aaon-20211231

This Membership Interest Purchase Agreement (this “Agreement”) is entered into as of the 18th day of November, 2021, by and among D-VELOPMENT, LLC, an Oregon limited liability company (“D-Velopment”), JVK HOLDINGS, LLC, an Arizona limited liability company (“JVK”), Randa K. Brooks, an individual (“Brooks”), Matthew J. Tobolski in his capacity as trustee of the TOBOLSKI FAMILY TRUST (“TFT”), DAVE BENSON, an individual (“Benson”), JOHN N. KUCERA, an individual (“Kucera”), Matt Toboloski, an individual (“Tobolski”), and AAON, INC., a Nevada corporation (“Buyer”). D-Velopment, JVK, Brooks and TFT are sometimes referred to collectively herein as the “Sellers” or individually as a “Seller”; Benson, Kucera, Brooks and Tobolski are sometimes referred to collectively herein as the “Principals” or individually as a “Principal”, and the Sellers and the Principals are sometimes referred to collectively herein as the “Seller Parties” or individually as a “Seller Party”.

and incorporated herein. In the event of supply chain disruptions in a given year that have 1) a material impact on the timely shipment of orders by the Company or 2) require the use of alternative sourcing of components that adversely affect profit margin, EBITDA shall be adjusted for that year to reflect the quantifiable impact of such disruptions on a project by project basis in an amount determined by Sellers, subject to the approval of the Board of Directors of Buyer, which approval shall not be unreasonably withheld. To the extent an adjustment is made in one year, an equal and opposite adjustment shall be made in the subsequent year.

“Current Assets” means cash and cash equivalents, accounts receivable, inventory, costs in excess of billings, and prepaid expenses, but excluding (a) the portion of any prepaid expense of which Buyer will not receive the benefit following the Closing, (b) deferred Tax assets, and (c) receivables from any of the Company’s Affiliates, managers, members, employees or officers and any of their respective Affiliates, other than those receivables arising in the normal course of the Company’s business, determined in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

“Current Liabilities” means accounts payable, accrued Taxes, billings in excess of costs, and accrued expenses, but excluding payables to any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates (other than accrued expenses for payroll, employee incentive plans, PTO, and similar expenses, which will be on the balance sheet as of the Closing Date, scheduled for payment on the next regularly scheduled payment date therefor), deferred Tax liabilities, Transaction Expenses and the current portion of any Indebtedness of the Company, determined in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

“Environmental Attributes” means any emissions and renewable energy credits, energy conservation credits, benefits, offsets and allowances, emission reduction credits or words of similar import or regulatory effect (including emissions reduction credits or allowances under all applicable emission trading, compliance or budget programs, or any other federal, state or regional emission, renewable energy or energy conservation trading or budget program) that have been held, allocated to or acquired for the development, construction, ownership, lease, operation, use or maintenance of the Company as of: (i) the date of this Agreement; and (ii) future years for which allocations have been established and are in effect as of the date of this Agreement.

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

recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and

“Indebtedness” means, without duplication and with respect to the Company, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services (other than Current Liabilities taken into account in the calculation of Closing Working Capital), (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (f). Indebtedness excludes indebtedness not to exceed $512,000 incurred in connection with any furniture, fixtures and equipment (and components thereof) ordered or to be ordered.

“Indemnity Cap” shall initially mean an amount equal to $10,000,000; however, the Indemnity Cap shall be increased at the time of issuance of 2021 Contingent Consideration in an amount equal to 10% of the amount of 2021 Contingent Consideration actually issued; shall be further increased at the time of issuance of 2022 Contingent Consideration, in an amount equal to 10% of the amount of 2022 Contingent Consideration actually issued; and shall be further increased at the time of issuance of 2023 Contingent Consideration, in an amount equal to 10% of the amount of 2023 Contingent Consideration actually issued, provided, that in no event shall the Indemnity Cap exceed an aggregate sum of $18,000,000 .

“Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account or user names (including “handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) mask works, and all registrations, applications for registration, and renewals thereof; (f) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof; (g) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (h) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; and (i) all other intellectual or industrial property and proprietary rights.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Company, or (b) the ability of any Seller Party to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any epidemic, pandemic or outbreak of disease (including, for the avoidance of doubt, COVID-19), or any worsening of such conditions, or any Public Health Measures (as defined below) or changes therein or interpretations thereof, (vi) any action required or permitted by this Agreement, except pursuant to Section 3.05 and Section 5.08; (vii) any changes in applicable Laws or accounting rules, including GAAP; or (viii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Company compared to other participants in the industries in which the Company conducts its businesses.

“Software” means any and all: (a) computer programs, computer software, applications, utilities, development tools, application programming interfaces (APIs), diagnostics, and embedded systems, including any and all software implementations of algorithms, models and methodologies, in any form or medium, including source code, object code and executable code; (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise; (c) descriptions, schematics, flow charts and other work product used to design, plan, organize and develop any of the foregoing; and (d) all documentation, including programmer documentation, user manuals, training materials and other documentation, relating to any of the foregoing.

“Subsidiary” means, with respect to any Person: (a) any corporation, partnership, limited liability company or other business entity of which a majority of the equity interests entitled to vote under ordinary circumstances in the election of directors (or in the selection of any other similar governing body in the case of an entity other than a corporation) are at the time owned or Controlled by such Person or by one or more of the other direct or indirect Subsidiaries of such Person or a combination thereof (regardless of whether, at the time, equity interests of any other class or classes shall have, or might have, voting power by reason of the occurrence of any contingency); (b) a partnership in which such Person or any direct or indirect Subsidiary of such Person is a general partner; or (c) a limited liability company in which such Person or any direct or indirect Subsidiary of such Person is a managing member or manager

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

“Transaction Expenses” means all fees and expenses incurred by the Company at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the transactions contemplated hereby and thereby, including without limitation, legal, accounting, investment banker and other third party service provider fees, fees associated with obtaining any third party approvals, consents or waivers, fees and expenses related to obtaining the release and termination of any Encumbrance on any asset of the Company, broker fees, and any severance, bonus or change of control payments related to the transactions contemplated by this Agreement.

(i) Shares of AAON Common Stock representing Twenty-Four Million Three Hundred Seventy-Five Thousand Dollars ($24,375,000.00) of the 2021 Contingent Consideration shall be received, cumulatively, by the Sellers if the Company’s Adjusted EBITDA for calendar year 2021 is Eleven Million One Hundred Thousand Dollars ($11,100,000.00) or greater. Sellers’ receipt of the remaining 2021 Contingent Consideration will be subject to the Company’s Adjusted EBITDA for calendar year 2021 being equal to or in excess of $12,600,000 (the “2021 EBITDA Target”). If there is a Shortfall in the Company’s Adjusted EBITDA for 2021 (i.e., the Company’s Adjusted EBITDA for 2021 is less than $12,600,000), but the Company’s Adjusted EBITDA for 2021 is in excess of $11,100,000, the remaining 2021 Contingent Consideration to be received by Sellers shall be proportionate with respect to the incremental amount of the Company’s Adjusted EBITDA in excess of $11,100,000. If, for example, the Company’s Adjusted EBITDA for 2021 is $11,850,000, then the Sellers would be entitled to $30,468,750 in 2021 Contingent Consideration, and the remaining $6,093,750 in 2021 Contingent Consideration will be available for recapture in 2022 (and only in 2022) as described below. Any of the 2021 Contingent Consideration not earned and which is not recaptured based on the Company’s Adjusted EBITDA for 2022, as described below, shall be forfeited.

(i) Shares of AAON Common Stock representing the 2022 Contingent Consideration shall be received, cumulatively, by the Sellers if the Company’s Adjusted EBITDA for 2022 is equal to or in excess of $20,000,000 (the “2022 EBITDA Target”). If the Company’s Adjusted EBITDA for 2022 is less than the 2022 EBITDA Target, but is in excess of the 2021 EBITDA Target, the 2022 Contingent Consideration to be received by Sellers shall be proportionate with respect to the incremental increase in the Company’s Adjusted EBITDA for 2022 over the 2021 EBITDA Target. For example, assume (i) the Company’s Adjusted EBITDA for 2021 equals or exceeds $12,600,000 (so there is no Shortfall for 2021), and (ii) the Company’s Adjusted EBITDA for 2022 equals $16,300,000—the Sellers would be entitled to receive 50% of the 2022 Contingent Consideration, and the remaining $14,625,000 in 2022 Contingent Consideration will be available for recapture in 2023 (and only in 2023) as described below. Any of the 2022 Contingent Consideration not earned and which is not recaptured based on the Company’s Adjusted EBITDA for 2023 as described below shall be forfeited.

(i) Shares of AAON Common Stock representing the 2023 Contingent Consideration shall be received, cumulatively, by the Sellers if the Company’s Adjusted EBITDA for 2023 is equal to or in excess of $28,000,000 (the “2023 EBITDA Target”). If the Company’s Adjusted EBITDA for 2023 is less than the 2023 EBITDA Target but is in excess of the 2022 EBITDA Target, the 2023 Contingent Consideration to be received by Sellers shall be proportionate with respect to the incremental increase in the BASX Adjusted EBITDA for 2023 over the 2022 EBITDA Target. Any 2023 Contingent Consideration which is not earned shall be forfeited.

(e) At the Closing, Buyer and each of the Key Employees will enter into a restricted stock grant (each, an “Employee Restricted Stock Grant”), pursuant to which the Key Employees may receive cumulatively (I) up to an additional $937,500 in shares of AAON Common Stock (the “2021 Incentive Consideration”), with the number of shares comprising the 2021 Incentive Consideration being equal to $937,500 divided by the AAON Signing VWAP, (II) up to an additional $750,000 in shares of AAON Common Stock (the “2022 Incentive Consideration”), with the number of shares comprising the 2022 Incentive Consideration being equal to $750,000 divided by the AAON Signing VWAP, and (III) up to an additional $312,500 in shares of AAON Common Stock (the “2023 Incentive Consideration”), with the number of shares comprising the 2023 Incentive Consideration being equal to $312,500 divided by the AAON Signing VWAP, for an aggregate total of $2,000,000 (the “Incentive Consideration”). Employee Restricted Stock Agreements shall provide that Incentive Consideration shall not be paid annually but instead paid in a single lump sum as described in 2.02(h) below.

(i) The Key Employees’ receipt of the 2021 Incentive Consideration shall be subject to the following conditions: Shares of AAON Common Stock representing $625,000.00 of the 2021 Incentive Consideration shall be earned, cumulatively, by the Key Employees if the Company’s Adjusted EBITDA for calendar year 2021 is Eleven Million One Hundred Thousand Dollars ($11,100,000.00) or greater. Key Employees’ receipt of the remaining 2021 Incentive Consideration will be subject to the Company’s Adjusted EBITDA for calendar year 2021 being equal to or in excess of the 2021 EBITDA Target. If there is a Shortfall in the Company’s Adjusted EBITDA for 2021 (i.e., the Company’s Adjusted EBITDA for 2021 is less than $12,600,000), but the Company’s Adjusted EBITDA for 2021 is in excess of $11,100,000, the remaining 2021 Incentive Consideration to be received by Key Employees shall be proportionate with respect to the incremental amount of the Company’s Adjusted EBITDA in excess of $11,100,000. Any of the 2021 Incentive Consideration not earned shall be forfeited.

(ii) The Key Employees’ receipt of the 2022 Incentive Consideration shall be subject to the following conditions: Shares of AAON Common Stock representing the 2022 Incentive Consideration shall be earned, cumulatively, by the Key Employees if the Company’s Adjusted EBITDA for 2022 is equal to or in excess of the 2022 EBITDA Target. If the Company’s Adjusted EBITDA for 2022 is less than the 2022 EBITDA Target, but is in excess of the 2021 EBITDA Target, the 2022 Incentive Consideration to be received by the Key Employees shall be proportionate with respect to the incremental increase in the Company’s Adjusted EBITDA for 2022 over the 2021 EBITDA Target. Any of the 2022 Incentive Consideration not earned shall be forfeited.

(iii) The Key Employees’ receipt of the 2023 Incentive Consideration shall be subject to the following conditions: Shares of AAON Common Stock representing the 2023 Incentive Consideration shall be earned, cumulatively, by the Key Employees if the Company’s Adjusted EBITDA for 2023 is equal to or in excess of the 2023 EBITDA Target. If the Company’s Adjusted EBITDA for 2023 is less than the 2023 EBITDA Target, but is in excess of the 2023 EBITDA Target, the 2023 Incentive Consideration to be received by the Key Employees shall be proportionate with respect to the incremental increase in the Company’s Adjusted EBITDA for 2023 over the 2022 EBITDA Target. Any of the 2023 Incentive Consideration not earned shall be forfeited.

Section 2.02(e)(i), (ii), (iii) or (iv) hereof is referred to collectively as the “Forfeited Incentive Consideration”. Each Employee Restricted Stock Grant with respect to Incentive Consideration shall further provide that, if the full-time employment of the grantee named in such Employee Restricted Stock Grant should terminate because of involuntary termination without Cause, then any Incentive Consideration with respect to the terminated Key Employee that has been earned for any prior calendar year shall not be deemed Forfeited Incentive Consideration, but instead shall be deemed earned and shall be paid as provided in sub-section (h) below. The Restricted Stock Grants of each Seller for each of 2021, 2022 and/or 2023, as applicable, shall be amended automatically to increase the number of shares of AAON Common Stock available to the Sellers in their respective 2021 Contingent Consideration, 2022 Contingent Consideration and 2023 Contingent Consideration, with such increase to equal such Seller’s Pro-Rata Share of the Forfeited Incentive Consideration otherwise earned pursuant to the terms of this Agreement, including without limitation any Forfeited Incentive Consideration that would have been recaptured by applying the criteria stated in 2.02(b) and 2.02(c). Any such increase shall be treated by the parties hereto in all respects as an increase in Purchase Price, and Exhibit C (allocating the Purchase Price) shall be deemed automatically amended to proportionately increase the allocated Purchase Price.

(f) Any Shortfall in the Company’s Adjusted EBITDA for 2021 may be recaptured (and the applicable portion of the 2021 Contingent Consideration described above not forfeited) on a proportionate basis to the extent that the Company’s Adjusted EBITDA for 2022 exceeds the 2022 EBITDA Target, as illustrated in the following example. Assume the Shortfall for 2021 equals $1,300,000. If the Company’s Adjusted EBITDA for 2022 exceeds the 2022 EBITDA Target by $1,300,000 or more, Sellers would receive 100% of the 2021 Contingent Consideration available for recapture and not previously earned and received, but if the Company’s Adjusted EBITDA for 2022 only exceeds the 2022 EBITDA Target by $650,000, Sellers would only receive 50% of the 2021 Contingent Consideration available for recapture and not previously earned and received.

(g) Any Shortfall in the Company’s Adjusted EBITDA for 2022 may be recaptured (and the applicable portion of the 2022 Contingent Consideration described above not forfeited) on a proportionate basis to the extent that the Company’s Adjusted EBITDA for 2023 exceeds the 2023 EBITDA Target, as illustrated in the following example. Assume the Shortfall for 2022 equals $4,600,000—if the Company’s Adjusted EBITDA for 2023 exceeds the 2023 EBITDA Target by $4,600,000 or more, Sellers would receive 100% of the 2022 Contingent Consideration available for recapture and not previously earned and received, but if the Company’s Adjusted EBIT for 2023 only exceeds the 2023 EBITDA Target by $2,300,000, Sellers would only receive 50% of the 2022 Contingent Consideration available for recapture and not previously earned and received.

(h) Within sixty (60) days after the end of each applicable calendar year, Buyer shall prepare and deliver to Sellers a statement setting forth its calculation of Company’s Adjusted EBITDA for the year just ended, which statement shall contain audited financial statements of the Company as of the applicable year end. After receipt of such statement, Sellers shall have sixty (60) days to review the calculation. During each such review period, Sellers and Sellers’ Accountants shall have full access to the books and records of the Company, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the calculation of the Company’s Adjusted EBITDA as Sellers may reasonably request for the purpose of reviewing the statement, provided, that such access shall be in a manner that does not interfere with the normal business operations of Buyer or the Company. If Sellers notify Buyer of any disagreement with such statement, then the parties shall attempt to resolve such disagreement through good-faith negotiation and if, within the ensuing fifteen (15) days, the parties are unable to resolve their disagreement, then they shall submit such disagreement to the Independent Accountant for resolution in accordance with the procedures of Section 2.04, mutatis mutandis. The 2021 Contingent Consideration, 2022 Contingent Consideration and 2023 Contingent Consideration payable to the Sellers, if any, shall be issued and delivered annually, within ten (10) days following the date that the amount of such contingent consideration is finally determined. The 2021 Incentive Consideration, 2022 Incentive Consideration and 2023 Incentive Consideration payable to the Key Employees, if any, shall be issued in a single delivery of shares of AAON Common Stock to each Key Employee entitled to receive same within ten (10) days following the date that 2023 Incentive Consideration is finally determined.

(j) Buyer acknowledges that the possibility of the Sellers receiving the 2021 Contingent Consideration, the 2022 Contingent Consideration and the 2023 Contingent Consideration constitutes a material inducement for the Sellers to enter into this Agreement. Therefore during the period of time from the Closing Date through December 31, 2023: (i) the business of the Company shall be operated as and accounted for as a separate business unit of the Buyer, (ii) the Buyer, and after the Closing, the Company, shall not take, or fail to take, any action for the primary purpose or with the primary intent of avoiding or reducing the 2021 Contingent Consideration, 2022 Contingent Consideration or 2023 Contingent Consideration, and (iii) the Buyer shall not, without the prior written consent of the Sellers, make any material change in the accounting principles in place at the Company at the Closing Date that negatively effects the calculation of EBITDA other than any change required to be implemented by the Financial Accounting Standards Board.

(j) If prior to December 31, 2023 (i) the Company or Buyer effects a sale of all or substantially all of the assets of the Company to a third party, (ii) Buyer effects a transaction involving the Company which results in at least 50% of the equity interests of Buyer then outstanding being owned by a third party or (iii) Buyer or the Company makes a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against Buyer or the Company seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up or reorganization, arrangement, adjustment, protection, relief or composition of its debts under any applicable Law relating to bankruptcy, insolvency or reorganization, then, all conditions to earning any unpaid 2021 Contingent Consideration, 2022 Contingent Consideration and 2023 Contingent Consideration, and any unpaid 2021 Incentive Consideration, 2022 Incentive Consideration or 2023 Incentive Consideration shall be deemed satisfied and all such consideration shall be due and payable within ten (10) days of such event.

(ii) At least five (5) Business Days before the Closing, Sellers shall prepare and deliver to Buyer a statement setting forth its good faith estimate of Closing Working Capital (the “Estimated Closing Working Capital”), which statement shall contain an estimated balance sheet of the Company as of the Closing Date (without giving effect to the transactions contemplated herein), a calculation of Estimated Closing Working Capital (the “Estimated Closing Working Capital Statement”), and a certificate of a Manager of the Company that the Estimated Closing Working Capital Statement was prepared in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, and in a manner consistent with the calculation example attached as Exhibit 2.04(a)(ii).

(i) Within sixty (60) days after the Closing Date, Buyer shall prepare and deliver to Sellers a statement setting forth its calculation of Closing Working Capital, which statement shall contain an audited balance sheet of the Company as of the Closing Date (without giving effect to the transactions contemplated herein), a calculation of Closing Working Capital (the “Closing Working Capital Statement”) and a certificate of the Chief Financial Officer of Buyer that the Closing Working Capital Statement was prepared in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, and in a manner consistent with the calculation example attached as Exhibit 2.04(a)(ii).

(i) Examination. After receipt of the Closing Working Capital Statement, Sellers shall have thirty (30) days (the “Review Period”) to review the Closing Working Capital Statement. During the Review Period, Sellers and Sellers’ Accountants shall have full access to the books and records of the Company, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Closing Working Capital Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Closing Working Capital Statement as Sellers may reasonably request for the purpose of reviewing the Closing Working Capital

(ii) Objection. On or prior to the last day of the Review Period, Sellers may object to the Closing Working Capital Statement by delivering to Buyer a written statement setting forth Sellers’ objections in reasonable detail, indicating each disputed item or amount and the basis for Sellers’ disagreement therewith (the “Statement of Objections”). If Sellers fail to deliver the Statement of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the Post-Closing Adjustment, as the case may be, reflected in the Closing Working Capital Statement shall be deemed to have been accepted by Sellers. If Sellers deliver the Statement of Objections before the expiration of the Review Period, Buyer and Sellers shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Working Capital Statement with such changes as may have been previously agreed in writing by Buyer and Sellers, shall be final and binding.

(iii) Resolution of Disputes. If Sellers and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“Disputed Amounts” and any amounts not so disputed, the “Undisputed Amounts”) shall be submitted for resolution to the office of Clifton Larson Allen or, if Clifton Larson Allen is unable to serve, Buyer and Sellers shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Sellers’ Accountants or Buyer’s Accountants (the “Independent Accountant”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Working Capital Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountant shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Working Capital Statement and the Statement of Objections, respectively.

Section 2.05 Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Membership Interests contemplated hereby shall take place at a closing (the “Closing”) to be held at 10:00 a.m., Tulsa, Oklahoma time, no later than three (3) Business Days after the last of the conditions to Closing set forth in Article VIII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), at the offices of Johnson & Jones, P.C., 6120 South Yale Avenue, Suite 500, Tulsa, Oklahoma 74136, or remotely by exchange of documents and signatures (or their electronic counterparts), or at such other time or on such other date or at such other

Section 3.02 Organization, Authority and Qualification of the Company. The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Oregon and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 3.02 of the Disclosure Schedules sets forth each jurisdiction in which the Company is licensed or qualified to do business, and the Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.

(b) There are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments of any character under which the Company is or may become obligated to issue or sell, or give any Person a right to subscribe for or acquire, or in any way dispose of, any shares of equity interests, or any securities or obligations exercisable or exchangeable for or convertible into any shares of equity interests, of the Company, and no securities or obligations evidencing such rights are authorized, issued or outstanding. There are no Contracts relating to the registration or voting of any equity securities or other securities of the Company to which the Company is a party.

Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for such filings as may be required under the HSR Act. The execution, delivery and performance by each Seller Party of this Agreement do not and will not: (a) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to the Company; (b) except as set forth in Section 3.05 of the Disclosure Schedules, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract to which the Company is a party or by which the Company is bound or to which any of the Company’s properties and assets are subject or any Permit affecting the properties, assets or business of the Company; or (c) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Company.

(a) Complete copies of the Company’s audited financial statements consisting of the balance sheet of the Company as of December 31 in each of the years 2019 and 2020 and the related statements of income and retained earnings, and members’ equity for the years then ended (the “Audited Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Company as of September 30, 2021 and the related statements of income and retained earnings and members’ equity for the nine-month period then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, the “Financial Statements”) are included in the Disclosure Schedules. The Financial Statements have been prepared in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements). The Financial Statements are based on the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated. The balance sheet of the Company as of December 31, 2020 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Company as of September 30, 2021 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. The Company maintains a standard system of accounting established and administered in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements.

(a) The Company has no liabilities, obligations or commitments of any nature whatsoever (including without limitation, indebtedness for borrowed money, retention bonuses, deferred compensation, equity appreciation rights, equity options, special severance arrangements, pension or other long-term obligations), asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount. As of the Closing, the Company will have no Liabilities other than trade payables and other liabilities and obligations of Company incurred in its ordinary course of business and specifically identified on Section 3.07(a) of the Disclosure Schedules.

(r) (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $250,000.00, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;

(a) The Company owns no Real Property. The Company has good and valid title to, or a valid leasehold interest in, all Real Property and personal property and other assets reflected in the Audited Financial Statements or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

(b) Section 3.10(b) of the Disclosure Schedules lists (i) the street address of each parcel of Real Property; (ii) if such property is leased or subleased by the Company, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to leased Real Property, Sellers have delivered or made available to Buyer true, complete and correct copies of any leases affecting the Real Property. The Company is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of the Company's business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the Company. There are no Actions pending nor, to the Sellers’ Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

Section 3.11 Condition and Sufficiency of Assets. Except as set forth in Section 3.11 of the Disclosure Schedules, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company are structurally sound, are in good operating condition and repair (subject to ordinary wear and tear), and are adequate for the uses to which they are being put. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Company, together with all other properties and assets of the Company, are sufficient for the continued conduct of the Company’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company as currently conducted.

(a) Section 3.12(a) of the Disclosure Schedules contains a correct, current, and complete list of: (i) all Company IP Registrations that are not expired or abandoned, specifying as to each, as applicable: the title, mark, or design; the record owner and inventor(s), if any; the jurisdiction by or in which it has been issued, registered, or filed; the patent, registration, or application serial number; the issue, registration, or filing date; and the current status and (ii) all material unregistered Trademarks included in the Company Intellectual Property; and (iii) all proprietary Software of the Company.

(b) Section 3.12(b) of the Disclosure Schedules contains a correct, current, and complete list of all Company IP Agreements that have not expired or been terminated, specifying for each the date, title, and parties thereto, and separately identifying the Company IP Agreements: (i) under which the Company is a licensor or otherwise grants to any Person any right or interest relating to any Company Intellectual Property; (ii) under which the Company is a licensee or otherwise granted any right or interest relating to the Intellectual Property of any Person; and (iii) which otherwise relate to the Company’s ownership or use of Intellectual Property, in each case identifying the Intellectual Property covered by such Company IP Agreement. Sellers have provided Buyer with true and complete copies (or in the case of any oral agreements, a complete and correct written description) of all Company IP Agreements that have not expired or been terminated, including all modifications, amendments and supplements thereto and waivers thereunder. Each Company IP Agreement that has not expired or been terminated is valid and binding on the Company in accordance with its terms and is in full force and effect. Neither the Company nor, to any of the Sellers’ Knowledge, any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any Company IP Agreement.

(c) Except as set forth in Section 3.12(c) of the Disclosure Schedules, the Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner of all right, title, and interest in and to the Company Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of the Company’s business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances. The Company has entered into binding, valid and enforceable, written Contracts with each current and former employee and independent contractor [who is or was involved in or has contributed to the invention, creation, or development of any Intellectual Property during the course of employment or engagement with the Company] whereby such employee or independent contractor (i) acknowledges the Company’s exclusive ownership of all Intellectual Property invented, created, or developed by such employee or independent contractor within the scope of his or her employment or engagement with the Company; (ii) grants to the Company a present, irrevocable assignment of any ownership interest such employee or independent contractor may have in or to such Intellectual Property, to the extent such Intellectual Property does not constitute a “work made for hire” under applicable Law; and (iii) irrevocably waives any right or interest, including any moral rights, regarding any such Intellectual Property, to the extent permitted by applicable Law. Sellers have provided Buyer with true and complete copies of all such Contracts. All assignments and other instruments necessary to establish, record, and perfect the Company’s ownership interest in the Company IP Registrations have been validly executed, delivered, and filed with the relevant Governmental Authorities and authorized registrars.

enforceable, and all Company IP Registrations are subsisting and in full force and effect. The Company has taken all reasonable and necessary steps to maintain the Company Intellectual Property and Licensed Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the Company Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements. All required filings and fees related to the Company IP Registrations have been timely submitted with and paid to the relevant Governmental Authorities and authorized registrars. Sellers have provided Buyer with true and complete copies of all file histories, documents, certificates,

(g) There are no Actions (including any opposition, cancellation, revocation, review, or other proceeding), whether settled, pending, or, to any of the Sellers’ Knowledge threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, or other violation by the Company of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability, or ownership of any Company Intellectual Property or Licensed Intellectual Property or the Company’s right, title, or interest in or to any Company Intellectual Property or Licensed Intellectual Property; or (iii) by the Company or by the owner of any Licensed Intellectual Property alleging any infringement, misappropriation, or other violation by any Person of the Company Intellectual Property or such Licensed Intellectual Property. No Seller Party has Knowledge of any facts or circumstances that could reasonably be expected to give rise to any such Action. The Company is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to materially restrict or materially impair the use of any Company Intellectual Property or Licensed Intellectual Property.

(h) Section 3.12(h) of the Disclosure Schedules contains a correct, current, and complete list of all social media accounts used in the Company’s business. The Company has complied with all terms of use, terms of service, and other Contracts and all associated policies and guidelines relating to its use of any social media platforms, sites, or services (collectively, “Platform Agreements”). There are no Actions, whether settled, pending, or to the Knowledge of Sellers threatened, alleging any (A) breach or other violation of any Platform Agreement by the Company; or (B) defamation, violation of publicity rights of any Person, or any other violation by the Company in connection with its use of social media.

(i) All Company IT Systems are in good working condition and are sufficient for the operation of the Company’s business as currently conducted. In the past twenty-four (24) months, there has been no malfunction, failure, continued substandard performance, denial-of-service, or other cyber incident, including any cyberattack, or other material impairment of the Company IT Systems that has resulted or is reasonably likely to result in disruption or damage to the business of the Company. The Company has taken all commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of the Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and Software and hardware support arrangements.

(j) The Company has complied with all applicable Laws and all publicly posted policies, notices, and statements concerning the collection, use, processing, storage, transfer, and security of personal information in the conduct of the Company’s business. In the past twenty-four (24) months, the Company has not (i) experienced any actual, alleged, or suspected data breach or other security incident involving personal information in its possession or control or (ii) been subject to or received any written notice of any audit, investigation, complaint, or other Action by any Governmental Authority or other Person concerning the Company’s collection, use, processing, storage, transfer, or protection of personal information or actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and to Sellers’ Knowledge, there are no facts or circumstances that could reasonably be expected to give rise to any such Action.

Section 3.13 Inventory. All inventory of the Company, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such inventory is owned by the Company free and clear of all Encumbrances, and no inventory is held on a consignment basis. Except for the Public Health Measures and other effects on the supply of products and materials as a result of COVID-19, to any of the Sellers’ Knowledge there is no

Section 3.14 Accounts Receivable. The accounts receivable reflected on the Interim Balance Sheet and the accounts receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by the Company involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of the Company not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice. The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Company have been determined in accordance with GAAP, except to the extent that BasX Properties, LLC is not included in the financial statements, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.

(a) Section 3.15(a) of the Disclosure Schedules sets forth (i) each customer who has paid aggregate consideration to the Company for goods or services rendered in an amount greater than or equal to $[2,000,000.00] for each of the three (3) most recent fiscal years (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods. Except as set forth in Section 3.15(a) of the Disclosure Schedules, the Company has not received any written, or to any of the Seller Parties’ Knowledge oral, notice that any of the Company’s Material Customers has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce its relationship with the Company.

(b) Section 3.15(b) of the Disclosure Schedules sets forth (i) each supplier to whom the Company has paid consideration for goods or services rendered in an amount greater than or equal to $[$1,000,000.00] for each of the three (3) most recent fiscal years (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods. Except as set forth in Section 3.15(b) of the Disclosure Schedules, the Company has not received any written, or to any of the Seller Parties’ Knowledge oral, notice that any of the Company’s Material Suppliers has ceased, or intends to cease, to supply goods or services to the Company or to otherwise terminate or materially reduce its relationship with the Company.

Section 3.16 Insurance. Section 3.16 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability and other casualty and property insurance maintained by the Company and relating to the assets, business, operations, employees, officers and directors of the Company (collectively, the “Insurance Policies”) and true and complete copies of such Insurance Policies have been made available to Buyer. Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Neither the Company nor any of the Sellers has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of the Company. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth on Section 3.16 of the Disclosure Schedules, there are no claims related to the business of the Company pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. The Company) is not in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Company and are sufficient for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is bound.

(a) Except as set forth in Section 3.17(a) of the Disclosure Schedules, there are no Actions pending or, to Sellers’ Knowledge, threatened (a) against or by the Company affecting any of its properties or assets (or by or against any Seller Party or any Affiliate thereof and relating to the Company); or (b) against or by the Company, any Seller Party or any Affiliate of a Seller Party that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Sellers’ Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action. There is no Action against any current or, to Sellers’ Knowledge, former director or employee of the Company with respect to which the Company has, or is reasonably likely to have, an indemnification obligation.

(b) All Permits required for the Company to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 3.18(b) of the Disclosure Schedules lists all current Permits issued to the Company, including the names of the Permits and their respective dates of issuance and expiration. To Sellers’ Knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 3.18(b) of the Disclosure Schedules.

(b) The Company has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 3.19(b) of the Disclosure Schedules) necessary for the ownership, lease, operation or use of the business or assets of the Company and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect through the Closing Date in accordance with Environmental Law, and none of the Sellers has Knowledge of any condition, event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business or assets of the Company as currently carried out.

(d) To any of the Sellers’ Knowledge, there has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the business or assets of the Company or any real property currently or formerly owned, operated or leased by the Company, and neither the Company nor any Seller Party has received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of the Company (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated

(f) Section 3.19(f) of the Disclosure Schedules contains a complete and accurate list of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company and any predecessors as to which the Company may retain liability, and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and neither any Seller Party nor the Company has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company.

(h) Sellers have provided or otherwise made available to Buyer and listed in Section 3.19(h) of the Disclosure Schedules: (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments, economic models and other similar documents with respect to the business or assets of the Company or any currently or formerly owned, operated or leased real property which are in the possession or control of any Seller Party or Company related to compliance with Environmental Laws, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials; and (ii) any and all material documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes).

(j) The Company owns and controls all Environmental Attributes (a complete and accurate list of which is set forth in Section 3.19(j) of the Disclosure Schedules) and has not entered into any contract or pledge to transfer, lease, license, guarantee, sell, mortgage, pledge or otherwise dispose of or encumber any Environmental Attributes as of the date hereof. Neither any Seller Party nor the Company has Knowledge of any condition, event or circumstance that might prevent, impede or materially increase the costs associated with the transfer (if required) to Buyer of any Environmental Attributes after the Closing Date.

(a) Section 3.20(a) of the Disclosure Schedules contains a true and complete list of each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off (PTO), medical, vision, dental, disability, welfare, Code Section 125 cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by the Company for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Company or any spouse or dependent of such individual, or under which the Company or any of its ERISA Affiliates has or may have any Liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise (as listed on Section 3.20(a) of the Disclosure Schedules, each, a “Benefit Plan”). The Company has separately identified in Section 3.20(a) of the Disclosure Schedules (i) each Benefit Plan that contains a change in control provision and

(b) With respect to each Benefit Plan, Sellers have made available to Buyer accurate, current and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (iv) copies of any summary plan descriptions, summaries of material modifications, summaries of benefits and coverage, COBRA communications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Benefit Plan; (v) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service and any legal opinions issued thereafter with respect to such Benefit Plan’s continued qualification; (vi) in the case of any Benefit Plan for which a Form 5500 must be filed, a copy of the two most recently filed Forms 5500, with all corresponding schedules and financial statements attached; (vii) actuarial valuations and reports related to any Benefit Plans with respect to the two most recently completed plan years; (viii) the most recent nondiscrimination tests performed under the Code; and (ix) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor, Department of Health and Human Services, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Benefit Plan.

(c) Except as set forth in Section 3.20(c) of the Disclosure Schedules, each Benefit Plan and any related trust (other than any multiemployer plan within the meaning of Section 3(37) of ERISA (each a “Multiemployer Plan”)) has been established, administered and maintained in accordance with its terms and in compliance in all material respects with all applicable Laws (including ERISA and the Code and any applicable local Laws). Each Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (a “Qualified Benefit Plan”) is so qualified and received a favorable and current determination letter from the Internal Revenue Service with respect to the most recent five year filing cycle, or with respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan or volume submitter plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to adversely affect the qualified status of any Qualified Benefit Plan. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject the Company or any of its ERISA Affiliates or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 or 4980H of the Code. No pension plan (other than a Multiemployer Plan) which is subject to minimum funding requirements, including any multiple employer plan, (each, a “Single Employer Plan”) in which employees of the Company or any ERISA Affiliate participate or have participated has an “accumulated funding deficiency”, whether or not waived, or is subject to a lien for unpaid contributions under Section 303(k) of ERISA or Section 430(k) of the Code. No Single Employer Plan covering employees of the Company which is a defined benefit plan has an “adjusted funding target attainment percentage,” as defined in Section 436 of the Code, less than 80%. Except as set forth in Section 3.20(c) of the Disclosure Schedules, all benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, GAAP. All Non-U.S. Benefit Plans that are intended to be funded and/or book-reserved are funded and/or book-reserved, as appropriate, based upon reasonable actuarial assumptions.

(f) Each Benefit Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Buyer, the Company or any of their Affiliates other than ordinary administrative expenses typically incurred in a termination event. The Company has no commitment or obligation and has not made any representations to any employee, officer, director, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.

(i) There has been no amendment to, announcement by any Seller Party, the Company or any of their Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan or collective bargaining agreement that would increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year (other than on a de minimis basis) with respect to any director, officer, employee, independent contractor or consultant, as applicable. None of Seller Parties, the Company, nor any of their Affiliates has any commitment or obligation or has made any representations to any director, officer, employee, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement.

(l) Except as set forth in Section 3.20(l) of the Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, employee, independent contractor or consultant of the Company to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) limit or restrict the right of the Company to merge, amend, or terminate any Benefit Plan; (iv) increase the amount payable under or result in any other material obligation pursuant to any Benefit Plan; (v) result in “excess parachute payments” within

(a) Section 3.21(a) of the Disclosure Schedules contains a list of all persons who are employees, independent contractors or consultants of the Company as of the date hereof, including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full-time or part-time); (iii) hire or retention date; (iv) current annual base compensation rate or contract fee; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof. Except as set forth in Section 3.21(a) of the Disclosure Schedules, as of the date hereof, all compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors or consultants of the Company for services performed on or prior to the date hereof have been paid in full (or accrued in full on the audited balance sheet contained in the Closing Working Capital Statement) and there are no outstanding agreements, understandings or commitments of the Company with respect to any compensation, commissions, bonuses or fees.

(b) Except as set forth in Section 3.21(b) of the Disclosure Schedules, the Company is not, and has not been for the past three (3) years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been for the past three (3) years, any Union representing or purporting to represent any employee of the Company, and, to Sellers’ Knowledge, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. Except as set forth in Section 3.21(b) of the Disclosure Schedules, there has never been, nor to any of the Sellers’ Knowledge has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting the Company or any of its employees. The Company has no duty to bargain with any Union.

(c) The Company is and has been in compliance in all material respects with all applicable Laws pertaining to employment and employment practices to the extent they relate to employees, volunteers, interns, consultants and independent contractors of the Company, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave and unemployment insurance. All individuals characterized and treated by the Company as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of the Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified in all material respects. The Company is in compliance with and has complied with all immigration laws, including Form I-9 requirements and any applicable mandatory E-Verify obligations. Except as set forth in Section 3.21(c) of the Disclosure Schedules, there are no Actions against the Company pending, or to the Sellers’ Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Company, including, without limitation, any charge, investigation or claim relating to unfair labor practices, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers' compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws.

(e) With respect to each Government Contract, the Company is and has been in compliance in all material respects with Executive Order No. 11246 of 1965 (“E.O. 11246”), Section 503 of the Rehabilitation Act of 1973 (“Section 503”) and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), including all implementing regulations. The Company maintains and complies with affirmative action plans in compliance with E.O. 11246, Section 503 and VEVRAA, including all implementing regulations. The Company is not, and has not been for the past three (3) years, the subject of any audit, investigation or enforcement action by any Governmental Authority in connection with any Government Contract or related compliance with E.O. 11246, Section 503 or VEVRAA. The Company has not been debarred, suspended or otherwise made ineligible from doing business with the United States government or any government contractor. The Company is in compliance in all material respects with and has complied in all material respects with all applicable immigration laws, including any applicable mandatory E-Verify obligations.

(a) The Company has timely and duly filed all Tax Returns in connection with any federal, state or local Tax required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects. All Taxes of the Company that have become due and payable for all periods covered by such Tax Returns (whether or not shown on such Tax Returns) have been fully and timely paid, except for such Taxes, if any, as are being contested in good faith and which are shown as a liability on the Financial Statements. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return.

(d) The Company has withheld from its employees, independent contractors, creditors, members and third parties and timely paid the withholdings to the appropriate Governmental Authority proper and accurate amounts in all respects required to have been withheld or paid over for all periods ending on or before the Closing Date in compliance with all Tax withholding and remitting provisions of applicable Laws and has complied in all respects with all Tax information reporting provisions of all applicable Laws. The Company is not, nor has it received any written notice or, to Sellers’ Knowledge, oral notice that it is in violation (or with notice that it will be in violation) of any applicable Law relating to the withholding of Taxes and payment of such withholdings to the appropriate Governmental Authority.

(e) (i) No audit or other proceeding by any Governmental Authority is pending or threatened in writing with respect to any Taxes due from the Company, (ii) the Company has not received any written notification that such an audit or proceeding may be commenced, with respect to any Taxes due from the Company, (iii) to the Sellers Knowledge, there is no proceeding referred to in (i) or (ii) above based upon personal contact with any agent of a Governmental Authority with any employee or representative of the Company, and (iv) all deficiencies for Taxes asserted or assessed against the Company by a Governmental Authority have been fully and timely paid, or otherwise settled with the relevant Governmental Authority, or are properly reflected in the Financial Statements.

(h) The unpaid Taxes of the Company did not, as of the Interim Balance Sheet Date, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Interim Financial Statements, and do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns. Since the Interim Balance Sheet Date, the Company has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business.

(j) None of the assets of the Company (i) directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Code, (ii) is tax-exempt bond financed property under Section 168(g)(5) of the Code, (iii) is tax-exempt use property within the meaning of Section 470(c)(2) or Section 168(h) of the Code, (iv) is subject to a motor vehicle operating lease under Section 7701(h) of the Code or any predecessor provision, or (v) is treated as owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately before the enactment of the Tax Reform Act of 1986.

(l) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending on or after the Closing Date as a result of any: (i) change in method of accounting made prior to the Closing; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed prior to the Closing; (iii) installment sale or open transaction disposition made prior to the Closing; (iv) prepaid amount received prior to the Closing; or (v) election by the Company under Section 108(i) of the Code made prior to the Closing.

Section 3.23 Books and Records. The minute books and stock record books of the Company, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Company contain accurate and complete records of all meetings, and actions taken by written consent of, the members, the board of directors or manages and any committees of the board of directors or managers of the Company, and no meeting, or action taken by written consent, of any such members, board of directors, managers or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Company.

Section 3.25. Anti-Corruption Matters. Neither the Company nor any of its officers, directors or employees in their capacities as such has offered, authorized, made, paid or received (whether previously or agreed to do so in the future), directly or indirectly, any bribes, kickbacks or other similar payments or offers or transfers of value in connection with obtaining or retaining business or to secure an improper advantage to or from any Person in violation of any Anti-Corruption and Anti-Bribery Law. Neither the Company nor any of its officers, directors or employees in their capacities as such has, directly or indirectly, committed any violation of any Anti-Corruption and Anti-Bribery Law.

(e) such Seller understands that the AAON Common Stock issued under the applicable Restricted Stock Grant has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Seller’s representations as expressed herein; such Seller further understands that the AAON Common Stock acquired by it under the applicable Restricted Stock Grant is “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, such Seller cannot sell, assign, transfer, pledge or otherwise dispose of, and must hold indefinitely, the AAON Common Stock acquired by it hereunder unless such AAON Common Stock is registered with the SEC and qualified by state authorities or an exemption from such registration and qualification requirements is available; in particular, such Seller is aware that the AAON Common Stock may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are met (and, among the conditions for use of Rule 144 may be availability of current information to the public about the Buyer, and such information may not be made available by the Buyer in the future);

(g) if such Seller (or the beneficiary of or any Person controlling such Seller) is employed by the Buyer, (A) he or she (or such Person) does not have any agreements with any current or prior employer or any other Person that will prohibit such Seller from, or that such Seller will breach as a result of, working for or providing services to the Buyer or any of its Affiliates, as applicable, or fulfilling such Seller’s duties and obligations to the Buyer or its Affiliates pursuant to such Seller Party’s Employment Agreement (if any), Restricted Stock Grant (if any), or otherwise, and (B) he or she (or such Person) has not breached any non-competition, non-solicitation or confidentiality duties imposed on him or her (or such Person) with respect to any current or prior employer or any other Person in any respect that will adversely affect the Buyer or its Affiliates.

Section 4.01 Authority of Sellers. Each Seller has all requisite power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which such Seller is a party, and to perform such Seller’s obligations hereunder and thereunder. This Agreement has been duly executed and delivered by such Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of such Seller enforceable against such Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or moratorium Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies (the “Enforceability Exceptions”). When each other Ancillary Document to which such Seller is or will be a party has been duly executed and delivered by such Seller (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of such Seller enforceable against it, him or her in accordance with its terms, except as enforceability may be limited by the Enforceability Exceptions.

Section 4.02 Title. Section 4.02 of the Disclosure Schedules accurately reflects the Membership Interests owned beneficially and of record by such Seller as of the date hereof and as of immediately prior to the Closing. All of the Membership interests owned by such Seller are free and clear of all Encumbrances, other than restrictions on transfer that may be imposed by state or federal securities laws. Upon delivery of conveyance documents reasonably requested by Buyer, such Seller at the Closing will transfer valid title to all of the issued and outstanding Membership Interests owned by such Seller to Buyer, free and clear of all Encumbrances, other than restrictions on transfer that may be imposed by state or federal securities laws.

Section 4.03 No Conflicts; Consents. The execution, delivery and performance by such Seller of this Agreement and the Ancillary Documents to which such Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational Documents of such Seller, if applicable, (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to such Seller, (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which such Seller is a party or by which such Seller is bound.

Section 5.01 Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and the Ancillary Documents to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by each of the Seller Parties) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, subject to the Enforceability Exceptions. When each Ancillary Document to which Buyer is or will be a party has been duly executed and delivered by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms, subject to the Enforceability Exceptions. The copies of the certificate of incorporation and bylaws of Buyer which are incorporated by reference as exhibits to Buyer’s Annual Report on Form 10-K for the year ended December 31, 2020 are complete and correct copies of such documents and contain all amendments thereto as in effect on the date of this Agreement.

Section 5.02 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational Documents of Buyer; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) except as set forth in Section 5.02 of the Disclosure Schedules, require the consent, notice or other action by any Person under any Contract to which Buyer is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for such filings as may be required under the HSR Act and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.

(a) As of the date of this Agreement, the authorized capital stock of Buyer consists of (i) 100,000,000 shares of AAON Common Stock, 52,403,733 of which are issued and outstanding as of August 2, 2021, and (ii) 5,000,000 shares of preferred stock, $0.001 par value, of which none are issued and outstanding. As of the date of this Agreement, there are 8,890,000 shares of AAON Common Stock reserved for issuance under the Buyer Employee Benefit Plans. The issued and outstanding shares of AAON Common Stock have been, and all shares of AAON Common Stock which may be issued in connection with the Restricted Stock Grants will be, duly authorized and validly issued, fully paid and

(b) Except as set forth above in this Section 5.03, no shares of capital stock or other voting securities of Buyer are issued, reserved for issuance or outstanding, and there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Buyer is a party or by which it is bound obligating Buyer to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Buyer or obligating Buyer to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking.

Section 5.04 Subsidiaries. The Buyer’s Subsidiaries and their respective jurisdictions of organization are identified in Section 5.04 of the Disclosure Schedules. Each Buyer Subsidiary is an entity duly organized, validly existing and (where applicable) in good standing under the laws of its jurisdiction of formation and has all company powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, consents and approvals the absence of which would not have a Material Adverse Effect. All of the outstanding shares of capital stock or other equity securities of, or other ownership interests in, each of Buyer’s Subsidiaries are duly authorized, validly issued, fully paid and nonassessable, and such shares, securities or interests are owned by Buyer free and clear of any Liens or limitations on voting rights. There are no subscriptions, options, warrants, calls, rights, convertible securities or other agreements or commitments of any character relating to the issuance, transfer, sales, delivery, voting or redemption (including any rights of conversion or exchange under any outstanding security or other instrument) for any of the capital stock or other equity interests of, or other ownership interests in, any of the Buyer’s Subsidiaries.

(a) Since January 1, 2018, Buyer has filed with the SEC all forms, reports, schedules, registration statements, definitive proxy statements and other documents (collectively, including all exhibits thereto, the “Buyer SEC Reports”) required to be filed by Buyer with the SEC. As of their respective dates, and giving effect to any amendments or supplements thereto filed prior to the date of this Agreement, the Buyer SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the respective rules and regulations of the SEC promulgated thereunder applicable to such Buyer SEC Reports, and none of the Buyer SEC Reports contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the Buyer’s Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 13 or 15 of the Exchange Act. There are no outstanding comments from the Staff of the SEC with respect to any of the Buyer SEC Reports.

(b) The consolidated balance sheets and the related consolidated statements of operations, consolidated statements of changes in stockholders’ equity and consolidated statements of cash flows (including, in each case, any related notes and schedules thereto) (collectively, the “Buyer Financial Statements”) of Buyer contained in the Buyer SEC Reports have been prepared from the books and records of Buyer and Buyer’s Subsidiaries, comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in conformity with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as otherwise noted therein) and present fairly the consolidated financial position and the consolidated results of operations and cash flows of Buyer and Buyer’s Subsidiaries as of the dates or for the periods presented therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments in the ordinary course of business).

the chief executive officer and chief financial officer of Buyer have made all certifications required by the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and the NASDAQ, and the statements contained in any such certifications are complete and correct. Buyer has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to Buyer required to be disclosed in Buyer’s Exchange Act Reports, including its consolidated Buyer Subsidiaries, is made known to Buyer’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; and, to the knowledge of Buyer, such disclosure controls and procedures are effective in timely alerting Buyer’s principal executive officer and its principal financial officer to material information required to be included in Buyer’s periodic reports required under the Exchange Act. Since January 1, 2018, based on their evaluation of the internal control over financial reporting, neither the Chief Executive Officer nor the Chief Financial Officer of Buyer have disclosed to the Buyer’s auditors and/or the Audit Committee of the Buyer’s Board of Directors any (i) significant deficiencies or material weaknesses in the design or operation of internal controls which are or were reasonably likely to adversely affect Buyer’s ability to record, process, summarize and report financial information or (ii) fraud, whether or not material, that involved management or other employees who have or had a significant role in Buyer’s and the Buyer Subsidiaries’ internal controls over financial reporting.

Section 5.10 Investment Purpose. Buyer is acquiring the Membership Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Membership Interests are not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Membership Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

Section 5.12 Legal Proceedings. Except as set forth in Section 5.12 of the Disclosure Schedules (none of which, either in the individual or in the aggregate, if determined adversely to the Buyer, are anticipated to result in a Material Adverse Effect on Buyer or its operations), there are no Actions pending or, to Buyer’s knowledge, threatened (a) against or by the Buyer or any Affiliate thereof affecting any of its properties or assets; or (b) against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Buyer’s Knowledge, except as set forth in Section 5.12 of the Disclosure Schedules, no event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

Section 6.01 Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Sellers shall, and shall cause the Company to, (x) conduct the business of the Company in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact the current organization, business and franchise of the Company and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having business relationships with the Company. Without limiting the foregoing, from the date hereof until the Closing Date, Sellers shall:

accompanied by a representative of the Sellers; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Company as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of Sellers and the Company to cooperate with Buyer in its investigation of the Company. Any investigation pursuant to this Section 6.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Company. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by any Seller Party in this Agreement.

(a) Each Seller Party agrees it shall not, and shall not authorize or permit any of its respective Affiliates (including the Company) or any of its Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Each Seller Party shall immediately cease and cause to be terminated, and shall cause their respective Affiliates (including the Company) and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (x) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company; (y) the issuance or acquisition of equity securities of the Company; or (z) the sale, lease, exchange or other disposition of any significant portion of the Company’s properties or assets.

Section 6.06 Confidentiality. From and after the Closing, each Seller Party agrees it shall, and shall cause its, his or her respective Affiliates to, hold, and shall use their reasonable best efforts to cause their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company, except to the extent that Seller Parties can show that such information (a) is generally available to and known by the public through no fault of any of the Seller Parties, any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller Parties, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any Seller Party or any of its Affiliates or its respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such Seller Party shall promptly notify Buyer in writing and shall disclose only that portion of such information which Seller Parties are advised by their counsel in writing is legally required to be disclosed, provided that each Seller Party shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

(a) For a period of five (5) years commencing on the Closing Date (the “Restricted Period”), each of the Seller Parties agrees it shall not, and shall not permit any of its respective Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant. Notwithstanding the foregoing, Kucera, JVK and their respective Affiliates shall not be limited from engaging in Restricted Business in the Territory. Moreover, each of the Seller Parties may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if such Seller Party is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person. Nothing in this Agreement shall limit Brooks from advising clients in her capacity as a certified public accountant, including clients engaging in the Restricted Business in the Territory. Nothing in this Agreement shall limit a Seller Party or its Affiliates from acting as a manufacturer’s representative for HVAC equipment, and acting as such shall not be engaging in a Restricted Business.

(b) During the Restricted Period, each of the Seller Parties agrees it shall not, and shall not permit any of its respective Affiliates to, directly or indirectly, hire or solicit any employee of the Company or the Buyer or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 6.07(b) shall prevent a Seller Party or any of their respective Affiliates from hiring (i) Dan Benson, (ii) any employee whose employment has been terminated by the Company or Buyer or (iii) after 365 days from the date of termination of employment, any employee whose employment has been terminated by the employee.

(c) During the Restricted Period, each Seller Party agrees it shall not, and shall not permit any of its respective Affiliates to, directly or indirectly, solicit, or attempt to solicit, any clients or customers of the Company or potential clients or customers of the Company for purposes of diverting their business or services from the Company as conducted on the date of Closing. Nothing in this Agreement shall limit a D-Velopment, Brooks, TFT, Benson or Tobolski or their respective Affiliates from soliciting any business, other than Restricted Business, from current and future customers or

(d) Each Seller Party acknowledges that a breach or threatened breach of this Section 6.07 would give rise to irreparable harm to the Company and/or Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by such Seller Party of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

(e) Each Seller Party acknowledges that the restrictions applicable to such Seller Party contained in this Section 6.07 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.07 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 6.07 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions (including those under the HSR Act) required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate fully with the other parties and their respective Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

(e) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller Parties or the Company with Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other parties with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other parties with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

(f) Notwithstanding the foregoing, nothing in this Section 6.08 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer, the Company or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the transactions contemplated by this Agreement; or (iii) any material modification or waiver of the terms and conditions of this Agreement.

Section 6.09 R&W Policy. Prior to the Closing, Buyer shall use reasonable best efforts to obtain and bind the R&W Policy on the terms and conditions, with exclusions and policy limits reasonably satisfactory to Buyer and Seller Parties. The underwriter shall be satisfactory to Seller parties. Seller Parties shall, and shall cause their respective Affiliates including the Company to, cooperate with Buyer’s efforts and provide assistance as reasonably requested by Buyer to obtain and bind the R&W Policy. Prior to the Closing, Buyer shall pay or cause to be paid, all costs and expenses related to the R&W Policy, including the total premium, underwriting costs, brokerage commissions, and other fees and expenses of such policy. Buyer shall maintain the R&W Policy in good standing at all times subsequent to Closing for a minimum of six years following Closing.

Section 6.13 Sufficiency of Company Free Cash Flow. The Sellers and Buyer acknowledge and agree that in negotiating the terms of this Agreement, including without limitation the EBITDA Targets, it was not contemplated that Buyer would be expected or required to inject additional cash or capital into the Company. Sellers hereby agree that Buyer’s failure to inject additional cash or capital into the Company shall not provide the basis, in whole or in part, for any claim by the Sellers against the Buyer should any failure to earn any of the (i) 2021 Contingent Consideration, (ii) the 2022 Contingent Consideration, (iii) the 2023 Contingent Consideration, or (iv) the Incentive Consideration, occur.

(a) Buyer and each of the Sellers agree to treat the purchase and sale of the Membership Interests in accordance with Rev. Rul. 99-6, Situation 2 as follows: (i) as to Buyer, as the purchase by Buyer of “all of” the assets of the Company from the Sellers, and (ii) as to Sellers, as the sale by the Sellers of the Membership Interests. For purposes of Sections 743(b), 755 and 1060 of the Code and the Treasury Regulations promulgated pursuant thereto, the Purchase Price shall be allocated in accordance with Section 1060 of the Code and the Treasury Regulations thereunder among the assets of the Company (or groups of such assets) for all purposes (including all Tax and financial accounting purposes) in accordance with their respective fair market values. An allocation of the Purchase Price in accordance with the immediately preceding sentence is attached hereto as Exhibit C. Except as Buyer and the Sellers may otherwise agree or as may be required otherwise pursuant to a final determination within the meaning of Section 1313(a) of the Code or a corresponding provision of state, local or foreign Tax Law, the parties (A) will, and will cause each of their respective Affiliates to, prepare and file all Tax Returns (including IRS Form 8308) in a manner consistent with Exhibit C, and (B) will not, and will cause each

(b) At the sole expense of the Sellers, the Sellers shall cause to be prepared and filed all Tax Returns required to be filed by the Company for taxable periods ending prior to or on the Closing Date which are to be filed after the Closing Date, which includes for the avoidance of doubt the final partnership Tax Return of the Company with respect to the period ending on the Closing Date (the “Company Returns”). Each such Company Return shall be prepared in a manner consistent with the Company’s past practice except as otherwise required by Law, and in accordance with the provisions of this Agreement; and the Sellers shall timely pay any Taxes reflected as due and payable on all such Tax Returns to the extent that such Taxes are not reflected as a liability in the calculation of Closing Working Capital, as finally determined.

(c) Buyer shall cause the Company, at the Company’s sole expense, to cause to be prepared and filed all Tax Returns, other than the Company Returns, for a Pre-Closing Tax Period (including a Straddle Period) which are to be filed by the Company after the Closing Date (the “Buyer Returns”). Each such Buyer Return shall be prepared in a manner consistent with the Company’s past practice except as otherwise required by Law, and in accordance with the provisions of this Agreement; and the Company shall timely pay any Taxes reflected as due and payable on all such Tax Returns and the Sellers shall timely pay any Pre-Closing Taxes reflected as due and payable on all such Tax Returns to the extent that such Pre-Closing Taxes are not reflected as a liability in the calculation of Closing Working Capital, as finally determined.

(d) None of Buyer, the Company, or any Affiliate of Buyer (including, after the Closing, the Company) shall amend, re-file or otherwise modify (or grant an extension of any statute of limitation with respect to) any Tax Return relating in whole or in part to the Company with respect to any Pre-Closing Tax Period without the prior written consent of the Sellers (which consent shall not be unreasonably withheld, conditioned or delayed), other than amendments to Company Returns for the years 2018 through 2021 for the purpose of claiming research and development tax credits. So long as the Company does not accrue additional Taxes or any other costs related thereto, the benefits of any such tax credits shall accrue solely to the Sellers.

(e) Any credits or refunds of Pre-Closing Taxes (to the extent that such credits or refunds are not reflected as an asset in the calculation of Closing Working Capital, as finally determined) shall belong to the Sellers and be paid to the Sellers upon actual receipt of such refund in cash or application of such credit actually to reduce other Taxes due and owing by Buyer, the Company or any of their Affiliates. If requested by the Sellers, Buyer shall, and shall cause the Company to, reasonably cooperate with the Sellers in filing any Tax Return necessary to claim such Tax refunds (including filing amended Tax Returns) by providing relevant information. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company. Any contrary provision of this Section 7.01(e) notwithstanding, the amount of any refund or credit which is required to be paid to the Sellers (i) shall be reduced by the amount of any Taxes on such refund or credit and any out-of-pocket expenses that Buyer, the Company or any of their respective Affiliates incur (or will incur) with respect to such refund or credit, and (ii) shall not include any refund or credit (which shall be for the benefit of Buyer, the Company or their respective Affiliates) that (A) results from the carryback of any net operating loss, capital loss or other Tax attribute incurred in any Tax period (or portion of any Straddle Period) beginning after the Closing Date or (B) is included in the computation of Closing Working Capital.

(f) After the Closing Date, Buyer, the Company and the Sellers, respectively, shall inform the other party in writing of the commencement of any claim, audit, investigation, examination, or other proceeding or self-assessment relating in whole or in part to a Pre-Closing Tax Period (“Tax Contest”) for which Buyer may be entitled to indemnity from the Sellers under this Agreement. After the Closing Date, Buyer shall have the exclusive right to represent the interests of the Company in any and all Tax Contests; provided, however, that, to the extent that any such Tax Contest could reasonably be expected to result in

a Tax indemnification liability of the Sellers pursuant to this Agreement, (i) Buyer shall keep the Sellers reasonably informed and consult in good faith with the Sellers with respect to any issue relating to such Tax Contest (and the Sellers, at the Sellers’ expense, will be permitted to attend meetings with taxing authorities) and (ii) Buyer shall timely provide the Sellers with copies of all correspondence, notices and other written materials received from any taxing authorities and shall otherwise keep the Sellers advised of significant developments in such Tax Contest and of significant communications involving representatives of the taxing authorities. Buyer shall not agree or consent to compromise or settle any Tax Contest on a basis that would result in a Pre-Closing Tax liability of the Company or liability of the Seller Parties for indemnification unless the Sellers consent to such settlement, compromise or concession, which consent will not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary in this Section 7.01(f), the Sellers shall, at the Sellers’ expense, control any claim, audit, investigation, examination, or other proceeding or self-assessments relating to a Pass-Through Tax Return of the Company, provided that Buyer shall have the right to participate at its own expense in any such action and the Sellers shall not settle, compromise or resolve such action without Buyer’s prior written consent to the extent such settlement could increase the Taxes of the Company, Buyer or any Affiliate in a taxable period after the Closing Date. The provisions of this Section 7.01 shall control over any contrary provisions of Section 9.05.

(g) The parties shall cooperate (and cause their respective Affiliates to cooperate) fully, as and to the extent reasonably requested by the other parties, in connection with the preparation and filing of Tax Returns pursuant to this Section 7.01 and any Tax audit, litigation or other proceeding with respect to Taxes and payments in respect thereof. Such cooperation shall include the retention and (upon the other parties’ request) the provision of records and information which are reasonably relevant to any such Tax audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer and the Company shall retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Governmental Authority. Each of the parties shall furnish the other parties with copies of all relevant correspondence received from any Governmental Authority in connection with any Tax audit or information request with respect to any Taxes for which any other party may have an indemnification obligation under this Agreement. Buyer and the Sellers agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Sections 6043 and 6043A of the Code and all Treasury Regulations promulgated thereunder.

(h) All transfer, documentary, sales, use, stamp, registration and other such Taxes (including any penalties and interest) incurred in connection with consummation of the transactions contemplated under this Agreement (“Transfer Taxes”) shall be borne by the Sellers, when due, and the Company will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes. Each of Buyer, the Company, and the Sellers will cooperate with each other to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any such Transfer Taxes.

(a) Other than the representations and warranties of Sellers contained in Section 3.02, Section 3.03, Section 3.26, Section 4.01 and Section 4.02 the representations and warranties of Sellers contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Sellers contained in Section 3.02, Section 3.03, Section 3.26 , Section 4.01 and Section 4.02 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

(a) Other than the representations and warranties of Buyer contained in Section 5.01 and Section 5.07, the representations and warranties of Buyer contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Buyer contained in Section 5.01 and Section 5.07 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date.

Section 9.01 Exclusive Remedy. Other than in the case of (a) Claims based on Fraud or (b) matters subject to the resolution process set forth in Section 2.02(g) or Section 2.04 hereof, from and after the Closing, the indemnification provisions in this Article IX shall be the sole and exclusive remedy of the Buyer Indemnified Parties and the Seller Indemnified Parties with respect to any breaches of any representation, warranty, covenant, agreement or other matter contained in this Agreement; provided that nothing herein shall prevent a party from seeking or obtaining an injunction or other equitable remedy, including in accordance with Section 6.07 or Section 11.11 hereof. Notwithstanding anything to the contrary contained herein, no limitations (including the limitation set forth in this Article IX), qualifications or procedures in this Agreement shall be deemed to limit or modify the ability of Buyer to make claims under or recover under the R&W Policy; it being understood that any matter for which there is coverage available under the R&W Policy shall be subject to the terms, conditions and limitations, if any, set forth in the R&W Policy.

(a) with respect to any Losses resulting or arising from a breach of Section 3.22 such Buyer Indemnified Party shall be entitled to bring a Claim under the provisions of Article VII and Section 9.04(c) and seek to recover directly from the Sellers on several, not joint, basis, in an aggregate amount not to exceed the Indemnity Cap less the amount of such Losses recovered pursuant to the R&W Policy or any other applicable insurance policy or source of recovery in accordance with Section 9.07(f) hereof, but if and only to the extent that (i) recovery under the R&W Policy is not available following a claim being made under the R&W Policy or exhaustion of the policy limits under the R&W Policy, and (ii) such Claim is brought within the applicable survival period set forth in Section 9.12;

(b) with respect to any Losses resulting or arising from a breach of any Fundamental Representation contained in Article III hereof, such Buyer Indemnified Party shall be entitled to bring a Claim under the provisions of Section 9.04(a) and/or Section 9.05(a) and seek to recover directly from the Sellers, on a several, not joint, basis, subject to the limitations set forth in Section 9.03 below, less the amount, if any, of such Losses recovered pursuant to the R&W Policy or any other applicable insurance policy or source of recovery in accordance with Section 9.07(f) hereof, but if and only to the extent that recovery under the R&W Policy is not available following a claim being made under the R&W Policy or exhaustion of the policy limits under the R&W Policy;

(c) with respect to any Losses resulting or arising from a breach of any Fundamental Representation contained in Article IV hereof, such Buyer Indemnified Party shall be entitled to bring a Claim under the provisions of Section 9.04(a) and/or Section 9.05(a) and seek to recover directly from the breaching Seller, on an individual, but not several or joint, basis, subject to the limitations set forth in Section 9.03 below, less the amount, if any, of such Losses recovered pursuant to the R&W Policy or any other applicable insurance policy or source of recovery in accordance with Section 9.07(f) hereof, but if and only to the extent that recovery under the R&W Policy is not available following a claim being made under the R&W Policy or exhaustion of the policy limits under the R&W Policy; and

(d) further provided, however, other than with respect to any Losses resulting or arising from a breach of any Fundamental Representation for which a Buyer Indemnified Party shall be entitled to seek recovery directly from the Sellers as set forth in Section 9.02(b) above, the Sellers shall have no Liability under Section 9.04(a) or Section 9.05(a) unless and until the aggregate amount of Losses that the Buyer Indemnified Parties are entitled to indemnification from the Sellers exceeds $1,220,000.00 (the “Basket”) and, in such event, the Sellers shall be liable, subject to the limitations set forth in Section 9.03 below, only for the amount of such Losses in excess of fifty percent (50%) of the Basket amount and only to the extent a Buyer Indemnified Party is unable to obtain recovery for such amount under the R&W Policy.

Section 9.03 Limitation of Losses. Notwithstanding any provision in this Agreement to the contrary, the aggregate Liability of each Seller for any and all Losses under this Agreement shall not exceed an amount equal to such Seller’s pro-rata portion of the Purchase Consideration (for Losses resulting or arising from a breach of any Fundamental Representation) received by such Seller or pro rata portion of the Indemnity Cap (for all other Losses), less the amount of such Losses recovered pursuant to the R&W Policy or any other applicable insurance policy or source of recovery in accordance with Section 9.07(f) hereof, provided however that no Seller shall have any liability for a breach of representation or warranty made by another Seller in Article IV.

(a) In the event that any legal proceedings shall be instituted or that any claim or demand shall be asserted by any Person or Losses suffered by a Buyer Indemnified Party or by a Seller Indemnified Party (any of the forgoing, a “Claim”), in respect of which payment may be sought under Section 9.04, Section 9.05 or Section 9.06 (regardless of the Basket referred to above), the indemnified party shall reasonably and promptly cause written notice of the assertion of any Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party. If the indemnifying party disputes its liability with respect to such Claim, the indemnifying party and the indemnified party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction as provided in Section 11.10. The indemnifying party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder; provided, however, that the indemnifying party will not be entitled to assume the defense, negotiation, settlement or otherwise deal with any Claim if (a) the Claim primarily relates to any criminal act or Taxes, (b) the Claim seeks an injunction or equity relief against the indemnified party or the Company as the primary element of such Claim, or (c) upon petition by the indemnified party, an applicable court rules that the indemnifying party failed or is failing to vigorously defend or prosecute such Claim; provided, further, that the indemnifying party will not consent to the entry of any judgment or enter into any settlement with respect to the Claim without the prior written consent of the indemnified party unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the indemnified party or the Company or require any indemnified party or the Company to admit fault, in which case no consent

will be required. If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, it shall within ten (10) Business Days (or sooner, if the nature of the Claim so requires) notify the indemnified party of its intent to do so. If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Claim. If the indemnified party defends any Claim, then the indemnifying party shall reimburse the indemnified party for the Expenses of defending such Claim upon submission of periodic bills. If the indemnifying party shall assume the defense of any Claim, the indemnified party may participate, at its, his or her own expense, in the defense of such Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if (a) so requested by the indemnifying party to participate or (b) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Claim.

(b) After any final deductible judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have arrived at a mutually binding agreement with respect to a Claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter.

(f) The amount of any Loss subject to indemnification hereunder shall be calculated net of any insurance proceeds of any kind (including the R&W Policy) or other recoveries (net of direct collection expenses and premium increases) actually received by Buyer (or its Affiliates) or the Company on account of such Loss (including amounts receivable from any third party for indemnification or contribution); provided, however, that Buyer shall have no obligation to make any claims against any insurance policies (other than the R&W Policy) or third party indemnification or contribution agreements with respect to any such Losses. In the event that an insurance recovery is made by Buyer (or its Affiliates) or the Company with respect to any Loss for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery (net of all direct collection expenses and premium increases) shall be remitted promptly to the Sellers.

Section 9.08 R&W Policy. The R&W Policy shall be at Purchaser’s sole expense, and it shall provide that (a) other than in the case of Fraud, the insurer writing such policy shall not have any claim, right, cause of action or recourse against any Seller Party or any of their respective Affiliates, officers, directors, managers, employees, equity holders, agents or representatives with respect to this Agreement or any Ancillary Document (and such insurer shall have no, and shall not pursue any and all, subrogation rights against any Seller Party, or any of their respective Affiliates, officers, directors, managers, employees, equity holders, agents or representatives), (b) each Seller Party and each of their respective Affiliates, officers, directors, managers, employees, equity holders, agents or representatives are intended

third-party beneficiaries of the provisions contemplated by this sentence, and (c) the insured and the insurer cannot amend, alter or modify the R&W Policy with respect to the provisions contemplated by subsections (a) and (b) of this sentence without the express prior written consent of each Seller. Purchaser shall not (and shall cause its Affiliates, officers, directors, managers, employees, equity holders, agents or representatives not to) grant any right of subrogation (except in the case of Fraud) or otherwise amend, modify, terminate or waive any term or condition set forth in the R&W Policy in a manner inconsistent with this Section 9.08.

Section 9.10 WAIVER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO (ON BEHALF OF THEMSELVES AND EACH OF THE INDEMNIFIED PERSONS) ANY RIGHT TO RECOVER CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR OTHER SPECIAL DAMAGES, IN EACH CASE IN ANY ARBITRATION, LAWSUIT, LITIGATION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER OR NOT THE POSSIBILITY OF SUCH HAS BEEN DISCLOSED IN ADVANCE OR COULD HAVE BEEN REASONABLY FORESEEN, EXCEPT TO THE EXTENT SUCH DAMAGES ARE AWARDED IN A FINAL JUDGEMENT TO A PARTY OTHER THAN ANY BUYER INDEMNIFIED PARTY OR THEIR RESPECTIVE AFFILIATES.

Section 9.12 Survival. The representations and warranties contained in this Agreement and in any certificate, document or instrument delivered in connection herewith, shall survive the execution and delivery of this Agreement, and the Closing hereunder, and shall terminate and expire on the date that is twenty-four (24) months after the Closing Date; provided, that (a) the representations in Section 3.19 (Environmental Matters) and Section 3.20 (Employee Benefit Matters) shall terminate and expire on the sixth (6th) anniversary of the Closing Date, (b) the representations in Section 3.22 (Taxes) shall terminate and expire upon the date of termination of the applicable statute of limitations plus three months, and (c) each of the Fundamental Representations shall survive indefinitely. The covenants and obligations contained herein will remain operative and in full force and effect until the expiration of the applicable statute of limitations following the date performance of such covenant was required, except as any such covenant may be limited in duration by the express terms thereof. Notwithstanding any provision of this Agreement to the contrary, the date or dates specified in the R&W Policy with respect to the time periods, including the time periods within which to make claims and/or regarding which any Buyer Indemnified Party may obtain recoveries under such policy, shall govern such claims and/or recoveries under the R&W Policy, and shall not extend or otherwise change the foregoing survival periods or be limited thereby.

Section 9.13 Additional Indemnification Regarding Construction Loan Guaranty. In addition to the other indemnification obligations of the Sellers set forth in this Article IX, the Sellers hereby agree to indemnify, jointly and severally, Buyer for any amount(s) that may be paid by the Company after the Closing pursuant to the Construction Loan Guaranty. For avoidance of doubt, with respect to any Claim made by Buyer pursuant to this Section 9.13: (i) the Indemnity Cap shall not apply; (ii) the Basket shall not apply; and (iii) such Claim shall not be covered by the R&W Policy and Buyer shall have no obligation to seek recovery therefor under the R&W Policy.

Section 11.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

Section 10.03 Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 11.06 Entire Agreement. This Agreement (including the Exhibits and Disclosure Schedules) and the Ancillary Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 11.09 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEVADA IN EACH CASE LOCATED IN THE CITY OF LAS VEGAS AND COUNTY OF CLARK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10(c).


SELLER PARTIES:
	D-Velopment, LLC, an Oregon limited liability company
	By:	/s/ Daniel D. Benson
		Daniel D. Benson, Manager

	JVK Holdings, LLC, an Arizona limited liability company
	By:	/s/ John N. Kucera
		John N. Kucera, Manager

	Tobolski Family Trust dated September 26, 2016, a Washington Revocable Trust
	By:	/s/ Matthew J. Tobolski
		Matt Tobolski, Trustee

		/s/ Dave Benson
	Dave Benson, an individual, executing solely with respect to his individual obligations in Sections 6.03, 6.06 and 6.07

		/s/ John N. Kucera
	John N. Kucera, an individual, executing solely with respect to his individual obligations in Sections 6.03, 6.06 and 6.07

		/s/ Randa K. Brooks
	Randa Brooks, an individual

		/s/ Matthew J. Tobolski
	Matt Tobolski, an individual, executing solely with respect to his individual obligations in Sections 6.03, 6.06 and 6.07

BUYER:
	AAON, Inc., a Nevada corporation
	By:	/s/ Gary D. Fields
	Gary D. Fields, CEO & President


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


TABLE OF CONTENTS
Item Number and Caption			Page Number

PART I

	1.	Business.	1

	1A.	Risk Factors.	9

	1B.	Unresolved Staff Comments.	14

	2.	Properties.	14

	3.	Legal Proceedings.	15

	4.	Mine Safety Disclosure.	15

PART II

	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	15

	6.	Reserved.	18

	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18

	7A.	Quantitative and Qualitative Disclosures About Market Risk.	31

	8.	Financial Statements and Supplementary Data.	32

	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	70

	9A.	Controls and Procedures.	70

	9B.	Other Information.	73

PART III

	10.	Directors, Executive Officers and Corporate Governance.	73

	11.	Executive Compensation.	73

	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	73

	13.	Certain Relationships and Related Transactions, and Director Independence.	73

	14.	Principal Accountant Fees and Services.	73

PART IV

	15.	Exhibits and Financial Statement Schedules.	74


	As of	As of	As of
	February 22, 2022	February 23, 2021	February 21, 2020
AAON Oklahoma	1,979	1,778	1,889
AAON Coil Products	574	490	401
BasX1	328	—	—
Total employees	2,881	2,268	2,290
1 BasX was acquired by the Company on December 10, 2021.


Declaration Date	Record Date	Payment Date	Dividend per Share






May 20, 2019	June 3, 2019	July 1, 2019	$0.16
November 6, 2019	November 27, 2019	December 18, 2019	$0.16
May 15, 2020	June 3, 2020	July 1, 2020	$0.19
November 10, 2020	November 27, 2020	December 18, 2020	$0.19
May 17, 2021	June 3, 2021	July 1, 2021	$0.19
November 9, 2021	November 26, 2021	December 17, 2021	$0.19


EQUITY COMPENSATION PLAN INFORMATION
Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted-average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

The 2007 Long-Term Incentive Plan	159,782	$	20.19	—
The 2016 Long-Term Incentive Plan	863,882	$	39.01	3,973,680


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


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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AAON	NASDAQ


ISSUER PURCHASES OF EQUITY SECURITIES
	(a) Total Number of Shares (or Units	(b) Average Price Paid (Per Share		(c) Total Number of Shares (or Units) Purchased as part of Publicly Announced	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the
Period	Purchased)	or Unit)		Plans or Programs	Plans or Programs

October 2021	19,426	$	68.98	19,426	—
November 2021	15,372	76.44		15,372	—
December 2021	43,385	78.37		43,385	—
Total	78,183	$	75.66	78,183	—


	Years Ended December 31,
	2021		2020		2019
	(in thousands)
Net Sales	$	534,517	$	514,551	$	469,333
Cost of Sales	396,687		358,702		349,908
Gross Profit	137,830		155,849		119,425
Selling, general and administrative expenses	68,598		60,491		52,077
(Gain) loss on disposal of assets and insurance recoveries	(21)		(6,478)		337
Income from operations	$	69,253	$	101,836	$	67,011


	For the years ended December 31,
	2021		Percent of Sales2		2020		Percent of Sales2		$ Change		% Change
	(in thousands)
Net Sales3
AAON Oklahoma	$	463,845	86.8	%	$	458,957	89.2	%	$	4,888	1.1	%
AAON Coil Products	66,589		12.5	%	55,594		10.8	%	10,995		19.8	%
BasX1	4,083		0.8	%	—		—		4,083		—
Net sales	$	534,517			$	514,551			$	19,966	3.9	%

Cost of Sales3
AAON Oklahoma	$	336,977	72.6	%	318,858		69.5	%	$	18,119	5.7	%
AAON Coil Products	56,514		84.9	%	39,844		71.7	%	16,670		41.8	%
BasX1	3,196		78.3	%	—		—		3,196		—
Cost of sales	$	396,687	74.2	%	$	358,702	69.7	%	$	37,985	10.6	%

Gross Profit3
AAON Oklahoma	$	126,868	27.4	%	$	140,099	30.5	%	$	(13,231)	(9.4)	%
AAON Coil Products	10,075		15.1	%	15,750		28.3	%	(5,675)		(36.0)	%
BasX1	887		21.7	%	—		—		887		—
Gross profit	$	137,830	25.8	%	$	155,849	30.3	%	$	(18,019)	(11.6)	%
1 BasX was acquired on December 10, 2021. We have included the results of BasX's operations in our consolidated financial statements as of December 11, 2021.

2 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment's net sales. Total cost of sales and total gross profit are calculated as a percentage of total net sales.

3 Presented after intercompany eliminations.


	Years Ended December 31,				Percent of Sales
	2021		2020		2021		2020
	(in thousands)
Warranty	$	6,351	$	6,621	1.2	%	1.3	%
Profit Sharing	8,526		11,593		1.6	%	2.3	%
Salaries & Benefits	23,458		20,159		4.4	%	3.9	%
Stock Compensation	5,543		5,341		1.0	%	1.0	%
Advertising	1,616		823		0.3	%	0.2	%
Depreciation	2,924		1,999		0.5	%	0.4	%
Insurance	3,010		1,066		0.6	%	0.2	%
Professional Fees	7,245		2,514		1.4	%	0.5	%
Donations	738		2,115		0.1	%	0.4	%


Other	9,187		8,260		1.7	%	1.6	%
Total SG&A	$	68,598	$	60,491	12.8	%	11.8	%


	Years Ended December 31,				Effective Tax Rate
	2021		2020		2021		2020
	(in thousands)
Income tax provision	$	10,424	$	22,966	15.1	%	22.5	%


	For the years ended December 31,
	2020		Percent of Sales1		2019		Percent of Sales1		$ Change		% Change
	(in thousands)
Net Sales2
AAON Oklahoma	$	458,957	89.2	%	$	418,669	89.2	%	$	40,288	9.6	%
AAON Coil Products	55,594		10.8	%	50,664		10.8	%	4,930		9.7	%
Net sales	$	514,551			$	469,333			$	45,218	9.6	%

Cost of Sales2
AAON Oklahoma	$	318,858	69.5	%	311,441		74.4	%	$	7,417	2.4	%
AAON Coil Products	39,844		71.7	%	38,467		75.9	%	1,377		3.6	%
Cost of sales	$	358,702	69.7	%	$	349,908	74.6	%	$	8,794	2.5	%
			—	%			—	%
Gross Profit2
AAON Oklahoma	$	140,099	30.5	%	$	107,228	25.6	%	$	32,871	30.7	%
AAON Coil Products	15,750		28.3	%	12,197		24.1	%	3,553		29.1	%
Gross profit	$	155,849	30.3	%	$	119,425	25.4	%	$	36,424	30.5	%
1 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment's net sales. Total cost of sales and total gross profit are calculated as a percentage of total net sales.

2 Presented after intercompany eliminations.


	Inception to Date
	(in thousands, except share and per share data)
Program	Shares	Total $		$ per share
Open market	4,205,255	$	74,793	$	17.79
401(k)	8,204,432	165,876		20.22
Directors and employees	2,027,727	22,341		11.02
Total	14,437,414	$	263,010	$	18.22



	2021		2020		% Change

Copper	$	4.94	$	3.65	35.3	%
Galvanized Steel	$	0.83	$	0.55	50.9	%
Stainless Steel	$	2.05	$	1.41	45.4	%
Aluminum	$	1.93	$	2.02	(4.5)	%



	2020		2019		% Change

Copper	$	3.65	$	3.63	0.6	%
Galvanized Steel	$	0.55	$	0.49	12.2	%
Stainless Steel	$	1.41	$	1.30	8.5	%
Aluminum	$	2.02	$	1.79	12.8	%


	2021		2020		2019
	(in thousands)
Operating Activities
Net Income	$	58,758	$	79,009	$	53,711
Income statement adjustments, net	46,566		44,793		42,440
Changes in assets and liabilities:
Accounts receivable	(9,737)		19,859		(13,412)
Income tax receivable	(1,136)		(3,815)		5,129
Inventories	(45,955)		(9,726)		2,557
Contract assets	1,886		—		—
Prepaid expenses and other	1,374		(2,364)		(329)
Accounts payable	10,899		(2,155)		280
Contract liabilities	(229)		—		—
Deferred revenue	447		1,010		425
Accrued liabilities and donations	(1,690)		2,203		7,124
Net cash provided by operating activities	61,183		128,814		97,925
Investing Activities
Capital expenditures	(55,362)		(67,802)		(37,166)
Insurance proceeds	—		6,417		—
Cash paid in business combination, net of cash acquired	(103,430)		—		—
Purchases of investments	—		—		(6,000)
Maturities of investments and proceeds from called investments	—		—		6,000
Other	73		112		120
Net cash used in investing activities	(158,719)		(61,273)		(37,046)
Financing Activities
Borrowings under revolving credit facility	40,000		—		—
Proceeds from financing obligation, net of issuance costs	—		—		6,614
Payment related to financing costs	—		—		(301)
Stock options exercised	21,148		21,418		12,625
Repurchase of stock	(20,876)		(30,060)		(19,586)
Employee taxes paid by withholding shares	(1,590)		(1,169)		(1,207)
Cash dividends paid to stockholders	(19,947)		(19,815)		(16,645)
Net cash provided by (used in) financing activities	$	18,735	$	(29,626)	$	(18,500)


	December 31,
	2021		2020
	(in thousands)
Raw materials	$	124,480	$	76,238
Work in process	3,049		2,088
Finished goods	4,528		7,154
	132,057		85,480
Less: Allowance for excess and obsolete inventories	(1,787)		(3,261)
Total, net	$	130,270	$	82,219


			Page

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)			33

Consolidated Balance Sheets			35

Consolidated Statements of Income			36

Consolidated Statements of Stockholders’ Equity			37

Consolidated Statements of Cash Flows			38

Notes to Consolidated Financial Statements			39


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
	December 31,
	2021		2020
Assets	(in thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	2,859	$	79,025
Restricted cash	628		3,263


Accounts receivable, net of allowance for credit losses of $549 and $506, respectively	70,780		47,387
Income tax receivable	5,723		4,587

Inventories, net	130,270		82,219
Contract assets	5,749		—
Prepaid expenses and other	2,071		3,770
Total current assets	218,080		220,251
Property, plant and equipment:
Land	5,016		4,072
Buildings	135,861		122,171
Machinery and equipment	318,259		281,266
Furniture and fixtures	23,072		18,956
Total property, plant and equipment	482,208		426,465
Less: Accumulated depreciation	224,146		203,125
Property, plant and equipment, net	258,062		223,340


Intangible assets, net	70,121		38
Goodwill	85,727		3,229
Right of use assets	16,974		1,571
Other long-term assets	1,216		579

Total assets	$	650,180	$	449,008

Liabilities and Stockholders’ Equity
Current liabilities:

Accounts payable	$	29,020	$	12,447
Accrued liabilities	50,206		46,586
Contract liabilities	7,542		—
Total current liabilities	86,768		59,033
Revolving credit facility, long-term	40,000		—
Deferred tax liabilities	31,993		28,324
Other long-term liabilities	18,843		4,423
New market tax credit obligation (a)	6,406		6,363
Commitments and contingencies (Note 19)
Stockholders’ equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued	—		—
Common stock, $.004 par value, 100,000,000 shares authorized, 52,527,985 and 52,224,767 issued and outstanding at December 31, 2021 and 2020, respectively	210		209
Additional paid-in capital	81,654		5,161
Retained earnings	384,306		345,495
Total stockholders’ equity	466,170		350,865
Total liabilities and stockholders’ equity	$	650,180	$	449,008
(a) Held by variable interest entities (Note 18)


Buildings			3 - 40 years
Machinery and equipment			3 - 20 years
Furniture and fixtures			3 - 15 years


	Year Ended December 31, 2021
	AAON Oklahoma		AAON Coil Products		BasX1		Total
	(in thousands)
Rooftop Units	$	398,461	$	—	$	—	$	398,461
Condensing Units	762		25,989		—		26,751
Air Handlers	—		26,589		95		26,684
Outdoor Mechanical Rooms	820		464		—		1,284
Cleanroom Systems	—		—		2,288		2,288
Data Center Cooling Solutions	—		—		1,688		1,688
Water-Source Heat Pumps	10,831		10,343		—		21,174
Part Sales	41,127		1		—		41,128
Other	11,844		3,203		12		15,059
	$	463,845	$	66,589	$	4,083	$	534,517

	Year Ended December 31, 2020
	AAON Oklahoma		AAON Coil Products		BasX1		Total
	(in thousands)
Rooftop Units	$	400,946	$	—	—		$	400,946
Condensing Units	900		20,249		—		21,149
Air Handlers	—		23,931		—		23,931
Outdoor Mechanical Rooms	2,355		487		—		2,842
Water-Source Heat Pumps	10,663		8,390		—		19,053
Part Sales	32,561		—		—		32,561
Other	11,532		2,537		—		14,069
	$	458,957	$	55,594	—		$	514,551

	Year Ended December 31, 2019
	AAON Oklahoma		AAON Coil Products		BasX1		Total
	(in thousands)
Rooftop Units	$	349,427	$	—	—		$	349,427
Condensing Units	865		17,610		—		18,475
Air Handlers	—		24,265		—		24,265
Outdoor Mechanical Rooms	1,134		509		—		1,643
Water-Source Heat Pumps	21,076		4,371		—		25,447
Part Sales	33,331		—		—		33,331
Other	12,836		3,909		—		16,745
	$	418,669	$	50,664	—		$	469,333
1 BasX was acquired by the Company on December 10, 2021, as such, the only applicable period presented for BasX is December 11, 2021 through December 31, 2021.


	(in thousands)
Accounts receivable	$	13,699
Inventories	2,725
Contract assets	7,635
Prepaid expenses and other	341
Property, plant and equipment	13,169
Right of use assets	15,611
Intangible assets	70,329
Goodwill	82,498
Accounts payable	(9,388)
Accrued liabilities	(3,807)
Contract liabilities	(7,771)
Lease liabilities	(15,611)
Contingent Consideration - shares of AAON	(66,000)
Consideration paid	$	103,430


	(in thousands)
Definite-lived intangible assets
Intellectual property	$	6,479
Customer relationships	48,684
	55,163

Indefinite-lived intangible assets
Trademarks	15,166
Total intangible assets acquired	$	70,329


	(unaudited)
	Years ended December 31,
	2021		2020
	(in thousands, except per share data)
Revenues	$	611,158	$	562,563
Net income	63,491		80,507
Earnings per share:
Basic	$	1.21	$	1.54
Dilutive	$	1.18	$	1.52


		Weighted Average	Weighted
Range of	Number	Remaining	Average
Exercise	of	Contractual	Exercise		Intrinsic
Prices	Shares	Life	Price		Value
					(in thousands)
$8.17 - 40.87	538,335	4.84	$	30.32	$	26,440
$41.37 - 41.37	361,231	6.37	41.37		13,748
$42.42 - 79.81	124,098	8.17	45.60		4,198
Total	1,023,664	5.79	$	36.07	$	44,386


		Weighted Average Exercise
Options	Shares	Price

Outstanding at December 31, 2020	3,752,945	$	39.00
Granted	368,501	72.95
Exercised	(595,057)	35.54
Forfeited or Expired	(160,920)	48.44
Outstanding at December 31, 2021	3,365,469	$	42.88
Exercisable at December 31, 2021	1,023,664	$	36.07


		Weighted Average Grant date
Restricted stock	Shares	Fair Value

Unvested at December 31, 2020	224,691	$	38.22
Granted	36,234	69.46
Vested	(91,923)	35.80
Forfeited	(7,777)	49.27
Unvested at December 31, 2021	161,225	$	46.08


	Year Ended
	December 31, 2021
Expected dividend rate	$	0.38
Expected volatility	39.10		%
Risk-free interest rate	0.28		%
Expected life (in years)	2.80


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2020	—	$	—
Granted	18,483	87.78
Vested	—	—
Forfeited	(1,632)	87.78
Unvested at December 31, 2021	16,851	$	87.78


		AAON, INC.

Dated:	February 28, 2022	By:	/s/ Gary D. Fields
			Gary D. Fields, Chief Executive Officer


Subsidiary						Jurisdiction of Organization
AAON, Inc.						Oklahoma
AAON Coil Products, Inc.						Texas
BasX, Inc.						Oregon

Cover Page - USD ($) $ in Millions	12 Months Ended
Cover Page - USD ($) $ in Millions	Dec. 31, 2021	Feb. 23, 2022	Jun. 30, 2021
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	0-18953
Entity Registrant Name	AAON, INC.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	87-0448736
Entity Address, Address Line One	2425 South Yukon Ave.,
Entity Address, City or Town	Tulsa,
Entity Address, State or Province	OK
Entity Address, Postal Zip Code	74107
City Area Code	918
Local Phone Number	583-2266
Title of 12(b) Security	Common Stock
Trading Symbol	AAON
Security Exchange Name	NASDAQ
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 2,682.9
Entity Common Stock, Shares Outstanding		52,529,320
Documents Incorporated by Reference	Portions of registrant’s definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders to be held May 12, 2022, incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.
Entity Central Index Key	0000824142
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Amendment Flag	false

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2021
Audit Information [Abstract]
Auditor Name	GRANT THORNTON LLP
Auditor Location	Tulsa, Oklahoma
Auditor Firm ID	248

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Net sales	$ 534,517	$ 514,551	$ 469,333
Cost of sales	396,687	358,702	349,908
Gross profit	137,830	155,849	119,425
Selling, general and administrative expenses	68,598	60,491	52,077
(Gain) loss on disposal of assets and insurance recoveries	(21)	(6,478)	337
Income from operations	69,253	101,836	67,011
Interest (expense) income, net	(132)	88	66
Other income (expense), net	61	51	(46)
Income before taxes	69,182	101,975	67,031
Income tax provision	10,424	22,966	13,320
Net income	$ 58,758	$ 79,009	$ 53,711
Earnings per share:
Basic (usd per share)	$ 1.12	$ 1.51	$ 1.03
Diluted (usd per share)	1.09	1.49	1.02
Cash dividends declared per common share (in dollars per share)	$ 0.38	$ 0.38	$ 0.32
Weighted average shares outstanding:
Basic (in shares)	52,404,199	52,168,679	52,079,865
Diluted (in shares)	53,728,989	53,061,169	52,635,415

Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings
Balance (in shares) at Dec. 31, 2018		51,991
Balance at Dec. 31, 2018	$ 249,443	$ 208	$ 0	$ 249,235
Net income	53,711			53,711
Stock options exercised and restricted stock awards granted (in shares)		542
Stock options exercised and restricted stock awards granted	12,625	$ 2	12,623
Share-based compensation	11,799		11,799
Stock repurchased and retired (in shares)		(454)
Stock repurchased and retired	(20,793)	$ (2)	(20,791)
Dividends	(16,645)			(16,645)
Balance (in shares) at Dec. 31, 2019		52,079
Balance at Dec. 31, 2019	290,140	$ 208	3,631	286,301
Net income	79,009			79,009
Stock options exercised and restricted stock awards granted (in shares)		712
Stock options exercised and restricted stock awards granted	21,418	$ 3	21,415
Share-based compensation	11,342		11,342
Stock repurchased and retired (in shares)		(566)
Stock repurchased and retired	(31,229)	$ (2)	(31,227)	0
Dividends	(19,815)			(19,815)
Balance (in shares) at Dec. 31, 2020		52,225
Balance at Dec. 31, 2020	350,865	$ 209	5,161	345,495
Net income	58,758			58,758
Stock options exercised and restricted stock awards granted (in shares)		623
Stock options exercised and restricted stock awards granted	21,148	$ 2	21,146
Share-based compensation	11,812		11,812
Stock repurchased and retired (in shares)		(320)
Stock repurchased and retired	(22,466)	$ (1)	(22,465)
Contingent consideration (Note 4)	66,000		66,000
Dividends	(19,947)			(19,947)
Balance (in shares) at Dec. 31, 2021		52,528
Balance at Dec. 31, 2021	$ 466,170	$ 210	$ 81,654	$ 384,306

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Stockholders’ equity:
Allowance for credit losses	$ 549	$ 506
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.004	$ 0.004
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	52,527,985	52,224,767
Common stock, shares outstanding (in shares)	52,527,985	52,224,767

Business Description	12 Months Ended
Business Description	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business Description	Business Description AAON, Inc. is a Nevada corporation which was incorporated on August 18, 1987. Our operating subsidiaries include AAON, Inc., an Oklahoma corporation, AAON Coil Products, Inc., a Texas corporation, and BasX, Inc. (dba BasX Solutions), an Oregon corporation (collectively, the “Company”). The consolidated financial statements include our accounts and the accounts of our subsidiaries. We are engaged in the engineering, manufacturing, marketing, and sale of premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data centers cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. Recent Developments On December 10, 2021, we closed on the acquisition of all of the issued and outstanding equity ownership of BasX, LLC, doing business as BasX Solutions ("BasX") (Note 4). We have included the results of BasX’s operations in our consolidated financial statements beginning December 11, 2021. On December 29, 2021, BasX, LLC converted to a C-Corporation, BasX, Inc., and is subject to income tax.