		661
Option awards		392		201		1,020		328
Stock based compensation expense, net of tax	$	978	$	1,338	$	3,719	$	2,135

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One-time IPO unit awards are fully expensed as of September 30, 2020.

A rollforward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of September 30, 2020 will be expensed over the remaining requisite service period from which individual award values relate, up to February 27, 2022.

	Three Months Ended September 30, 2020									Nine Months Ended September 30, 2020
	Units			Options			Total			Units			Options			Total
Beginning Balance	$	2,975		$	2,019		$	4,994		$	2,596		$	1,124		$	3,720
Grants		—			—			—			3,022			2,041			5,063
Forfeitures		(25	)		—			(25	)		(555	)		(518	)		(1,073	)
Expense		(586	)		(392	)		(978	)		(2,699	)		(1,020	)		(3,719	)
Balance as of September 30, 2020	$	2,364		$	1,627		$	3,991		$	2,364		$	1,627		$	3,991

Note 21. Greenwood Facility Closure and Restructuring

Based on the Company’s investments in new technology and automation, which have resulted in a smaller footprint requirement to maintain manufacturing capacity, the Company announced it would be closing its Greenwood, SC facility on May 6, 2020. The facility closure was finalized during the third quarter of 2020 with all customer components re-distributed amongst five other MEC manufacturing facilities. All customer relationships and manufactured components were maintained through this transition without disruption to our customers.

Costs associated with the closure are being accounted for in accordance with ASC420 Exit or Disposal Cost Obligations.

For the three months ended September 30, 2020, the Company incurred $687 of costs associated with the facility closure and restructuring including $51 for severance and retention bonuses, $88 for the loss on sale of manufacturing equipment not transferred to another facility, $78 for the buyout of operating leases, and the remainder mostly related to costs to close the facility and relocate equipment to other facilities. For the nine months ended September 30, 2020, the Company incurred $2,524 of costs associated with the facility closure and restructuring, including $282 for severance and retention bonus, $931 for the loss on sale of manufacturing equipment not transferred to another MEC facility, $78 for the buyout of operating leases, $622 for the disposition of inventory, and the remainder mostly related to costs to close the facility and relocate equipment to other facilities. These costs were recognized on the cost of sales line item of the Condensed Consolidated Statements of Comprehensive Income (Loss). The Company expects to incur an immaterial amount of additional costs associated with the facility closure in the fourth quarter this year.

The Greenwood facility has a net book value of approximately $3,552 as of September 30, 2020 and is classified as assets held for sale on the Condensed Consolidated Balance Sheet. Based on information provided by reputable independent third parties, the Company has concluded that the fair value of the facility exceeds its net book value.

The following table summarizes the activity related to the Greenwood restructuring through September 30, 2020:

	Employee Severance and Retention Bonus Reserve			Inventory Excess and Obsolescence Reserve			Other			Total
Balance as of March 31, 2020	$	—		$	—		$	—		$	—
Charges		231			638			969			1,838
Cash receipts (payments)		(34	)		—			(969	)		(1,003	)
Accrual adjustments		—			—			—			—
Balance as of June 30, 2020		197			638			—			835
Charges		51			(16	)		652			687
Cash receipts (payments)		(248	)		16			(652	)		(884	)
Accrual adjustments		—			(638	)		—			(638	)
Balance as of September 30, 2020	$	—		$	—		$	—		$	—

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As a result of the Greenwood facility closure, future earnings and cash flows will no longer be impacted by the depreciation associated with the assets disposed of or the facility, maintenance costs of the facility, and facility personnel expenses.

Assets disposed of had a net book value of $2,475 with a remaining useful life of approximately 3 years resulting in approximately $825 of annual depreciation expense that will no longer be incurred. The facility has a net book value of $3,552 as of September 30, 2020 with a remaining weighted average useful life of approximately 27 years resulting in approximately $133 of annual depreciation expense that will no longer be incurred.

The Company incurred approximately $800 of annual facility maintenance costs, including utilities, that will no longer be incurred.

Total personnel costs associated with the facility were approximately $2,250 for the first quarter 2020 resulting in approximately $9,000 of annual personnel expenses, of which the majority of these costs will be transitioned to the other five MEC facilities that will now be manufacturing these components. As previously mentioned, all customer relationships and manufacturing programs were retained through the transition.

The aforementioned depreciation, maintenance costs, and personnel expenses associated with the Greenwood facility have been classified as cost of sales on the Condensed Consolidated Statements of Comprehensive Income (Loss).

Note 22. Subsequent events

The company evaluated events and transactions for potential recognition or disclosure in theinterim unaudited Condensed Consolidated Financial Statements through November 3, 2020, the date on which theinterim unaudited Condensed Consolidated Financial Statements were available to be issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, as such were previously supplemented and amended in Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, and “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 and our unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item I of this Quarterly Report on Form 10-Q. In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this Management Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

All amounts are presented in thousands except share amounts, per share data, years and ratios.

Overview

MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy-and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. We have developed long-standing relationships with our blue-chip customers based upon a high level of experience, trust and confidence.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy-and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.

In May 2019, we completed our IPO. In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

COVID-19 Impact

COVID-19 has had and will continue to have a negative impact on our business, financial condition, cash flows, and results of operations, although the full extent is uncertain.

For the three and nine months ended September 30, 2020, net sales reflected the significant disruption we encountered primarily due to COVID-19 with customer shutdowns, demand changes, and continued destocking, which were most apparent in the Commercial Vehicle, Agriculture and Construction & Access Equipment end markets served. Despite MEC and its customer base carrying the essential business designation, customer production facilities shut down 5 – 6 weeks on average during the second quarter due to COVID-19. As a direct result of the customer shutdowns, MEC temporarily halted production at some of its facilities during the second quarter. Customer manufacturing facilities gradually reopened toward the end of the second quarter, but MEC production volumes remain below pre-pandemic levels as of the end of the third quarter with all MEC facilities open. Despite the decline in volumes for the second and third quarters, all existing customer relationships and manufacturing programs remain intact. While end markets have started to stabilize, we have improved our near- and long-term cost structure through facility and process optimization and are actively working with our customers to grow our partnerships while pursuing incremental sales through a wide range of new customer and market opportunities.

The future financial effects of COVID-19 are unknown due to many factors. These factors include uncertainty of the effectiveness of governmental actions to address COVID-19, including health, monetary and fiscal policies, the effect of elevated levels of sovereign and state debt, capital market disruptions, changes in demand and pricing, trade agreements, other geopolitical events, and volatility in the price of many commodities. As a result, predicting the Company’s forecasted financial performance is difficult and subject to many assumptions.

The Company’s first priority has been to safeguard the health and well-being of its employees while fulfilling its obligations as an essential business serving its customer base. This proactive approach has kept employees safe and production facilities operational

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based on customer demand. Our goal is to continue to successfully manage through the effects of COVID-19 and strengthen our position serving customers in the future.

How We Assess Performance

Net Sales. Net sales reflect sales of our components and products net of allowances for returns and discounts. In addition to COVID-19, several factors affect our net sales in any given period, including general economic conditions, weather, timing of acquisitions and the production schedules of our customers. Net sales are recognized at the time of shipment to the customer.

Manufacturing Margins. Manufacturing margins represents net sales less cost of sales. Cost of sales consists of all direct and indirect costs used in the manufacturing process, including raw materials, labor, equipment costs, depreciation, lease expenses, subcontract costs and other directly related overhead costs. Our cost of sales is directly affected by the fluctuations in commodity prices, primarily sheet steel and aluminum, but these changes are largely mitigated by contractual agreements with our customers that allow us to pass through these price changes based upon certain market indexes.

Depreciation and Amortization. We carry property, plant and equipment on our balance sheet at cost, net of accumulated depreciation and amortization. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the asset. Amortization expense is the periodic expense related to leasehold improvements and intangible assets. Leasehold improvements are amortized over the lesser of the life of the underlying asset or the remaining lease term. Our intangible assets were recognized as a result of certain acquisitions and are generally amortized on a straight-line basis over the estimated useful lives of the assets.

Other Selling, General, and Administrative Expenses. Other selling, general and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, finance, human resources, information systems, administration and other certain managerial employees and certain corporate level administrative expenses such as incentive compensation, audit, accounting, legal and other consulting and professional services, travel, and insurance.

Other Key Performance Indicators

EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA represents net income before interest expense, provision (benefit) for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.

Adjusted EBITDA represents EBITDA before transaction fees incurred in connection with the acquisition of Defiance Metal Products Co., Inc. (DMP) and the IPO, the loss on debt extinguishment relating to our December 2018 credit agreement, non-cash purchase accounting charges including costs recognized on the step-up of acquired inventory and contingent consideration fair value adjustments, one-time increases in deferred compensation and long-term incentive plan expenses related to the IPO, stock-based compensation, and restructuring expenses related to the closure of the Greenwood facility. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted EBITDA Margin as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

Starting in the first quarter of 2020,we excluded stock-based compensation expense from Adjusted EBITDA. Management excludes this charge when evaluating the performance of the business because it is a non-cash charge, and the Company is able to fund vesting obligations through treasury shares. Further, the exclusion of these charges aligns with the calculation of Adjusted EBITDA for purposes of our covenant calculations under the Credit Agreement. And finally, revaluations of grant date fair values can vary significantly with the passage of time without any accounting impact. For example, the fair value of the stock-based compensation awards granted in May 2019 would have been approximately half of that value had they been granted at the end of this quarter.

Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to the similarly named measures reported by other companies. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.

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The following table presents a reconciliation of net income(loss), the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA, and the calculation of Adjusted EBITDA Margin for each of the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net income (loss)	$	(1,100	)	$	9,746		$	(8,064	)	$	(3,079	)
Interest expense		647			987			2,110			5,811
Provision (benefit) for income taxes		733			2,512			(1,101	)		(231	)
Depreciation and amortization		7,894			8,297			24,334			24,652
EBITDA		8,174			21,543			17,279			27,153
Loss on the extinguishment of debt		—			—			—			154
Costs recognized on step-up of acquired inventory		—			—			—			395
Contingent consideration revaluation		—			(9,598	)		—			(6,054	)
Deferred compensation expense specific to IPO		—			—			—			10,159
Long term incentive plan expense specific to IPO		—			—			—			9,921
Other IPO and DMP acquisition related expenses		—			900			—			5,288
IPO stock-based compensation expense		—			725			1,029			1,146
Stock based compensation expense		978			613			2,690			989
Greenwood restructuring charges		687			—			2,524			—
Adjusted EBITDA	$	9,839		$	14,183		$	23,522		$	49,151
Net sales	$	91,075		$	128,511		$	262,262		$	417,373
EBITDA Margin		9.0	%		16.8	%		6.6	%		6.5	%
Adjusted EBITDA Margin		10.8	%		11.0	%		9.0	%		11.8	%

Consolidated Results of Operations

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

	Three Months Ended September 30,
	2020						2019						Increase (Decrease)
	Amount			% of Net Sales			Amount			% of Net Sales			Amount Change			% Change
Net sales	$	91,075			100.0	%	$	128,511			100.0	%	$	(37,436	)		-29.1	%
Cost of sales		81,340			89.3	%		113,941			88.7	%		(32,601	)		-28.6	%
Manufacturing margins		9,735			10.7	%		14,570			11.3	%		(4,835	)		-33.2	%
Amortization of intangibles		2,677			2.9	%		2,677			2.1	%		—			0.0	%
Profit sharing, bonuses and deferred compensation		2,288			2.5	%		678			0.5	%		1,610			237.5	%
Employee stock ownership plan expense		—			0.0	%		1,500			1.2	%		(1,500	)		-100.0	%
Other selling, general and administrative expenses		4,490			4.9	%		6,068			4.7	%		(1,578	)		-26.0	%
Contingent consideration revaluation		—			0.0	%		(9,598	)		-7.5	%		9,598			100.0	%
Income from operations		280			0.3	%		13,245			10.3	%		(12,965	)		-97.9	%
Interest expense		(647	)		0.7	%		(987	)		0.8	%		(340	)		-34.4	%
Provision for income taxes		733			0.8	%		2,512			2.0	%		(1,779	)		-70.8	%
Net income (loss) and comprehensive income (loss)	$	(1,100	)		-1.2	%	$	9,746			7.6	%	$	(10,846	)		-111.3	%
EBITDA	$	8,174			9.0	%	$	21,543			16.8	%	$	(13,369	)		-62.1	%
Adjusted EBITDA	$	9,839			10.8	%	$	14,183			11.0	%	$	(4,344	)		-30.6	%

Net Sales. Net sales were $91,075 for the three months ended September 30, 2020 as compared to $128,511 for the three months ended September 30, 2019, a decrease of $37,436, or 29.1%. This change is due to volume reductions across nearly all end markets served driven by COVID-19 and the continued customer destocking activities within the Agriculture and Construction & Access Equipment end markets served. Despite the volume declines, all existing customer relationships and manufacturing programs remain intact.

Manufacturing Margins. Manufacturing margins were $9,735 for the three months ended September 30, 2020 as compared to $14,570 for the three months ended September 30, 2019, a decrease of $4,835, or 33.2%. The decline was driven by the aforementioned sales volume reductions resulting in under-absorbed manufacturing costs. In addition, $687 of restructuring costs were

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charged to cost of sales in the current period related to the Greenwood facility closure, the details of which are outlined in Note 21 of the Condensed Consolidated Financial Statements.

Manufacturing margin percentages were 10.7% for the three months ended September 30, 2020, as compared to 11.3% for the three months ended September 30, 2019, a decline of 60 basis points. This decline was mostly attributable to lower sales volumes due to COVID-19 resulting in under-absorbed fixed overhead costs along with the $687 of restructuring charges to cost of sales in the current period related to the Greenwood facility closure. Based on the business realignment and cost reduction initiatives enacted, the Company believes manufacturing margin percentages should improve beyond historical percentages when volumes return to historical levels.

Amortization of Intangibles Expense. Amortization of intangibles expense was $2,677 for both the three months ended September 30, 2020 and 2019.

Profit Sharing, Bonuses and Deferred Compensation Expenses. Profit sharing, bonuses, and deferred compensation expenses were $2,288 for the three months ended September 30, 2020 as compared to $678 for the three months ended September 30, 2019, an increase of $1,610, or 237.5%. This change was primarily driven by the re-establishment of some year-to-date discretionary bonus and 401(k) related accruals that had been eliminated in the second quarter this year due to the uncertainty caused by COVID-19 at that time.

Employee Stock Ownership Plan Expense. Employee stock ownership plan expense was zero for the three months ended September 30, 2020 as compared to $1,500 for the three months ended September 30, 2019, a decrease of $1,500, or 100.0%. Prior to December 31, 2019, the annual ESOP contribution was discretionary except that it must have been at least 3% of the compensation for all safe harbor participants for the plan year. Beginning in 2020, all contributions are discretionary. The change is due to the decision to eliminate this particular discretionary contribution for the fiscal year 2020 as a result of lower financial performance due to the impacts of COVID-19.

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $4,490 for the three months ended September 30, 2020 as compared to $6,068 for the three months ended September 30, 2019, a decrease of $1,578, or 26.0%. The prior year period includes an additional $900 of one-time IPO related expenses. Excluding the one-time charges, these expenses decreased $678 driven by synergies achieved through the integration of DMP, lower travel and entertainment expenses in the current period due to COVID-19 restrictions, and other cost saving initiatives.

Contingent Consideration Revaluation. The DMP purchase agreement provided for a payout to the previous shareholders of DMP of $7,500, but not more than $10,000 if a certain level of EBITDA was generated during the twelve-month period ended September 30, 2019. We estimated the fair value of the contingent consideration payable balance of $6,076 as of the acquisition date of December 14, 2018. We then remeasured the fair value each quarter through September 30, 2019, with the change recorded as a contingent consideration revaluation adjustment. Based on our calculations in accordance with the purchase agreement, and as agreed to by DMP’s former shareholders, it was determined DMP’s EBITDA fell short of the payout threshold and as a result, the contingent consideration payable balance of $9,598 was adjusted to zero, resulting in income of this amount for the three months ended September 30, 2019.

Interest Expense. Interest expense was $647 for the three months ended September 30, 2020 as compared to $987 for the three months ended September 30, 2019, a decrease of $340, or 34.4%. The changeis due to lower borrowings during the third quarter of 2020 as compared to the third quarter of 2019 along with lower interest rates attributable to the more favorable terms afforded under the Amended & Restated Credit Agreement.

Provision for Income Taxes. Income tax expense was $733 for the three months ended September 30, 2020 as compared to $2,512 for the three months ended September 30, 2019. Please reference Note 9 of the Condensed Consolidated Financial Statements for more specifics. As of September 30, 2020, our federal operating loss (NOL) carryforward was approximately $23,000 driven by the pretax losses incurred in the current year along with the entirety of the prior year. The NOL does not expire and will be used to offset future pretax income. We expect our long-term effective tax rate to be 26%, based on current tax regulations.

Net Income (Loss) and Comprehensive Income (Loss). Net loss and comprehensive loss were $1,100 for the three months ended September 30, 2020 as compared to net income and comprehensive income of $9,746 for the three months ended September 30, 2019. The decrease of $10,846 was primarily due to the reversal of the contingent consideration payable during the prior period and other previously discussed items.

EBITDA and EBITDA Margin. EBITDA and EBITDA Margin were $8,174 and 9.0%, respectively, for the three months ended September 30, 2020 as compared to $21,543 and 16.8%, respectively, for the three months ended September 30, 2019. The

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$13,369decrease in EBITDA was primarily due to the reversal of the contingent consideration payable during the prior period and the Greenwood restructuring costs and adverse impacts of COVID-19 in the current period.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin were $9,839 and 10.8%, respectively, for the three months ended September 30, 2020, as compared to $14,183 and 11.0%, respectively, for the three months ended September 30, 2019. The decrease in Adjusted EBITDA of $4,344 was primarily due to the adverse impacts of COVID-19 in the current period.

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Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

	Nine Months Ended September 30,
	2020						2019						Increase (Decrease)
	Amount			% of Net Sales			Amount			% of Net Sales			Amount Change			% Change
Net sales	$	262,262			100.0	%	$	417,373			100.0	%	$	(155,111	)		-37.2	%
Cost of sales		241,838			92.2	%		362,689			86.9	%		(120,851	)		-33.3	%
Manufacturing margins		20,424			7.8	%		54,684			13.1	%		(34,260	)		-62.7	%
Amortization of intangibles		8,030			3.1	%		8,030			1.9	%		—			0.0	%
Profit sharing, bonuses and deferred compensation		4,807			1.8	%		25,258			6.1	%		(20,451	)		-81.0	%
Employee stock ownership plan expense		—			0.0	%		4,500			1.1	%		(4,500	)		-100.0	%
Other selling, general and administrative expenses		14,642			5.6	%		20,296			4.9	%		(5,654	)		-27.9	%
Contingent consideration revaluation		—			0.0	%		(6,054	)		-1.5	%		6,054			100.0	%
Gain (loss) from operations		(7,055	)		-2.7	%		2,655			0.6	%		(9,710	)		-365.7	%
Interest expense		(2,110	)		0.8	%		(5,811	)		1.4	%		(3,701	)		-63.7	%
Loss on extinguishment of debt		—			0.0	%		(154	)		0.0	%		(154	)		-100.0	%
Benefit for income taxes		(1,101	)		-0.4	%		(231	)		-0.1	%		870			376.6	%
Net loss and comprehensive loss	$	(8,064	)		-3.1	%	$	(3,079	)		-0.7	%	$	4,985			161.9	%
EBITDA	$	17,279			6.6	%	$	27,153			6.5	%	$	(9,874	)		-36.4	%
Adjusted EBITDA	$	23,522			9.0	%	$	49,151			11.8	%	$	(25,629	)		-52.1	%

Net Sales. Net sales were $262,262 for the nine months ended September 30, 2020 as compared to $417,373 for the nine months ended September 30, 2019, a decrease of $155,111, or, 37.2%. This change is primarily attributed to volume reductions across nearly all end markets served driven by COVID-19 and the continued impact of market demand changes and related destocking activities, which was most apparent in the Commercial Vehicle, Agricultural, and Construction & Access Equipment end markets served. Despite the volume declines, all existing customer relationships and manufacturing programs remain intact.

Manufacturing Margins. Manufacturing margins were $20,424 for the nine months ended September 30, 2020 as compared to $54,684 for the nine months ended September 30, 2019, a decrease of $34,260, or, 62.7%. The decline was mainly driven by the aforementioned volume reductions driven by COVID-19 along with the continued impact of market demand changes and destocking activities, and $2,524 of restructuring costs related to the Greenwood facility consolidation, the details of which are outlined in Note 21 of the Condensed Consolidated Financial Statements. In addition, costs of sales includes approximately $775 of inventory obsolescence and health care charges specific to the estimated potential impacts of COVID-19.

Our traditional methods of determining inventory obsolescence and health care accruals significantly rely upon historical data. When estimating the approximately $775 of COVID-19 reserves during the first quarter of the current year, we had neither historical information, nor much other data from which to compute an estimated impact for this type of event. Nevertheless, the Company believes the obvious risk posed by the pandemic may have a financial impact in these areas. This charge for these COVID-19 specific accruals represents our best good faith estimate of the potential financial impact to the Company based on information available to us. Due to the continued risk posed by COVID-19, these reserves have remained mostly unchanged since establishment. We will continue to evaluate and report on our position with respect to these reserves as we work through the pandemic.

Manufacturing margin percentages were 7.8% for the nine months ended September 30, 2020 as compared to 13.1%, of net sales for the nine months ended September 30, 2019, a decline of 530 basis points. This decline was mostly attributable to the aforementioned impacts of COVID-19, market demand changes, destocking activities, Greenwood facility restructuring costs, and COVID-19 specific accruals. Based on the cost reduction initiatives enacted, the Company believes manufacturing margin percentages should improve beyond historical percentages when volumes return to historical levels.

Amortization of Intangibles Expense. Amortization of intangibles expense was $8,030 for both the nine months ended September 30, 2020, and 2019.

Profit Sharing, Bonuses and Deferred Compensation Expense. Profit sharing, bonuses and deferred compensation expenses were $4,807 for the nine months ended September 30, 2020 as compared to $25,258 for the nine months ended September 30, 2019, a decrease of $20,451, or 81.0%. The prior year included $20,080 of one-time IPO expenses, including $10,159 for deferred compensation and $9,921 for long-term incentive plan. Excluding these items from the prior year, these expenses decreased by $371. The decrease is primarily due to lower financial performance mostly from the impacts of COVID-19.

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Employee Stock Ownership Plan Expense. Employee stock ownership plan expense was zero for the nine months ended September 30, 2020 as compared to $4,500, for the nine months ended September 30, 2019, a decrease of $4,500, or 100.0%. Prior to December 31, 2019, the annual ESOP contribution was discretionary except that it must have been at least 3% of the compensation for all safe harbor participants for the plan year. Beginning in 2020, all contributions are discretionary.The change is due to the decision to eliminate this particular discretionary contribution for the fiscal year 2020 as a result of lower financial performance mostly due to the impacts of COVID-19.

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $14,642 for the nine months ended September 30, 2020 as compared to $20,296 for the nine months ended September 30, 2019, a decrease of $5,654, or 27.9%. The prior year period includes $5,288 of one-time other IPO and DMP acquisition related expenses. Excluding these one-time charges, these expenses decreased $366. The decrease was driven by synergies achieved through the integration of DMP, lower travel and entertainment expenses in the current period due to COVID-19 restrictions, and other cost saving initiatives initiated in the current year.

Contingent Consideration Revaluation. The DMP purchase agreement provided for a payout to the previous shareholders of DMP of $7,500, but not more than $10,000 if a certain level of EBITDA was generated during the twelve-month period ended September 30, 2019. We estimated the fair value of the contingent consideration payable balance of $6,076 as of the acquisition date of December 14, 2018. We then remeasured the fair value each quarter through September 30, 2019, with the change recorded as a contingent consideration revaluation adjustment. Based on our calculations in accordance with the purchase agreement, and as agreed to by DMP’s former shareholders, it was determined DMP’s EBITDA fell short of the payout threshold and as a result, the contingent consideration payable balance of $9,598 was adjusted to zero, resulting in income of $6,054 for the nine months ended September 30, 2019.

Interest Expense. Interest expense was $2,110 for the nine months ended September 30, 2020 as compared to $5,811 for the nine months ended September 30, 2019, a decrease of $3,701, or 63.7%. The change is due to lower borrowings during the current period as compared to the same prior year period along with lower interest rates attributable to the more favorable terms afforded under the Amended & Restated Credit Agreement.

Benefit for Income Taxes. Income tax benefit was $1,101 for the nine months ended September 30, 2020 as compared to $231 for the nine months ended September 30, 2019. The increase is due to a greater pretax loss in the current period. Please reference Note 9of the Condensed Consolidated Financial Statements for more specifics. As of September 30, 2020, our federal NOL carryforward was approximately $23,000 driven by the pretax losses incurred during the current year and the entirety of the prior year.  The NOL does not expire and will be used to offset future pretax income. We expect our long-term effective tax rate to be 26%, based on current tax regulations.

Net Loss and Comprehensive Loss. Net loss and comprehensive loss were $8,064 for the nine months ended September 30, 2020 as compared to $3,079 for the nine months ended September 30, 2019. The increase of $4,984 was due to the previously discussed items.

EBITDA and EBITDA Margin. EBITDA and EBITDA Margin were $17,279 and 6.6%, respectively, for the nine months ended September 30, 2020 as compared to $27,153 and 6.5%, respectively, for the nine months ended September 30, 2019. The $9,874 decrease in EBITDA was primarily due to the reduction in sales volumes driven by COVID-19, the decline in market demand, destocking activities, along with the Greenwood facility closure costs in the current period collectively having a greater impact than the one-time IPO costs incurred during the prior period.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin were $23,522 and 9.0%, respectively, for the nine months ended September 30, 2020 as compared to $49,151 and 11.8%, respectively, for the nine months ended September 30, 2019. The decrease in Adjusted EBITDA of $25,629 was primarily due to the reduction in sales volumes in the current period driven by COVID-19, the decline in market demand, and destocking activities.

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Liquidity and Capital Resources

Cash Flows Analysis

	Nine Months Ended September 30,						Increase (Decrease)
(in thousands)	2020			2019			$Change			% Change
Net cash provided by operating activities	$	19,291		$	16,424			2,867			17.5	%
Net cash used in investing activities		(3,434	)		(26,768	)		23,334			87.2	%
Net cash provided by (used in) financing activities		(15,748	)		7,256			(23,004	)		-317.0	%
Net change in cash	$	109		$	(3,088	)	$	3,197			103.5	%

Operating Activities. Cash provided by operating activities was $19,291 for the nine months ended September 30, 2020, as compared to $16,424 for the nine months ended September 30, 2019. The $2,867, or 17.5% increase in operating cash flows was primarily due to a greater reduction in inventory, prepaids and other assets, along with beneficial changes in a variety of other operating assets and liability categories in the current year as compared to the same prior year period. Changes to pricing, payment terms and credit terms did not have a significant impact on changes to working capital items, or any other element of the operating cash flow activities, for the periods presented.

Investing Activities. Cash used in investing activities was $3,434 for the nine months ended September 30, 2020, as compared to $26,768 for the nine months ended September 30, 2019. The $23,334, or 87.2% decrease in cash used in investing activities was driven by our capital spend changing from a focus on investments in new technology and automation in 2019 to leveraging those investments and preserving cash in 2020. In addition, due to the Greenwood facility closure, the company generated more proceeds for the sale of equipment in the current period as compared to the same prior year period.

Financing Activities. Cash used in financing activities was $15,748 for the nine months ended September 30, 2020, as compared to cash provided by financing activities of $7,256 for the nine months ended September 30, 2019. The $23,004 change was driven by the use of operating cash flow in the current period to pay down debt and purchase of stock as compared to net cash provided by financing activities in the prior year driven by the IPO proceeds.

Amended and Restated Credit Agreement

On September 26, 2019, and as last amended as of June 30, 2020, we entered into the amended and restated credit agreement (Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The Credit Agreement provides for a $200,000 Revolving Loan, with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

Our obligations under the Credit Agreement are secured by first priority security interests in substantially all of our personal property and guaranteed by, and secured by first priority security interests in, substantially all of the personal property of, our direct and indirect subsidiaries: Center Manufacturing, Inc., Center Manufacturing Holdings, Inc., Center—Moeller Products LLC, Defiance Metal Products Co., Defiance Metal Products of Arkansas, Inc., Defiance Metal Products of PA., Inc. and Defiance Metal Products of WI, Inc.

Borrowings under the Credit Agreement bear interest at a fluctuating LIBOR (which may be adjusted for certain reserve requirements), plus 1.00-2.00% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on LIBOR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of (a) the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time) and (ii) the Federal Funds Rate plus 0.50%, plus (b) 0.00% to 1.00%, depending on the current Total Consolidated Leverage Ratio.  The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available.

At September 30, 2020, the interest rate on outstanding borrowings under the Revolving Loan was 2.50%. At September 30, 2020, we had availability of approximately $140,000 under the Revolving Loan.

We must pay a commitment fee at a rate of 0.20% per annum on the average daily unused portion of the aggregate unused revolving commitments under the Credit Agreement. We must also pay fees as specified in the Fee Letter (as defined in the Credit Agreement) and with respect to any letters of credit issued under the Credit Agreement.

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The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At September 30, 2020, our interest coverage ratio was 7.44to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions. This ratio was increased through the Second Amendment to the Credit Agreement to 4.25 to 1.00 for this quarter, as discussed in more detail below. As of September 30, 2020, our consolidated total leverage ratio was 2.16 to 1.00.

The Credit Agreement includes customary events of default, including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, material money judgments, and failure to maintain subsidiary guarantees. If an event of default occurs, the Agent will be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the credit facility, and all other actions permitted to be taken by a secured creditor.

Second Amendment to the Credit Agreement

On June 30, 2020, the Company entered into an amendment (Second Amendment) to the Credit Agreement. The Second Amendment provides the Company with temporary relief regarding a financial covenant (the consolidated total leverage ratio) for the period from June 30, 2020, through December 31, 2021, or such earlier date as the Company may elect (Covenant Relief Period), in return for certain increases in interest rates and fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which takes effect for the quarters ended on and after September 30, 2020, includes interest at a fluctuating LIBOR (at a floor of 75 basis points), plus 1.00% – 2.75%, along with the commitment fee ranging from 20 to 50 basis points.

During the Covenant Relief Period, the required ceiling on the Company’s consolidated total leverage ratio will be 4.25 to 1.00 for quarters ending June 30, 2020 through and including December 31, 2020 and will decline in quarterly increments to 3.25 to 1.00 for the quarter ending December 31, 2021.

As of September 30, 2020, our consolidated total leverage ratio was 2.16 to 1.00 in accordance with the Second Amendment of the Credit Agreement.

At September 30, 2020, we were in compliance with all covenants under the Credit Agreement and the Second Amendment.

Capital Requirements and Sources of Liquidity

During the nine months ended September 30, 2020 and 2019, our capital expenditures were $5,354 and $22,820, respectively. The decrease of $17,466 was driven by shifts in focuses from investments in new technology and automation in 2019 to leveraging those investments and controlling spend in 2020. Capital expenditures for the full year 2020 are expected to be approximately $10,000 to $13,000. The greater the adverse impact COVID-19 has on the business, the closer we expect to be on the lower end of this range.

We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth. At September 30, 2020, we had immediate availability of approximately $140,000 through our Revolving Loan and another $100,000 through an accordion feature under our Credit Agreement, subject to the covenants under the Credit Agreement and Second Amendment. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital.We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates of the impact of COVID-19 at this time, we expect to be in compliance with these financial covenants through 2020 and beyond.

We believe that our operating cash flow and available borrowings under the Credit Agreement are sufficient to fund our operations for 2020 when taking into consideration the estimated impacts of COVID-19 based on the information we have available at this time. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

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Contractual Obligations

The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at September 30, 2020:

			Payments Due by Period
(in thousands)	Total		2020 (Remainder)		2021 – 2022		2023 – 2024		Thereafter
Long-term debt principal payment obligations (1)	$	59,986	$	—	$	—	$	59,986	$	—
Forecasted interest on debt payment obligations (2)		6,478		405		3,239		2,834		—
Capital lease obligations		3,126		184		1,468		1,248		226
Operating lease obligations		13,003		877		5,412		3,733		2,981
Total	$	82,593	$	1,466	$	10,119	$	67,801	$	3,207

⁽¹⁾ The long-term amounts in the table include principal payments under the Company’s Credit Agreement, which expires in 2024.

⁽²⁾ Forecasted interest on debt obligations based on the debt balance, interest rate and unused fee as of September 30, 2020.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in customer forecasts, interest rates, and, to a lesser extent, commodities. To reduce such risks, we selectively use financial instruments and other proactive management techniques.

Customer Forecasts

The use and consumption of our components, products and services fluctuates depending on order forecasts we receive from our customers. These order forecasts can change dramatically from quarter to quarter dependent upon the respective markets that our customers provide products in.

Interest Rate Risk

We are exposed to interest rate risk on certain of our short- and long-term debt obligations used to finance our operations and acquisitions. We have LIBOR-based floating rate borrowings under the Credit Agreement, which exposes us to variability in interest payments due to changes in the referenced interest rates.

The amount borrowed under the Revolver Loan under the Credit Agreement was $60.0 million as of September 30, 2020. The interest rate was 2.50% as of September 30, 2020. Please see “Liquidity and Capital Resources - Amended and Restated Credit Agreement” in Part I, Item 2 of this Quarterly Report on Form 10-Q and Note 4 in the Notes to the Unaudited Condensed Consolidated Financial Statements for more specifics.

A hypothetical 100-basis-point increase in interest rates would have resulted in an additional $0.2 million of interest expense based on our variable rate debt at September 30, 2020. We do not use derivative financial instruments to manage interest risk or to speculate on future changes in interest rates. A rise in interest rates could negatively affect our cash flow.

Commodity Risk

We source a wide variety of materials and components from a network of suppliers. While such materials are generally available from numerous suppliers, commodity raw materials, such as steel, aluminum, copper, paint and paint chemicals, and other production costs are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and in many cases utilize contracts with those customers to mitigate the impact of commodity raw material price fluctuations. As of September 30, 2020, we did not have any commodity hedging instruments in place.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

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Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form10-Q. As a result of the material weakness described below, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

As a newly public company, neither we nor our independent registered public accounting firm are required at this time to perform an evaluation of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, and neither we nor our independent registered public accounting firm have performed such an evaluation.

During the course of the quarterly and year-end processes in 2019, we identified a material weakness in the design and operation of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to a lack of consistently documented accounting policies and procedures and a lack of formalized controls over the accounting and recording of complex and significant unusual transactions which, in the aggregate, constitute a material weakness.

We have taken numerous steps to enhance our internal control environment during 2019 and to date in 2020. While preparing for our initial public offering, as of December 31, 2018, we had identified two material weaknesses in the design and operation of our internal control over financial reporting. As of December 31, 2019, we have concluded that one of the previously identified material weaknesses has been remediated and the other has been partially remediated. The previously identified deficiencies, that represented the two material weaknesses, included the preparation and review of journal entries, a limited number of personnel with a level of GAAP accounting knowledge commensurate with our financial reporting requirements and certain information technology general controls specific to segregation of duties, systems access and change management processes. However, deficiencies in our control environment, specifically deficiencies related to a lack of consistently documented accounting policies and procedures and a lack of formalized controls over the accounting and recording of complex and significant unusual transactions, which we have collectively determined aggregate to a material weakness, remained as of September 30, 2020. We are currently enacting a number of steps to enhance our control over financial reporting and address this material weakness, including: enhancing our internal review procedures during the financial statement close process, and designing and implementing consistent policies throughout the Company; however, our current efforts to design and implement effective controls may not be sufficient to remediate the material weakness described above or prevent future material weaknesses or other deficiencies from occurring. Despite these actions, we may identify additional material weaknesses in our internal control over financial reporting in the future.

If we fail to effectively remediate this material weakness in our internal control over financial reporting, if we identify future material weaknesses in our internal control over financial reporting or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price may be adversely affected.

Commencing with our Annual Report on Form 10-K for the year ending December 31, 2020 we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10-K filing for that year, as required by Section 404 of the Sarbanes Oxley Act. We have expended significant resources in developing the necessary documentation and testing procedures required by Section 404. If we fail to implement the requirements of Section 404 in a timely manner, regulatory authorities such as the SEC or the Public Company Accounting Oversight Board, might subject us to sanctions or investigation. We cannot be certain that the actions we have undertaken to improve our internal controls over financial reporting will be sufficient, or that we will be able to implement our planned processes and procedures in a timely manner.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material litigation proceedings. From time to time, however, we may be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020, other than as such were previously supplemented and amended in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020 which was filed with the SEC on May 6, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below sets forth information with respect to purchases we made of shares of our common stock during the quarter ended September 30, 2020:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1-31, 2020		—	$	—		—	$	19,896,405
August 1-31, 2020		—	$	—		—	$	19,896,405
September 1-30, 2020		—	$	—		—	$	19,896,405
Total		—				—

⁽¹⁾ On October 28, 2019 our board of directors authorized the purchase of up to $25.0 million of shares of our common stock. This authorization expires on December 31, 2021.

Item 5. Other Information.

On November 3, 2020, the Company entered into Change in Control Employment and Severance Agreements (“Change in Control Agreements”) with Robert D. Kamphuis, the Company’s Chairman, President and Chief Executive Officer; Todd M. Butz, the Company’s Chief Financial Officer; Ryan F. Raber, the Company’s Executive Vice President – Strategy, Sales & Marketing; and Randall P. Stille, the Company’s Chief Operating Officer.

The Change in Control Agreements will provide for certain protections relating to the executive officers’ employment during a two-year period following a change in control of the Company. If, during the protected period, the executive officer’s employment is terminated by the Company without cause, other than by reason of death or disability, or the executive officer terminates his employment with good reason, then, if the executive officer provides a release of claims, he will be entitled to a severance payment of two times (three times, in the case of the CEO) the sum of his annual base salary and target annual bonus.

In addition, the executive officer will be entitled to continued life insurance, hospitalization, medical and dental coverage for 24 months (36 months, in case of the CEO) following the termination of employment. Any equity-based and cash incentive awards granted after the change of control will be deemed immediately earned or vested in full as of the termination of employment.

Prior to a change in control, the Change in Control Agreements do not restrict the Company’s right to terminate the executive officer’s employment for any reason. However, if the executive officer’s employment is terminated by the Company without cause within 180 days prior to a change in control and the executive officer reasonably demonstrates that the termination was at the request of the acquirer or otherwise arose in connection with or in anticipation of the change in control, the executive officer will be entitled to the protections described above.

The Change in Control Agreements impose restrictive covenants on the executive officers, including non-solicitation of Company customers, non-competition with the Company and non-interference with Company employees during the executive

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officer’s employment and for 12 months after employment ends. The Change in Control Agreements also obligate executive officers to protect the Company’s confidential information.

The Change in Control Agreements do not provide for any tax gross-ups. To the extent payments in connection with the change in control would trigger the parachute payment excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, then the executive officer will either receive the total payments and pay the excise tax or have the total payments reduced such that no excise tax will be imposed, whichever is better for the executive officer on an after-tax basis.

The foregoing summary of the Change in Control Agreements is not complete and is qualified in its entirety by reference to the full text of the forms of Change in Control Agreements, copies of which are filed herewith as Exhibits 10.1 and 10.2 and are incorporated herein by reference.

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Item 6. Exhibits.

The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

Exhibit Number	Description
10.1	Form of Change in Control Employment and Severance Agreement between Mayville Engineering Company, Inc. and each of Robert D. Kamphuis and Todd M. Butz.
10.2	Form of Change in Control Employment and Severance Agreement between Mayville Engineering Company, Inc. and each of Ryan F. Raber and Randall P. Stille.
10.3	Second Amendment, dated as of June 30, 2020, to the Amended and Restated Credit Agreement, dated as of September 26, 2019, by and among Mayville Engineering Company, Inc., the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent for the lenders, and Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10 to the Company’s Current Report on Form 8-K (File No. 001-38894) filed on July 6, 2020).
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Mayville Engineering Company, Inc.
Date: November 3, 2020	By:	/s/ Robert D. Kamphuis
		Robert D. Kamphuis
		Chairman, President & Chief Executive Officer
	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT

THIS CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT, effective as of the ____ day of _________, 2020 (this “Agreement”), is by and between MAYVILLE ENGINEERING COMPANY, INC., a Wisconsin corporation (the “Company”), and ______________________ (the “Executive”).

W I T N E S S E T H

WHEREAS, the Executive is employed by the Company and/or a subsidiary of the Company (collectively, the “Employer”) in a key executive capacity and the Executive’s services are valuable to the conduct of the business of the Company;

WHEREAS, the Company desires to continue to attract and retain dedicated and skilled management employees in a period of industry change, consistent with achieving the best possible value for its shareholders in any change in control of the Company;

WHEREAS, the Company recognizes that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing a potential conflict of interest between the Company’s needs for the Executive to remain focused on the Company’s business and for the necessary continuity in management prior to and following a change in control, and the Executive’s reasonable personal concerns regarding future employment with the Employer and economic protection in the event of loss of employment as a consequence of a change in control;

WHEREAS, the Company and the Executive are desirous that any proposal for a change in control or acquisition of the Company will be considered by the Executive objectively and with reference only to the best interests of the Company and its shareholders;

WHEREAS, the Executive will be in a better position to consider the Company’s best interests if the Executive is afforded reasonable economic security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition;

WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company and has acquired certain confidential information and data with respect to the Company;

WHEREAS, the Company desires to insure, insofar as possible, that it will continue to have the benefit of the Executive’s services and to protect its confidential information and goodwill; and

WHEREAS, the Company is currently party to a Severance Agreement, effective as of May 20, 2019, with the Executive (the “Pre-CIC Severance Agreement”), which provides for severance benefits upon certain terminations of employment but does not contemplate any enhanced benefits in connection with a change in control of the Company.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

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1.Definitions.

(a)409A Affiliate.  The term “409A Affiliate” means each entity that is required to be included in the Company’s controlled group of corporations within the meaning of Section 414(b) of the Code, or that is under common control with the Company within the meaning of Section 414(c) of the Code; provided, however, that the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent” each place it appears therein or in the regulations thereunder.

(b)Accrued Benefits.  The Executive’s “Accrued Benefits” shall include the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer for the time period ending with the Termination Date; (iii) any and all other cash earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plan then in effect; (iv) notwithstanding any provision of any cash bonus or cash incentive compensation plan applicable to the Executive (other than certain cash-based long-term incentive compensation awards as provided in clause (B) below), but subject to any irrevocable deferral election then in effect, a lump sum amount, in cash, equal to the sum of (A) any cash bonus or cash incentive compensation that has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the Termination Date but has not yet been paid (pursuant to Section 5(e) or otherwise) and (B) a pro rata portion to the Termination Date of the aggregate value of all contingent cash-based bonus or incentive compensation awards to the Executive (including any such annual bonus and, unless the applicable award document expressly references this definition and provides otherwise, any such long-term incentive compensation awards) for all uncompleted periods under the plan calculated as to each such award as if the Goals with respect to such bonus or incentive compensation award had been attained at the target level; and (v) all other payments and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other beneficiary) may be entitled on the Termination Date as compensatory fringe benefits or under the terms of any benefit plan of the Employer, excluding severance payments under any Employer severance policy, practice or agreement in effect on the Termination Date.  Payment of Accrued Benefits shall be made promptly in accordance with the Company’s prevailing practice with respect to clauses (i) and (ii) or, with respect to clauses (iii), (iv) and (v), pursuant to the terms of the benefit plan or practice establishing such benefits; provided that payments pursuant to clause (iv)(B) shall be paid on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or, to the extent not so required, within ninety (90) days of the Executive’s Separation from Service.

(c)Act.  The term “Act” means the Securities Exchange Act of 1934, as amended.

(d)Affiliate and Associate.  The terms “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule l2b-2 of the General Rules and Regulations under the Act.

(e)Annual Cash Compensation.  The term “Annual Cash Compensation” shall mean the sum of (i) the Executive’s Annual Base Salary (determined as of the time of the Change in Control of the Company or, if higher, immediately prior to the date the Notice of Termination is given) plus (ii) an amount equal to the Executive’s annual cash incentive target bonus for the fiscal

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year in which the Termination Date occurs (the aggregate amount set forth in clause (i) and clause (ii) shall hereafter be referred to as the “Annual Cash Compensation”).

(f)Beneficial Owner.  A Person shall be deemed to be the “Beneficial Owner” of any securities:

(i)which such Person or any of such Person’s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase, or (B) securities issuable upon exercise of any rights issued pursuant to the terms of any rights agreement of the Company, at any time before the issuance of such securities;

(ii)which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule l3d-3 of the General Rules and Regulations under the Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Act and (B) is not also then reportable on a Schedule l3D under the Act (or any comparable or successor report); or

(iii)which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.

(g)Cause.  “Cause” for termination by the Employer of the Executive’s employment shall be limited to (i) the engaging by the Executive in intentional conduct that the Company establishes, by clear and convincing evidence, has caused demonstrable and serious financial injury to the Employer, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative; (ii) the Executive’s conviction of a felony (as evidenced by binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion of all rights of appeal), the elements of which are substantially related to the Executive’s duties or responsibilities owed to the Employer; or (iii) continuing willful and unreasonable refusal by the Executive to perform the Executive’s duties or responsibilities (unless significantly changed without the Executive’s consent).

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(h)Change in Control of the Company. A “Change in Control of the Company” shall be deemed to have occurred if an event or events constituting a “Change of Control” as defined in the Company’s 2019 Omnibus Incentive Plan, as an existence on the date hereof, shall have occurred.

(i)Code.  The term “Code” means the Internal Revenue Code of 1986, including any amendments thereto or successor tax codes thereof.  Any reference to a specific provision of the Code includes any regulations promulgated under such provision and any successor provision.

(j)Company Customer.  “Company Customer” is limited to those customers, clients or partners who did business with the Company within the most recent twenty-four (24) months of the Executive’s employment (or during the period of the Executive’s employment, if the Executive was employed for less than twenty-four months) and (i) about whom the Executive, as a result of his or her employment, had access to information or goodwill as a normal part of the Executive’s job performance that would assist in solicitation of such Company Customer, or (ii) with whom the Executive personally dealt on behalf of the Company in the twelve (12) months immediately preceding the last day of the Executive’s employment and that the Executive was introduced to or otherwise had business contact with such Company Customer as a result of his or her employment with the Company.  “Company Customer” shall also include an individual or business to whom a pitch to solicit or secure business or a sale was prepared (even if not yet made) within the 12-month period preceding the end of the Executive’s employment, and with which the Executive had not insignificant involvement in the preparation, or had exposure to specific information developed for that particular pitch.

(k)Competitive Products.  “Competitive Products” means products that serve the same function as, or that could be used to replace, products the Company provided to, offered to, or was in the process of developing for a present, former, or future possible customer/client/partner at any time during the twelve (12) months immediately preceding the last day of the Executive’s employment (or at any time during the Executive’s employment if Executive was employed for less than twelve months).  Competitive Products does not include any product that the Company no longer provides and/or does not intend to provide in the 12-month period following the date on which Executive’s employment with the Company ends.

(l)Competitive Services.  “Competitive Services” means services of the type that the Company provided or offered to its customers, clients or partners at any time during the twelve (12) months immediately preceding the last day of the Executive’s employment with the Company (or at any time during the Executive’s employment if the Executive was employed for less than twelve months).  “Competitive Services” also includes those services that the Company was in the process of developing or which it was actively engaged in research and development to offer to a customer/client/partner or anticipated customer/client/partner at the time Executive’s employment with the Company ended.  Competitive Services does not include any service that the Company no longer provides and/or does not intend to provide in the 12-month period following the date on which Executive’s employment with the Company ends.

(m)Confidential Information.  “Confidential Information” means Company information not generally known to, and not readily ascertainable through proper means by, the Company’s competitors on matters such as customer lists, customer information, and customer needs; nonpublic financial information; marketing, business and strategic plans; business methods; research strategies and plans; patent applications; sales and marketing plans; future market and

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product plans; Company (not individual) know-how; trade secrets; Company research and development, techniques, processes, product development, work processes or methodologies; production machinery, tools, raw materials and methodologies; analytical analyses, product analyses, inventions, formulaic work, formulas, formulaic techniques, analytical methodology, efficacy data and testing data; technology, drawings, engineering, code, code writing, software (and hardware) development and platform development; mechanical development and research, and all drawings or engineering for the same; and other information of a technical or economic nature relating to the Company’s business, and to which the Executive has access.  Confidential Information includes negative know-how, which is information about what the Company has tried that did not work, if that information is not generally known or easily ascertainable by the Company’s competitors and would give them an advantage in knowing what not to do.  Information, data, and materials received by the Company from others in confidence (or subject to nondisclosure or similar covenants that is of the same character as that described in this paragraph, shall also be deemed to be and shall be Protected Information.  Notwithstanding the foregoing, Confidential Information shall not include information that the Executive can prove: (i) was in the public domain, being publicly and openly known through lawful and proper means; (ii) was independently developed or acquired by the Executive without reliance in any way on other Confidential Information of the Company or any customer, client or partner; or, (iii) was approved by the Company for use and disclosure by the Executive without restriction.

(n)Covered Termination.  Subject to Section 2(b), the term “Covered Termination” means any Termination of Employment during the Employment Period where the Termination Date or the date Notice of Termination is delivered is any date prior to the end of the Employment Period.

(o)Direct Competitor.  “Direct Competitor” means a person, business or company providing Competitive Products or Competitive Services anywhere in the United States.  “Direct Competitor” does not include any business which the parties have agreed in writing to exclude from the definition.

(p)Employment Period.  Subject to Section 2(b), the term “Employment Period” means a period commencing on the date of a Change in Control of the Company, and ending at 11:59 p.m. Central Time on the  second anniversary of such date

(q)Good Reason.  The Executive shall have “Good Reason” for termination of employment in the event of any of the following without the Executive’s prior written consent:

(i)any breach of this Agreement by the Employer, including specifically any breach by the Employer of the agreements contained in Section 3, Section 4, Section 5, or Section 6, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;

(ii)any reduction in the Executive’s (A) base salary, (B) percentage of base salary available as cash incentive compensation or bonus opportunity, (C) grant date fair value of annual equity-based awards or (D) other benefits, in each case relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the Change in Control of the Company or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period;

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(iii)the removal of the Executive from, or any failure to reelect or reappoint the Executive to, any of the positions held with the Employer on the date of the Change in Control of the Company or any other positions with the Employer to which the Executive shall thereafter be elected, appointed or assigned, except in the event that such removal or failure to reelect or reappoint relates to the termination by the Employer of the Executive’s employment for Cause or by reason of disability pursuant to Section 12;

(iv)a good faith determination by the Executive that there has been a material adverse change in the Executive’s working conditions or status with the Employer relative to the most favorable working conditions or status in effect during the 180-day period prior to the Change in Control of the Company, or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period, including but not limited to (A) a significant change in the nature or scope of the Executive’s authority, powers, functions, duties or responsibilities (including a change in reporting structure that entails a significant change in such nature or scope), or (B) a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertent event not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;

(v)the relocation of the Executive’s principal place of employment to a location more than 50 miles from the Executive’s principal place of employment on the date 180 days prior to the Change in Control of the Company (or if the Executive has not been employed for 180 days prior to the Change in Control of the Company, as in effect on the date the Executive entered into this Agreement);

(vi)the Employer requires the Executive to travel on Employer business 20% in excess of the average number of days per month the Executive was required to travel during the 180-day period prior to the Change in Control of the Company; or

(vii)failure by the Company to obtain the Agreement referred to in Section 17(a) as provided therein.

(r)Person.  The term “Person” shall mean any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity, or a group of any of the foregoing acting in concert.

(s)Separation from Service.  For purposes of this Agreement, the term “Separation from Service” means the Executive’s Termination of Employment, or if the Executive continues to provide services following his or her Termination of Employment, such later date as is considered a separation from service from the Company and its 409A Affiliates within the meaning of Code Section 409A.  Specifically, if the Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, such shift in status is not automatically a Separation from Service.

(t)Termination of Employment.  For purposes of this Agreement, the Executive’s termination of employment shall be presumed to occur when the Company and Executive reasonably anticipate that no further services will be performed by the Executive for the Company and its 409A Affiliates or that the level of bona fide services the Executive will perform as

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an employee of the Company and its 409A Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed by the Executive (whether as an employee or independent contractor) for the Company and its 409A Affiliates over the immediately preceding 36-month period (or such lesser period of services).  Whether the Executive has experienced a Termination of Employment shall be determined by the Employer in good faith and consistent with Section 409A of the Code.  Notwithstanding the foregoing, if the Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide reason, the Executive will not be deemed to have incurred a Separation from Service for the first 6 months of the leave of absence, or if longer, for so long as the Executive’s right to reemployment is provided either by statute or by contract, including this Agreement; provided that if the leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, the leave may be extended by the Employer for up to 29 months without causing a Termination of Employment.

(u)Termination Date.  Except as otherwise provided in Section 2(b), Section 10(b), and Section 17(a), the term “Termination Date” means (i) if the Executive’s Termination of Employment is by the Executive’s death, the date of death; (ii) if the Executive’s Termination of Employment is by reason of voluntary early retirement, as agreed in writing by the Employer and the Executive, the date of such early retirement which is set forth in such written agreement; (iii) if the Executive’s Termination of Employment is, for purposes of this Agreement, by reason of disability pursuant to Section 12, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period; (iv) if the Executive’s Termination of Employment is by the Executive voluntarily (other than for Good Reason), the date the Notice of Termination is given; and (v) if the Executive’s Termination of Employment is by the Employer (other than by reason of disability pursuant to Section 12) or by the Executive for Good Reason, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period.  Notwithstanding the foregoing,

(A)If termination is for Cause pursuant to Section 1(g)(iii) and if the Executive has cured the conduct constituting such Cause as described by the Employer in its Notice of Termination within such 30-day or shorter period, then the Executive’s employment hereunder shall continue as if the Employer had not delivered its Notice of Termination.

(B)If the Executive shall in good faith give a Notice of Termination for Good Reason and the Employer notifies the Executive that a dispute exists concerning the termination within the 15-day period following receipt thereof, then the Executive may elect to continue his or her employment during such dispute and the Termination Date shall be determined under this paragraph.  If the Executive so elects and it is thereafter determined that Good Reason did exist, the Termination Date shall be the earliest of (1) the date on which the dispute is finally determined, either (x) by mutual written agreement of the parties or (y) in accordance with Section 22, (2) the date of the Executive’s death or (3) one day prior to the end of the Employment Period.  If the Executive so elects and it is thereafter determined that Good Reason did not exist, then the employment of the Executive hereunder shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason and there shall be no Termination Date arising

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out of such Notice.  In either case, this Agreement continues, until the Termination Date, if any, as if the Executive had not delivered the Notice of Termination except that, if it is finally determined that Good Reason did exist, the Executive shall in no case be denied the benefits described in Section 9 (including a Termination Payment) based on events occurring after the Executive delivered his Notice of Termination.

(C)Except as provided in Section 1(u)(B), if the party receiving the Notice of Termination notifies the other party that a dispute exists concerning the termination within the appropriate period following receipt thereof and it is finally determined that the reason asserted in such Notice of Termination did not exist, then (1) if such Notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his or her employment and the Termination Date shall be the earlier of the date 15 days after the Notice of Termination is given or one day prior to the end of the Employment Period and (2) if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.

Capitalized terms used in this Agreement not defined in this Section 1 have the meanings assigned in the other sections of this Agreement.  The definitions of the following terms may be found in the sections indicated:

Term	Section
Annual Base Salary	Section 5(a)
Base Period Income	Section 9(b)(iii)
Bonus Amount	Section 5(e)(i)
Bonus Plan	Section 5(e)
Company Incentive Plan	Section 5(e)(iii)
DTSA	Section 14(f)
Excise Tax	Section 9(b)(i)
Expenses	Section 15
Goals	Section 5(e)(iii)
National Tax Counsel	Section 9(b)(ii)
Notice of Termination	Section 13
Plans	Section 9(c)(iv)
Restricted Employee	Section 14(c)
Termination Payment	Section 9(a)
Total Payments	Section 9(b)(i)

2.Termination or Cancellation Prior to Change in Control.

(a)Subject to Section 2(b) and the terms of the Pre-CIC Severance Agreement, the Employer and the Executive shall each retain the right to terminate the employment of the Executive at any time and for any reason (or no reason) prior to a Change in Control of the Company.  Subject to Section 2(b), in the event that prior to a Change in Control of the Company (i) the Executive’s employment is terminated or (ii) as determined in writing by the Compensation Committee of the Board of Directors of the Company in its sole discretion, the Executive’s authority, powers, functions, duties, responsibilities or pay grade are materially reduced, this Agreement shall

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be terminated and cancelled and of no further force and effect, and any and all rights and obligations of the parties hereunder shall cease.

(b)Anything in this Agreement to the contrary notwithstanding, if the Executive’s employment with the Employer is terminated by the Employer (other than a termination due to the Executive’s death or as a result of the Executive’s disability (as determined under Section 12) during the period of 180 days prior to the date on which a Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then for all purposes of this Agreement such termination of employment shall be deemed a “Covered Termination,” a “Notice of Termination” shall be deemed to have been given, and the “Employment Period” shall be deemed to have begun on the date of such termination which shall be deemed to be the “Termination Date” and the date of the Change of Control of the Company for purposes of this Agreement, and any benefit under this Agreement that is more favorable to the Executive compared with a similar benefit under the Pre-CIC Severance Agreement shall be provided in lieu of such similar benefit under the Pre-CIC Severance Agreement.  Anything in this Agreement to the contrary notwithstanding, if the Executive’s authority, powers, functions, duties, responsibilities or pay grade were reduced pursuant to Section 2(a)(ii) during the period of 180 days prior to the date on which the Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such reduction in authority, powers, functions, duties, responsibilities or pay grade (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then the termination and cancellation of this Agreement pursuant to Section 2(a) shall be deemed null and void, this Agreement shall be deemed to remain in full force and effect with any and all rights and obligations of the parties hereunder continuing and such reduction in authority, powers, functions, duties, responsibilities or pay grade shall be considered “Good Reason” for the Executive to terminate employment in connection with a Change in Control of the Company.

3.Employment Period.  If a Change in Control of the Company occurs when the Executive is employed by the Employer, then (a) this Agreement will apply in place of the Pre-CIC Severance Agreement, (b) the Employer will continue thereafter to employ the Executive during the Employment Period, and (c) the Executive will remain in the employ of the Employer in accordance with and subject to the terms and provisions of this Agreement.  Any Termination of Employment during the Employment Period, whether by the Company or the Employer, shall be deemed a termination by the Company for purposes of this Agreement.

4.Duties.  During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of the Change in Control of the Company or in such other capacities and positions as may be agreed to by the Employer and the Executive in writing, devote the Executive’s best efforts and all of the Executive’s business time, attention and skill to the business and affairs of the Employer, as such business and affairs now exist and as they may hereafter be conducted.

5.Compensation.  During the Employment Period, the Executive shall be compensated as follows:

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(a)The Executive shall receive, at reasonable intervals (but not less often than monthly) and in accordance with such standard policies as may be in effect immediately prior to the Change in Control of the Company, an annual base salary in cash equivalent of not less than twelve times the Executive’s highest monthly base salary for the twelve-month period immediately preceding the month in which the Change in Control of the Company occurs or, if higher, annual base salary at the rate in effect immediately prior to the Change in Control of the Company (which base salary shall, unless otherwise agreed in writing by the Executive or subject to any irrevocable deferral election then in effect, include the current receipt by the Executive of any amounts which, prior to the Change in Control of the Company, the Executive had elected to defer, whether such compensation is deferred under Section 401(k) of the Code or otherwise), subject to adjustment as hereinafter provided in Section 6 (such salary amount as adjusted upward from time to time is hereafter referred to as the “Annual Base Salary”).

(b)The Executive shall receive fringe benefits at least equal in value to the highest value of such benefits provided for the Executive at any time during the 180-day period immediately prior to the Change in Control of the Company or, if more favorable to the Executive, those provided generally at any time during the Employment Period to any executives of the Employer of comparable status and position to the Executive; and shall be reimbursed, at such intervals and in accordance with such standard policies that are most favorable to the Executive that were in effect at any time during the 180-day period immediately prior to the Change in Control of the Company, for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer, including travel expenses.

(c)The Executive and/or the Executive’s family, as the case may be, shall be included, to the extent eligible thereunder (which eligibility shall not be conditioned on the Executive’s salary grade or on any other requirement which excludes persons of comparable status to the Executive unless such exclusion was in effect for such plan or an equivalent plan at any time during the 180-day period immediately prior to the Change in Control of the Company), in any and all plans providing benefits for the Employer’s salaried employees in general, including but not limited to group life insurance, hospitalization, medical, dental, profit sharing and stock bonus plans; provided, that, (i) in no event shall the aggregate level of benefits under such plans in which the Executive is included be less than the aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(c) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (ii) in no event shall the aggregate level of benefits under such plans be less than the aggregate level of benefits under plans of the type referred to in this Section 5(c) provided at any time after the Change in Control of the Company to any executive of the Employer of comparable status and position to the Executive.

(d)The Executive shall annually be entitled to not less than the amount of paid vacation and not fewer than the highest number of paid holidays to which the Executive was entitled annually at any time during the 180-day period immediately prior to the Change in Control of the Company or such greater amount of paid vacation and number of paid holidays as may be made available annually to other executives of the Employer of comparable status and position to the Executive at any time during the Employment Period.

(e)The Executive shall be included in all plans providing additional benefits to executives of the Employer of comparable status and position to the Executive, including but not limited to short- or long-term cash-based incentive compensation plans (such plan or plans together,

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the “Bonus Plan”), deferred compensation plans, supplemental retirement plans, equity awards, and similar or comparable plans; provided, that, unless otherwise provided in clauses (i) or (ii) below, in no event shall the aggregate level of benefits under such plans or awards be less than the higher of  (x) the highest aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(e) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (y) the aggregate levels of benefits under plans of the type referred to in this Section 5(e) provided at any time after the Change in Control of the Company to any executive of the Employer comparable in status and position to the Executive.  

(i)With respect to the Bonus Plan, the amount of the compensation (the “Bonus Amount”) that the Executive is eligible to earn under the Bonus Plan if the threshold, target and maximum performance objectives are met shall be no less than the highest threshold, target and maximum amounts, respectively, that Executive was eligible to receive under awards outstanding under the Employer’s short- or long-term cash-based incentive compensation plan or plans as in effect at any time during the 180-day period immediately prior to the Change in Control of the Company; provided that the amount Executive is eligible to earn shall in no event be lower than the amount of short- or long-term cash-based incentive compensation that any executive of the Employer comparable in status and position to the Executive is eligible to earn.  Payment of the Bonus Amount, if earned, shall not be affected by the Executive’s Termination of Employment after the end of the Employment Period.

(ii)With respect to equity awards, the Executive shall annually receive awards under one or more equity-based compensation plan or plans of the Employer.  Such annual equity awards shall have a grant date fair value at least equal to the aggregate grant date fair value of the largest equity-based awards granted to the Executive at any time during the one-year period immediately prior to the Change in Control of the Company, measured, in each case, as a multiple of the Executive’s Annual Base Salary; provided that, solely for purposes of determining the grant date fair value of the largest equity-based awards granted to the Executive during such one-year period immediately prior to the Change in Control of the Company, any inducement awards or other awards that are intended to be non-recurring shall be disregarded or, to the extent such awards are intended to replace more than one annual award, shall be pro-rated so that only a one-year portion of the award shall be counted; and provided further that the grant date fair value of the equity awards granted to the Executive shall in no event be lower than the grant date fair value of the annual equity-based awards granted to any executive of the Employer comparable in status and position to the Executive.

(iii)To the extent any compensation that the Executive has an opportunity to earn after a Change in Control of the Company is subject to achieving performance objectives, such performance objectives shall be established and communicated in writing to the Executive within the first ninety (90) days of the performance period and shall be reasonably related to the business of the Employer (the “Goals”).  All Goals shall be attainable with approximately the same degree of probability as the most attainable goals under the Employer’s performance-based compensation plan or plans as in effect at any time during the 180-day period immediately prior to the Change in Control of the Company (whether one or more, the “Company Incentive Plan”) and in view of the Employer’s existing and projected financial and business circumstances applicable at the time, and shall have a

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performance period that is no longer than the performance period corresponding to the most analogous type of compensation under the Company Incentive Plan.

6.Annual Compensation Adjustments.  During the Employment Period, the Board of Directors of the Company (or an appropriate committee thereof) will consider and appraise, at least annually, the contributions of the Executive to the Company, and in accordance with the Company’s practice prior to the Change in Control of the Company, due consideration shall be given to the upward adjustment of the Executive’s Annual Base Salary, at least annually, (a) commensurate with increases generally given to other executives of the Employer of comparable status and position to the Executive, and (b) as the scope of the Company’s operations or the Executive’s duties expand.

7.Termination For Cause or Without Good Reason.  If there is a Covered Termination for Cause or due to the Executive’s voluntarily terminating his or her employment other than for Good Reason (any such terminations to be subject to the procedures set forth in Section 13), then the Executive shall be entitled to receive only Accrued Benefits.

8.Termination Giving Rise to a Termination Payment and Certain Other Benefits.  If there is a Covered Termination by the Executive for Good Reason, or by the Company other than by reason of (i) death, (ii) disability pursuant to Section 12, or (iii) Cause (any such terminations to be subject to the procedures set forth in Section 13), then (A) the Executive shall be entitled to receive the Accrued Benefits and, in lieu of further base salary for periods following the Termination Date and as liquidated damages and additional severance pay, the Termination Payment pursuant to Section 9(a), (B) all equity-based and cash incentive awards then held by the Executive that were granted prior to the Change in Control of the Company shall be subject to the terms of the equity or incentive plan under which the awards were granted and (C) all equity-based and cash incentive awards then held by the Executive that were granted on or after the Change in Control of the Company shall vest or be earned in full immediately upon such Covered Termination, with the amount or value of any performance-based awards determined based on the deemed achievement of all applicable performance conditions at 100% of target, without pro-ration.

9.Payments Upon Termination.

(a)Termination Payment. The “Termination Payment” shall be an amount equal to the Annual Cash Compensation times [for CEO: three (3)][for CFO: two (2)].  The Termination Payment shall be paid to the Executive in cash equivalent (i) on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs, without interest thereon, to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or (ii) to the extent not so required, within fifteen (15) business days after the Termination Date provided that, in each case, the Executive signs and does not revoke a release of claims in the form attached hereto as Exhibit A if timely requested by the Company (provided further that, if the time during which the Executive may sign the release prior to payment includes two calendar years, the payment shall be made in the second calendar year).  Notwithstanding the foregoing, in the event the Executive’s Termination Date is pursuant to Section 2(b), the Termination Payment shall be paid within ten (10) business days after the date of the Change in Control of the Company (as defined without reference to Section 2(b)), without interest.  Such lump sum payment shall not be reduced by any present value or similar factor, and the Executive shall not be required to mitigate the amount of the Termination Payment by securing other employment or otherwise, nor will such Termination Payment be reduced by reason of the Executive securing other employment or for any other reason, except as provided in subsection (b) below.  The

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Termination Payment shall be in lieu of, and acceptance by the Executive of the Termination Payment shall constitute the Executive’s release of any rights of the Executive to, any other cash severance payments under any Company severance policy, practice or agreement.

(b)280G Provision.

(i)Notwithstanding any other provision of this Agreement, if any portion of the Termination Payment or any other payment or other benefit to the Executive under this Agreement, or under any other agreement with or plan of the Employer or any 409A Affiliate (in the aggregate, “Total Payments”), would constitute an “excess parachute payment” (as defined below) and would, but for this Section 9(b)(i), result in the imposition on the Executive of an excise tax under Code Section 4999 (the “Excise Tax”), then the Total Payments to be made to the Executive shall either be (A) delivered in full, or (B) delivered in a reduced amount that is One Dollar ($1.00) less than the amount that would cause any portion of such Total Payments to be subject to the Excise Tax, whichever of the foregoing results in the receipt by the Executive of the greatest benefit on an after-tax basis (taking into account the applicable federal, state and local income taxes and the Excise Tax).

(ii)Within forty (40) days following the Executive’s Termination of Employment or notice by one party to the other of its belief that there is a payment or benefit due the Executive that will result in an excess parachute payment, the Executive and the Company, at the Company’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel (“National Tax Counsel”) selected by the Company’s independent auditors and reasonably acceptable to the Executive (which may be regular outside counsel to the Company), which opinion sets forth (A) the amount of the Base Period Income (as defined below), (B) the amount and present value of Total Payments, (C) the amount and present value of any excess parachute payments determined without regard to any reduction of Total Payments pursuant to Section 9(b)(i), and (D) the net after-tax proceeds to the Executive, taking into account the tax imposed under Code Section 4999 if (1) the Total Payments were reduced in accordance with Section 9(b)(i)(B), or (2) the Total Payments were not so reduced.  The opinion of National Tax Counsel shall be addressed to the Company and the Executive and shall be binding upon the Company and the Executive.  If such National Tax Counsel opinion determines that clause (B) of Section 9(b)(i) applies, then the payments hereunder or any other payment or benefit determined by such counsel to be includable in Total Payments shall be reduced or eliminated so that under the bases of calculations set forth in such opinion there will be no excess parachute payment.  In such event, payments or benefits included in the Total Payments shall be reduced or eliminated by applying the following principles, in order: (x) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (y) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (z) cash payments shall be reduced prior to non-cash benefits; provided that if the foregoing order of reduction or elimination would violate Code Section 409A, then the reduction shall be made pro rata among the payments or benefits included in the Total Payments (on the basis of the relative present value of the parachute payments).  

(iii)For purposes of this Agreement, (A) the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Section

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280G of the Code and such “parachute payments” shall be valued as provided therein, (B) present value for purposes of this Agreement shall be calculated in accordance with Section 1274(b)(2) of the Code, (C) the term “Base Period Income” means an amount equal to the Executive’s “annualized includable compensation for the base period” as defined in Section 280G(d)(1) of the Code, (D) for purposes of the National Tax Counsel opinion, the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Executive, and (E) the Executive shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation, and state and local income taxes at the highest marginal rate of taxation in the state or locality of the Executive’s domicile (determined in both cases in the calendar year in which the Covered Termination occurs or notice described in Section 9(b)(ii) is given, whichever is earlier), net of the maximum reduction in federal income taxes that may be obtained from the deduction of such state and local taxes.  If the National Tax Counsel so requests in connection with the opinion required by this Section 9(b), the Executive and the Company shall obtain, at the Company’s expense, and the National Tax Counsel may rely on, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by the Executive solely with respect to its status under Section 280G of the Code and the regulations thereunder.  

(iv)The Company agrees to bear all costs associated with, and to indemnify and hold harmless, the National Tax Counsel of and from any and all claims, damages, and expenses resulting from or relating to its determinations pursuant to this Section 9(b), except for claims, damages or expenses resulting from the gross negligence or willful misconduct of such firm.

(v)This Section 9(b) shall be amended to comply with any amendment or successor provision to Sections 280G or 4999 of the Code.  If such provisions are repealed without successor, then this Section 9(b) shall be cancelled without further effect.

(c)Additional Benefits.  If there is a Covered Termination and the Executive is entitled to Accrued Benefits and the Termination Payment, then the Company shall provide to the Executive the following additional benefits:

(i)The Executive shall receive until the end of the second calendar year following the calendar year in which the Executive’s Separation from Service occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Executive’s status with the Company immediately prior to the date of the Change in Control of the Company (or, if higher, immediately prior to the Executive’s Termination of Employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Executive’s Annual Base Salary.

(ii)Until the earlier of [for CEO:  thirty-six (36)][for CFO:  twenty-four (24)] months following the Executive’s Separation from Service or such time as the Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, the Executive shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance,

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hospitalization, medical and dental coverage as was required hereunder with respect to the Executive immediately prior to the date the Notice of Termination is given, subject to the following:

(A)Following the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith.  If the Executive is entitled to the Termination Payment pursuant to Section 2(b), then within ten (10) days following the Change in Control of the Company (determined without regard to Section 2(b)), the Company shall reimburse the Executive for any COBRA premiums the Executive paid for his or her hospitalization, medical and dental coverage under COBRA from the Executive’s Termination Date through the date of the Change in Control of the Company (determined without regard to Section 2(b)).

(B)To the extent required to comply with Code Section 409A, during the first six months following the Executive’s Separation from Service, the Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy.  After the end of such six month period, the Company shall make a cash equivalent payment to the Executive equal to the aggregate premiums paid by the Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above; provided that this clause (B) shall cease to apply if on the date of the Executive’s Separation from Service, neither the Company nor any other entity that is considered a “service recipient” with respect to the Executive within the meaning of Code Section 409A has any stock which is publicly traded on an established securities market (within the meaning of Treasury Regulation Section 1.897-1(m)) or otherwise.

10.Death.

(a)Except as provided in Section 10(b), in the event of a Covered Termination due to the Executive’s death, the Executive’s estate, heirs and beneficiaries shall receive all the Executive’s Accrued Benefits through the Termination Date.

(b)In the event the Executive dies after a Notice of Termination is given (i) by the Company or (ii) by the Executive for Good Reason, the Executive’s estate, heirs and beneficiaries shall be entitled to the benefits described in Section 10(a) and, subject to the provisions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive lived, except that the Termination Payment shall be paid within 90 days following the date of the Executive’s death, without interest thereon.  For purposes of this Section 10(b), the Termination Date shall be the earlier of 30 days following the giving of the Notice of Termination, subject to extension pursuant to Section 1(q), or one day prior to the end of the Employment Period.

11.Retirement.  If, during the Employment Period, the Executive and the Employer shall execute an agreement providing for the early retirement of the Executive from the Employer, or the Executive shall otherwise give notice that he is voluntarily choosing to retire early

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from the Employer, the Executive shall receive Accrued Benefits through the Termination Date; provided, that if the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than by reason of death, disability or Cause and the Executive also, in connection with such termination, elects voluntary early retirement, the Executive shall also be entitled to receive a Termination Payment pursuant to Section 9.

12.Termination for Disability.  If, during the Employment Period, as a result of the Executive’s disability due to physical or mental illness or injury (regardless of whether such illness or injury is job-related), the Executive shall have been absent from the Executive’s duties hereunder on a full-time basis for a period of six consecutive months and, within 30 days after the Company notifies the Executive in writing that it intends to terminate the Executive’s employment (which notice shall not constitute the Notice of Termination contemplated below), the Executive shall not have returned to the performance of the Executive’s duties hereunder on a full-time basis, the Company may terminate the Executive’s employment for purposes of this Agreement pursuant to a Notice of Termination given in accordance with Section 13.  If the Executive’s employment is terminated on account of the Executive’s disability in accordance with this Section, the Executive shall receive Accrued Benefits through the Termination Date and shall remain eligible for all benefits provided by any long term disability programs of the Employer in effect at the time of such termination.

13.Termination Notice and Procedure.  Any Covered Termination by the Company or the Executive (other than a termination of the Executive’s employment that is a Covered Termination by virtue of Section 2(b)) shall be communicated by a written notice of termination (“Notice of Termination”) to the Executive, if such Notice is given by the Company, and to the Company, if such Notice is given by the Executive, all in accordance with the following procedures and those set forth in Section 24:

(a)If such termination is for disability, Cause or Good Reason, the Notice of Termination shall indicate in reasonable detail the facts and circumstances alleged to provide a basis for such termination.

(b)Any Notice of Termination by the Company shall have been approved, prior to the giving thereof to the Executive, by a resolution duly adopted by a majority of the directors of the Company (or any successor corporation) then in office.

(c)If the Notice is given by the Executive for Good Reason, the Executive may cease performing his or her duties hereunder on or after the date fifteen (15) days after the delivery of Notice of Termination and shall in any event cease employment on the Termination Date.  If the Notice is given by the Company, then the Executive may cease performing his or her duties hereunder on the date of receipt of the Notice of Termination, subject to the Executive’s rights hereunder.

(d)The Executive shall have thirty (30) days, or such longer period as the Company may determine to be appropriate, to cure any conduct or act, if curable, alleged to provide grounds for termination of the Executive’s employment for Cause under this Agreement pursuant to Section 1(g)(iii).

(e)The recipient of any Notice of Termination shall personally deliver or mail in accordance with Section 24 written notice of any dispute relating to such Notice of Termination to

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the party giving such Notice within 15 days after receipt thereof; provided, however, that if the Executive’s conduct or act alleged to provide grounds for termination by the Company for Cause is curable, then such period shall be 30 days.  After the expiration of such period, the contents of the Notice of Termination shall become final and not subject to dispute.

14.Further Obligations of the Executive; Trade Secrets.

(a)Non-Solicitation.  The Executive acknowledges that the relationships and goodwill that he develops with Company Customers as a result of his or her employment belong to the Company and that using such relationships and goodwill against the interests of the Company would be unfair.  The Executive further acknowledges that because those relationships and goodwill are based on personal trust, the Company will need an opportunity, free from interference by the Executive, to secure the relationships and goodwill for itself after Executive’s employment ends.  The Executive therefore agrees that while employed by the Company and for a period of twelve (12) months after the Executive’s employment with the Company ends, for whatever reason, the Executive will not, and will not assist anyone else to, (i) solicit or encourage any Company Customer to terminate or diminish its relationship with the Company relating to Competitive Services or Competitive Products; or (ii) seek to persuade any Company Customer to conduct with anyone other than the Company any business or activity relating to Competitive Services or Competitive Products that such Company Customer conducts or could conduct with the Company.

(b)Non-Competition.  The Executive agrees that while employed by the Company and for a period of twelve (12) months after the Executive’s employment with the Company ends for any reason, the Executive will not, on the Executive’s own behalf, or on behalf of any other person or entity, directly or indirectly, provide services to a Direct Competitor in a role where the Executive’s knowledge of Confidential Information is likely to affect the Executive’s decisions or actions for the Direct Competitor, to the detriment of the Company.

(c)Non-Interference.  Executive agrees that during his or her employment with the Company, and for a period of twelve (12) months from the termination of employment with the Company for any reason whatsoever, Executive shall not, either personally or in conjunction with others either (i) solicit, interfere with, or endeavor to cause any Restricted Employee of the Company to leave his or her employment in order to work for a Direct Competitor, or (ii) otherwise induce or attempt to induce any such Restricted Employee to terminate employment with the Company in order to work for a Director Competitor.  A “Restricted Employee” is an employee of the Company with whom the Executive has a managing or reporting relationship, which could be exploited by the Executive to persuade the Restricted Employee to leave his or her employment with the Company, and whom has special knowledge and/or information (including access to Confidential Information) that could cause the Company damage/harm if he or she went to work for a Direct Competitor.  Nothing in this Section 14(c) is meant to prohibit an employee of the Company that is not a party to this Agreement from becoming employed by another organization or person.

(d)Confidentiality.

(i)In the course of his or her employment with the Company, the Executive may be making use of, acquiring, or adding to the Company’s Confidential Information.  In addition, the Executive’s work for the Company requires Executive be provided access to valuable Confidential Information.  The Confidential Information to which the Executive will have access is valuable to the Company and/or its customers and

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business partners and each party takes steps to maintain the secrecy and confidential nature of these matters, including the regular use of computer passwords, locks and other security measures, and requires employees with access to this information to execute agreements similar to this Agreement where possible.  The Executive acknowledges that the Company will not provide him or her (on a going forward basis) with access to the Confidential Information unless Employee executes this Agreement.

(ii)Executive makes the following promises regarding Confidential Information.  Nothing in the following promises is intended to restrict Executive’s opportunities for employment.  The promises in this Section 14(d) are made to ensure that the Executive does not use Confidential Information except for the Company’s benefit.

(A)The Executive promises to protect and maintain the confidentiality of Confidential Information while employed by the Company.  The Executive will follow all Company policies and procedures for the protection and security of this information.  The Executive will also immediately report to management any potential or actual security breach or loss.

(B)The Executive agrees to return (and not retain) any and all materials reflecting Confidential Information that he or she may possess (including all Company-owned equipment) immediately upon end of employment or upon demand by the Company.  

(C)The Executive agrees to not use or disclose, except as necessary for the performance of his or her services on behalf of the Company or as required by law or legal process, any Confidential Information where such use or disclosure would be detrimental to the interests of the Company.  This promise applies only for so long as such Confidential Information remains confidential and not generally known to, and not readily ascertainable through proper means by, the Company’s competitors, or two years following the end of Executive’s employment with the Company, whichever occurs first. Because the Company has significant sales throughout the World, and because Confidential Information is generally very portable and transferable without geographic borders or constraints, this prohibition applies throughout the World.

(iii)If the Executive is requested or required to provide Confidential Information in a legal proceeding other than a government investigation or government legal action, the Executive will promptly notify the Company of the request so that the Company may either seek an appropriate protective order or waive the Executive’s obligations under this Agreement.  However, nothing in this Agreement prohibits the Executive from reporting a possible violation of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or Inspector General, or making other disclosures that are protected under any whistleblower provision of federal, state, or local law or regulation.  The Executive does not need the prior authorization of the Company to make any such reports or disclosures and Executive is not required to notify the Company that he or she made such reports or disclosures.  Further, nothing in this Agreement is intended to preclude the Executive from discussing or disclosing any concerns relative to

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sexual harassment or assault.  To the extent the Executive is covered by the National Labor Relations Act, nothing in this Agreement is intended (nor does it) prevent him from discussing applicable terms and conditions of employment, such as compensation and benefits.

(e)Non-Disparagement.  The Executive and the Company agree that they will not make any disparaging or derogatory remarks or statements about the other party to this Agreement in any public forum; provided that either party to this Agreement may give non-malicious and truthful testimony about the other party if properly subpoenaed.

(f)Trade Secrets/Defend Trade Secrets Act.  Nothing in this Agreement diminishes or limits any protection granted by law to trade secrets or relieves the Executive of any duty not to disclose, use, or misappropriate any information that is a trade secret, for as long as such information remains a trade secret.  Additionally, nothing in this Agreement is intended to discourage the Executive from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law.  Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:  

(i)An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that:  (A) is made (1) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  

(ii)An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual:  (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement shall limit, curtail or diminish the Company’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.

15.Expenses and Interest.  If, after a Change in Control of the Company, (a) a dispute arises with respect to the enforcement of the Executive’s rights under this Agreement or (b) any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein or to recover damages for breach hereof, in either case so long as the Executive is not acting in bad faith, then the Company shall reimburse the Executive for any reasonable attorneys’ fees and necessary costs and disbursements incurred as a result of the dispute, legal or arbitration proceeding (“Expenses”), and prejudgment interest on any money judgment or arbitration award obtained by the Executive calculated at the rate of interest announced by U.S. Bank National Association, Minneapolis, Minnesota, from time to time at its prime or base lending rate from the date that payments to him or her should have been made under this Agreement.  Within ten days after the Executive’s written request therefore (but in no event later than the end of the calendar year following the calendar year in which such Expense is incurred), the Company shall reimburse the Executive, or such other person or entity as the Executive may designate in writing to the Company, the Executive’s reasonable Expenses.

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16.Payment Obligations Absolute.  The Company’s obligation during and after the Employment Period to pay the Executive the amounts and to make the benefit and other arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against him or her or anyone else.  Except as provided in Section 15, all amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company will not seek to recover all or any part of such payment from the Executive, or from whomsoever may be entitled thereto, for any reason whatsoever.

17.Successors.

(a)If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a “Sale of Business”), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company.  Failure of the Company to obtain such written agreement prior to the effective date of such Sale of Business shall be a breach of this Agreement constituting “Good Reason” hereunder, except that for purposes of implementing the foregoing the date upon which such Sale of Business becomes effective shall be deemed the Termination Date.  In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, “Company” shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 17 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person.  The Executive shall, in his or her discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company and the Company (as so defined) in any action to enforce any rights of the Executive hereunder.  Except as provided in this Section 17(a), this Agreement shall not be assignable by the Company.  This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

(b)This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, heirs and beneficiaries.  All amounts payable to the Executive under Sections 3, 7, 8, 9, 10, 11, 12 and 15 if the Executive had lived shall be paid, in the event of the Executive’s death, to the Executive’s estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Employer, as such terms are in effect on the date of the Change in Control of the Company, that expressly govern benefits under such plan in the event of the Executive’s death.

18.Severability.  The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

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19.Contents of Agreement; Waiver of Rights; Amendment.  This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and shall supersede in all respects, and the Executive hereby waives all rights under, any prior or other agreement or understanding between the parties with respect to such subject matter, including, but not limited to any Change in Control Employment and Severance Agreement between the Company and the Executive entered into prior to the date hereof; provided that this Agreement shall not supersede the Pre-CIC Severance Agreement with respect to a termination of the Executive’s employment prior to a Change in Control of the Company.  This Agreement may not be amended or modified at any time except by written instrument executed by the Company and the Executive.

20.Withholding.  The Company shall be entitled to withhold from amounts to be paid to the Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law.  In addition, if prior to the date of payment of the Termination Payment hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due with respect to any payment or benefit to be provided hereunder, the Employer may provide for an immediate payment of the amount needed to pay the Executive’s portion of such tax (plus an amount equal to the taxes that will be due on such amount) and the Executive’s Termination Payment shall be reduced accordingly.  The Employer shall be entitled to rely on an opinion of the National Tax Counsel if any question as to the amount or requirement of any such withholding shall arise.

21.Certain Rules of Construction.  No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise.  No draft of this Agreement shall be taken into account in construing this Agreement.  Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Executive and an authorized representative of the Company.

22.Governing Law; Resolution of Disputes.  This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Wisconsin, without reference to the conflict of law principles thereof.  Any dispute arising out of this Agreement shall, at the Executive’s election, be determined by arbitration under the rules of the American Arbitration Association then in effect (in which case both parties shall be bound by the arbitration award) or by litigation.  Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Milwaukee, Wisconsin or, at the Executive’s election, if the Executive is not then residing or working in the Mayville, Wisconsin or Milwaukee, Wisconsin area, in the judicial district encompassing the city in which the Executive resides; provided, that, if the Executive is not then residing in the United States, the election of the Executive with respect to such venue shall be either Milwaukee, Wisconsin or in the judicial district encompassing that city in the United States among the thirty cities having the largest population (as determined by the most recent United States Census data available at the Termination Date) which is closest to the Executive’s residence.  The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.  

23.Additional Section 409A Provisions.  (a)  If, after the date of a Change in Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Executive’s income prior to the date such amount is actually paid or

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the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Executive shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the amount required to be included in the Executive’s income as a result of such failure and shall reduce the amount of payments or benefits otherwise due hereunder.  

(b)The Company and the Executive intend the terms of this Agreement to be in compliance with Section 409A of the Code.  The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.  To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code.

(c)If the Executive believes he or she is entitled to a payment or benefit pursuant to the terms of this Agreement that was not timely paid or provided, and such payment or benefit is considered deferred compensation subject to the requirements of Section 409A of the Code, the Executive acknowledges that to avoid an additional tax on such payment or benefit pursuant to the provisions of Section 409A of the Code, the Executive must make a reasonable, good faith effort to collect such payment or benefit no later than 90 days after the latest date upon which the payment could have been timely made or benefit timely provided without violating Section 409A of the Code, and if not paid or provided, must take further enforcement measures within 180 days after such latest date.

24.Notice.  Notices given pursuant to this Agreement shall be in writing and, except as otherwise provided by Section 13(c), shall be deemed given when actually received by the Executive or actually received by the Company’s Secretary or any officer of the Company other than the Executive.  If mailed, such notices shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Mayville Engineering Company, Inc., Attention: Corporate Secretary (or Chief Executive Officer, if the Executive is then Corporate Secretary), 715 South Street, Mayville, Wisconsin 53050, or if to the Executive, at the address set forth below the Executive’s signature to this Agreement or the Executive’s address in the Company’s records, or to such other address as the party to be notified shall have theretofore given to the other party in writing.

25.No Waiver.  No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.

26.Headings.  The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

MAYVILLE ENGINEERING COMPANY, INC.

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By: _________________________________

[NAME]

Its:  [TITLE]

EXECUTIVE:

[NAME]

Address:

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Exhibit A

RELEASE

1.In exchange for the promises and payments provided for in the Change in Control Employment and Severance Agreement (the “Agreement”) effective as _______ ___, 20__ between Mayville Engineering Company, Inc., a Wisconsin corporation (the “Company”), and [EXECUTIVE] (the “Executive”), the Executive hereby releases and forever discharges the Released Parties (defined below) from any and all claims, demands, rights, liabilities and causes of action of any kind or nature, known or unknown, arising prior to or through the date the Executive executes this Release, including, but not limited to, any claims, demands, rights, liabilities and causes of action arising or having arisen out of or in connection with the Executive’s employment or termination of employment with the Company.  “Released Parties” includes the Company, its parent companies, subsidiaries, related and affiliated companies, and its and their past and present employees, directors, officers, agents, shareholders, insurers, attorneys, executors, assigns and other representatives of any kind.  The Executive also releases and waives any claim or right to further compensation, benefits, damages, penalties, attorneys’ fees, costs or expenses of any kind from the Company or any of the other Released Parties except as provided in the Agreement or this Release.  This Release specifically includes, but is not limited to, a release of any and all claims pursuant to state and local fair employment law(s); Title VII of the Civil Rights Act of 1964; the Rehabilitation Act of 1973; the Reconstruction Era Civil Rights Acts, 42 U.S.C. §§1981-1988; the Civil Rights Act of 1991; the Age Discrimination in Employment Act (“ADEA”); the Americans with Disabilities Act; state and federal family and/or medical leave acts; state and federal wage payment laws to the extent such claims can legally be waived; and any other federal, state or local laws or regulations of any kind, whether statutory or decisional.  This Release also includes, but is not limited to, a release of any claims for wrongful termination, retaliation, tort, breach of contract, defamation, misrepresentation, violation of public policy or invasion of privacy.  This Release does not apply to (a) any claims or rights the Executive may have with respect to unpaid salary and accrued but unused vacation through the date of the Executive’s separation, (b) any claims or rights the Executive may have for unreimbursed business expenses incurred prior to the date of the Executive’s separation, (c) any claims or rights the Executive may have with respect to vested benefits under any employee benefit plans or with respect to severance or other benefits to be provided in the future under the Agreement, (d) any claims or rights the Executive may have for indemnification with respect to any claims, losses, damages, liabilities, actions or expenses (including attorneys’ fees) asserted against or incurred by the Executive as a result of the Executive’s service as an employee, officer or director of the Company, (e) any claims or rights the Executive may have as a shareholder or owner of any stock or other equity interest in the Company, (f) claims that may arise after the date the Executive signs this Release or (g) any claim that may not be released under applicable law.

2.The Executive states that the Executive has not filed or joined in any complaints, lawsuits, or proceedings of any kind against the Company or any of the other Released Parties, and the Executive promises never to file, pursue, participate in, or join in any lawsuits or proceedings asserting any claims that are released in this Release.  However, nothing in this Release prevents the Executive from (a) challenging the enforceability of this Release under the ADEA; or (b) filing a charge with the EEOC or otherwise cooperating with the EEOC; however, this Release does prohibit the Executive from obtaining any personal or monetary relief from the Released Parties based upon such cooperation or charge, whether filed by the Executive or anyone else on behalf of the Executive.

3.The Executive agrees and understands that this Release does not supersede any confidentiality or noncompete agreements or obligations to which the Executive was subject while employed by the Company or reduce the Executive’s obligations to comply with applicable laws relating to trade secrets, confidential information or unfair competition.  

4.The Executive hereby acknowledges that the benefits provided in the Agreement are greater than those to which the Executive is entitled by any contract, employment policy, or otherwise.  The Executive has up to twenty-one (21) days to consider whether to accept this Release and the Executive enters into it voluntarily.  The Executive may revoke this Release, in writing, within seven (7) days after signing it, and this Release will not become enforceable or effective until the revocation period has expired.  The Company advises the Executive to consult with an attorney prior to signing this Release.

5.Neither the Company’s signing of this Release nor any actions taken by the Company toward compliance with the terms of this Release or the Agreement constitute an admission by the Company that it has acted improperly or unlawfully with regard to the Executive or that it has violated any state or federal law.

6.If any portion of this Release is found to be unenforceable, the parties desire that all other portions that can be separated from it, or appropriately limited in scope, shall remain fully valid and enforceable.  The Executive enters into this Release knowingly and voluntarily and without any coercion.

AGREED TO AND ACCEPTED BY:

EXECUTIVE

_________________________________Date: ______________

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EX-10.2

Exhibit 10.2

CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT

THIS CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT, effective as of the ____ day of _________, 2020 (this “Agreement”), is by and between MAYVILLE ENGINEERING COMPANY, INC., a Wisconsin corporation (the “Company”), and ______________________ (the “Executive”).

W I T N E S S E T H

WHEREAS, the Executive is employed by the Company and/or a subsidiary of the Company (collectively, the “Employer”) in a key executive capacity and the Executive’s services are valuable to the conduct of the business of the Company;

WHEREAS, the Company desires to continue to attract and retain dedicated and skilled management employees in a period of industry change, consistent with achieving the best possible value for its shareholders in any change in control of the Company;

WHEREAS, the Company recognizes that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing a potential conflict of interest between the Company’s needs for the Executive to remain focused on the Company’s business and for the necessary continuity in management prior to and following a change in control, and the Executive’s reasonable personal concerns regarding future employment with the Employer and economic protection in the event of loss of employment as a consequence of a change in control;

WHEREAS, the Company and the Executive are desirous that any proposal for a change in control or acquisition of the Company will be considered by the Executive objectively and with reference only to the best interests of the Company and its shareholders;

WHEREAS, the Executive will be in a better position to consider the Company’s best interests if the Executive is afforded reasonable economic security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition;

WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company and has acquired certain confidential information and data with respect to the Company; and

WHEREAS, the Company desires to insure, insofar as possible, that it will continue to have the benefit of the Executive’s services and to protect its confidential information and goodwill.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1.Definitions.

(a)409A Affiliate.  The term “409A Affiliate” means each entity that is required to be included in the Company’s controlled group of corporations within the meaning of Section 414(b) of the Code, or that is under common control with the Company within the meaning of

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Section 414(c) of the Code; provided, however, that the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent” each place it appears therein or in the regulations thereunder.

(b)Accrued Benefits.  The Executive’s “Accrued Benefits” shall include the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer for the time period ending with the Termination Date; (iii) any and all other cash earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plan then in effect; (iv) notwithstanding any provision of any cash bonus or cash incentive compensation plan applicable to the Executive (other than certain cash-based long-term incentive compensation awards as provided in clause (B) below), but subject to any irrevocable deferral election then in effect, a lump sum amount, in cash, equal to the sum of (A) any cash bonus or cash incentive compensation that has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the Termination Date but has not yet been paid (pursuant to Section 5(e) or otherwise) and (B) a pro rata portion to the Termination Date of the aggregate value of all contingent cash-based bonus or incentive compensation awards to the Executive (including any such annual bonus and, unless the applicable award document expressly references this definition and provides otherwise, any such long-term incentive compensation awards) for all uncompleted periods under the plan calculated as to each such award as if the Goals with respect to such bonus or incentive compensation award had been attained at the target level; and (v) all other payments and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other beneficiary) may be entitled on the Termination Date as compensatory fringe benefits or under the terms of any benefit plan of the Employer, excluding severance payments under any Employer severance policy, practice or agreement in effect on the Termination Date.  Payment of Accrued Benefits shall be made promptly in accordance with the Company’s prevailing practice with respect to clauses (i) and (ii) or, with respect to clauses (iii), (iv) and (v), pursuant to the terms of the benefit plan or practice establishing such benefits; provided that payments pursuant to clause (iv)(B) shall be paid on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or, to the extent not so required, within ninety (90) days of the Executive’s Separation from Service.

(c)Act.  The term “Act” means the Securities Exchange Act of 1934, as amended.

(d)Affiliate and Associate.  The terms “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule l2b-2 of the General Rules and Regulations under the Act.

(e)Annual Cash Compensation.  The term “Annual Cash Compensation” shall mean the sum of (i) the Executive’s Annual Base Salary (determined as of the time of the Change in Control of the Company or, if higher, immediately prior to the date the Notice of Termination is given) plus (ii) an amount equal to the Executive’s annual cash incentive target bonus for the fiscal year in which the Termination Date occurs (the aggregate amount set forth in clause (i) and clause (ii) shall hereafter be referred to as the “Annual Cash Compensation”).

(f)Beneficial Owner.  A Person shall be deemed to be the “Beneficial Owner” of any securities:

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(i)which such Person or any of such Person’s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase, or (B) securities issuable upon exercise of any rights issued pursuant to the terms of any rights agreement of the Company, at any time before the issuance of such securities;

(ii)which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule l3d-3 of the General Rules and Regulations under the Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Act and (B) is not also then reportable on a Schedule l3D under the Act (or any comparable or successor report); or

(iii)which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.

(g)Cause.  “Cause” for termination by the Employer of the Executive’s employment shall be limited to (i) the engaging by the Executive in intentional conduct that the Company establishes, by clear and convincing evidence, has caused demonstrable and serious financial injury to the Employer, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative; (ii) the Executive’s conviction of a felony (as evidenced by binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion of all rights of appeal), the elements of which are substantially related to the Executive’s duties or responsibilities owed to the Employer; or (iii) continuing willful and unreasonable refusal by the Executive to perform the Executive’s duties or responsibilities (unless significantly changed without the Executive’s consent).

(h)Change in Control of the Company. A “Change in Control of the Company” shall be deemed to have occurred if an event or events constituting a “Change of Control” as defined in the Company’s 2019 Omnibus Incentive Plan, as an existence on the date hereof, shall have occurred.

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(i)Code.  The term “Code” means the Internal Revenue Code of 1986, including any amendments thereto or successor tax codes thereof.  Any reference to a specific provision of the Code includes any regulations promulgated under such provision and any successor provision.

(j)Company Customer.  “Company Customer” is limited to those customers, clients or partners who did business with the Company within the most recent twenty-four (24) months of the Executive’s employment (or during the period of the Executive’s employment, if the Executive was employed for less than twenty-four months) and (i) about whom the Executive, as a result of his or her employment, had access to information or goodwill as a normal part of the Executive’s job performance that would assist in solicitation of such Company Customer, or (ii) with whom the Executive personally dealt on behalf of the Company in the twelve (12) months immediately preceding the last day of the Executive’s employment and that the Executive was introduced to or otherwise had business contact with such Company Customer as a result of his or her employment with the Company.  “Company Customer” shall also include an individual or business to whom a pitch to solicit or secure business or a sale was prepared (even if not yet made) within the 12-month period preceding the end of the Executive’s employment, and with which the Executive had not insignificant involvement in the preparation, or had exposure to specific information developed for that particular pitch.

(k)Competitive Products.  “Competitive Products” means products that serve the same function as, or that could be used to replace, products the Company provided to, offered to, or was in the process of developing for a present, former, or future possible customer/client/partner at any time during the twelve (12) months immediately preceding the last day of the Executive’s employment (or at any time during the Executive’s employment if Executive was employed for less than twelve months).  Competitive Products does not include any product that the Company no longer provides and/or does not intend to provide in the 12-month period following the date on which Executive’s employment with the Company ends.

(l)Competitive Services.  “Competitive Services” means services of the type that the Company provided or offered to its customers, clients or partners at any time during the twelve (12) months immediately preceding the last day of the Executive’s employment with the Company (or at any time during the Executive’s employment if the Executive was employed for less than twelve months).  “Competitive Services” also includes those services that the Company was in the process of developing or which it was actively engaged in research and development to offer to a customer/client/partner or anticipated customer/client/partner at the time Executive’s employment with the Company ended.  Competitive Services does not include any service that the Company no longer provides and/or does not intend to provide in the 12-month period following the date on which Executive’s employment with the Company ends.

(m)Confidential Information.  “Confidential Information” means Company information not generally known to, and not readily ascertainable through proper means by, the Company’s competitors on matters such as customer lists, customer information, and customer needs; nonpublic financial information; marketing, business and strategic plans; business methods; research strategies and plans; patent applications; sales and marketing plans; future market and product plans; Company (not individual) know-how; trade secrets; Company research and development, techniques, processes, product development, work processes or methodologies; production machinery, tools, raw materials and methodologies; analytical analyses, product analyses, inventions, formulaic work, formulas, formulaic techniques, analytical methodology, efficacy data and testing data; technology, drawings, engineering, code, code writing, software (and hardware)

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development and platform development; mechanical development and research, and all drawings or engineering for the same; and other information of a technical or economic nature relating to the Company’s business, and to which the Executive has access.  Confidential Information includes negative know-how, which is information about what the Company has tried that did not work, if that information is not generally known or easily ascertainable by the Company’s competitors and would give them an advantage in knowing what not to do.  Information, data, and materials received by the Company from others in confidence (or subject to nondisclosure or similar covenants that is of the same character as that described in this paragraph, shall also be deemed to be and shall be Protected Information.Notwithstanding the foregoing, Confidential Information shall not include information that theExecutive can prove: (i) was in the public domain, being publicly and openly known through lawful and proper means; (ii) was independently developed or acquired by the Executive without reliance in any way on other Confidential Information of the Company or any customer, client or partner; or, (iii) was approved by the Company for use and disclosure by the Executive without restriction.

(n)Covered Termination.  Subject to Section 2(b), the term “Covered Termination” means any Termination of Employment during the Employment Period where the Termination Date or the date Notice of Termination is delivered is any date prior to the end of the Employment Period.

(o)Direct Competitor.  “Direct Competitor” means a person, business or company providing Competitive Products or Competitive Services anywhere in the United States.  “Direct Competitor” does not include any business which the parties have agreed in writing to exclude from the definition.

(p)Employment Period.  Subject to Section 2(b), the term “Employment Period” means a period commencing on the date of a Change in Control of the Company, and ending at 11:59 p.m. Central Time on the second anniversary of such date.

(q)Good Reason.  The Executive shall have “Good Reason” for termination of employment in the event of any of the following without the Executive’s prior written consent:

(i)any breach of this Agreement by the Employer, including specifically any breach by the Employer of the agreements contained in Section 3, Section 4, Section 5, or Section 6, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;

(ii)any reduction in the Executive’s (A) base salary, (B) percentage of base salary available as cash incentive compensation or bonus opportunity, (C) grant date fair value of annual equity-based awards or (D) other benefits, in each case relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the Change in Control of the Company or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period;

(iii)the removal of the Executive from, or any failure to reelect or reappoint the Executive to, any of the positions held with the Employer on the date of the Change in Control of the Company or any other positions with the Employer to which the Executive shall thereafter be elected, appointed or assigned, except in the event that such

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removal or failure to reelect or reappoint relates to the termination by the Employer of the Executive’s employment for Cause or by reason of disability pursuant to Section 12;

(iv)a good faith determination by the Executive that there has been a material adverse change in the Executive’s working conditions or status with the Employer relative to the most favorable working conditions or status in effect during the 180-day period prior to the Change in Control of the Company, or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period, including but not limited to (A) a significant change in the nature or scope of the Executive’s authority, powers, functions, duties or responsibilities (including a change in reporting structure that entails a significant change in such nature or scope), or (B) a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertent event not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;

(v)the relocation of the Executive’s principal place of employment to a location more than 50 miles from the Executive’s principal place of employment on the date 180 days prior to the Change in Control of the Company (or if the Executive has not been employed for 180 days prior to the Change in Control of the Company, as in effect on the date the Executive entered into this Agreement);

(vi)the Employer requires the Executive to travel on Employer business 20% in excess of the average number of days per month the Executive was required to travel during the 180-day period prior to the Change in Control of the Company; or

(vii)failure by the Company to obtain the Agreement referred to in Section 17(a) as provided therein.

(r)Person.  The term “Person” shall mean any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity, or a group of any of the foregoing acting in concert.

(s)Separation from Service.  For purposes of this Agreement, the term “Separation from Service” means the Executive’s Termination of Employment, or if the Executive continues to provide services following his or her Termination of Employment, such later date as is considered a separation from service from the Company and its 409A Affiliates within the meaning of Code Section 409A.  Specifically, if the Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, such shift in status is not automatically a Separation from Service.

(t)Termination of Employment.  For purposes of this Agreement, the Executive’s termination of employment shall be presumed to occur when the Company and Executive reasonably anticipate that no further services will be performed by the Executive for the Company and its 409A Affiliates or that the level of bona fide services the Executive will perform as an employee of the Company and its 409A Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed by the Executive (whether as an employee or independent contractor) for the Company and its 409A Affiliates over the immediately preceding 36-month period (or such lesser period of services).  Whether the Executive has experienced a

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Termination of Employment shall be determined by the Employer in good faith and consistent with Section 409A of the Code.  Notwithstanding the foregoing, if the Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide reason, the Executive will not be deemed to have incurred a Separation from Service for the first 6 months of the leave of absence, or if longer, for so long as the Executive’s right to reemployment is provided either by statute or by contract, including this Agreement; provided that if the leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, the leave may be extended by the Employer for up to 29 months without causing a Termination of Employment.

(u)Termination Date.  Except as otherwise provided in Section 2(b), Section 10(b), and Section 17(a), the term “Termination Date” means (i) if the Executive’s Termination of Employment is by the Executive’s death, the date of death; (ii) if the Executive’s Termination of Employment is by reason of voluntary early retirement, as agreed in writing by the Employer and the Executive, the date of such early retirement which is set forth in such written agreement; (iii) if the Executive’s Termination of Employment is, for purposes of this Agreement, by reason of disability pursuant to Section 12, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period; (iv) if the Executive’s Termination of Employment is by the Executive voluntarily (other than for Good Reason), the date the Notice of Termination is given; and (v) if the Executive’s Termination of Employment is by the Employer (other than by reason of disability pursuant to Section 12) or by the Executive for Good Reason, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period.  Notwithstanding the foregoing,

(A)If termination is for Cause pursuant to Section 1(g)(iii) and if the Executive has cured the conduct constituting such Cause as described by the Employer in its Notice of Termination within such 30-day or shorter period, then the Executive’s employment hereunder shall continue as if the Employer had not delivered its Notice of Termination.

(B)If the Executive shall in good faith give a Notice of Termination for Good Reason and the Employer notifies the Executive that a dispute exists concerning the termination within the 15-day period following receipt thereof, then the Executive may elect to continue his or her employment during such dispute and the Termination Date shall be determined under this paragraph.  If the Executive so elects and it is thereafter determined that Good Reason did exist, the Termination Date shall be the earliest of (1) the date on which the dispute is finally determined, either (x) by mutual written agreement of the parties or (y) in accordance with Section 22, (2) the date of the Executive’s death or (3) one day prior to the end of the Employment Period.  If the Executive so elects and it is thereafter determined that Good Reason did not exist, then the employment of the Executive hereunder shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason and there shall be no Termination Date arising out of such Notice.  In either case, this Agreement continues, until the Termination Date, if any, as if the Executive had not delivered the Notice of Termination except that, if it is finally determined that Good Reason did exist, the Executive shall in no

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case be denied the benefits described in Section 9 (including a Termination Payment) based on events occurring after the Executive delivered his Notice of Termination.

(C)Except as provided in Section 1(u)(B), if the party receiving the Notice of Termination notifies the other party that a dispute exists concerning the termination within the appropriate period following receipt thereof and it is finally determined that the reason asserted in such Notice of Termination did not exist, then (1) if such Notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his or her employment and the Termination Date shall be the earlier of the date 15 days after the Notice of Termination is given or one day prior to the end of the Employment Period and (2) if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.

Capitalized terms used in this Agreement not defined in this Section 1 have the meanings assigned in the other sections of this Agreement.  The definitions of the following terms may be found in the sections indicated:

Term	Section
Annual Base Salary	Section 5(a)
Base Period Income	Section 9(b)(iii)
Bonus Amount	Section 5(e)(i)
Bonus Plan	Section 5(e)
Company Incentive Plan	Section 5(e)(iii)
DTSA	Section 14(f)
Excise Tax	Section 9(b)(i)
Expenses	Section 15
Goals	Section 5(e)(iii)
National Tax Counsel	Section 9(b)(ii)
Notice of Termination	Section 13
Plans	Section 9(c)(iv)
Restricted Employee	Section 14(c)
Termination Payment	Section 9(a)
Total Payments	Section 9(b)(i)

2.Termination or Cancellation Prior to Change in Control.

(a)Subject to Section 2(b), the Employer and the Executive shall each retain the right to terminate the employment of the Executive at any time and for any reason (or no reason) prior to a Change in Control of the Company.  Subject to Section 2(b), in the event that prior to a Change in Control of the Company (i) the Executive’s employment is terminated or (ii) as determined in writing by the Compensation Committee of the Board of Directors of the Company in its sole discretion, the Executive’s authority, powers, functions, duties, responsibilities or pay grade are materially reduced, this Agreement shall be terminated and cancelled and of no further force and effect, and any and all rights and obligations of the parties hereunder shall cease.

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(b)Anything in this Agreement to the contrary notwithstanding, if the Executive’s employment with the Employer is terminated by the Employer (other than a termination due to the Executive’s death or as a result of the Executive’s disability (as determined under Section 12) during the period of 180 days prior to the date on which a Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then for all purposes of this Agreement such termination of employment shall be deemed a “Covered Termination,” a “Notice of Termination” shall be deemed to have been given, and the “Employment Period” shall be deemed to have begun on the date of such termination which shall be deemed to be the “Termination Date” and the date of the Change of Control of the Company for purposes of this Agreement.  Anything in this Agreement to the contrary notwithstanding, if the Executive’s authority, powers, functions, duties, responsibilities or pay grade were reduced pursuant to Section 2(a)(ii) during the period of 180 days prior to the date on which the Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such reduction in authority, powers, functions, duties, responsibilities or pay grade (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then the termination and cancellation of this Agreement pursuant to Section 2(a) shall be deemed null and void, this Agreement shall be deemed to remain in full force and effect with any and all rights and obligations of the parties hereunder continuing and such reduction in authority, powers, functions, duties, responsibilities or pay grade shall be considered “Good Reason” for the Executive to terminate employment in connection with a Change in Control of the Company.

3.Employment Period.  If a Change in Control of the Company occurs when the Executive is employed by the Employer, the Employer will continue thereafter to employ the Executive during the Employment Period, and the Executive will remain in the employ of the Employer in accordance with and subject to the terms and provisions of this Agreement.  Any Termination of Employment during the Employment Period, whether by the Company or the Employer, shall be deemed a termination by the Company for purposes of this Agreement.

4.Duties.  During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of the Change in Control of the Company or in such other capacities and positions as may be agreed to by the Employer and the Executive in writing, devote the Executive’s best efforts and all of the Executive’s business time, attention and skill to the business and affairs of the Employer, as such business and affairs now exist and as they may hereafter be conducted.

5.Compensation.  During the Employment Period, the Executive shall be compensated as follows:

(a)The Executive shall receive, at reasonable intervals (but not less often than monthly) and in accordance with such standard policies as may be in effect immediately prior to the Change in Control of the Company, an annual base salary in cash equivalent of not less than twelve times the Executive’s highest monthly base salary for the twelve-month period immediately preceding the month in which the Change in Control of the Company occurs or, if higher, annual base salary at the rate in effect immediately prior to the Change in Control of the Company (which base salary shall, unless otherwise agreed in writing by the Executive or subject to any irrevocable deferral election then in effect, include the current receipt by the Executive of any amounts which,

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prior to the Change in Control of the Company, the Executive had elected to defer, whether such compensation is deferred under Section 401(k) of the Code or otherwise), subject to adjustment as hereinafter provided in Section 6 (such salary amount as adjusted upward from time to time is hereafter referred to as the “Annual Base Salary”).

(b)The Executive shall receive fringe benefits at least equal in value to the highest value of such benefits provided for the Executive at any time during the 180-day period immediately prior to the Change in Control of the Company or, if more favorable to the Executive, those provided generally at any time during the Employment Period to any executives of the Employer of comparable status and position to the Executive; and shall be reimbursed, at such intervals and in accordance with such standard policies that are most favorable to the Executive that were in effect at any time during the 180-day period immediately prior to the Change in Control of the Company, for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer, including travel expenses.

(c)The Executive and/or the Executive’s family, as the case may be, shall be included, to the extent eligible thereunder (which eligibility shall not be conditioned on the Executive’s salary grade or on any other requirement which excludes persons of comparable status to the Executive unless such exclusion was in effect for such plan or an equivalent plan at any time during the 180-day period immediately prior to the Change in Control of the Company), in any and all plans providing benefits for the Employer’s salaried employees in general, including but not limited to group life insurance, hospitalization, medical, dental, profit sharing and stock bonus plans; provided, that, (i) in no event shall the aggregate level of benefits under such plans in which the Executive is included be less than the aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(c) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (ii) in no event shall the aggregate level of benefits under such plans be less than the aggregate level of benefits under plans of the type referred to in this Section 5(c) provided at any time after the Change in Control of the Company to any executive of the Employer of comparable status and position to the Executive.

(d)The Executive shall annually be entitled to not less than the amount of paid vacation and not fewer than the highest number of paid holidays to which the Executive was entitled annually at any time during the 180-day period immediately prior to the Change in Control of the Company or such greater amount of paid vacation and number of paid holidays as may be made available annually to other executives of the Employer of comparable status and position to the Executive at any time during the Employment Period.

(e)The Executive shall be included in all plans providing additional benefits to executives of the Employer of comparable status and position to the Executive, including but not limited to short- or long-term cash-based incentive compensation plans (such plan or plans together, the “Bonus Plan”), deferred compensation plans, supplemental retirement plans, equity awards, and similar or comparable plans; provided, that, unless otherwise provided in clauses (i) or (ii) below, in no event shall the aggregate level of benefits under such plans or awards be less than the higher of  (x) the highest aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(e) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (y) the aggregate levels of benefits under plans of the type referred to in this Section 5(e) provided at any time after the Change in

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Control of the Company to any executive of the Employer comparable in status and position to the Executive.  

(i)With respect to the Bonus Plan, the amount of the compensation (the “Bonus Amount”) that the Executive is eligible to earn under the Bonus Plan if the threshold, target and maximum performance objectives are met shall be no less than the highest threshold, target and maximum amounts, respectively, that Executive was eligible to receive under awards outstanding under the Employer’s short- or long-term cash-based incentive compensation plan or plans as in effect at any time during the 180-day period immediately prior to the Change in Control of the Company; provided that the amount Executive is eligible to earn shall in no event be lower than the amount of short- or long-term cash-based incentive compensation that any executive of the Employer comparable in status and position to the Executive is eligible to earn.  Payment of the Bonus Amount, if earned, shall not be affected by the Executive’s Termination of Employment after the end of the Employment Period.

(ii)With respect to equity awards, the Executive shall annually receive awards under one or more equity-based compensation plan or plans of the Employer.  Such annual equity awards shall have a grant date fair value at least equal to the aggregate grant date fair value of the largest equity-based awards granted to the Executive at any time during the one-year period immediately prior to the Change in Control of the Company, measured, in each case, as a multiple of the Executive’s Annual Base Salary; provided that, solely for purposes of determining the grant date fair value of the largest equity-based awards granted to the Executive during such one-year period immediately prior to the Change in Control of the Company, any inducement awards or other awards that are intended to be non-recurring shall be disregarded or, to the extent such awards are intended to replace more than one annual award, shall be pro-rated so that only a one-year portion of the award shall be counted; and provided further that the grant date fair value of the equity awards granted to the Executive shall in no event be lower than the grant date fair value of the annual equity-based awards granted to any executive of the Employer comparable in status and position to the Executive.

(iii)To the extent any compensation that the Executive has an opportunity to earn after a Change in Control of the Company is subject to achieving performance objectives, such performance objectives shall be established and communicated in writing to the Executive within the first ninety (90) days of the performance period and shall be reasonably related to the business of the Employer (the “Goals”).  All Goals shall be attainable with approximately the same degree of probability as the most attainable goals under the Employer’s performance-based compensation plan or plans as in effect at any time during the 180-day period immediately prior to the Change in Control of the Company (whether one or more, the “Company Incentive Plan”) and in view of the Employer’s existing and projected financial and business circumstances applicable at the time, and shall have a performance period that is no longer than the performance period corresponding to the most analogous type of compensation under the Company Incentive Plan.

6.Annual Compensation Adjustments.  During the Employment Period, the Board of Directors of the Company (or an appropriate committee thereof) will consider and appraise, at least annually, the contributions of the Executive to the Company, and in accordance with the Company’s practice prior to the Change in Control of the Company, due consideration shall be given

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to the upward adjustment of the Executive’s Annual Base Salary, at least annually, (a) commensurate with increases generally given to other executives of the Employer of comparable status and position to the Executive, and (b) as the scope of the Company’s operations or the Executive’s duties expand.

7.Termination For Cause or Without Good Reason.  If there is a Covered Termination for Cause or due to the Executive’s voluntarily terminating his or her employment other than for Good Reason (any such terminations to be subject to the procedures set forth in Section 13), then the Executive shall be entitled to receive only Accrued Benefits.

8.Termination Giving Rise to a Termination Payment and Certain Other Benefits.  If there is a Covered Termination by the Executive for Good Reason, or by the Company other than by reason of (i) death, (ii) disability pursuant to Section 12, or (iii) Cause (any such terminations to be subject to the procedures set forth in Section 13), then (A) the Executive shall be entitled to receive the Accrued Benefits and, in lieu of further base salary for periods following the Termination Date and as liquidated damages and additional severance pay, the Termination Payment pursuant to Section 9(a), (B) all equity-based and cash incentive awards then held by the Executive that were granted prior to the Change in Control of the Company shall be subject to the terms of the equity or incentive plan under which the awards were granted and (C) all equity-based and cash incentive awards then held by the Executive that were granted on or after the Change in Control of the Company shall vest or be earned in full immediately upon such Covered Termination, with the amount or value of any performance-based awards determined based on the deemed achievement of all applicable performance conditions at 100% of target, without pro-ration.

9.Payments Upon Termination.

(a)Termination Payment. The “Termination Payment” shall be an amount equal to the Annual Cash Compensation times two (2).  The Termination Payment shall be paid to the Executive in cash equivalent (i) on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs, without interest thereon, to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or (ii) to the extent not so required, within fifteen (15) business days after the Termination Date provided that, in each case, the Executive signs and does not revoke a release of claims in the form attached hereto as Exhibit A if timely requested by the Company (provided further that, if the time during which the Executive may sign the release prior to payment includes two calendar years, the payment shall be made in the second calendar year).  Notwithstanding the foregoing, in the event the Executive’s Termination Date is pursuant to Section 2(b), the Termination Payment shall be paid within ten (10) business days after the date of the Change in Control of the Company (as defined without reference to Section 2(b)), without interest.  Such lump sum payment shall not be reduced by any present value or similar factor, and the Executive shall not be required to mitigate the amount of the Termination Payment by securing other employment or otherwise, nor will such Termination Payment be reduced by reason of the Executive securing other employment or for any other reason, except as provided in subsection (b) below.  The Termination Payment shall be in lieu of, and acceptance by the Executive of the Termination Payment shall constitute the Executive’s release of any rights of the Executive to, any other cash severance payments under any Company severance policy, practice or agreement.

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(b)280G Provision.

(i)Notwithstanding any other provision of this Agreement, if any portion of the Termination Payment or any other payment or other benefit to the Executive under this Agreement, or under any other agreement with or plan of the Employer or any 409A Affiliate (in the aggregate, “Total Payments”), would constitute an “excess parachute payment” (as defined below) and would, but for this Section 9(b)(i), result in the imposition on the Executive of an excise tax under Code Section 4999 (the “Excise Tax”), then the Total Payments to be made to the Executive shall either be (A) delivered in full, or (B) delivered in a reduced amount that is One Dollar ($1.00) less than the amount that would cause any portion of such Total Payments to be subject to the Excise Tax, whichever of the foregoing results in the receipt by the Executive of the greatest benefit on an after-tax basis (taking into account the applicable federal, state and local income taxes and the Excise Tax).

(ii)Within forty (40) days following the Executive’s Termination of Employment or notice by one party to the other of its belief that there is a payment or benefit due the Executive that will result in an excess parachute payment, the Executive and the Company, at the Company’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel (“National Tax Counsel”) selected by the Company’s independent auditors and reasonably acceptable to the Executive (which may be regular outside counsel to the Company), which opinion sets forth (A) the amount of the Base Period Income (as defined below), (B) the amount and present value of Total Payments, (C) the amount and present value of any excess parachute payments determined without regard to any reduction of Total Payments pursuant to Section 9(b)(i), and (D) the net after-tax proceeds to the Executive, taking into account the tax imposed under Code Section 4999 if (1) the Total Payments were reduced in accordance with Section 9(b)(i)(B), or (2) the Total Payments were not so reduced.  The opinion of National Tax Counsel shall be addressed to the Company and the Executive and shall be binding upon the Company and the Executive.  If such National Tax Counsel opinion determines that clause (B) of Section 9(b)(i) applies, then the payments hereunder or any other payment or benefit determined by such counsel to be includable in Total Payments shall be reduced or eliminated so that under the bases of calculations set forth in such opinion there will be no excess parachute payment.  In such event, payments or benefits included in the Total Payments shall be reduced or eliminated by applying the following principles, in order: (x) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (y) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (z) cash payments shall be reduced prior to non-cash benefits; provided that if the foregoing order of reduction or elimination would violate Code Section 409A, then the reduction shall be made pro rata among the payments or benefits included in the Total Payments (on the basis of the relative present value of the parachute payments).  

(iii)For purposes of this Agreement, (A) the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Section 280G of the Code and such “parachute payments” shall be valued as provided therein, (B) present value for purposes of this Agreement shall be calculated in accordance with Section 1274(b)(2) of the Code, (C) the term “Base Period Income” means an amount equal to the Executive’s “annualized includable compensation for the base period” as defined in Section

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280G(d)(1) of the Code, (D) for purposes of the National Tax Counsel opinion, the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Executive, and (E) the Executive shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation, and state and local income taxes at the highest marginal rate of taxation in the state or locality of the Executive’s domicile (determined in both cases in the calendar year in which the Covered Termination occurs or notice described in Section 9(b)(ii) is given, whichever is earlier), net of the maximum reduction in federal income taxes that may be obtained from the deduction of such state and local taxes.  If the National Tax Counsel so requests in connection with the opinion required by this Section 9(b), the Executive and the Company shall obtain, at the Company’s expense, and the National Tax Counsel may rely on, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by the Executive solely with respect to its status under Section 280G of the Code and the regulations thereunder.  

(iv)The Company agrees to bear all costs associated with, and to indemnify and hold harmless, the National Tax Counsel of and from any and all claims, damages, and expenses resulting from or relating to its determinations pursuant to this Section 9(b), except for claims, damages or expenses resulting from the gross negligence or willful misconduct of such firm.

(v)This Section 9(b) shall be amended to comply with any amendment or successor provision to Sections 280G or 4999 of the Code.  If such provisions are repealed without successor, then this Section 9(b) shall be cancelled without further effect.

(c)Additional Benefits.  If there is a Covered Termination and the Executive is entitled to Accrued Benefits and the Termination Payment, then the Company shall provide to the Executive the following additional benefits:

(i)The Executive shall receive until the end of the second calendar year following the calendar year in which the Executive’s Separation from Service occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Executive’s status with the Company immediately prior to the date of the Change in Control of the Company (or, if higher, immediately prior to the Executive’s Termination of Employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Executive’s Annual Base Salary.

(ii)Until the earlier of twenty-four (24) months following the Executive’s Separation from Service or such time as the Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, the Executive shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical and dental coverage as was required hereunder with respect to the Executive immediately prior to the date the Notice of Termination is given, subject to the following:

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(A)Following the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith.  If the Executive is entitled to the Termination Payment pursuant to Section 2(b), then within ten (10) days following the Change in Control of the Company (determined without regard to Section 2(b)), the Company shall reimburse the Executive for any COBRA premiums the Executive paid for his or her hospitalization, medical and dental coverage under COBRA from the Executive’s Termination Date through the date of the Change in Control of the Company (determined without regard to Section 2(b)).

(B)To the extent required to comply with Code Section 409A, during the first six months following the Executive’s Separation from Service, the Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy.  After the end of such six month period, the Company shall make a cash equivalent payment to the Executive equal to the aggregate premiums paid by the Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above; provided that this clause (B) shall cease to apply if on the date of the Executive’s Separation from Service, neither the Company nor any other entity that is considered a “service recipient” with respect to the Executive within the meaning of Code Section 409A has any stock which is publicly traded on an established securities market (within the meaning of Treasury Regulation Section 1.897-1(m)) or otherwise.

10.Death.

(a)Except as provided in Section 10(b), in the event of a Covered Termination due to the Executive’s death, the Executive’s estate, heirs and beneficiaries shall receive all the Executive’s Accrued Benefits through the Termination Date.

(b)In the event the Executive dies after a Notice of Termination is given (i) by the Company or (ii) by the Executive for Good Reason, the Executive’s estate, heirs and beneficiaries shall be entitled to the benefits described in Section 10(a) and, subject to the provisions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive lived, except that the Termination Payment shall be paid within 90 days following the date of the Executive’s death, without interest thereon.  For purposes of this Section 10(b), the Termination Date shall be the earlier of 30 days following the giving of the Notice of Termination, subject to extension pursuant to Section 1(q), or one day prior to the end of the Employment Period.

11.Retirement.  If, during the Employment Period, the Executive and the Employer shall execute an agreement providing for the early retirement of the Executive from the Employer, or the Executive shall otherwise give notice that he is voluntarily choosing to retire early from the Employer, the Executive shall receive Accrued Benefits through the Termination Date; provided, that if the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than by reason of death, disability or Cause and the Executive also, in connection

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with such termination, elects voluntary early retirement, the Executive shall also be entitled to receive a Termination Payment pursuant to Section 9.

12.Termination for Disability.  If, during the Employment Period, as a result of the Executive’s disability due to physical or mental illness or injury (regardless of whether such illness or injury is job-related), the Executive shall have been absent from the Executive’s duties hereunder on a full-time basis for a period of six consecutive months and, within 30 days after the Company notifies the Executive in writing that it intends to terminate the Executive’s employment (which notice shall not constitute the Notice of Termination contemplated below), the Executive shall not have returned to the performance of the Executive’s duties hereunder on a full-time basis, the Company may terminate the Executive’s employment for purposes of this Agreement pursuant to a Notice of Termination given in accordance with Section 13.  If the Executive’s employment is terminated on account of the Executive’s disability in accordance with this Section, the Executive shall receive Accrued Benefits through the Termination Date and shall remain eligible for all benefits provided by any long term disability programs of the Employer in effect at the time of such termination.

13.Termination Notice and Procedure.  Any Covered Termination by the Company or the Executive (other than a termination of the Executive’s employment that is a Covered Termination by virtue of Section 2(b)) shall be communicated by a written notice of termination (“Notice of Termination”) to the Executive, if such Notice is given by the Company, and to the Company, if such Notice is given by the Executive, all in accordance with the following procedures and those set forth in Section 24:

(a)If such termination is for disability, Cause or Good Reason, the Notice of Termination shall indicate in reasonable detail the facts and circumstances alleged to provide a basis for such termination.

(b)Any Notice of Termination by the Company shall have been approved, prior to the giving thereof to the Executive, by a resolution duly adopted by a majority of the directors of the Company (or any successor corporation) then in office.

(c)If the Notice is given by the Executive for Good Reason, the Executive may cease performing his or her duties hereunder on or after the date fifteen (15) days after the delivery of Notice of Termination and shall in any event cease employment on the Termination Date.  If the Notice is given by the Company, then the Executive may cease performing his or her duties hereunder on the date of receipt of the Notice of Termination, subject to the Executive’s rights hereunder.

(d)The Executive shall have thirty (30) days, or such longer period as the Company may determine to be appropriate, to cure any conduct or act, if curable, alleged to provide grounds for termination of the Executive’s employment for Cause under this Agreement pursuant to Section 1(g)(iii).

(e)The recipient of any Notice of Termination shall personally deliver or mail in accordance with Section 24 written notice of any dispute relating to such Notice of Termination to the party giving such Notice within 15 days after receipt thereof; provided, however, that if the Executive’s conduct or act alleged to provide grounds for termination by the Company for Cause is

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curable, then such period shall be 30 days.  After the expiration of such period, the contents of the Notice of Termination shall become final and not subject to dispute.

14.Further Obligations of the Executive; Trade Secrets.

(a)Non-Solicitation.  The Executive acknowledges that the relationships and goodwill that he develops with Company Customers as a result of his or her employment belong to the Company and that using such relationships and goodwill against the interests of the Company would be unfair.  The Executive further acknowledges that because those relationships and goodwill are based on personal trust, the Company will need an opportunity, free from interference by the Executive, to secure the relationships and goodwill for itself after Executive’s employment ends.  The Executive therefore agrees that while employed by the Company and for a period of twelve (12) months after the Executive’s employment with the Company ends, for whatever reason, the Executive will not, and will not assist anyone else to, (i) solicit or encourage any Company Customer to terminate or diminish its relationship with the Company relating to Competitive Services or Competitive Products; or (ii) seek to persuade any Company Customer to conduct with anyone other than the Company any business or activity relating to Competitive Services or Competitive Products that such Company Customer conducts or could conduct with the Company.

(b)Non-Competition.  The Executive agrees that while employed by the Company and for a period of twelve (12) months after the Executive’s employment with the Company ends for any reason, the Executive will not, on the Executive’s own behalf, or on behalf of any other person or entity, directly or indirectly, provide services to a Direct Competitor in a role where the Executive’s knowledge of Confidential Information is likely to affect the Executive’s decisions or actions for the Direct Competitor, to the detriment of the Company.

(c)Non-Interference.  Executive agrees that during his or her employment with the Company, and for a period of twelve (12) months from the termination of employment with the Company for any reason whatsoever, Executive shall not, either personally or in conjunction with others either (i) solicit, interfere with, or endeavor to cause any Restricted Employee of the Company to leave his or her employment in order to work for a Direct Competitor, or (ii) otherwise induce or attempt to induce any such Restricted Employee to terminate employment with the Company in order to work for a Director Competitor.  A “Restricted Employee” is an employee of the Company with whom the Executive has a managing or reporting relationship, which could be exploited by the Executive to persuade the Restricted Employee to leave his or her employment with the Company, and whom has special knowledge and/or information (including access to Confidential Information) that could cause the Company damage/harm if he or she went to work for a Direct Competitor.  Nothing in this Section 14(c) is meant to prohibit an employee of the Company that is not a party to this Agreement from becoming employed by another organization or person.

(d)Confidentiality.

(i)In the course of his or her employment with the Company, the Executive may be making use of, acquiring, or adding to the Company’s Confidential Information.  In addition, the Executive’s work for the Company requires Executive be provided access to valuable Confidential Information.  The Confidential Information to which the Executive will have access is valuable to the Company and/or its customers and business partners and each party takes steps to maintain the secrecy and confidential nature of these matters, including the regular use of computer passwords, locks and other security

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measures, and requires employees with access to this information to execute agreements similar to this Agreement where possible.  The Executive acknowledges that the Company will not provide him or her (on a going forward basis) with access to the Confidential Information unless Employee executes this Agreement.

(ii)Executive makes the following promises regarding Confidential Information.  Nothing in the following promises is intended to restrict Executive’s opportunities for employment.  The promises in this Section 14(d) are made to ensure that the Executive does not use Confidential Information except for the Company’s benefit.

(A)The Executive promises to protect and maintain the confidentiality of Confidential Information while employed by the Company.  The Executive will follow all Company policies and procedures for the protection and security of this information.  The Executive will also immediately report to management any potential or actual security breach or loss.

(B)The Executive agrees to return (and not retain) any and all materials reflecting Confidential Information that he or she may possess (including all Company-owned equipment) immediately upon end of employment or upon demand by the Company.  

(C)The Executive agrees to not use or disclose, except as necessary for the performance of his or her services on behalf of the Company or as required by law or legal process, any Confidential Information where such use or disclosure would be detrimental to the interests of the Company.  This promise applies only for so long as such Confidential Information remains confidential and not generally known to, and not readily ascertainable through proper means by, the Company’s competitors, or two years following the end of Executive’s employment with the Company, whichever occurs first. Because the Company has significant sales throughout the World, and because Confidential Information is generally very portable and transferable without geographic borders or constraints, this prohibition applies throughout the World.

(iii)If the Executive is requested or required to provide Confidential Information in a legal proceeding other than a government investigation or government legal action, the Executive will promptly notify the Company of the request so that the Company may either seek an appropriate protective order or waive the Executive’s obligations under this Agreement.  However, nothing in this Agreement prohibits the Executive from reporting a possible violation of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or Inspector General, or making other disclosures that are protected under any whistleblower provision of federal, state, or local law or regulation.  The Executive does not need the prior authorization of the Company to make any such reports or disclosures and Executive is not required to notify the Company that he or she made such reports or disclosures.  Further, nothing in this Agreement is intended to preclude the Executive from discussing or disclosing any concerns relative to sexual harassment or assault.  To the extent the Executive is covered by the National Labor Relations Act, nothing in this Agreement is intended (nor does it) prevent him from

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discussing applicable terms and conditions of employment, such as compensation and benefits.

(e)Non-Disparagement.  The Executive and the Company agree that they will not make any disparaging or derogatory remarks or statements about the other party to this Agreement in any public forum; provided that either party to this Agreement may give non-malicious and truthful testimony about the other party if properly subpoenaed.

(f)Trade Secrets/Defend Trade Secrets Act.  Nothing in this Agreement diminishes or limits any protection granted by law to trade secrets or relieves the Executive of any duty not to disclose, use, or misappropriate any information that is a trade secret, for as long as such information remains a trade secret.  Additionally, nothing in this Agreement is intended to discourage the Executive from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law.  Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:  

(i)An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that:  (A) is made (1) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  

(ii)An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual:  (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement shall limit, curtail or diminish the Company’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.

15.Expenses and Interest.  If, after a Change in Control of the Company, (a) a dispute arises with respect to the enforcement of the Executive’s rights under this Agreement or (b) any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein or to recover damages for breach hereof, in either case so long as the Executive is not acting in bad faith, then the Company shall reimburse the Executive for any reasonable attorneys’ fees and necessary costs and disbursements incurred as a result of the dispute, legal or arbitration proceeding (“Expenses”), and prejudgment interest on any money judgment or arbitration award obtained by the Executive calculated at the rate of interest announced by U.S. Bank National Association, Minneapolis, Minnesota, from time to time at its prime or base lending rate from the date that payments to him or her should have been made under this Agreement.  Within ten days after the Executive’s written request therefore (but in no event later than the end of the calendar year following the calendar year in which such Expense is incurred), the Company shall reimburse the Executive, or such other person or entity as the Executive may designate in writing to the Company, the Executive’s reasonable Expenses.

16.Payment Obligations Absolute.  The Company’s obligation during and after the Employment Period to pay the Executive the amounts and to make the benefit and other

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arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against him or her or anyone else.  Except as provided in Section 15, all amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company will not seek to recover all or any part of such payment from the Executive, or from whomsoever may be entitled thereto, for any reason whatsoever.

17.Successors.

(a)If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a “Sale of Business”), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company.  Failure of the Company to obtain such written agreement prior to the effective date of such Sale of Business shall be a breach of this Agreement constituting “Good Reason” hereunder, except that for purposes of implementing the foregoing the date upon which such Sale of Business becomes effective shall be deemed the Termination Date.  In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, “Company” shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 17 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person.  The Executive shall, in his or her discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company and the Company (as so defined) in any action to enforce any rights of the Executive hereunder.  Except as provided in this Section 17(a), this Agreement shall not be assignable by the Company.  This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

(b)This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, heirs and beneficiaries.  All amounts payable to the Executive under Sections 3, 7, 8, 9, 10, 11, 12 and 15 if the Executive had lived shall be paid, in the event of the Executive’s death, to the Executive’s estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Employer, as such terms are in effect on the date of the Change in Control of the Company, that expressly govern benefits under such plan in the event of the Executive’s death.

18.Severability.  The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

19.Contents of Agreement; Waiver of Rights; Amendment.  This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and shall supersede in all respects, and the Executive hereby waives all rights under, any prior or other

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agreement or understanding between the parties with respect to such subject matter, including, but not limited to any Change in Control Employment and Severance Agreement between the Company and the Executive entered into prior to the date hereof.  This Agreement may not be amended or modified at any time except by written instrument executed by the Company and the Executive.

20.Withholding.  The Company shall be entitled to withhold from amounts to be paid to the Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law.  In addition, if prior to the date of payment of the Termination Payment hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due with respect to any payment or benefit to be provided hereunder, the Employer may provide for an immediate payment of the amount needed to pay the Executive’s portion of such tax (plus an amount equal to the taxes that will be due on such amount) and the Executive’s Termination Payment shall be reduced accordingly.  The Employer shall be entitled to rely on an opinion of the National Tax Counsel if any question as to the amount or requirement of any such withholding shall arise.

21.Certain Rules of Construction.  No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise.  No draft of this Agreement shall be taken into account in construing this Agreement.  Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Executive and an authorized representative of the Company.

22.Governing Law; Resolution of Disputes.  This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Wisconsin, without reference to the conflict of law principles thereof.  Any dispute arising out of this Agreement shall, at the Executive’s election, be determined by arbitration under the rules of the American Arbitration Association then in effect (in which case both parties shall be bound by the arbitration award) or by litigation.  Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Milwaukee, Wisconsin or, at the Executive’s election, if the Executive is not then residing or working in the Mayville, Wisconsin or Milwaukee, Wisconsin area, in the judicial district encompassing the city in which the Executive resides; provided, that, if the Executive is not then residing in the United States, the election of the Executive with respect to such venue shall be either Milwaukee, Wisconsin or in the judicial district encompassing that city in the United States among the thirty cities having the largest population (as determined by the most recent United States Census data available at the Termination Date) which is closest to the Executive’s residence.  The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.  

23.Additional Section 409A Provisions.  (a)  If, after the date of a Change in Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Executive’s income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Executive shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such

21

21

distribution shall equal the amount required to be included in the Executive’s income as a result of such failure and shall reduce the amount of payments or benefits otherwise due hereunder.  

(b)The Company and the Executive intend the terms of this Agreement to be in compliance with Section 409A of the Code.  The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.  To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code.

(c)If the Executive believes he or she is entitled to a payment or benefit pursuant to the terms of this Agreement that was not timely paid or provided, and such payment or benefit is considered deferred compensation subject to the requirements of Section 409A of the Code, the Executive acknowledges that to avoid an additional tax on such payment or benefit pursuant to the provisions of Section 409A of the Code, the Executive must make a reasonable, good faith effort to collect such payment or benefit no later than 90 days after the latest date upon which the payment could have been timely made or benefit timely provided without violating Section 409A of the Code, and if not paid or provided, must take further enforcement measures within 180 days after such latest date.

24.Notice.  Notices given pursuant to this Agreement shall be in writing and, except as otherwise provided by Section 13(c), shall be deemed given when actually received by the Executive or actually received by the Company’s Secretary or any officer of the Company other than the Executive.  If mailed, such notices shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Mayville Engineering Company, Inc., Attention: Corporate Secretary (or Chief Executive Officer, if the Executive is then Corporate Secretary), 715 South Street, Mayville, Wisconsin 53050, or if to the Executive, at the address set forth below the Executive’s signature to this Agreement or the Executive’s address in the Company’s records, or to such other address as the party to be notified shall have theretofore given to the other party in writing.

25.No Waiver.  No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.

26.Headings.  The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

MAYVILLE ENGINEERING COMPANY, INC.

By: _________________________________

[NAME]

Its:  [TITLE]

22

22

EXECUTIVE:

[NAME]

Address:

23

23

Exhibit A

RELEASE

1.In exchange for the promises and payments provided for in the Change in Control Employment and Severance Agreement (the “Agreement”) effective as _______ ___, 20__ between Mayville Engineering Company, Inc., a Wisconsin corporation (the “Company”), and [EXECUTIVE] (the “Executive”), the Executive hereby releases and forever discharges the Released Parties (defined below) from any and all claims, demands, rights, liabilities and causes of action of any kind or nature, known or unknown, arising prior to or through the date the Executive executes this Release, including, but not limited to, any claims, demands, rights, liabilities and causes of action arising or having arisen out of or in connection with the Executive’s employment or termination of employment with the Company.  “Released Parties” includes the Company, its parent companies, subsidiaries, related and affiliated companies, and its and their past and present employees, directors, officers, agents, shareholders, insurers, attorneys, executors, assigns and other representatives of any kind.  The Executive also releases and waives any claim or right to further compensation, benefits, damages, penalties, attorneys’ fees, costs or expenses of any kind from the Company or any of the other Released Parties except as provided in the Agreement or this Release.  This Release specifically includes, but is not limited to, a release of any and all claims pursuant to state and local fair employment law(s); Title VII of the Civil Rights Act of 1964; the Rehabilitation Act of 1973; the Reconstruction Era Civil Rights Acts, 42 U.S.C. §§1981-1988; the Civil Rights Act of 1991; the Age Discrimination in Employment Act (“ADEA”); the Americans with Disabilities Act; state and federal family and/or medical leave acts; state and federal wage payment laws to the extent such claims can legally be waived; and any other federal, state or local laws or regulations of any kind, whether statutory or decisional.  This Release also includes, but is not limited to, a release of any claims for wrongful termination, retaliation, tort, breach of contract, defamation, misrepresentation, violation of public policy or invasion of privacy.  This Release does not apply to (a) any claims or rights the Executive may have with respect to unpaid salary and accrued but unused vacation through the date of the Executive’s separation, (b) any claims or rights the Executive may have for unreimbursed business expenses incurred prior to the date of the Executive’s separation, (c) any claims or rights the Executive may have with respect to vested benefits under any employee benefit plans or with respect to severance or other benefits to be provided in the future under the Agreement, (d) any claims or rights the Executive may have for indemnification with respect to any claims, losses, damages, liabilities, actions or expenses (including attorneys’ fees) asserted against or incurred by the Executive as a result of the Executive’s service as an employee, officer or director of the Company, (e) any claims or rights the Executive may have as a shareholder or owner of any stock or other equity interest in the Company, (f) claims that may arise after the date the Executive signs this Release or (g) any claim that may not be released under applicable law.

2.The Executive states that the Executive has not filed or joined in any complaints, lawsuits, or proceedings of any kind against the Company or any of the other Released Parties, and the Executive promises never to file, pursue, participate in, or join in any lawsuits or proceedings asserting any claims that are released in this Release.  However, nothing in this Release prevents the Executive from (a) challenging the enforceability of this Release under the ADEA; or (b) filing a charge with the EEOC or otherwise cooperating with the EEOC; however, this Release does prohibit the Executive from obtaining any personal or monetary relief from the Released Parties based upon such cooperation or charge, whether filed by the Executive or anyone else on behalf of the Executive.

3.The Executive agrees and understands that this Release does not supersede any confidentiality or noncompete agreements or obligations to which the Executive was subject while employed by the Company or reduce the Executive’s obligations to comply with applicable laws relating to trade secrets, confidential information or unfair competition.  

4.The Executive hereby acknowledges that the benefits provided in the Agreement are greater than those to which the Executive is entitled by any contract, employment policy, or otherwise.  The Executive has up to twenty-one (21) days to consider whether to accept this Release and the Executive enters into it voluntarily.  The Executive may revoke this Release, in writing, within seven (7) days after signing it, and this Release will not become enforceable or effective until the revocation period has expired.  The Company advises the Executive to consult with an attorney prior to signing this Release.

5.Neither the Company’s signing of this Release nor any actions taken by the Company toward compliance with the terms of this Release or the Agreement constitute an admission by the Company that it has acted improperly or unlawfully with regard to the Executive or that it has violated any state or federal law.

6.If any portion of this Release is found to be unenforceable, the parties desire that all other portions that can be separated from it, or appropriately limited in scope, shall remain fully valid and enforceable.  The Executive enters into this Release knowingly and voluntarily and without any coercion.

AGREED TO AND ACCEPTED BY:

EXECUTIVE

_________________________________Date: ______________

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert D. Kamphuis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mayville Engineering Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Intentionally omitted];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2020	By:	/s/ Robert D. Kamphuis
		Robert D. Kamphuis
		Chairman, President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd M. Butz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mayville Engineering Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Intentionally omitted];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2020	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mayville Engineering Company, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert D. Kamphuis, as Chairman, President and Chief Executive Officer of the Company, and Todd M. Butz, as Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2020	By:	/s/ Robert D. Kamphuis
		Robert D. Kamphuis
		Chairman, President & Chief Executive Officer
	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Oct. 30, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Registrant Name	Mayville Engineering Company, Inc.
Entity Central Index Key	0001766368
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	MEC
Security Exchange Name	NYSE
Entity File Number	001-38894
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0944729
Entity Address, Address Line One	715 South Street
Entity Address, City or Town	Mayville
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53050
City Area Code	920
Local Phone Number	387-4500
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		20,059,390

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 110	$ 1
Receivables, net of allowances for doubtful accounts of $1,293 at September 30, 2020 and $526 at December 31, 2019	48,654	40,188
Inventories, net	37,964	45,692
Tooling in progress	3,642	1,589
Prepaid expenses and other current assets	2,717	3,007
Total current assets	93,087	90,477
Property, plant and equipment, net	107,887	125,063
Assets held for sale	3,552
Goodwill	71,535	71,535
Intangible assets-net	64,143	72,173
Capital lease, net	2,742	3,227
Other long-term assets	1,003	1,107
Total	343,949	363,582
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	27,606	32,173
Current portion of capital lease obligation	619	598
Accrued liabilities:
Salaries, wages, and payroll taxes	10,529	5,752
Profit sharing and bonus	1,310	6,229
Other current liabilities	4,526	3,439
Total current liabilities	44,590	48,191
Bank revolving credit notes	59,986	72,572
Capital lease obligation, less current maturities	2,220	2,687
Deferred compensation and long-term incentive, less current portion	25,183	24,949
Deferred income tax liability	12,998	14,188
Other long-term liabilities	100	100
Total liabilities	145,077	162,687
Common shares, no par value, 75,000,000 authorized, 21,093,035 shares issued at September 30, 2020 and 20,845,693 at December 31, 2019
Additional paid-in-capital	189,780	183,687
Retained earnings	14,026	22,090
Treasury shares at cost, 1,033,645 shares at September 30, 2020 and 1,213,482 at December 31, 2019	(4,934)	(4,882)
Total shareholders’ equity	198,872	200,895
Total	$ 343,949	$ 363,582

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Receivables, net of allowances for doubtful accounts	$ 1,293	$ 526
Common Stock, No Par Value
Common Stock, Shares Authorized	75,000,000	75,000,000
Common Stock, Shares, Issued	21,093,035	20,845,693
Treasury stock at cost	1,033,645	1,213,482

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net sales	$ 91,075	$ 128,511	$ 262,262	$ 417,373
Cost of sales	81,340	113,941	241,838	362,689
Amortization of intangibles	2,677	2,677	8,030	8,030
Profit sharing, bonuses, and deferred compensation	2,288	678	4,807	25,258
Employee stock ownership plan expense		1,500		4,500
Other selling, general and administrative expenses	4,490	6,068	14,642	20,296
Contingent consideration revaluation		(9,598)		(6,054)
Income (loss) from operations	280	13,245	(7,055)	2,655
Interest expense	(647)	(987)	(2,110)	(5,811)
Loss on extinguishment of debt				(154)
Income (loss) before taxes	(367)	12,258	(9,165)	(3,310)
Income tax expense (benefit)	733	2,512	(1,101)	(231)
Net income (loss) and comprehensive income (loss)	(1,100)	9,746	(8,064)	(3,079)
Earnings (loss) per share
Net income (loss) available to shareholders	$ (1,100)	$ 9,746	$ (8,064)	$ (3,079)
Basic and diluted earnings (loss) per share	$ (0.05)	$ 0.49	$ (0.41)	$ (0.18)
Basic and diluted weighted average shares outstanding	20,077,039	19,740,296	19,838,701	16,684,337
Tax-adjusted pro forma information
Net income (loss) available to shareholders	$ (1,100)	$ 9,746	$ (8,064)	$ (3,079)
Pro forma provision for income taxes				173
Pro forma net income (loss)	$ (1,100)	$ 9,746	$ (8,064)	$ (3,252)
Pro forma basic and diluted earnings (loss) per share	$ (0.05)	$ 0.49	$ (0.41)	$ (0.19)
Basic and diluted weighted average shares outstanding	20,077,039	19,740,296	19,838,701	16,684,337

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical)	9 Months Ended
	Sep. 30, 2019
Effective income tax rate reconciliation	26.00%

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (8,064)	$ (3,079)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	16,304	16,622
Amortization	8,030	8,030
Stock-based compensation expense	3,719	2,135
Allowance for doubtful accounts	767	(271)
Inventory excess and obsolescence reserve	279	165
Costs recognized on step-up of acquired inventory		395
Contingent consideration revaluation		(6,054)
Loss (gain) on disposal of property, plant and equipment	688	(74)
Deferred compensation and long-term incentive	234	11,392
Gain on extinguishment or forgiveness of debt		(367)
Other non-cash adjustments	262	1,892
Changes in operating assets and liabilities – net of effects of acquisition:
Accounts receivable	(9,233)	(9,524)
Inventories	7,449	3,700
Tooling in progress	(2,053)	826
Prepaids and other current assets	338	(1,633)
Accounts payable	(4,016)	(1,175)
Deferred income taxes	(1,189)	(4,266)
Accrued liabilities, excluding long-term incentive	5,776	(2,290)
Net cash provided by operating activities	19,291	16,424
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(5,354)	(22,820)
Proceeds from sale of property, plant and equipment	1,920	76
Non-cash adjustments		(1,656)
Acquisitions, net of cash acquired		(2,368)
Net cash used in investing activities	(3,434)	(26,768)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes	209,857	367,364
Payments on bank revolving credit notes	(222,443)	(339,993)
Repayments of other long-term debt		(119,963)
Deferred financing costs	(206)
Proceeds from IPO, net		101,763
Purchase of treasury stock	(2,510)	(1,592)
Payments on capital leases	(446)	(323)
Net cash provided (used in) by financing activities	(15,748)	7,256
Net increase (decrease) in cash and cash equivalents	109	(3,088)
Cash and cash equivalents at beginning of period	1	3,089
Cash and cash equivalents at end of period	110	1
Supplemental disclosure of cash flow information:
Cash paid for interest	2,366	6,288
Cash paid for taxes	351	538
Non-cash construction in progress in accounts payable	$ 201	$ 1,238

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Additional Paid-in Capital [Member]	Treasury Shares [Member]	Retained Earnings [Member]
Beginning, Balance at Mar. 31, 2019
Transfer from temporary equity (see Note 17)	105,845	133,806	(57,659)	29,698
Net loss post IPO	(15,681)			(15,681)
Share issuance - IPO	101,763	101,763
Stock-based compensation	797	797
Share repurchases	(1,592)		(1,592)
Cancellation of Treasury Stock		(55,369)	55,369
Ending, Balance at Jun. 30, 2019	191,132	180,997	(3,882)	14,017
Net income (loss)	9,746			9,746
Stock-based compensation	1,338	1,338
Ending, Balance at Sep. 30, 2019	202,216	182,335	(3,882)	23,763
Beginning, Balance at Dec. 31, 2019	200,895	183,687	(4,882)	22,090
Net income (loss)	50			50
Purchase of treasury stock	(2,435)		(2,435)
ESOP contribution	4,831	2,374	2,457
Stock-based compensation	1,582	1,582
Ending, Balance at Mar. 31, 2020	204,923	187,643	(4,860)	22,140
Beginning, Balance at Dec. 31, 2019	200,895	183,687	(4,882)	22,090
Net income (loss)	(8,064)
Ending, Balance at Sep. 30, 2020	198,872	189,780	(4,934)	14,026
Beginning, Balance at Mar. 31, 2020	204,923	187,643	(4,860)	22,140
Net income (loss)	(7,014)			(7,014)
Purchase of treasury stock	(74)		(74)
Stock-based compensation	1,159	1,159
Ending, Balance at Jun. 30, 2020	198,994	188,802	(4,934)	15,126
Net income (loss)	(1,100)			(1,100)
Stock-based compensation	978	978
Ending, Balance at Sep. 30, 2020	$ 198,872	$ 189,780	$ (4,934)	$ 14,026

XML

Basis of presentation

9 Months Ended

Sep. 30, 2020

Basis Of Presentation [Abstract]

Basis of presentation

Note 1. Basis of presentation

The interim unaudited consolidated financial statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2019 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements.

Nature of Operations

MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 19 facilities across seven states. These facilities make it possible to offer conventional and computer numerical control (CNC) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.

In May 2019, we completed our initial public offering (IPO). In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

COVID-19 has had and will continue to have a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts).

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, creating Topic 842, which requires lessees to record the assets and liabilities arising from all leases in the statement of financial position. Under ASU 2016-02, lessees will recognize a liability for lease payments and a right-of-use asset. When measuring assets and liabilities, a lessee should include amounts related to option terms, such as the option of extending or terminating the lease or purchasing the underlying asset, that are reasonably certain to be exercised. For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election to not recognize lease assets and liabilities. This guidance retains the distinction between finance leases and operating leases and the classification criteria remains similar to existing guidance. For financing leases, a lessee will recognize the interest on a lease liability separate from amortization of the right-of-use asset. In addition, repayments of principal will be presented within financing activities, and interest payments will be presented within operating activities in the statement of cash flows. For operating leases, a lessee will recognize a single lease cost on a straight-line basis and classify all cash payments within operating activities in the statement of cash flows. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For as long as the Company remains an “emerging growth company” (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, this guidance is effective for annual or any interim goodwill impairment test in annual reporting periods beginning after December 15, 2018. For as long as the Company remains an EGC, the new guidance is effective for any annual or interim goodwill impairment test in annual reporting periods beginning after December 15, 2021. During the period ended March 31, 2020, the Company elected to early adopt this guidance. This adoption had no impact on the financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes, creating Topic 740, which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2020. For as long as the Company remains an EGC, the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

A summary of the Company’s evaluation of other recent accounting pronouncements is included in the Company’s 2019 financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019.

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IPO

9 Months Ended

Sep. 30, 2020

Initial Public Offering [Abstract]

IPO

Note 2. IPO

The IPO of shares of the Company’s common stock was completed in May 2019. In connection with the offering, the Company initially sold 6,250,000 shares of common stock at $17 per share generating proceeds of $99,344, net of underwriting discounts and commissions. Additional shares were also sold under an option granted to the underwriters that same month, resulting in a sale of an additional 152,209 shares of common stock at $17 per share, generating additional proceeds of $2,419, net of underwriting discounts and commissions. IPO proceeds were used to pay down certain indebtedness.

In conjunction with the IPO, the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1, resulting in the conversion of 10,075 shares in our Employee Stock Ownership Plan to 13,443,484 shares.

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Select balance sheet data

9 Months Ended

Sep. 30, 2020

Select Balance Sheet Data [Abstract]

Select balance sheet data

Note 3. Select balance sheet data

Inventory

Inventories as of September 30, 2020 and December 31, 2019 consist of:

	September 30, 2020		December 31, 2019
Finished goods and purchased parts	$	23,525	$	28,664
Raw materials		8,634		10,834
Work-in-process		5,805		6,194
Total	$	37,964	$	45,692

Property, plant and equipment

Property, plant and equipment as of September 30, 2020 and December 31, 2019 consist of:

	Useful Lives Years*	September 30, 2020		December 31, 2019
Land	Indefinite	$	1,033	$	1,264
Land improvements	15-39		3,169		3,169
Building and building improvements	15-39		55,022		58,021
Machinery, equipment and tooling	3-10		198,951		204,248
Vehicles	5		3,712		3,738
Office furniture and fixtures	3-7		16,243		15,469
Construction in progress	N/A		1,677		3,154
Total property, plant and equipment, gross			279,807		289,063
Less accumulated depreciation			171,920		164,000
Total property, plant and equipment, net		$	107,887	$	125,063

Additionally, the Company completed the closure of its Greenwood, SC manufacturing facility during the quarter. The net amount of property, plant and equipment associated with the facility was $3,552, which is classified in assets held for sale on the Condensed Consolidated Balance Sheets as of September 30, 2020.

Goodwill

Changes in goodwill between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	71,535
Impairment		—
Balance as of September 30, 2020	$	71,535

 Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2020 and December 31, 2019:

	Useful Lives Years	September 30, 2020			December 31, 2019
Amortizable intangible assets:
Customer relationships and contracts	9-12	$	78,340		$	78,340
Trade name	10		14,780			14,780
Non-compete agreements	5		8,800			8,800
Patents	19		24			24
Accumulated amortization			(41,612	)		(33,582	)
Total amortizable intangible assets, net			60,332			68,362
Non-amortizable brand name			3,811			3,811
Total intangible assets, net		$	64,143		$	72,173

Non-amortizable brand name is tested annually for impairment.

Changes in intangible assets between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	72,173
Amortization expense		(8,030	)
Balance as of September 30, 2020	$	64,143

Amortization expense was $2,677 for the three months ended September 30, 2020 and 2019, and $8,030 for the nine months ended September 30, 2020 and 2019.

Future amortization expense is expected to be as followed:

Year ending December 31,
2020 (remainder)	$	2,676
2021	$	10,706
2022	$	6,952
2023	$	6,866
2024	$	5,192
Thereafter	$	27,940

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Bank revolving credit notes

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Bank revolving credit notes

Note 4. Bank revolving credit notes

On September 26, 2019, and as last amended as of June 30, 2020, we entered into an amended and restated credit agreement (Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent. The Credit Agreement provides for a $200,000  revolving credit facility (the Revolving Loan), with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of debt capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00 as well as a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions.

In order to provide a means of insurance against future macroeconomic events, we entered into an amendment (Second Amendment) to the Credit Agreement on June 30, 2020. The Second Amendment provides the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, or such earlier date as the Company may elect (Covenant Relief Period), in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which takes effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% – 2.75%, along with the commitment fee ranging from 20 to 50 basis points.

During the Covenant Relief Period, the required ceiling on the Company’s total leverage ratio will be 4.25 to 1.00 for quarters ending June 30, 2020 through and including December 31, 2020, and will decline in quarterly increments to 3.25 to 1.00 through the quarter ending December 31, 2021.

At September 30, 2020, our consolidated total leverage ratio was 2.16 to 1.00 as compared to a covenant maximum of 4.25 to 1.00 in accordance with the Second Amendment of the Credit Agreement.

At September 30, 2020, our interest coverage ratio was 7.44 to 1.00 as compared to a covenant minimum of 3.00 to 1.00 under the Credit Agreement.

Under the Credit Agreement, interest is payable quarterly at the adjusted LIBOR plus an applicable margin based on the current funded indebtedness to adjusted EBITDA ratio. The interest rate was 2.50% and 3.25% as of September 30, 2020 and December 31, 2019, respectively. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.20% as of September 30, 2020 and December 31, 2019.

The Company was in compliance with all financial covenants of its credit agreements as of September 30, 2020 and December 31, 2019. The amount borrowed on the revolving credit notes was $59,986 and $72,572 as of September 30, 2020 and December 31, 2019, respectively.

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Capital lease obligation

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Capital lease obligation

Note 5. Capital lease obligation

Capital leases consist of equipment with a capitalized cost of $3,825 at September 30, 2020 and December 31, 2019, and accumulated depreciation of $1,084 and $598 at September 30, 2020 and December 31, 2019, respectively. Depreciation of $161 and $483 was recognized on the capital lease assets during the three and nine months ended September 30, 2020, respectively, and $196 and $342 during the three and nine months ended September 30, 2019, respectively. Non-cash capital lease transactions amounted to zero forthe three and nine months ended September 30, 2020. Future minimum lease payments required under the lease are as follows:

Year ending December 31,
2020 (remainder)	$	184
2021		734
2022		734
2023		734
2024		514
Thereafter		226
Total		3,126
Less payment amount allocated to interest		287
Present value of capital lease obligation	$	2,839
Current portion of capital lease obligation		619
Long-term portion of capital lease obligation		2,220
Total capital lease obligation	$	2,839

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Operating lease obligation

9 Months Ended

Sep. 30, 2020

Lessee Disclosure [Abstract]

Operating lease obligation

Note 6. Operating lease obligation

Operating leases relate to property, plant and equipment. Future minimum lease payments required under the leases are as follows:

Year ending December 31,
2020 (remainder)	$	877
2021		3,112
2022		2,300
2023		2,260
2024		1,473
Thereafter		2,981
Total	$	13,003

The Company leases certain office space, warehousing facilities, equipment and vehicles under operating lease arrangements with third-party lessors. These lease arrangements expire at various time through December 2028. Total rent expense under the arrangements was approximately $1,128 and $1,223 for the three months ended September 30, 2020 and 2019, respectively, and $3,283 and $3,624 for the nine months ended September 30, 2020 and 2019, respectively.

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Employee stock ownership plan

9 Months Ended

Sep. 30, 2020

Employee Stock Ownership Plan E S O P Shares In E S O P [Abstract]

Employee stock ownership plan

Note 7. Employee stock ownership plan

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company can make annual contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company. Prior to December 31, 2019, the annual contribution was discretionary except that it must have been at least 3% of the compensation for all safe harbor participants for the plan year. Beginning on January 1, 2020, all contributions are discretionary. For the three months ended September 30, 2020 and 2019, the Company’s ESOP expense amounted to zero and $1,500, respectively. For the nine months ended September 30, 2020 and 2019, the Company’s ESOP expense amounted to zero and $4,500, respectively.

At various times following death, disability, retirement or termination of employment, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP. Prior to the IPO, all distributions were paid to participants in cash.

As of September 30, 2020, and December 31, 2019, the ESOP shares consisted of 10,032,641 and 11,790,113 in allocated shares, respectively. Prior to its IPO, the Company was obligated to repurchase shares in the trust that were not distributed to ESOP participants as determined by the ESOP trustees, and thus the shares were mandatorily redeemable. Subsequent to the IPO, shares are sold in the public market.

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Retirement plans

9 Months Ended

Sep. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Retirement Plans

Note 8. Retirement plans

The Mayville Engineering Company Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to 50% of their eligible compensation plan to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code.

The 401(k) Plan also provides for employer discretionary profit-sharing contributions and the Board of Directors may authorize discretionary profit-sharing contributions (which are usually approved at the end of each calendar year).

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Income taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income taxes

Note 9. Income taxes

On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.

For the nine months ended September 30, 2020 our annual effective tax rate (EFT) is 26.80%, excluding discrete items. Income tax expense (benefit) was $733 and ($1,101), and the effective tax rate (ETR) from continuing operations was -199.82% and 12.17%for the three and nine months ended September 30, 2020, respectively. The following caused the ETR to be different from our expected annual ETR at statutory tax rates:

• For the three and nine months ended September 30, 2020, we recorded a discrete tax expense of zero and $483, respectively, as a result of the removal of a deferred tax asset related to loan fee amortization.

• For the three and nine months ended September 30, 2020, we recorded a discrete tax expense of $853 for both periods due to the vesting of certain stock-based compensation awards and the change in stock price. The Company expects to have discrete adjustments in the future as long as it continues to issue and have outstanding stock-based compensation awards.

For the nine months ended September 30, 2019, our annual EFT was 23.35% excluding discrete items. Income tax expense (benefit) was estimated at $2,512 and ($231) and the ETR from continuing operations was 19.60% and 3.50% for the three and nine months ended September 30, 2019, respectively.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in these jurisdictions. Accounting Standards Codification (ASC) Topic 740, Income Taxes, states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits.

Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements for the three and nine months ended September 30, 2020 and 2019.

Prior to the Company’s IPO, the Company’s legacy business was an S Corporation, where substantially all taxes were passed to the shareholders and the Company did not pay federal or state corporate income taxes on its taxable income. In connection with the IPO, the Company’s legacy business converted to a C Corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward. Upon the Company’s conversion from a non-taxable entity to a taxable entity, we established an opening deferred tax asset of $784 as a result of evaluating estimated temporary differences that existed on this date.

The Company’s policy for recording interest and penalties associated with potential income tax audits is to record such expense as a component of income tax expense. There were no amounts for penalties or interest recorded as of September 30, 2020. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions.

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Contingencies

9 Months Ended

Sep. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Contingencies

Note 10. Contingencies

From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the consolidated financial statements.

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Deferred compensation

9 Months Ended

Sep. 30, 2020

Deferred Compensation Liability [Abstract]

Deferred compensation

Note 11. Deferred compensation

The Mayville Engineering Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. Eligible employees may elect to defer a portion of his or her compensation for any plan year and the deferral cannot exceed 50% of the participant’s base salary and may include the participant’s annual short-term cash incentive up to 100%. The participant’s election must be made prior to the first day of the plan year.

 An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company.

Prior to the IPO, all deferrals were deemed to have been invested in the Company’s common stock at a price equal to the share value on the date of deferral and the value of the account increased or decreased with the change in the value of the stock. Individual accounts are maintained for each participant. Each participant’s account is credited with the participant’s deferred compensation and investment income or loss, reduced for charges, if any.

For the period subsequent to the IPO, deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock).

The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation.

The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three months ended September 30, 2020 and 2019, eligible employees elected to defer compensation of $10 for both periods.During the nine months ended September 30, 2020 and 2019, eligible employees elected to defer compensation of $51 and $1,064, respectively. As of September 30, 2020, and December 31, 2019, the total amount accrued for all benefit years under this plan was $25,183 and $24,949, respectively, which is included within the deferred compensation and long-term incentive on the Condensed Consolidated Balance Sheets. These amounts include the initial deferral of compensation as adjusted for (a) subsequent changes in the share value of the Company stock pursuant to the IPO or (b) following the IPO in the investment options chosen by the participants. Total expense for the deferred compensation plan for the three months ended September 30, 2020 and 2019 amounted to $310 and $141, respectively. Total expense for the deferred compensation plan for the nine months ended September 30, 2020 and 2019 amounted to $289 and $10,405, respectively. These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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Long-Term incentive plan

9 Months Ended

Sep. 30, 2020

Share Based Compensation [Abstract]

Long-Term incentive plan

Note 12. Long-Term incentive plan

Prior to the IPO,the Company’s long-term incentive plan (LTIP) was available for any employee who had been designated to be eligible to participate by the Compensation Committee of the Board of Directors. Annually, the LTIP provided for long-term cash incentive awards to eligible participants based on the Company’s performance over a three-year performance period.

The LTIP was non-funded and each participant in the plan was considered a general unsecured creditor of the Company and each agreement constituted a promise by the Company to make benefit payments if the future conditions were met, or if discretion is exercised in favor of a benefit payment.

The qualifying conditions for each award granted under the plan included a minimum increase in the aggregate fair value of the Company of 12% during the three-year performance period and the eligible participants must have been employed by the Company on the date of the cash payment or have retired after attaining age 65, died or become disabled during the period from the beginning of the performance period to the date of payment. If the qualifying conditions were not attained, discretionary payments were made, up to a maximum amount specified in each award agreement. Discretionary payments were determined by the Compensation Committee of the Board of Directors (for payment to the Chief Executive Officer of the Company) and by the Chief Executive Officer (for payments to other participants in the plan).

If a participant was not employed throughout the performance period due to retirement, death or disability, their maximum benefit was prorated based on the number of days employed by the Company during the performance periods.

The LTIP was terminated in May 2019 in conjunction with the IPO. Total expense for the long-term incentive plan for the three and nine months ended September 30, 2019 amounted to zero and $10,000, respectively. These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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Self-Funded insurance

9 Months Ended

Sep. 30, 2020

Insurance [Abstract]

Self-Funded Insurance

Note 13. Self-Funded insurance

The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees, and estimated unpaid claims. As of March 31, 2020, the Company has consolidated benefit plans with no specific stop loss and an aggregate stop loss to limit risk. Expense related to this contract is approximately $4,757 and $4,709 for the three months ended September 30, 2020 and 2019, respectively, and $16,072 and $14,875 for the nine months ended September 30, 2020 and 2019, respectively. An estimated accrued liability of approximately $1,567 and $1,316 was recorded as of September 30, 2020 and December 31, 2019, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

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Segments

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segments

Note 14. Segments

The Company applies the provisions of ASC Topic 280, Segment Reporting. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined it has one operating segment. The Company does not earn revenues or have long-lived assets located in foreign countries.

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Fair value of financial instruments

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair value of financial instruments

Note 15. Fair value of financial instruments

Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input.

• Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability.

The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy:

			Fair Value Measurements at Report Date Using
	Balance at September 30, 2020		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	25,183	$	4,542	$	20,641	$	—
Total	$	25,183	$	4,542	$	20,641	$	—

			Fair Value Measurements at Report Date Using
	Balance at December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,949	$	2,470	$	22,479	$	—
Total	$	24,949	$	2,470	$	22,479	$	—

Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets.

Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the financial statements at cost and approximate fair value.

Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the majority of the balance as Level 2. The change in fair value is recorded in the Profit sharing, bonuses, and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income (Loss). The balance due to participants is reflected on the Deferred compensation and long-term incentive line item on the Condensed Consolidated Balance Sheets.

The Company’s non-financial assets such as intangible assets and property, plant, and equipment are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized.

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Common Equity

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Common Equity

Note 16. Common Equity

On May 13, 2019 the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1. The share dividend was accounted for as a 1,334.34-for-1 stock split and is retroactively reflected in these consolidated financial statements. All share redemption provisions were removed effective with the IPO.

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Temporary Equity

9 Months Ended

Sep. 30, 2020

Temporary Equity [Abstract]

Temporary Equity

Note 17. Temporary Equity

Prior to our IPO in May 2019, our common stock was considered redeemable under GAAP because of certain repurchase obligations related to the ESOP. As a result, all common shares were recorded as temporary equity (redeemable common shares) on the Condensed Consolidated Balance Sheets at their redemption values as of the respective balance sheet dates.

All contractual redemption features were removed at the time of the IPO. As a consequence, all outstanding shares of common stock ceased to be considered temporary equity and were reclassified to Shareholders’ Equity, including the associated balances of retained earnings. As the common shares have no par value, the amounts recorded in temporary equity for the share redemption value were recorded to additional paid-in capital within Shareholders’ Equity upon the transfer.

The following table shows all changes to temporary equity during the nine months ended September 30, 2019.

	Temporary Equity
	Redeemable Common Shares			Treasury Shares			Retained Earnings
Balance as of January 1, 2019	$	133,806		$	(57,659	)	$	26,842
Net income		—			—			2,459
Balance as of March 31, 2019		133,806			(57,659	)		29,301
Net income pre IPO								397
Transfer from temporary equity to common equity		(133,806	)		57,659			(29,698	)
Balance as of June 30, 2019		—			—			—
Balance as of September 30, 2019	$	—		$	—		$	—

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Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

Note 18. Revenue Recognition

Contract Assets and Contract Liabilities

The Company has contract assets and contract liabilities, which are included in other current assets and other current liabilities on the Condensed Consolidated Balance Sheet, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of payment is contingent upon delivery. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process (PPAP). At this time, the tool is placed into service and the cost to build the tooling is released from the balance sheet and included in cost of goods sold.

The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2020.

(in thousands)	Contract Assets		Contract Liabilities
As of January 1, 2020	$	1,589	$	914
Net Activity		2,053		840
As of September 30, 2020	$	3,642	$	1,754

Disaggregated Revenue

The following table represents a disaggregation of revenue by product category:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Outdoor sports	$	1,898		$	1,869		$	5,260		$	5,839
Fabrication		56,658			84,814			169,674			267,516
Performance structures		18,543			18,010			42,334			57,086
Tube		12,772			16,484			37,047			57,196
Tank		4,316			8,747			13,399			33,452
Total		94,187			129,924			267,714			421,089
Intercompany sales elimination		(3,112	)		(1,413	)		(5,452	)		(3,716	)
Total, net sales	$	91,075		$	128,511		$	262,262		$	417,373

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Concentration of major customers

9 Months Ended

Sep. 30, 2020

Risks And Uncertainties [Abstract]

Concentration of major customers

Note 19. Concentration of major customers

The following customers accounted for 10% or greater of the Company’s recorded net sales and net trade receivables:

	Net Sales								Accounts Receivable
	Three Months Ended September 30,				Nine Months Ended September 30,				As of		As of
	2020		2019		2020		2019		September 30, 2020		December 31, 2019
Customer
A	13.3	%	13.6	%	15.6	%	15.4	%	10.4	%	<10	%
B	10.5	%	12.4	%	10.1	%	13.8	%	<10	%	<10	%
C	13.3	%	13.9	%	11.3	%	12.7	%	<10	%	<10	%
D	<10	%	<10	%	<10	%	<10	%	<10	%	10.4	%
E	<10	%	<10	%	<10	%	<10	%	<10	%	13.5	%
F	15.7	%	10.1	%	11.7	%	<10	%	12.3	%	<10	%

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Stock based compensation

9 Months Ended

Sep. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock based compensation

Note 20. Stock based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to two million shares.

The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC Topic 718, Compensation – Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument. For units, fair value is equivalent to the stock price at the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options.

Cancellations and forfeitures are accounted for as incurred.

Stock awards were granted on May 12, 2020, February 27, 2020, and May 8, 2019. There were no stock awards granted prior to this.

During the nine months ended September 30, 2020, 264,991 units vested. For the same period, 125,414 options vested with a strike price of $17.00. There was no vesting for the three months ended September 30, 2020.

As of September 30, 2020, 843,942 options remained outstanding with a weighted average strike price of $9.97 and a weighted average contractual life of 9.31 years remaining.

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
One-time IPO unit awards	$	—	$	725	$	1,029	$	1,146
Unit awards		586		412		1,670		661
Option awards		392		201		1,020		328
Stock based compensation expense, net of tax	$	978	$	1,338	$	3,719	$	2,135

One-time IPO unit awards are fully expensed as of September 30, 2020.

A rollforward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of September 30, 2020 will be expensed over the remaining requisite service period from which individual award values relate, up to February 27, 2022.

	Three Months Ended September 30, 2020									Nine Months Ended September 30, 2020
	Units			Options			Total			Units			Options			Total
Beginning Balance	$	2,975		$	2,019		$	4,994		$	2,596		$	1,124		$	3,720
Grants		—			—			—			3,022			2,041			5,063
Forfeitures		(25	)		—			(25	)		(555	)		(518	)		(1,073	)
Expense		(586	)		(392	)		(978	)		(2,699	)		(1,020	)		(3,719	)
Balance as of September 30, 2020	$	2,364		$	1,627		$	3,991		$	2,364		$	1,627		$	3,991

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Greenwood Facility Closure and Restructuring

9 Months Ended

Sep. 30, 2020

Restructuring And Related Activities [Abstract]

Greenwood Facility Closure and Restructuring

Note 21. Greenwood Facility Closure and Restructuring

Based on the Company’s investments in new technology and automation, which have resulted in a smaller footprint requirement to maintain manufacturing capacity, the Company announced it would be closing its Greenwood, SC facility on May 6, 2020. The facility closure was finalized during the third quarter of 2020 with all customer components re-distributed amongst five other MEC manufacturing facilities. All customer relationships and manufactured components were maintained through this transition without disruption to our customers.

Costs associated with the closure are being accounted for in accordance with ASC420 Exit or Disposal Cost Obligations.

For the three months ended September 30, 2020, the Company incurred $687 of costs associated with the facility closure and restructuring including $51 for severance and retention bonuses, $88 for the loss on sale of manufacturing equipment not transferred to another facility, $78 for the buyout of operating leases, and the remainder mostly related to costs to close the facility and relocate equipment to other facilities. For the nine months ended September 30, 2020, the Company incurred $2,524 of costs associated with the facility closure and restructuring, including $282 for severance and retention bonus, $931 for the loss on sale of manufacturing equipment not transferred to another MEC facility, $78 for the buyout of operating leases, $622 for the disposition of inventory, and the remainder mostly related to costs to close the facility and relocate equipment to other facilities. These costs were recognized on the cost of sales line item of the Condensed Consolidated Statements of Comprehensive Income (Loss). The Company expects to incur an immaterial amount of additional costs associated with the facility closure in the fourth quarter this year.

The Greenwood facility has a net book value of approximately $3,552 as of September 30, 2020 and is classified as assets held for sale on the Condensed Consolidated Balance Sheet. Based on information provided by reputable independent third parties, the Company has concluded that the fair value of the facility exceeds its net book value.

The following table summarizes the activity related to the Greenwood restructuring through September 30, 2020:

	Employee Severance and Retention Bonus Reserve			Inventory Excess and Obsolescence Reserve			Other			Total
Balance as of March 31, 2020	$	—		$	—		$	—		$	—
Charges		231			638			969			1,838
Cash receipts (payments)		(34	)		—			(969	)		(1,003	)
Accrual adjustments		—			—			—			—
Balance as of June 30, 2020		197			638			—			835
Charges		51			(16	)		652			687
Cash receipts (payments)		(248	)		16			(652	)		(884	)
Accrual adjustments		—			(638	)		—			(638	)
Balance as of September 30, 2020	$	—		$	—		$	—		$	—

As a result of the Greenwood facility closure, future earnings and cash flows will no longer be impacted by the depreciation associated with the assets disposed of or the facility, maintenance costs of the facility, and facility personnel expenses.

Assets disposed of had a net book value of $2,475 with a remaining useful life of approximately 3 years resulting in approximately $825 of annual depreciation expense that will no longer be incurred. The facility has a net book value of $3,552 as of September 30, 2020 with a remaining weighted average useful life of approximately 27 years resulting in approximately $133 of annual depreciation expense that will no longer be incurred.

The Company incurred approximately $800 of annual facility maintenance costs, including utilities, that will no longer be incurred.

Total personnel costs associated with the facility were approximately $2,250 for the first quarter 2020 resulting in approximately $9,000 of annual personnel expenses, of which the majority of these costs will be transitioned to the other five MEC facilities that will now be manufacturing these components. As previously mentioned, all customer relationships and manufacturing programs were retained through the transition.

The aforementioned depreciation, maintenance costs, and personnel expenses associated with the Greenwood facility have been classified as cost of sales on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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Subsequent events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent events

Note 22. Subsequent events

The company evaluated events and transactions for potential recognition or disclosure in theinterim unaudited Condensed Consolidated Financial Statements through November 3, 2020, the date on which theinterim unaudited Condensed Consolidated Financial Statements were available to be issued.

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Basis of presentation (Policies)

9 Months Ended

Sep. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 19 facilities across seven states. These facilities make it possible to offer conventional and computer numerical control (CNC) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.

In May 2019, we completed our initial public offering (IPO). In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

COVID-19 has had and will continue to have a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, creating Topic 842, which requires lessees to record the assets and liabilities arising from all leases in the statement of financial position. Under ASU 2016-02, lessees will recognize a liability for lease payments and a right-of-use asset. When measuring assets and liabilities, a lessee should include amounts related to option terms, such as the option of extending or terminating the lease or purchasing the underlying asset, that are reasonably certain to be exercised. For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election to not recognize lease assets and liabilities. This guidance retains the distinction between finance leases and operating leases and the classification criteria remains similar to existing guidance. For financing leases, a lessee will recognize the interest on a lease liability separate from amortization of the right-of-use asset. In addition, repayments of principal will be presented within financing activities, and interest payments will be presented within operating activities in the statement of cash flows. For operating leases, a lessee will recognize a single lease cost on a straight-line basis and classify all cash payments within operating activities in the statement of cash flows. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For as long as the Company remains an “emerging growth company” (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, this guidance is effective for annual or any interim goodwill impairment test in annual reporting periods beginning after December 15, 2018. For as long as the Company remains an EGC, the new guidance is effective for any annual or interim goodwill impairment test in annual reporting periods beginning after December 15, 2021. During the period ended March 31, 2020, the Company elected to early adopt this guidance. This adoption had no impact on the financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes, creating Topic 740, which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2020. For as long as the Company remains an EGC, the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

A summary of the Company’s evaluation of other recent accounting pronouncements is included in the Company’s 2019 financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019.

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Select balance sheet data (Tables)

9 Months Ended

Sep. 30, 2020

Select Balance Sheet Data [Abstract]

Schedule of Inventories

Inventories as of September 30, 2020 and December 31, 2019 consist of:

	September 30, 2020		December 31, 2019
Finished goods and purchased parts	$	23,525	$	28,664
Raw materials		8,634		10,834
Work-in-process		5,805		6,194
Total	$	37,964	$	45,692

Schedule of Property, Plant and Equipment

Property, plant and equipment as of September 30, 2020 and December 31, 2019 consist of:

	Useful Lives Years*	September 30, 2020		December 31, 2019
Land	Indefinite	$	1,033	$	1,264
Land improvements	15-39		3,169		3,169
Building and building improvements	15-39		55,022		58,021
Machinery, equipment and tooling	3-10		198,951		204,248
Vehicles	5		3,712		3,738
Office furniture and fixtures	3-7		16,243		15,469
Construction in progress	N/A		1,677		3,154
Total property, plant and equipment, gross			279,807		289,063
Less accumulated depreciation			171,920		164,000
Total property, plant and equipment, net		$	107,887	$	125,063

Schedule of Changes In Goodwill

Changes in goodwill between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	71,535
Impairment		—
Balance as of September 30, 2020	$	71,535

Schedule of Listing of Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2020 and December 31, 2019:

	Useful Lives Years	September 30, 2020			December 31, 2019
Amortizable intangible assets:
Customer relationships and contracts	9-12	$	78,340		$	78,340
Trade name	10		14,780			14,780
Non-compete agreements	5		8,800			8,800
Patents	19		24			24
Accumulated amortization			(41,612	)		(33,582	)
Total amortizable intangible assets, net			60,332			68,362
Non-amortizable brand name			3,811			3,811
Total intangible assets, net		$	64,143		$	72,173

Schedule of Changes In Intangible Assets

Changes in intangible assets between December 31, 2019 and September 30, 2020 consist of:

Balance as of December 31, 2019	$	72,173
Amortization expense		(8,030	)
Balance as of September 30, 2020	$	64,143

Schedule of Future Amortization Expense

Future amortization expense is expected to be as followed:

Year ending December 31,
2020 (remainder)	$	2,676
2021	$	10,706
2022	$	6,952
2023	$	6,866
2024	$	5,192
Thereafter	$	27,940

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Capital lease obligation (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of Future Minimum Lease Payments Required Under The Lease

Future minimum lease payments required under the lease are as follows:

Year ending December 31,
2020 (remainder)	$	184
2021		734
2022		734
2023		734
2024		514
Thereafter		226
Total		3,126
Less payment amount allocated to interest		287
Present value of capital lease obligation	$	2,839
Current portion of capital lease obligation		619
Long-term portion of capital lease obligation		2,220
Total capital lease obligation	$	2,839

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Operating lease obligation (Tables)

9 Months Ended

Sep. 30, 2020

Lessee Disclosure [Abstract]

Future Minimum Lease Payments Under Leases

Operating leases relate to property, plant and equipment. Future minimum lease payments required under the leases are as follows:

Year ending December 31,
2020 (remainder)	$	877
2021		3,112
2022		2,300
2023		2,260
2024		1,473
Thereafter		2,981
Total	$	13,003

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Fair value of financial instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy

The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy:

			Fair Value Measurements at Report Date Using
	Balance at September 30, 2020		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	25,183	$	4,542	$	20,641	$	—
Total	$	25,183	$	4,542	$	20,641	$	—

			Fair Value Measurements at Report Date Using
	Balance at December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,949	$	2,470	$	22,479	$	—
Total	$	24,949	$	2,470	$	22,479	$	—

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Temporary Equity (Tables)

9 Months Ended

Sep. 30, 2020

Temporary Equity [Abstract]

Schedule of Changes to Temporary Equity

The following table shows all changes to temporary equity during the nine months ended September 30, 2019.

	Temporary Equity
	Redeemable Common Shares			Treasury Shares			Retained Earnings
Balance as of January 1, 2019	$	133,806		$	(57,659	)	$	26,842
Net income		—			—			2,459
Balance as of March 31, 2019		133,806			(57,659	)		29,301
Net income pre IPO								397
Transfer from temporary equity to common equity		(133,806	)		57,659			(29,698	)
Balance as of June 30, 2019		—			—			—
Balance as of September 30, 2019	$	—		$	—		$	—

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Revenue From Contract With Customer [Abstract]

Schedule of Changes in Contract Assets and Liabilities

The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2020.

(in thousands)	Contract Assets		Contract Liabilities
As of January 1, 2020	$	1,589	$	914
Net Activity		2,053		840
As of September 30, 2020	$	3,642	$	1,754

Schedule of Disaggregation of Revenue by Product Category

The following table represents a disaggregation of revenue by product category:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Outdoor sports	$	1,898		$	1,869		$	5,260		$	5,839
Fabrication		56,658			84,814			169,674			267,516
Performance structures		18,543			18,010			42,334			57,086
Tube		12,772			16,484			37,047			57,196
Tank		4,316			8,747			13,399			33,452
Total		94,187			129,924			267,714			421,089
Intercompany sales elimination		(3,112	)		(1,413	)		(5,452	)		(3,716	)
Total, net sales	$	91,075		$	128,511		$	262,262		$	417,373

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Concentration of major customers (Tables)

9 Months Ended

Sep. 30, 2020

Risks And Uncertainties [Abstract]

Schedules of Major Customer Concentrations

The following customers accounted for 10% or greater of the Company’s recorded net sales and net trade receivables:

	Net Sales								Accounts Receivable
	Three Months Ended September 30,				Nine Months Ended September 30,				As of		As of
	2020		2019		2020		2019		September 30, 2020		December 31, 2019
Customer
A	13.3	%	13.6	%	15.6	%	15.4	%	10.4	%	<10	%
B	10.5	%	12.4	%	10.1	%	13.8	%	<10	%	<10	%
C	13.3	%	13.9	%	11.3	%	12.7	%	<10	%	<10	%
D	<10	%	<10	%	<10	%	<10	%	<10	%	10.4	%
E	<10	%	<10	%	<10	%	<10	%	<10	%	13.5	%
F	15.7	%	10.1	%	11.7	%	<10	%	12.3	%	<10	%

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Stock based compensation (Tables)

9 Months Ended

Sep. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock-based Compensation Expenses

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
One-time IPO unit awards	$	—	$	725	$	1,029	$	1,146
Unit awards		586		412		1,670		661
Option awards		392		201		1,020		328
Stock based compensation expense, net of tax	$	978	$	1,338	$	3,719	$	2,135

Schedule of Unrecognized Stock-based Compensation Expense

	Three Months Ended September 30, 2020									Nine Months Ended September 30, 2020
	Units			Options			Total			Units			Options			Total
Beginning Balance	$	2,975		$	2,019		$	4,994		$	2,596		$	1,124		$	3,720
Grants		—			—			—			3,022			2,041			5,063
Forfeitures		(25	)		—			(25	)		(555	)		(518	)		(1,073	)
Expense		(586	)		(392	)		(978	)		(2,699	)		(1,020	)		(3,719	)
Balance as of September 30, 2020	$	2,364		$	1,627		$	3,991		$	2,364		$	1,627		$	3,991

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Greenwood Facility Closure and Restructuring (Tables)

9 Months Ended

Sep. 30, 2020

Restructuring And Related Activities [Abstract]

Schedule of Activity Related to Restructuring

The following table summarizes the activity related to the Greenwood restructuring through September 30, 2020:

	Employee Severance and Retention Bonus Reserve			Inventory Excess and Obsolescence Reserve			Other			Total
Balance as of March 31, 2020	$	—		$	—		$	—		$	—
Charges		231			638			969			1,838
Cash receipts (payments)		(34	)		—			(969	)		(1,003	)
Accrual adjustments		—			—			—			—
Balance as of June 30, 2020		197			638			—			835
Charges		51			(16	)		652			687
Cash receipts (payments)		(248	)		16			(652	)		(884	)
Accrual adjustments		—			(638	)		—			(638	)
Balance as of September 30, 2020	$	—		$	—		$	—		$	—

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Basis of presentation - Additional Information (Details)	9 Months Ended
	Sep. 30, 2020 Facility State Segment
Basis Of Presentation [Line Items]
Number of facilities operated | Facility	19
Number of states | State	7
Number of operating segments | Segment	1
ASU 2017-04 [Member]
Basis Of Presentation [Line Items]
Change in accounting principle, accounting standards update, early adoption	true
Change in accounting principle, accounting standards update, immaterial effect	true

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IPO - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended
	May 31, 2019	Sep. 30, 2020	Dec. 31, 2019
Initial Public Offering [Line Items]
Conversion of stock Employee Stock Ownership Plan	10,075
Shares in Employee Stock Ownership Plan		10,032,641	11,790,113
IPO [Member]
Initial Public Offering [Line Items]
Shares in Employee Stock Ownership Plan		13,443,484	13,443,484
Common Stock [Member] | IPO [Member]
Initial Public Offering [Line Items]
Common stock sold	6,250,000
Sale of shares prices	$ 17
Cash inflow of issuance of stock	$ 99,344
Common Stock [Member] | Underwriter [Member] | IPO [Member]
Initial Public Offering [Line Items]
Common stock sold	152,209
Sale of shares prices	$ 17
Cash inflow of issuance of stock	$ 2,419
May 2019 IPO [Member]
Initial Public Offering [Line Items]
Dividend stock split conversion ratio	133434.00%

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Select balance sheet data - Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Select Balance Sheet Data [Abstract]
Finished goods and purchased parts	$ 23,525	$ 28,664
Raw materials	8,634	10,834
Work-in-process	5,805	6,194
Total	$ 37,964	$ 45,692

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Select balance sheet data - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 279,807	$ 289,063
Less accumulated depreciation	171,920	164,000
Total property, plant and equipment, net	107,887	125,063
Land [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 1,033	1,264
Property, plant and equipment useful lives	Indefinite
Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 3,169	3,169
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	15 years
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	39 years
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 55,022	58,021
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	15 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	39 years
Machinery, Equipment and Tooling [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 198,951	204,248
Machinery, Equipment and Tooling [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	3 years
Machinery, Equipment and Tooling [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	10 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 3,712	3,738
Property, plant and equipment useful lives	5 years
Office Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 16,243	15,469
Office Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	3 years
Office Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	7 years
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 1,677	$ 3,154

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Select balance sheet data - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Select Balance Sheet Data [Abstract]
Net amount of property, plant and equipment associated with facility	$ 3,552		$ 3,552
Amortization expense	$ 2,677	$ 2,677	$ 8,030	$ 8,030

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Select balance sheet data - Schedule of Changes In Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Select Balance Sheet Data [Abstract]
Balance	$ 71,535
Impairment	0
Balance	$ 71,535

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Select balance sheet data - Schedule of Listing of Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Amortizable intangible assets [Abstract]
Accumulated amortization	$ (41,612)	$ (33,582)
Total amortizable intangible assets, net	60,332	68,362
Total intangible assets, net	64,143	72,173
Brand Name [Member]
Amortizable intangible assets [Abstract]
Total intangible assets, net	3,811	3,811
Customer Relationships and Contracts [Member]
Amortizable intangible assets [Abstract]
Amortizable intangible assets, gross	$ 78,340	$ 78,340
Customer Relationships and Contracts [Member] | Minimum [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	9 years	9 years
Customer Relationships and Contracts [Member] | Maximum [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	12 years	12 years
Trade Names [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	10 years	10 years
Amortizable intangible assets, gross	$ 14,780	$ 14,780
Noncompete Agreements [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	5 years	5 years
Amortizable intangible assets, gross	$ 8,800	$ 8,800
Patents [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	19 years	19 years
Amortizable intangible assets, gross	$ 24	$ 24

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Select balance sheet data - Schedule of Changes In Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Select Balance Sheet Data [Abstract]
Balance			$ 72,173
Amortization expense	$ (2,677)	$ (2,677)	(8,030)	$ (8,030)
Balance	$ 64,143		$ 64,143

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Select balance sheet data - Schedule of Future Amortization Expense (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Select Balance Sheet Data [Abstract]
2020 (remainder)	$ 2,676
2021	10,706
2022	6,952
2023	6,866
2024	5,192
Thereafter	$ 27,940

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Bank revolving credit notes - Additional Information (Details) - USD ($)		3 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Sep. 26, 2019	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Line Of Credit Facility [Line Items]
Revolving credit notes				$ 59,986,000	$ 72,572,000
A&R Credit Agreement [Member]
Line Of Credit Facility [Line Items]
Minimum interest coverage ratio				3.00%
Maximum consolidated leverage ratio				3.25%
A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement additional borrowing capacity through accordion feature	$ 100,000,000
Credit agreement maturity date	Sep. 26, 2024
Second Amendment [Member]
Line Of Credit Facility [Line Items]
Minimum interest coverage ratio				3.00%
Maximum consolidated leverage ratio				4.25%
Debt instrument covenant description				The Second Amendment provides the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, or such earlier date as the Company may elect (Covenant Relief Period), in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which takes effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% – 2.75%, along with the commitment fee ranging from 20 to 50 basis points.
Floor rate				0.75%
Consolidated leverage ratio				2.16%
Interest coverage ration				7.44%
Second Amendment [Member] | Scenario Forecast [Member]
Line Of Credit Facility [Line Items]
Leverage ratio		3.25%	4.25%
Second Amendment [Member] | Minimum [Member]
Line Of Credit Facility [Line Items]
Debt instrument commitment fee percentage				0.20%
Second Amendment [Member] | Minimum [Member] | LIBOR [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				1.00%
Second Amendment [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Debt instrument commitment fee percentage				0.50%
Second Amendment [Member] | Maximum [Member] | LIBOR [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				2.75%
Revolving Credit Facility [Member]
Line Of Credit Facility [Line Items]
Interest rate				2.50%	3.25%
Revolving commitments fee percentage				0.20%	0.20%
Revolving credit notes				$ 59,986,000	$ 72,572,000
Revolving Credit Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	$ 200,000,000
Letter of Credit Sub-facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	5,000,000
Swingline Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	$ 20,000,000

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Capital lease obligation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Capital Leased Assets [Line Items]
Capital Lease Obligations	$ 2,839		$ 2,839
Non-cash capital lease transactions	0		0
Equipment [Member]
Capital Leased Assets [Line Items]
Capitalized cost	3,825		3,825		$ 3,825
Capital lease, accumulated depreciation	1,084		1,084		$ 598
Capital lease, depreciation recognized	$ 161	$ 196	$ 483	$ 342

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Capital lease obligation - Schedule of Future Minimum Lease Payments Required Under The Lease (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020 (remainder)	$ 184
2021	734
2022	734
2023	734
2024	514
Thereafter	226
Total	3,126
Less payment amount allocated to interest	287
Present value of capital lease obligation	2,839
Current portion of capital lease obligation	619	$ 598
Long-term portion of capital lease obligation	2,220	$ 2,687
Total capital lease obligation	$ 2,839

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Operating lease obligation - Future Minimum Lease Payments Under Leases (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
2020 (remainder)	$ 877
2021	3,112
2022	2,300
2023	2,260
2024	1,473
Thereafter	2,981
Total	$ 13,003

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Operating lease obligation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Lessee Disclosure [Abstract]
Operating lease expiration period			2028-12
Rent expense	$ 1,128	$ 1,223	$ 3,283	$ 3,624

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Employee stock ownership plan - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Annual contribution vesting percentage					3.00%
Employee stock ownership plan (ESOP), (income) expense		$ 1,500		$ 4,500
Shares in ESOP	10,032,641		10,032,641		11,790,113
Employee Stock Option [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Employee stock ownership plan (ESOP), (income) expense	$ 0	$ 1,500	$ 0	$ 4,500

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Retirement plans - Additional Information (Details)	9 Months Ended
	Sep. 30, 2020
Compensation And Retirement Disclosure [Abstract]
Percentage of employee contribution of eligible compensation plan	50.00%

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Income taxes - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 733,000	$ 2,512,000	$ (1,101,000)	$ (231,000)
Effective income tax rate	(199.82%)	19.60%	12.17%	3.50%
Annual effective income tax rate excluding discrete items			26.80%	23.35%
Effective income tax rate reconciliation result of removal deferred tax asset amount	$ 0		$ 483,000
Effective income tax rate reconciliation due to vesting of stock-based compensation awards and change in stock price amount	853,000		853,000
Deferred tax assets tax holiday	784,000		784,000
Penalties or interest recorded	$ 0		$ 0

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Deferred compensation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Description of deferred compensation arrangements			The Mayville Engineering Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors.
Deferred compensation plan (Income) expense	$ 2,288	$ 678	$ 4,807	$ 25,258
Deferred compensation cash-based arrangements liability	25,183		25,183		$ 24,949
Deferred Profit Sharing [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred compensation plan (Income) expense	310	141	289	10,405
Employees [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred compensation plan (Income) expense	$ 10	$ 10	$ 51	$ 1,064
Maximum [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Annual short term cash incentive			100.00%
Deferred compensation arrangements			50.00%

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Long-Term incentive plan - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Long term incentives plan terms			Prior to the IPO, the Company’s long-term incentive plan (LTIP) was available for any employee who had been designated to be eligible to participate by the Compensation Committee of the Board of Directors. Annually, the LTIP provided for long-term cash incentive awards to eligible participants based on the Company’s performance over a three-year performance period.
Long-Term Incentive Plan	$ 2,288,000	$ 678,000	$ 4,807,000	$ 25,258,000
Deferred Bonus [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Long-Term Incentive Plan		$ 0		$ 10,000,000
Chief Executive Officer [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Increase in fair value of long term incentive plan			12.00%
Long term incentive plan			3 years

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Self-Funded insurance - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Insurance [Abstract]
Estimated accrued liability	$ 1,567		$ 1,567		$ 1,316
Reinsured limit of aggregate expense	$ 4,757	$ 4,709	$ 16,072	$ 14,875

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Segments - Additional Information (Details)	9 Months Ended
	Sep. 30, 2020 Segment
Segment Reporting [Abstract]
Number of operating segments	1

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Fair value of financial instruments - Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	$ 25,183	$ 24,949
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	4,542	2,470
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	20,641	22,479
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	0	0
Deferred Compensation [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	25,183	24,949
Deferred Compensation [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	4,542	2,470
Deferred Compensation [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	20,641	22,479
Deferred Compensation [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	$ 0	$ 0

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Common Equity - Additional Information (Details)	May 13, 2019
Equity [Abstract]
Stockholders' equity dividend description	On May 13, 2019 the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1. The share dividend was accounted for as a 1,334.34-for-1 stock split and is retroactively reflected in these consolidated financial statements. All share redemption provisions were removed effective with the IPO.

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Temporary Equity - Schedule of Changes to Temporary Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019
Redeemable Common Stock [Member]
Temporary Equity [Line Items]
Beginning, Balance	$ 133,806	$ 133,806
Transfer from temporary equity to common equity	(133,806)
Ending, Balance		133,806
Treasury Shares [Member]
Temporary Equity [Line Items]
Beginning, Balance	(57,659)	(57,659)
Transfer from temporary equity to common equity	57,659
Ending, Balance		(57,659)
Retained Earnings [Member]
Temporary Equity [Line Items]
Beginning, Balance	29,301	26,842
Net income	397	2,459
Transfer from temporary equity to common equity	$ (29,698)
Ending, Balance		$ 29,301

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Revenue Recognition - Schedule of Changes in Contract Assets and Liabilities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Revenue From Contract With Customer [Abstract]
Contract asset, beginning balance	$ 1,589
Net Activity	2,053
Contract asset, ending balance	3,642
Contract liability, beginning balance	914
Net Activity	840
Contract liability, ending balance	$ 1,754

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Revenue Recognition - Schedule of Disaggregation of Revenue by Product Category (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation Of Revenue [Line Items]
Net sales	$ 91,075	$ 128,511	$ 262,262	$ 417,373
Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	94,187	129,924	267,714	421,089
Intercompany Sales Elimination
Disaggregation Of Revenue [Line Items]
Net sales	(3,112)	(1,413)	(5,452)	(3,716)
Outdoor Sports | Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	1,898	1,869	5,260	5,839
Fabrication | Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	56,658	84,814	169,674	267,516
Performance structures | Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	18,543	18,010	42,334	57,086
Tube | Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	12,772	16,484	37,047	57,196
Tank | Operating Segments
Disaggregation Of Revenue [Line Items]
Net sales	$ 4,316	$ 8,747	$ 13,399	$ 33,452

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Concentration of major customers - Schedules of Major Customer Concentrations (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Customer A [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	13.30%	13.60%	15.60%	15.40%
Customer A [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage					<10%
Concentration risk percentage			10.40%
Customer B [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	10.50%	12.40%	10.10%	13.80%
Customer B [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage			<10%		<10%
Customer C [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	13.30%	13.90%	11.30%	12.70%
Customer C [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage			<10%		<10%
Customer D [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	<10%	<10%	<10%	<10%
Customer D [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage			<10%
Concentration risk percentage					10.40%
Customer E [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	<10%	<10%	<10%	<10%
Customer E [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage			<10%
Concentration risk percentage					13.50%
Customer F [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage				<10%
Concentration risk percentage	15.70%	10.10%	11.70%
Customer F [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage					<10%
Concentration risk percentage			12.30%

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Stock based compensation - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, outstanding number	843,942	843,942
Weighted average exercise price	$ 9.97	$ 9.97
Weighted average contractual life remaining		9 years 3 months 21 days
Unrecognized stock-based compensation recognition period		Feb. 27, 2022
Non-Employee Director [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options awarded, value			$ 0
2019 Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Payments based on the value of its common stock	2,000,000	2,000,000
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, vested	0	264,991
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, vested	0	125,414
Weighted average strike price	$ 17.00	$ 17.00

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Stock based compensation - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	$ 978	$ 1,338	$ 3,719	$ 2,135
One-Time IPO Unit Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax		725	1,029	1,146
Unit Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	586	412	1,670	661
Option Award [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	$ 392	$ 201	$ 1,020	$ 328

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Stock based compensation - Schedule of Unrecognized Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	$ 4,994	$ 3,720
Grants		5,063
Forfeitures	(25)	(1,073)
Expense	(978)	(3,719)
Ending Balance	3,991	3,991
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	2,975	2,596
Grants		3,022
Forfeitures	(25)	(555)
Expense	(586)	(2,699)
Ending Balance	2,364	2,364
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	2,019	1,124
Grants		2,041
Forfeitures		(518)
Expense	(392)	(1,020)
Ending Balance	$ 1,627	$ 1,627

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Greenwood Facility Closure and Restructuring - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($) Facility	Sep. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)
Restructuring Cost And Reserve [Line Items]
Loss (gain) on disposal of property, plant and equipment			$ 688	$ (74)
Estimated fair value of facility					$ 835
Greenwood Facility [Member]
Restructuring Cost And Reserve [Line Items]
Date of announcement of closing facility	May 06, 2020
Total costs incurred for facility closure and restructuring	$ 687		2,524
Loss (gain) on disposal of property, plant and equipment	88		931
Severance and retention bonuses	51		282
Disposition of inventory			622
Buyout of operating leases	78		78
Estimated fair value of facility	3,552		3,552
Assets disposed, net book value	$ 2,475		$ 2,475
Assets disposed remaining useful life			3 years
Assets disposed depreciation expense			$ 825
Assets disposed remaining weighted average useful life			27 years
Annual depreciation expense			$ 133
Disposal group annual facility maintenance costs			800
Disposal group assets personnel costs		$ 2,250
Disposal group assets annual personnel expenses			$ 9,000
Disposal group assets annual personnel expenses to be transitioned to other facilities | Facility			5

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Greenwood Facility Closure and Restructuring - Schedule of Activity Related to Restructuring (Detail) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020
Restructuring Cost And Reserve [Line Items]
Beginning, Balance	$ 835
Charges	687	$ 1,838
Cash receipts (payments)	(884)	(1,003)
Accrual adjustments	(638)
Ending, Balance		835
Employee Severance and Retention Bonus Reserve [Member]
Restructuring Cost And Reserve [Line Items]
Beginning, Balance	197
Charges	51	231
Cash receipts (payments)	(248)	(34)
Ending, Balance		197
Inventory Excess and Obsolescence Reserve [Member]
Restructuring Cost And Reserve [Line Items]
Beginning, Balance	638
Charges	(16)	638
Cash receipts (payments)	16
Accrual adjustments	(638)
Ending, Balance		638
Other [Member]
Restructuring Cost And Reserve [Line Items]
Charges	652	969
Cash receipts (payments)	$ (652)	$ (969)