10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 3, 2016

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

For the transition period from              to             .

Commission file number: 001-37480

UNIQUE FABRICATING, INC.

(Exact name of registrant as specified in its Charter)

Delaware	001-37480	46-1846791
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

Unique Fabricating, Inc.

800 Standard Parkway

Auburn Hills, MI 48326

(248)-853-2333

(Address including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

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

As of August 12, 2016 the registrant had 9,700,823 shares of common stock outstanding.

TABLE OF CONTENTS

Item 1. Financial Statements	1
Consolidated Balance Sheets as of July 3, 2016 (unaudited) and as of January 3, 2016	1
Consolidated Statements of Operations for the thirteen and twenty-six week periods ended July 3, 2016 (unaudited) and thirteen and twenty-five week periods ended June 28, 2015 (unaudited)	2
Consolidated Statements of Stockholders' Equity for the twenty-six week period ended July 3, 2016 (unaudited) and the twenty-five week period ended June 28, 2015 (unaudited)	3
Consolidated Statements of Cash Flow for the twenty-six week period ended July 3, 2016 (unaudited) and twenty-five week period ended June 28, 2015 (unaudited)	4
Notes to Consolidated Financial Statements (unaudited)	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	39
Item 4. Controls and Procedures	40
Part II Other Information	41
Signatures	43

i

ITEM 1. FINANCIAL STATEMENTS    

UNIQUE FABRICATING, INC.

Consolidated Balance Sheets

	(Unaudited)
	July 3, 2016		January 3, 2016
Assets
Current assets
Cash and cash equivalents	$	1,584,045	$	726,898
Accounts receivable – net	26,649,319		20,480,186
Inventory – net	16,022,274		14,585,611
Prepaid expenses and other current assets:
Prepaid expenses and other	1,276,129		1,494,697
Refundable taxes	182,763		55,477
Deferred tax asset	—		1,063,721
Assets held for sale	2,033,327		2,033,327
Total current assets	47,747,857		40,439,917
Property, plant, and equipment – net	20,300,544		18,761,178
Goodwill	28,871,179		19,213,958
Intangible assets– net	25,820,620		20,139,213
Other assets
Investments – at cost	1,054,120		1,054,120
Deposits and other assets	125,172		120,742
Deferred tax asset	131,651		—
Total assets	$	124,051,143	$	99,729,128
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	12,745,665	$	11,430,662
Current maturities of long-term debt	2,415,100		2,519,069
Accrued compensation	2,832,829		2,283,833
Other accrued liabilities	1,409,289		1,159,028
Other liabilities	10,848		—
Total current liabilities	19,413,731		17,392,592
Long-term debt – net of current portion	29,197,790		13,906,993
Line of credit-net	22,085,413		14,595,093
Other long-term liabilities
Deferred tax liability	4,545,204		5,774,452
Other liabilities	181,179		46,874
Total liabilities	75,423,317		51,716,004
Stockholders’ Equity
Common stock, $0.001 par value – 15,000,000 shares authorized and 9,699,932 and 9,591,860 issued and outstanding at July 3, 2016 and January 3, 2016, respectively	9,700		9,592
Additional paid-in-capital	45,432,793		44,352,188
Retained earnings	3,185,333		3,651,344
Total stockholders’ equity	48,627,826		48,013,124
Total liabilities and stockholders’ equity	$	124,051,143	$	99,729,128

See Notes to Consolidated Financial Statements.

1

UNIQUE FABRICATING, INC.

Consolidated Statements of Operations (Unaudited)

	Thirteen Weeks Ended July 3, 2016			Thirteen Weeks Ended June 28, 2015			Twenty-Six Weeks Ended July 3, 2016			Twenty-Five Weeks Ended June 28, 2015
Net sales	$	42,048,220		$	35,672,173		$	82,030,724		$	68,102,680
Cost of sales	32,956,982			27,244,229			63,339,540			51,750,874
Gross profit	9,091,238			8,427,944			18,691,184			16,351,806
Selling, general, and administrative expenses	7,164,986			5,088,876			13,719,587			10,332,313
Restructuring expenses							35,054			—
Operating income	1,926,252			3,339,068			4,936,543			6,019,493
Non-operating income (expense)
Investment income	—			230			—			230
Other income (expense), net	(23,741		)	7,027			(23,692		)	14,321
Interest expense	(872,954		)	(853,335		)	(1,214,076		)	(1,712,689		)
Total non-operating expense, net	(896,695		)	(846,078		)	(1,237,768		)	(1,698,138		)
Income – before income taxes	1,029,557			2,492,990			3,698,775			4,321,355
Income tax expense	430,385			801,090			1,265,952			1,436,718
Net income	$	599,172		$	1,691,900		$	2,432,823		$	2,884,637
Net income per share
Basic	$	0.06		$	0.25		$	0.25		$	0.43
Diluted	$	0.06		$	0.24		$	0.25		$	0.41
Cash dividends declared per share	$	0.15		$	—		$	0.30		$	—

See Notes to Consolidated Financial Statements.

2

UNIQUE FABRICATING, INC.

Consolidated Statements of Stockholders’ Equity  (Unaudited)

	Number of Shares	Common Stock		Additional Paid-In Capital		Retained Earnings			Total
Balance - January 4, 2015	4,324,599	$	4,325	$	13,723,456	$	2,864,154		$	16,591,935
Net income	—	—		—		2,884,637			2,884,637
Stock option expense	—	—		12,309		—			12,309
Reduction for accretion on redeemable stock	—	—		—		(1,364,031		)	(1,364,031		)
Balance - June 28, 2015	4,324,599	$	4,325	$	13,735,765	$	4,384,760		$	18,124,850

	Number of Shares	Common Stock		Additional Paid-In Capital		Retained Earnings			Total
Balance - January 3, 2016	9,591,860	$	9,592	$	44,352,188	$	3,651,344		$	48,013,124
Net income	—	—		—		2,432,823			2,432,823
Stock option expense	—	—		85,998		—			85,998
Exercise of warrants and options for common stock	37,275	37		103,952		—			103,989
Common stock issued for purchase of Intasco USA, Inc.	70,797	71		890,655		—			890,726
Cash dividends paid	—	—		—		(2,898,834		)	(2,898,834		)
Balance - July 3, 2016	9,699,932	$	9,700	$	45,432,793	$	3,185,333		$	48,627,826

See Notes to Consolidated Financial Statements.

3

UNIQUE FABRICATING, INC.

 Consolidated Statements of Cash Flows (Unaudited)

	Twenty-Six Weeks Ended July 3, 2016			Twenty-Five Weeks Ended June 28, 2015
Cash flows from operating activities
Net income	$	2,432,823		$	2,884,637
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,507,750			1,739,541
Amortization of debt issuance costs	61,517			155,226
(Gain) loss on sale of assets	(717		)	14,330
Loss on extinguishment of debt	60,202			—
Bad debt expense	(190,993		)	(642		)
Loss on derivative instrument	145,153			2,925
Stock option expense	85,998			12,309
Deferred income taxes	(394,800		)	41,574
Changes in operating assets and liabilities that provided (used) cash:
Accounts receivable	(3,832,058		)	(3,142,546		)
Inventory	1,049,118			(1,243,984		)
Prepaid expenses and other assets	161,046			(248,191		)
Accounts payable	834,462			1,873,471
Accrued and other liabilities	419,501			39,534
Net cash provided by operating activities	3,339,002			2,128,184
Cash flows from investing activities
Purchases of property and equipment	(1,507,867		)	(2,079,527		)
Proceeds from sale of property and equipment	3,000			1,797
Acquisition of Intasco, net of cash acquired	(21,030,795		)	—
Net cash used in investing activities	(22,535,662		)	(2,077,730		)
Cash flows from financing activities
Net change in bank overdraft	337,878			309,074
Proceeds from debt	32,000,000			—
Payments on debt and in-kind interest	(1,234,415		)	(508,962		)
Debt issuance costs	(514,441		)	—
Proceeds from revolving credit facilities	7,634,630			1,479,466
Pay-off of debt assumed through business acquisitions	(15,375,000		)	—
Expenses of in process equity offering	—			(571,803		)
Post acquisition payments for Unique Fabricating	—			(755,018		)
Proceeds from exercise of stock options and warrants	103,989			—
Distribution of cash dividends	(2,898,834		)	—
Net cash provided by (used in) financing activities	20,053,807			(47,243		)
Net increase (decrease) in cash and cash equivalents	857,147			3,211
Cash and cash equivalents – beginning of period	726,898			756,044
Cash and cash equivalents – end of period	$	1,584,045		$	759,255
Supplemental disclosure of cash flow Information – cash paid for
Interest	$	878,826		$	1,233,275
Income taxes	$	1,478,140		$	1,176,528
Supplemental disclosure of cash flow Information – non cash activities for
Common stock issued for purchase of Intasco USA, Inc.	$	890,726		$	—
Accretion on redeemable common stock	$	—		$	1,364,031

See Notes to Consolidated Financial Statements.

4

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Nature of Business and Significant Accounting Policies

Nature of Business — UFI Acquisition, Inc. (UFI), a Delaware corporation, was formed on January 14, 2013, for the purpose of acquiring Unique Fabricating, Inc. and its subsidiaries (Unique Fabricating) (collectively, the “Company” or “Unique”) on March 18, 2013. The Company operates as one operating and reportable segment to fabricate and broker foam and rubber products, which are primarily sold to original equipment manufacturers (OEMs) and tiered suppliers in the automotive, appliance, water heater and heating, ventilation and air conditioning (HVAC) industries. In September 2014, UFI changed its name to Unique Fabricating, Inc. which is now the parent company of the consolidated group. As a result of the name change, the subsidiary previously named Unique Fabricating, Inc. became Unique Fabricating NA, Inc.

Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying Consolidated Financial Statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of such financial statements. The interim results for the periods presented may not be indicative of the Company's actual annual results.

Principles of Consolidation — The Consolidated Financial Statements include the accounts of the Company and all subsidiaries over which the Company exercises control. All intercompany transactions and balances have been eliminated upon consolidation.

Initial Public Offering—On July 7, 2015, the Company completed its initial public offering of 2,702,500 shares of common stock at a price to the public of $9.50 per share (the "IPO"), including 352,500 shares subject to an over-allotment option granted to the underwriters. After underwriting discounts, commissions, and approximate fees and expenses of the offering, as set forth in our registration statement for the IPO on Form S-1, the Company received net IPO proceeds of approximately $22.2 million. Of these proceeds the Company used a portion to pay all of the $13.1 million principal amount of our 16% senior subordinated note, together with accrued interest through the date of payment. The Company used the remaining proceeds to temporarily reduce borrowings under the revolver portion of its senior secured credit facility. The Company also issued to the underwriters warrants to purchase up to 141,000 shares of common stock, as additional compensation in the IPO. The warrants are exercisable at a per share exercise price equal to 125% of the initial public offering price of $9.50 per share, and can be exercised commencing 1 year from the date of the IPO, until the date 5 years from the date of the IPO. The warrants have an aggregate grant date fair value of $336,300 and have been classified as equity and incremental direct costs associated with the IPO.

Fiscal Years — The Company’s quarterly periods end on the Sunday closest to the end of the quarterly period. The quarterly and year to date period, which was 13 and 26 weeks, respectively, during 2016, ended on July 3, 2016, and the quarterly and year to date period, which was 13 and 25 weeks, respectively, during 2015, ended on June 28, 2015. Fiscal year 2015 ended on Sunday, January 3, 2016.

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

Accounts Receivable — Accounts receivable are stated at the invoiced amount and do not bear interest. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in the existing accounts receivable. Management determines the allowance based on historical write-off experience and an understanding of individual customer payment history and financial condition. Management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered. The allowance for doubtful accounts was $716,502 and $734,230 at July 3, 2016 and January 3, 2016, respectively.

Inventory — Inventory is stated at the lower of cost or market, with cost determined on the first in, first out method (FIFO). Inventory acquired as part of a business combination is recorded at its estimated fair value at the time of the business combination. The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments.

5

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Valuation of Long-Lived Assets — The carrying value of long-lived assets held for use is periodically evaluated when events or circumstances warrant such a review. The carrying value of a long-lived asset held for use is considered impaired when the anticipated separately identifiable undiscounted cash flows from the asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The Company determined that no impairment indicators were present and all originally assigned useful lives remained appropriate during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Property, Plant, and Equipment — Property, plant, and equipment purchases are recorded at cost. Property, plant, and equipment acquired as part of a business combination are recorded at estimated fair value at the time of the business combination. Depreciation is calculated using the straight line method over the estimated useful life of each asset. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the period of the related leases. Upon retirement or disposal, the initial cost or valuation and accumulated depreciation are removed from the accounts, and any gain or loss is included in net income. Repair and maintenance costs are expensed as incurred.

Intangible Assets — The Company does not hold any intangible assets with indefinite lives. Identifiable intangible assets recognized as part of a business combination are recorded at their estimated fair value at the time of the business combination. Acquired intangible assets subject to amortization are amortized on a straight line basis, which approximates the pattern in which the economic benefit of the respective intangible is realized, over their respective estimated useful lives. Amortizable intangible assets are reviewed for impairment whenever events or circumstances indicate that the related carrying amount may be impaired. The remaining useful lives of intangible assets are reviewed to determine whether events and circumstances warrant a revision to the remaining period of amortization. The Company determined that no impairment indicators were present and all originally assigned useful lives remained appropriate during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Goodwill — Goodwill represents the excess of the acquisition cost of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed from business combinations at the date of acquisition. Goodwill is not amortized, but rather is assessed at least on an annual basis for impairment. If it is determined that it is more likely than not that the fair value is greater than the carrying value of a reporting unit then a qualitative assessment may be used for the annual impairment test. Otherwise, a two-step process is used. The first step requires estimating the fair value of each reporting unit compared to its carrying value. If the carrying value exceeds the estimated fair value, a second step is performed in order to determine the implied fair value of the goodwill. If the carrying value of the goodwill exceeds its implied fair value then goodwill is deemed impaired and is written down to its implied fair value.

There were no impairment charges recognized during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Debt Issuance Costs — Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as debt discount, as a reduction of the noted debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt.

At July 3, 2016 and January 3, 2016, debt issuance costs were $336,408 and $192,098, respectively, while amounts paid to or on behalf of lenders presented as debt discounts were $302,210 and $98,452, respectively. On April 29, 2016, the Company refinanced its existing term loan and revolving debt facility with new term loans and a new revolving debt facility which are further described in Note 6. The Company reviewed this refinancing for extinguishment accounting and concluded that $60,202 of the $160,111 remaining issuance costs not amortized on the old revolving debt facility qualified for extinguishment and were recognized as a loss on extinguishment immediately. The remaining $99,909 of unamortized issuance costs not extinguished on the old revolving debt facility and all of the $92,508 of remaining unamortized debt discounts on the old term loan did not meet extinguishment accounting and were therefore carried forward to the new revolving debt facility and term loans.

In July of 2015, the 16% senior subordinated note was entirely paid off with the IPO proceeds. On the date paid off, $386,552 of debt discounts remained to be amortized. The Company concluded that the 16% senior subordinated note and related debt discounts qualified for extinguishment accounting and the debt discounts were recognized as a loss on extinguishment immediately in the third quarter of 2015. The extinguishment was recognized as part of interest expense in the consolidated statements of operations.

6

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Amortization expense has been recognized as a component of interest expense which includes both debt issuance costs and debt discounts in the amounts of $36,737 and $61,517 for the 13 and 26 weeks ended July 3, 2016, respectively, and $80,956 and $155,226 for the 13 and 25 weeks ended June 28, 2015, respectively.

Investments — Investments in entities in which the Company has less than a 20 percent interest or is not able to exercise significant influence are carried at cost. Dividends received are included in income, except for those dividends received in excess of the Company’s proportionate share of accumulated earnings, which are applied as a reduction of the cost of the investment. Impairment losses due to a decline in the value of the investment that is other than temporary are recognized when incurred. No dividend income or impairment loss was recognized for the 13 and 26 weeks ended July 3, 2016, respectively, and 13 and 25 weeks ended June 28, 2015, respectively.

Accounts Payable — Under the Company’s cash management system, checks issued but not yet presented to the Company’s bank frequently result in overdraft balances for accounting purposes and are classified as accounts payable on the consolidated balance sheets. Accounts payable included $2,050,139 and $2,403,498 of checks issued in excess of available cash balances at July 3, 2016 and January 3, 2016, respectively.

Stock Based Compensation — The Company accounts for its stock based compensation using the fair value of the award estimated at the grant date of the award. The Company estimates the fair value of awards, consisting of stock options, using the Black Scholes option pricing model. Compensation expense is recognized in earnings using the straight line method over the vesting period, which represents the requisite service period.

Revenue Recognition — Revenue is recognized by the Company upon shipment to customers when the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sale price is fixed and determinable. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Shipping and Handling — Shipping and handling costs are included in costs of sales as they are incurred.

Income Taxes — A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the period. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between financial reporting and tax accounting measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized.

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement with the relevant tax authority. The Company assesses all tax positions for which the statute of limitations remain open. The Company had no unrecognized tax benefits as of July 3, 2016 and January 3, 2016. The Company recognizes any penalties and interest when necessary as income tax expense. There were no penalties or interest recorded during the 13 and 26 and 13 and 25 weeks ended July 3, 2016 and June 28, 2015, respectively.

Foreign Currency Adjustments — The Company’s functional currency for all operations worldwide is the United States dollar. Nonmonetary assets and liabilities of foreign operations are remeasured at historical rates and monetary assets and liabilities are remeasured at exchange rates in effect at the end of each reporting period. Income statement accounts are remeasured at average exchange rates for the year. Gains and losses from remeasurement of foreign currency financial statements into United States dollars are classified in operating income in the consolidated statements of operations.

Concentration Risks — The Company is exposed to various significant concentration risks as follows:

Customer and Credit — During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively, the Company’s sales were derived from customers principally engaged in the North American automotive industry. Company sales directly and indirectly to General Motors Company (GM), FCA US, LLC (Chrysler), and Ford Motor Company

7

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

(Ford) as a percentage of total net sales were: 12, 11, and 13 percent, respectively during the 13 weeks ended July 3, 2016; 12, 12, and 13 percent, respectively, during the 26 weeks ended July 3, 2016; 15, 15, and 15 percent, respectively during the 13 weeks ended June 28, 2015; and 15, 16, and 15 percent, respectively, during the 25 weeks ended June 28, 2015. No Tier 1 supplier represented more than 10 percent of direct Company sales for any period noted above. No suppliers accounted for more than 10 percent of direct accounts receivable as of July 3, 2016 and January 3, 2016.

Labor Markets — At July 3, 2016, of the Company’s hourly plant employees working in the United States manufacturing facilities, 29 percent were covered under a collective bargaining agreement which expires in August 2016 while another 5 percent were covered under a separate agreement that expires in January 2017.

Foreign Currency Exchange — The expression of assets and liabilities in a currency other than the Company's functional currency, which is the United States dollar, gives rise to exchange gains and losses when such assets and obligations are paid in another currency. Foreign currency exchange rate adjustments (i.e., differences between amounts recorded and actual amounts owed or paid) are reported in the consolidated statements of operations as the foreign currency fluctuations occur. Foreign currency exchange rate adjustments are reported in the consolidated statements of cash flows using the exchange rates in effect at the time of the cash flows. At July 3, 2016, the Company’s exposure to assets and liabilities denominated in another currency was not significant. To the extent there is a fluctuation in the exchange rates, the amount of local currency to be paid or received to satisfy foreign currency obligations in 2016 may increase or decrease.

International Operations — The Company manufactures and sells products outside of the United States primarily in Mexico and Canada. Foreign operations are subject to various political, economic and other risks and uncertainties inherent in foreign countries. Among other risks, the Company’s operations are subject to the risks of: restrictions on transfers of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; political conditions; and governmental regulations. During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, 11, 11, 12 and 12 percent, respectively, of the Company’s production occurred in Mexico. During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, 8, 4, 0, and 0 percent, respectively, of the Company's production occurred in Canada. Sales derived from customers located in Mexico, Canada, and other foreign countries were 12, 8, and 2 percent, respectively during the 13 weeks ended July 3, 2016, 12, 6, and 1 percent, respectively during the 26 weeks ended July 3, 2016, 13, 4, and 2 percent, respectively during the 13 weeks ended June 28, 2015, and 13, 4, and 1 percent, respectively, during the 25 weeks ended June 28, 2015, of the Company’s total sales.

Derivative Financial Instruments — All derivative instruments are required to be reported on the consolidated balance sheets at fair value unless the transactions qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. See Note 7 for further information regarding the Company's derivative instrument makeup.

Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (the “ASU”). Previously, such costs were required to be presented as a non-current asset in an entity's balance sheet and amortized into interest expense over the term of the related debt instrument. The changes implemented by the ASU require that debt issuance costs be presented in the entity's balance sheet as a direct deduction from the carrying value of the related debt liability. The amortization of debt issuance costs remains unchanged per the ASU. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied this change to the current and prior periods in the financial statements for comparable purposes. Debt issuance costs are no longer disclosed separately by the Company in the balance sheet and are now shown as a direct deduction from the carrying value of the related debt liability.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes most of the existing guidance on revenue recognition in ASC Topic 605, Revenue Recognition, and establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that

8

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606): Deferral of the Effective Date, to defer implementation of ASU 2014-09 by one year. The guidance is now currently effective for fiscal years beginning after December 15, 2018 and is to be applied retrospectively at the entity's election either to each prior reporting period presented or with the cumulative effect of application recognized at the date of initial application. The ASU allows for early adoption for fiscal years beginning after December 15, 2016, and the Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The ASU requires an entity to measure inventory at the lower of cost and net realizable value, simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2016, and is to be applied prospectively with early adoption permitted.The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Currently, deferred income tax liabilities and assets are required to be separated into current and non-current amounts in an entity's balance sheet. The changes implemented by the ASU require that all deferred income tax liabilities and assets are to be classified as non-current on the balance sheet. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods only in the consolidated financial statements. Deferred taxes are now shown as non-current by the Company in the balance sheet.

In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in Topic 850. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with current guidance. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09), to simplify the accounting for share-based payment transactions. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017. The Company early adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods in the consolidated financial statements. Excess tax benefits are no longer disclosed in the consolidated statements of cash flows as a result of this early adoption.

We do not expect that any other recently issued accounting pronouncements will have a material impact on our consolidated financial statements.

Note 2 — Business Combinations

2016

On April 29, 2016, Unique-Intasco Canada, Inc. (the “Canadian Buyer”), a newly formed subsidiary of the Company, acquired the business and substantially all of the assets of Intasco Corporation, a Canadian based tape manufacturer, for a purchase price of $21,049,045 in cash at closing. On the same date, Unique Fabricating NA, Inc. (the “US Buyer”), an existing subsidiary of the Company, purchased 100% of the outstanding capital stock of Intasco USA, Inc., a United States based tape manufacturer, for a purchase price of $890,726 paid by the issuance of 70,797 shares of the Company's common stock. These shares were issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended. A portion of the purchase price is being held in escrow to fund the obligations of Intasco Corporation and Intasco USA, Inc., (together “Intasco”) and a related party to indemnify the Canadian Buyer and US Buyer against certain claims, losses, and

9

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

liabilities. The purchase agreement included a potential purchase price adjustment provision based on the actual working capital acquired on the day of closing as compared to what was originally estimated at closing. On the date of closing, the Company paid an estimated working capital adjustment of $126,047 to Intasco, which is included in the total cash consideration paid above. Subsequent to the end of the quarter, during August 2016, Intasco paid the Company $212,823 for the actual final working capital adjustment. This final actual working capital settlement is included in the table below. The cash purchase price was paid with borrowings under a new senior credit facility which replaced the Company's existing facility as further described in Note 6. The Company incurred transaction costs of $848,252 related to the acquisition of Intasco. The acquisition significantly broadens the Company's solution offering, production capabilities, and potentially expands its reach into new markets.

In connection with the business combination, Intasco terminated the leases it had with an affiliated entity for its operating facilities in the United States and Canada and the Company entered into new leases for the same facilities. The terms of the Company's lease in the United States provides for a term of two years with monthly rental payments of $4,000 beginning on May 1, 2016 and $4,080 beginning on May 1, 2017. The terms of the Company's lease in Canada provides for a term of five years with monthly rental payments of $16,750 CAD beginning on May 1, 2016, $17,085 CAD beginning on May 1, 2017, and $17,427 CAD beginning on May 1, 2019.

The following table summarizes the preliminary acquisition date fair values of the assets acquired and liabilities assumed.

Cash	$	18,250
Accounts receivable	2,146,082
Inventory	2,485,781
Other current assets	74,194
Property, plant, and equipment	861,491
Identifiable intangible assets	7,316,694
Accounts payable and accrued liabilities	(716,080		)
Deferred tax liability	(97,622		)
Total identifiable net assets	12,088,790
Goodwill	9,657,221
Total	21,746,011

The goodwill arising from the acquisition consists largely of Intasco's reputation, trained employees, and other unique features that cannot be associated with a specific identifiable asset. Of the total amount of goodwill recognized, $7,267,507 is expected to be deductible for tax purposes. The Company also recognized intangible assets as part of the acquisition which consisted of customer contracts, trade names, and unpatented technology. For further detail of the Company's intangibles please refer to Note 5.

The consolidated operating results for the 13 and 26 weeks ended July 3, 2016 included the operating results of Intasco from April 29, 2016. Intasco's revenue included in the accompanying statement of operations for both the 13 and 26 weeks ended July 3, 2016, totaled $3,684,008, from the date of the acquisition. Intasco's net income included in the accompanying statement of operations for both the 13 and 26 weeks ended July 3, 2016, totaled $(302,411), from the date of acquisition. The loss is primarily due to $521,071 of transaction costs incurred by the Company being recorded on Intasco's financial statements.

10

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

2015

On August 31, 2015, the Company, through a newly created subsidiary, Unique Molded Foam Technologies, Inc., acquired substantially all of the assets of Great Lakes Foam Technologies, Inc. (“Great Lakes”) for total cash consideration of $11,947,392, after all adjustments described below. The purchase agreement included a potential purchase price adjustment provision based on the actual working capital acquired on the day of closing as compared to what was originally estimated at closing. On the date of closing, the Company paid a total purchase price of $12,000,000 less the estimated working capital adjustment of $180,009 owed to the Company by Great Lakes. During November 2015, the Company paid Great Lakes $127,401 for the actual working capital adjustment true-up once the actual working capital was determined. This acquisition was financed through the Company's revolving line of credit without the need for further revisions to any debt or equity agreements. The Company incurred costs of $415,849 related to the acquisition of Great Lakes. The acquisition allows the Company to strengthen its existing product offerings and potentially enable it to access new customers and increase sales to certain of its existing customers.

In connection with the business combination, Great Lakes terminated the lease it had with an affiliated entity for its operating facility and the Company entered into a new lease for the same facility. The terms of the Company's lease provide for monthly rental payments of $7,500 for five years beginning on August 31, 2015.

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed.

Accounts receivable	$	1,001,005
Inventory	1,115,809
Deferred tax assets	1,468
Other current assets	2,500
Property, plant, and equipment	810,001
Identifiable intangible assets	5,915,000
Accounts payable and accrued liabilities	(928,933		)
Total identifiable net assets	7,916,850
Goodwill	4,030,542
Total	$	11,947,392

The goodwill arising from the acquisition consists largely of Great Lakes reputation, trained employees, and other unique features that cannot be associated with a specific identifiable asset. The Company also recognized intangible assets as part of the acquisition which consisted of customer contracts and non-compete agreements. For further detail of the Company's intangibles please refer to Note 5.

The consolidated operating results for the 13 and 25 weeks ended June 28, 2015 does not include any operating results for Great Lakes as the acquisition did not take place until August 31, 2015.

The following pro forma supplementary data for the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015 gives effect to the acquisition of Intasco as if it had occurred on January 5, 2015 (the first day of the Company's 2015 fiscal year) and Great Lakes as if it had occurred on December 30, 2013 (the first day of the Company’s 2014 fiscal year). The pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed and does not project the Company’s results of operations for any future date.

11

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Net sales	$	43,509,852	$	42,742,615	$	87,877,251	$	82,243,570
Net income	$	1,151,033	$	1,605,703	$	3,028,561	$	3,495,001
Net income per common share – basic	$	0.12	$	0.24	$	0.31	$	0.52
Net income per common share – diluted	$	0.12	$	0.23	$	0.31	$	0.50

Note 3 — Inventory

Inventory consists of the following:

	July 3, 2016		January 3, 2016
Raw materials	$	9,569,798	$	8,048,747
Work in progress	684,983		643,207
Finished goods	5,767,493		5,893,657
Total inventory	$	16,022,274	$	14,585,611

Included in inventory are assets located in Mexico with a carrying amount of $2,218,703 at July 3, 2016 and $1,788,902 at January 3, 2016, and assets located in Canada with a carrying amount of $1,578,314 at July 3, 2016 and $0 at January 3, 2016.

The inventory acquired in the 2016 acquisition of Intasco included a fair value adjustment of $318,518. At July 3, 2016$39,352 of this fair value adjustment remained in inventory while $279,166 was included in cost of goods sold during the 13 and 26 weeks ended July 3, 2016.

The inventory acquired in the 2015 acquisition of Great Lakes included a fair value adjustment of $146,191. At July 3, 2016 and January 3, 2016, $0 of this fair value adjustment remained in inventory while $0 was included in cost of goods sold during the 13 and 26 weeks ended July 3, 2016. Also, $0 was included in cost of goods sold during the 13 and 25 weeks ended June 28, 2015.

Note 4 — Property, Plant, and Equipment

Property, plant, and equipment consists of the following:

	July 3, 2016		January 3, 2016		Depreciable Life – Years
Land	$	1,663,153	$	1,663,153
Buildings	7,541,976		7,541,976		23 – 40
Shop equipment	11,958,416		10,291,903		7 – 10
Leasehold improvements	876,949		824,869		3 – 10
Office equipment	1,010,194		682,884		3 – 7
Mobile equipment	192,521		135,501		3
Construction in progress	893,532		588,343
Total cost	24,136,741		21,728,629
Accumulated depreciation	3,836,197		2,967,451
Net property, plant, and equipment	$	20,300,544	$	18,761,178

Depreciation expense was $445,108 and $872,463 for the 13 and 26 weeks ended July 3, 2016, respectively, and $319,547 and $635,266 for the 13 and 25 weeks ended June 28, 2015.

12

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Included in property, plant, and equipment are assets located in Mexico with a carrying amount of $1,152,718 and $637,435 at July 3, 2016 and January 3, 2016, respectively, and assets located in Canada with a carrying amount of $771,069 and $0 at July 3, 2016 and January 3, 2016, respectively.

Note 5 — Intangible Assets

Intangible assets of the Company consist of the following at July 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	26,523,065	$	6,531,648	8.16
Trade names	4,673,044		723,012		16.43
Non-compete agreements	1,161,790		764,424		2.53
Unpatented technology	$	1,534,787	$	52,982	5.00
Total	$	33,892,686	$	8,072,066

Intangible assets of the Company consist of the following at January 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	20,948,881	$	5,195,109	8.73
Trade names	4,465,322		599,734		20.00
Non-compete agreements	1,161,790		641,937		2.53
Total	$	26,575,993	$	6,436,780

The weighted average amortization period for all intangible assets is 8.96 years. Amortization expense for intangible assets totaled $930,286 and $1,635,287 for the 13 and 26 weeks ended July 3, 2016, and $572,954 and $1,104,275 for the 13 and 25 weeks ended June 28, 2015.

Estimated amortization expense is as follows:

2016	$	2,060,828
2017	4,121,655
2018	4,070,321
2019	3,945,264
2020	3,913,627
Thereafter	7,708,925
Total	$	25,820,620

Note 6 — Long-term Debt

Old Senior Credit Facility

The Company had a senior credit facility with a bank it entered into on March 18, 2013, in conjunction with the acquisition of Unique Fabricating, and subsequently amended. The facility initially provided for a $12.5 million revolving line of credit (“Revolver”) and an $11.0 million term loan facility (“Term Loan”). On December 18, 2013, in conjunction with the acquisition of Prescotech Holdings Inc. (“PTI”), the Company entered into an amendment with its bank under this senior credit facility. The amendment increased the Revolver to $15.0 million and the Term Loan to $20.0 million. In October 2014, an additional amendment increased the Revolver to $19.5 million, and the increased amount available was used to construct a second facility in LaFayette, Georgia. The total construction costs were $4.4 million which was all funded by the Revolver. The total amount was capitalized, including interest costs of $0.1 million, and depreciated over the useful lives of the various assets. In December 2015, an additional amendment increased the Revolver capacity to $25.0 million. On April 29, 2016, in conjunction with the acquisition of Intasco, this senior credit facility was repaid and terminated and replaced with a new senior credit facility which is described below. On the date of termination, $15.4 million outstanding under the Term Loan, and $17.3 million outstanding under the Revolver were repaid.

13

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

As of January 3, 2016, $14,787,191 was outstanding under the Revolver. This amount was gross of debt issuance costs which are further disclosed in Note 1. Borrowings under the Revolver were subject to a borrowing base, bore interest at the 30 day LIBOR plus a margin that ranged from 2.75 percent to 3.25 percent (an effective rate of 3.5000 percent at January 3, 2016 ), and were secured by substantially all of the Company’s assets. The half percent range per annum on the Term Loan, as noted in the table below, and Revolver was determined quarterly based on the senior leverage ratio. The Revolver was going to mature on December 18, 2017.

The Company also had a senior subordinated note payable with a private lender effective March 18, 2013, as amended. The holder of the senior subordinated note payable also held equity interests of the Company, and therefore, was a related party. As disclosed in Note 1, the Company used the net proceeds from the IPO to repay on July 7, 2015, the $13.1 million principal amount of the senior subordinated note, together with accrued interest through the date of payment.

New Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as syndication agent, and other lenders, entered into a credit agreement (the “New Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.0 million. The New Credit Agreement is a senior secured credit facility and consists of a revolving line of credit of up to$30.0 million (the “New Revolver”) to the US Borrower, a $17.0 million principal amount Term Loan (the “US Term Loan”) to the US Borrower, and a $15.0 million principal amount Term Loan (the “CA Term Loan”) to the CA Borrower. At Closing, the US Term Loan and the CA Term Loan were fully funded and the US Borrower borrowed approximately $22.9 million under the New Revolver. The borrowings were used to finance the acquisition of Intasco, including working capital adjustments and amounts paid into escrow, and to repay the Company’s existing senior credit facility, which was terminated as noted above.

The New Revolver, US Term Loan, and CA Term Loan all mature on April 29, 2021 and bear interest at the Company's election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or ii) the LIBOR rate, plus an applicable margin ranging from 1.75% to 2.50% in the case of the Base Rate and 2.75% to 3.50% in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds measured quarterly.

In addition, the New Credit Agreement allows for increases in the principal amount of the New Revolver and US and CA Term Loans not to exceed a $10.0 million principal amount, in the aggregate, provided that before and after giving effect to the proposed increase (and any transactions to be consummated using proceeds of the increase) the total leverage and debt service coverage ratio do not exceed specified amounts. The New Credit Agreement also provides for the issuance of letters of credit with, a face amount of up to a $2.0 million in the aggregate, provided that any letter of credit that is issued will reduce availability under the New Revolver.

As of July 3, 2016, $22,421,821 was outstanding under the New Revolver. This amount is gross of debt issuance costs which are further described in Note 1. The New Revolver had an effective interest rate of 3.9603% percent per annum at July 3, 2016, and is secured by substantially all of the Company’s assets. At July 3, 2016, the maximum additional available borrowings under the Revolver were $7,478,179, which includes a reduction for a $100,000 letter of credit issued for the benefit of the landlord of one of the Company’s leased facilities. The maximum amount available was further subject to borrowing base restrictions.

14

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Long term debt consists of the following:

	July 3, 2016		January 3, 2016
US Term Loan, payable to lenders in quarterly installments of $318,750 through March 31, 2018, $425,000 through March 31, 2019, and $531,250 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $202,368 from costs paid to or on behalf of the lenders.	$	16,478,882	$	—
CA Term Loan, payable to lenders in quarterly installments of $281,250 through March 31, 2018, $375,000 through March 31, 2019, and $468,750 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $99,842 from costs paid to or on behalf of the lenders.	$	14,618,908	$	—
Term Loan, payable to a bank in quarterly installments of $500,000 through December 31, 2015, $625,000 through December 31, 2016, $750,000 through September 30, 2017, with a lump sum due at maturity. Interest is paid on a quarterly basis at an annual rate of LIBOR plus a margin of 3.00 percent to 3.50 percent (an effective rate of 3.567 percent per annum at January 3, 2016). The Term Loan was originally due on March 15, 2018, but was amended to be due December 18, 2017, and was secured by substantially all of the Company’s assets. At January 3, 2016, the balance of the Term Loan is presented net of a debt discount of $98,452 from costs paid to or on behalf of the lender.	$	—	$	15,901,548

Note payable to the seller of Chardan which is unsecured and subordinated to the New Credit Agreement. Interest accrues monthly at an annual rate of 6 percent. The note payable is due in full on February 6, 2019.	500,000		500,000
Other debt	15,100		24,514
Total debt excluding Revolver	31,612,890		16,426,062
Less current maturities	2,415,100		2,519,069
Long-term debt – Less current maturities	$	29,197,790	$	13,906,993

The New Credit Agreement contains customary negative covenants and requires that the Company comply with various financial covenants including a total leverage ratio and debt service coverage ratio, as defined. As of July 3, 2016, the Company was in compliance with these financial covenants. As of January 3, 2016, the Company was in compliance with all financial covenants under the old senior credit facility. Additionally, the US Term Loan and CA Term Loan contains a clause, effective January 1, 2017, that requires an excess cash flow payment to be made if the Company’s cash flow exceeds certain thresholds as defined by the New Credit Agreement and certain performance thresholds are not met.

Maturities on the Company’s New Revolver and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows:

2016	$	1,209,655
2017	2,405,445
2018	3,000,000
2019	4,300,000
2020	4,000,000
Thereafter	39,421,821
Total	54,336,921
Discounts	(302,210		)
Debt issuance costs	(336,408		)
Total debt – Net	$	53,698,303

15

Note 7 — Derivative Financial Instruments

Interest Rate Swap

The Company holds a derivative financial instrument, in the form of an interest rate swap, as required by its New Credit Agreement, for the purpose of hedging certain identifiable transactions in order to mitigate risks relating to the variability of future earnings and cash flows caused by interest rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The interest rate swap is recognized in the accompanying consolidated balance sheets at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized currently in net income as interest expense in the consolidated statements of operations.

Effective January 17, 2014, in connection with the refinancing of the old senior credit facility during December 2013, the Company entered into an interest rate swap which required the Company to pay a fixed rate of 1.27 percent while receiving a variable rate based on the one month LIBOR for a net monthly settlement based on the notional amount which began immediately. The notional amount began at $10,000,000 and decreased by $250,000 each quarter until March 31, 2016, when it began decreasing by $312,500 per quarter until the stated expiration date on January 31, 2017. At January 3, 2016, the fair value of this old interest rate swap was ($46,874), and was included in other long-term liabilities in the consolidated balance sheets. The Company paid $16,113 and $33,094 in net monthly settlements in the 13 and 26 weeks ended July 3, 2016, respectively, and $30,760 and $46,712 for the 13 and 25 weeks ended June 28, 2015, respectively. Both the change in fair value and the monthly settlements were included in interest expense in the consolidated statements of operations.

Effective June 30, 2016, as required under the new credit facility entered into during April 2016 as discussed in Note 6, the Company entered into a new interest rate swap which requires the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount beginning immediately. This terminated the old swap entered into on January 17, 2014. The notional amount at the effective date was $16,681,250 and decreases by $318,750 each quarter until June 30, 2017, and begins decreasing by $425,000 per quarter until June 29, 2018, when it begins decreasing by $531,250 per quarter until it expires on June 28, 2019. At July 3, 2016, the fair value of this new interest rate swap was $(181,179), and was included in in other long-term liabilities in the consolidated balance sheets. There were no payments by the Company with respect to the interest rate swap for both the 13 and 26 weeks ended July 3, 2016. Both the change in fair value and the monthly settlements were included in interest expense in the consolidated statements of operations.

Foreign Currency Forward Contract

Effective June 29, 2016, the Company entered into a foreign currency forward contract to hedge the Mexican Peso. The forward contract has an equivalent USD notional amount of $3,300,000 and expires on June 30, 2017. The Company is exposed to market risk, including fluctuations in foreign currency exchange rates which may result in cash flow risks, and as a result from time to time will enter into forward contracts to mitigate risks relating to the variability of future earnings and cash flows caused by foreign currency rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The foreign currency forward contract is recognized in the accompanying consolidated balance sheets at its fair value and monthly settlement payments due on the foreign currency forward contract and changes in its fair value are recognized currently in net income as gain/losses on foreign currency exchange (which is part of other income (expense), net) in the consolidated statements of operations. At July 3, 2016, the fair value of this new foreign currency forward contract was $(10,848), which at July 3, 2016 was included in other short-term liabilities in the consolidated balance sheets. There were no payments by the Company with respect to the foreign currency forward contract for both the 13 and 26 weeks ended July 3, 2016 .

Note 8 — Restructuring

Unique's restructuring activities are undertaken as necessary to implement management's strategy, streamline operations, take advantage of available capacity and resources, and achieve net cost reductions. The restructuring activities generally relate to realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, either in the normal course of business or pursuant to specific restructuring programs.

On October 27, 2015, the Company announced the planned closure of its manufacturing facility located in Murfreesboro, Tennessee that resulted in a workforce reduction of approximately 30 employees. The planned closure of the Murfreesboro

16

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

facility was effective in the fourth quarter of 2015 and completed in January 2016. The action was necessary due to the tight labor market in Murfreesboro and the struggle to staff production levels to meet the ongoing growth strategy for Murfreesboro's respective products manufactured at the plant. In order to ensure the Company's ability to service its customers at the increasing volumes projected for the future, the Company decided to move existing Murfreesboro production including equipment to the Company's other manufacturing facilities in Evansville, Indiana and LaFayette, Georgia. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as the closing does not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The Company reversed severance related costs which had been previously recorded as a result of this plant closure in the amount of $0 in the 13 weeks ended July 3, 2016 and $(51,951) in the 26 weeks ended July 3, 2016. The amount of other costs incurred associated with this plant closure, which primarily consisted of moving existing production equipment at Murfreesboro to other facilities was $0 in the 13 weeks ended July 3, 2016 and $87,005 in the 26 weeks ended July 3, 2016. Further expected charges as of July 3, 2016, are $0.0 million related to severance costs and other costs. All of these costs were recorded to the restructuring expense line in continuing operations in the Company's consolidated statement of operations. The Company also intends to sell the building in Murfreesboro, which the Company owns, which has a current net book value of $2,033,327 and a current estimated selling price of approximately $2,750,000. The building qualifies as held for sale, is expected to be sold in the next year, and is presented properly as such in the consolidated balance sheets as a current asset.

The table below summarizes the activity in the restructuring liability for the 26 weeks ended July 3, 2016.

	Employee Termination Benefits Liability			Other Exit Costs Liability			Total
Accrual balance at January 3, 2016	$	190,864		$	63,327		$	254,191
Provision for estimated expenses incurred during the year	(51,951		)	87,005			35,054
Payments made during the year	(138,913		)	(150,332		)	(289,245		)
Accrual balance at July 3, 2016	$	—		$	—		$	—

Note 9 — Redeemable Common Stock

On March 18, 2013, in conjunction with the acquisition of Unique Fabricating, and on December 18, 2013, in conjunction with the acquisition of PTI, the Company issued shares of common stock to its subordinated lender. The 1,415,400 shares issued to the subordinated lender included features for the shares to be redeemed at their fair value on the sixth or seventh anniversary of the purchase or when the founders group no longer owned 75 percent of the shares originally purchased. These shares were accounted for as redeemable common stock due to the redemption feature being outside of the Company’s control. These shares were recorded initially using their net proceeds and were adjusted to their redemption value each period using a ratable allocation based on the Company’s estimate of the redemption date and fair value of the shares. The Company accreted the redemption value of these shares over the estimated redemption period to the earliest known redemption date with any changes in estimates accounted for prospectively. However, reductions in the redemption value were only recorded to the extent of previously recorded increases.

On January 14, 2013, the Company sold 999,999 shares of common stock for $0.167 per share to a group of founding shareholders. An agreement that existed before the closing of the Company's IPO required the Company to redeem these shares if the Company were sold, liquidated or completed an initial public offering for less than $4 per share. These shares were accounted for as redeemable common stock due to the redemption feature being outside of the Company’s control. These shares were recorded initially using their proceeds of $0.167 per share and there was not any accretion of these shares from this initial value because they were already recorded at their redemption value. The redemption value of the shares was $166,667.

Effective upon the closing of the IPO in July of 2015, the Company’s 999,999 shares issued to the founder group at $0.167 per share were no longer redeemable as the IPO was completed at a price of more than $4 per share and the Company was no longer required to purchase these shares. Furthermore, the 1,415,400 shares issued to the subordinated lender were also no longer redeemable, effective upon the closing of the IPO, as the subordinated lender agreed to terminate its right to require the Company to repurchase its shares in exchange for the Company granting it certain registration rights. As a result, all of the shares included in redeemable common stock were reclassified to common stock and amounts attributable to redeemable common stock were allocated to common stock at par value and additional paid-in-capital.

17

As of June 28, 2015 the redemption value of the redeemable shares was estimated to be $13,446,300 which was more than the initial proceeds. As a result, $1,364,031 of accretion was recorded in the period ended June 28, 2015. The redemption value was calculated based on an internal methodology, which was based on calculating Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) multiples based on enterprise values of selected public companies that are comparable to the Company. An estimated EBITDA multiple was then determined for the Company and used to calculate the enterprise value and thereby the per share value used in the redemption value.

Note 10 — Stock Incentive Plans

2013 Stock Incentive Plan

The Company’s board of directors approved a stock incentive plan (the “Plan”) in 2013. The Plan permits the Company to grant 495,000 non statutory or incentive stock options to the employees, directors and consultants of the Company. 495,000 shares of unissued common stock are required to be reserved for the Plan. The board of directors has the authority to determine the participants to whom stock options shall be awarded as well as any restrictions to be placed upon the awards. The exercise price cannot be less than the fair value of the underlying shares at the time the stock options are issued and the maximum length of an award is ten years.

On July 17, 2013 and January 1, 2014, the board of directors approved the issuance of 375,000 and 120,000 non statutory stock option awards, respectively to employees of the Company with an exercise price of $3.33 with a weighted average grant date fair value of $86,450 and $42,000 respectively. On April 29, 2016 the Company issued 7,200 non statutory stock option awards to employees of the Company with an exercise price of $12.58 with a weighted average grant date fair value of $20,160. All 3 tranches of grants of the awards vest 20 percent on the grant date and an additional 20 percent on each of the first, second, third and fourth anniversaries thereafter. Vested awards can only be exercised while the participants are employed by the Company. Upon termination, the Company may repurchase the vested awards at their fair value (or their exercise price if terminated for cause) prior to their exercise.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		January 1, 2014		July 17, 2013
Expected volatility	40.00	%	34.00	%	34.00	%
Dividend yield	5.00	%	—	%	—	%
Expected term (in years)	5		4		4
Risk-free rate	1.28	%	1.27	%	0.96	%

2014 Omnibus Performance Award Plan

In 2014 the board of directors and stockholders adopted the Unique Fabricating, Inc. 2014 Omnibus Performance Award Plan, or the 2014 Plan. The 2014 Plan provides for the grant of cash awards, stock options, stock appreciation rights, or SARs, shares of restricted stock and restricted stock units, or RSUs, performance shares and performance units. The 2014 Plan authorizes the grant of awards relating to 250,000 shares of our common stock. In the event of any transaction that causes a change in capitalization, the Compensation Committee, such other committee administering the 2014 Plan or the board of directors will make such adjustments to the number of shares of common stock delivered, and the number and/or price of shares of common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights. An amendment approved in March of 2016 by our board of directors which was included as a proposal and approved by our stockholders in our June 2016 proxy statement, increased the authorized grant of awards to a total of 450,000 shares of our common stock.

18

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

On August 17, 2015, the board of directors approved the issuance of a total of 230,000 stock option awards of which 45,000 non statutory awards were granted to the board of directors, and 185,000 incentive stock options were granted to employees of the Company. All of the awards had an exercise price of $12.50 with a weighted average grant date fair value of $625,600. These awards vest 20 percent on the grant date and an additional 20 percent on each of the first, second, third and fourth anniversaries thereafter. Vested awards can only be exercised while the participants are employed by the Company.

On November 20, 2015, the board of directors approved the issuance of stock option awards for 15,000 shares to employees of the Company. All of the awards had an exercise price of $11.50 with a weighted average grant date fair value of $33,500. The vesting schedule, vesting percentage, and capability of the employees to exercise these options have the exact same conditions as the August 17, 2015 grants discussed above.

On April 29, 2016, the board of directors approved the issuance of stock option awards for 5,000 shares to employees of the Company. All of the awards had an exercise price of $12.58 with a weighted average grant date fair value of $14,000. The vesting schedule, vesting percentage, and capability of the employees to exercise these options have the exact same conditions as the November 20 and August 17, 2015 grants discussed above.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		November 20, 2015		August 17, 2015
Expected volatility	40.00	%	35.00	%	38.00	%
Dividend yield	5.00	%	5.00	%	4.80	%
Expected term (in years)	5		5		5
Risk-free rate	1.28	%	1.70	%	1.58	%

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
Outstanding at January 3, 2016	695,000	$	6.54	8.35
Granted	12,200	$	12.58	10.00
Exercised	17,520	$	3.33	0
Forfeited or expired	7,200	$	3.33	0
Outstanding at July 3, 2016	682,480	$	6.77	7.90	$	4,388,346
Vested and exercisable at July 3, 2016	278,720	$	5.02	7.48	$	2,279,930

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares as of July 3, 2016 and multiplying this result by the related number of options outstanding and exercisable at July 3, 2016. The estimated fair value of the shares is based on the closing price of the stock of $13.20 as of July 3, 2016.

The Company recorded compensation expense of $46,900 and $85,998 for the 13 and 26 weeks ended July 3, 2016, respectively, and $6,401 and $12,309 for the 13 and 25 weeks ended June 28, 2015, respectively, in its consolidated statements of operations, as a component of sales, general and administrative expenses. The income tax benefit related to share based compensation expense was $17,195 and $29,434 for the 13 and 26 weeks ended July 3, 2016, respectively, and $2,038 and $4,092 for the 13 and 25 weeks ended June 28, 2015, respectively.

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UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

As of July 3, 2016, there was $468,585 of total unrecognized compensation cost related to nonvested stock option awards under the plans. That cost is expected to be recognized over a weighted average period of 2.19 years.

Note 11 — Income Taxes

For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date income before income taxes. The tax effects of unusual or infrequently occurring items, including changes in judgement about valuation allowances and effect of changes in tax laws or rates, are reported in the interim period in which they occur, if applicable.

Income tax expense for the 13 and 26 weeks ended July 3, 2016 was $430,385 and $1,265,952, respectively, compared to $801,090 and $1,436,718 for the 13 and 25 weeks ended June 28, 2015, respectively. The income tax rate varies from the US statutory income tax rate primarily due to state income taxes, and the effect of foreign income taxes (Canada and Mexico), offset by a benefit related to the domestic production activities deduction, or DPAD. The difference between the actual effective rate of 41.8% and the statutory rate of 34.0% for the 13 weeks ended July 3, 2016 was mainly a result of $49,923 of non-deductible transactions costs related to the Intasco acquisition, which increased our effective tax rate by 4.9%. During the 26 weeks ended July 3, 2016 the effective tax rate and statutory rate were in alignment with each other. During the 13 weeks ended June 28, 2015, the difference between the actual effective tax rate of 32.1% and the statutory rate of 34.0% was mainly a result of DPAD, which provided a $68,827 income tax benefit and therefore reduced our effective tax rate by 2.7%. During the 25 weeks ended June 28, 2015, the effective tax rate and statutory rate were in alignment with each other for the period.

Note 12 — Operating Leases

The Company leases office space, production facilities and equipment under operating leases with various expiration dates through the year 2021. The leases for office space and production facilities require the Company to pay taxes, insurance, utilities and maintenance costs. Three of the leases for office space and production facilities provides for escalating rents over the life of the respective lease and rent expense is recognized over the term of the lease on a straight line basis, with the difference between lease payments and rent expense recorded as deferred rent in other accrued liabilities in the consolidated balance sheets. Total rent expense charged to operations was approximately $477,100 and $927,305 for the 13 and 26 weeks ended July 3, 2016, and $334,926 and $662,438 for the 13 and 25 weeks ended June 28, 2015.

Future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows at July 3, 2016:

2016	$	995,203
2017	1,934,819
2018	1,782,160
2019	1,380,108
2020	850,998
Thereafter	85,456
Total	$	7,028,744

Note 13 — Retirement Plans

The Company maintains a defined contribution plan covering certain full time salaried employees. Employees can make elective contributions to the plan. The Company contributes 100 percent of an employee’s contribution in an amount up to the first 3 percent of each employee’s total compensation and 50 percent of the contribution for the next 2 percent of each employee’s total compensation. In addition, the Company, at the discretion of the board of directors, may make additional contributions to the plan on behalf of the plan participants. The Company contributed $100,356 and $215,981 for the 13 and 26 weeks ended July 3, 2016, respectively, and $94,603 and $183,966 for the 13 and 25 weeks ended June 28, 2015, respectively.

The Intasco operations acquired in April 2016 have separate retirement plans. The United States facility sponsors a SIMPLE IRA account for qualifying employees. The plan makes a contribution equal to 3 percent of a participant's gross wages to the participating employees' SIMPLE IRA accounts. Contributions in the United States totaled $1,671 for both the 13 and 26 weeks ended July 3, 2016.

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The Canadian facility sponsors a retirement plan where Intasco makes a matching contribution of participant contributions up to a maximum amount based on the participants' number of years of service. Contributions in Canada totaled $15,248 for both the 13 and 26 weeks ended July 3, 2016.

Note 14 — Related Party Transactions

A shareholder provided subordinated debt financing which is discussed further in Note 6. Effective upon the closing of the IPO as disclosed in Note 1, this subordinated debt amount was paid off in full with the proceeds received from the IPO. Interest charges were recognized in the amounts of $0 for the 13 and 26 weeks ended July 3, 2016, and $523,876 and $1,041,995 for the 13 and 25 weeks ended June 28, 2015, respectively, related to the subordinated debt financing.

Effective March 18, 2013, the Company is under a five year management agreement with a firm related to several shareholders. The agreement required annual management fees of $300,000 and additional fees for assistance provided with acquisitions. The Company incurred management fees of $56,250 and $112,500 for the 13 and 26 weeks ended July 3, 2016, and $75,000 and $150,000 for the 13 and 25 weeks ended June 28, 2015. During the 13 and 26 weeks ended July 3, 2016, the Company paid acquisition related fees under the management agreement of $259,900 as a result of the Intasco acquisition on April 29, 2016. There were no acquisition related party fees for the 13 and 25 weeks ended June 28, 2015. The Company allocates these fees, if any, to the services provided based on their relative fair values. Effective upon completion of the IPO, the agreement was amended to reduce the annual management fee by an amount equal to the amount, if any, of annual cash retainers and equity awards received as compensation for service on the board of directors by any person who is a related person of Taglich Private Equity, LLC or Taglich Brothers, Inc.

Note 15 — Fair Value Measurements

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates.

Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item.

In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item.

The Company measures its interest rate swap at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variance and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market.

The Company measures its foreign currency forward contract on a recurring basis based primarily on Level 2 inputs using the present value of future cash flows to be incurred on the contracts. In accordance with market standards and conventions for

21

UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

valuing such contracts, the transactions reflect the current direction and amounts expected in each currency, spot exchange rates at period-end, discount factors and forward interest rate curves for each relevant currency pair and future maturity date.

Note 16 — Contingencies

The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While uncertainties are inherent in the final outcome of such matters, the Company believes that there are no pending proceedings in which the Company is currently involved that will have a material effect on its financial position, results of operations or cash flow.

Note 17 — Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed giving effect to all potentially weighted average dilutive shares including options and warrants. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share.

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Basic earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Net income attributable to common stockholders	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Net income per share-basic	$	0.06	$	0.25	$	0.25	$	0.43

Diluted earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Effect of dilutive securities:
Stock options(1)(2)	211,765		197,845		211,644		194,901
Warrants(1)(2)	13,702		85,100		11,536		79,868
Diluted weighted average shares outstanding	9,905,841		7,022,943		9,869,446		7,014,767
Net income per share-diluted	$	0.06	$	0.24	$	0.25	$	0.41

(1)Options to purchase 425,280 shares of common stock remaining to be exercised under the 2013 plan, warrants to purchase 2,286 shares of common stock remaining to be exercised and warrants to purchase 141,000 shares issued to the underwriters of the Company's IPO granted in July 2015 as discussed in Note 10, were considered in the computation of diluted earnings per share using the treasury stock method in the 2016 calculation. Options to purchase 245,000 shares of common stock that were granted in August 2015 and November 2015, as noted in Note 10, under the 2014 plan and options to purchase 7,200 shares of common stock and 5,000 shares of common stock that were granted under the 2013 and 2014 plan, respectively, in April 2016 were not included in the computation of diluted earnings per share in the 2016 period because the effect would have been anti-dilutive.

(2)Options to purchase 495,000 shares of common stock remaining to be exercised and warrants to purchase 139,200 shares of common stock remaining to be exercised were considered in the computation of diluted earnings per share using the treasury stock method in the 2015 calculation.

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UNIQUE FABRICATING, INC.

Notes to Consolidated Financial Statements (Unaudited)

Note 18 — Subsequent Event

Declaration of Cash Dividend

On August 16, 2016, our board of directors declared a quarterly cash dividend of $0.15 per common share. The dividend will be payable on September 7, 2016 to stockholders of record at the close of business on August 31, 2016. The aggregate amount of the dividend is approximately $1.4 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This Management's Discussion and Analysis of Financial Condition and Results of Operation is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the accompanying unaudited consolidated financial statements and the related notes to unaudited consolidated financial statements included elsewhere in this document as well as the consolidated financial statements and the related notes to consolidated financial statements for the year ended January 3, 2016 included in our Annual Report on Form 10-K with the Securities and Exchange Commission (the "SEC"). Our actual results and the timing of events could differ materially from those discussed in forward-looking statements contained herein. Factors that could cause or contribute to these differences include those discussed below as well as in our Annual Report on Form 10-K, particularly in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” We make no guarantees regarding outcomes, and assume no obligation to update the forward-looking statements herein, except as may be required by law.

Forward-Looking Statements

The following discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. These statements are based on management's beliefs and assumptions and on information currently available to us. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. When used in this document the words “anticipate,” “believe,” “continue,” “could,” “seek,” “might,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “approximately,” “project,” “should,” “will,” “would,” or the negative or plural of these words or similar expressions, as they relate to our company, business and management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the future events and circumstances discussed may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements, including those discussed in our Prospectus and in particular the section entitled “Risk Factors” of the Prospectus.

Forward-looking statements speak only as of the date of this Form 10-Q filing. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions based on new information, future events or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Basis of Presentation

The Company’s policy is that quarterly periods end on the Sunday closest to the end of the calendar quarterly period. The second quarter of 2016 ended on July 3, 2016 and the second quarter of 2015 ended on June 28, 2015. The Company’s policy is that fiscal years end annually on the Sunday closest to December 31. Fiscal 2015 ended on January 3, 2016 and the current fiscal year will end on January 1, 2017. The Company’s operations are classified in one reportable business segment. Although we expanded the products that we manufacture and sell to include components used in the appliance, HVAC and water heater industries, products for these industries are manufactured at facilities that also manufacture or are capable of manufacturing products for the automotive industries. All of our manufacturing locations have similar capabilities, and most plants serve multiple markets. The manufacturing operations for our automotive, appliance, HVAC and water heater products share management and labor forces and use common personnel and strategies for new product development, marketing and the sourcing of raw materials.

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

• have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

• comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

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• submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency”; and

• disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an “emerging growth company” for up to five years, or until the earliest to occur of (1) the last day of the first fiscal year in which our total annual gross revenues exceed $1.0 billion, (2) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period. Even after we no longer qualify as an emerging growth company, we still may qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with auditor attestation requirements pursuant to Section 404(b) of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation.

Overview

Unique is engaged in the engineering and manufacture of multi-material foam, rubber, and plastic components utilized in noise, vibration and harshness, acoustical management, water and air sealing, decorative and other functional applications. The Company combines a long history of organic growth with some more recent strategic acquisitions to diversify both product capabilities and markets served.

Unique currently services the North America automotive and heavy duty truck markets, in addition to the appliance, water heater and HVAC markets. Sales are conducted directly with major automotive and heavy duty truck, appliance, water heater and HVAC companies, referred throughout this Quarterly Report on Form 10-Q as original equipment manufacturers (OEMs), or indirectly through the Tier 1 suppliers of these OEMs. The Company has its principal executive offices in Auburn Hills, Michigan and has sales, engineering and production facilities in Auburn Hills, Michigan, Concord, Michigan, LaFayette, Georgia, Louisville, Kentucky, Evansville, Indiana, Ft. Smith, Arkansas, Bryan, Ohio, Port Huron, Michigan, London, Ontario, Monterrey, Mexico and Queretaro, Mexico. The Company also has an independent client sales representative who maintains offices in Baldham, Germany.

Unique derives the majority of its net sales from the sales of foam, rubber, plastic, and tape adhesive related automotive products. These products are produced from a variety of manufacturing processes including die cutting, compression molding, thermoforming, reaction injection molding, and fusion molding. We believe Unique has a broader array of processes and materials utilized than any of its direct competitors, based on our product offerings. By sealing out air noise and water intrusion, and by providing sound absorption and blocking, Unique’s products improve the interior comfort of a vehicle, increasing perceived vehicle quality and the overall experience of its passengers. Unique’s products perform similar functions for appliances, water heaters and HVAC systems, improving thermal characteristics, reducing noise and prolonging equipment life.

We primarily operate within the highly competitive and cyclical automotive parts industry. Over the past six years the industry has experienced consistent growth as it recovered from the recession of 2009. Many sectors of the supply chain are operating near capacity. Over the same period we have grown our core automotive parts business at a faster rate than the industry as a whole, reflecting our growth through acquisitions as well as indicating we are taking market share from competitors and increasing our content per vehicle on the programs we supply. We expect these trends to continue.

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Recent Developments

Acquisition of Intasco

On April 29, 2016, Unique-Intasco Canada, Inc. (the “Canadian Buyer”), a newly formed subsidiary of Unique Fabricating, Inc., (the “Company”) acquired the business and substantially all of the assets of Intasco Corporation, a Canadian based tape manufacturer, for a purchase price of $21.03 million , net of cash acquired, at closing. On the same date, Unique Fabricating NA, Inc. (the “US Buyer”), an existing subsidiary of the Company, purchased 100% of the outstanding capital stock of Intasco USA, Inc., a United States based tape manufacturer, for a purchase price of $0.89 million paid by the issuance of 70,797 shares of the Company's common stock, par value $0.001 per share. The shares issued are “restricted shares” issued in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended. A portion of the purchase price is being held in escrow to fund the obligations of Intasco Corporation and Intasco USA, Inc., (together “Intasco”) and a related party to indemnify the Canadian Buyer and US Buyer against certain claims, losses, and liabilities. The purchase price was paid with borrowings under a New Credit Facility which replaced the Company's existing facility and is described below.

Intasco is a material convertor of pressure sensitive products such as film, label stock, foams and adhesives primarily to the automotive industry in the United States and Canada. They specialize in interior and exterior attachment tape systems.

New Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as lender and Administrative Agent and the other lenders, entered into a Credit Agreement (the “New Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.00 million. The New Credit Agreement is a senior secured credit facility and consists of a revolving line of credit of up to $30.00 million (the “New Revolver”) to the US Borrower, a $17.00 million principal amount Term Loan (the “US Term Loan”) to the US Borrower, and a $15.00 million principal Term Loan (the “CA Term Loan”) to the CA Borrower. In conjunction with the acquisition of Intasco, the Company's old senior credit facility was repaid and terminated. On the date of termination of the old senior credit facility, $15.4 million outstanding principal amount was repaid on the Term Loan, and $17.3 million outstanding was repaid on the Revolver.

Initial Public Offering

On July 7, 2015, we completed our initial public offering of 2,702,500 shares of common stock at a price to the public of $9.50 per share (the "IPO"), including 352,500 shares subject to an over-allotment option granted to the underwriters. After underwriting discounts, commissions, and approximate fees and expenses of the offering, as set forth in our registration statement for the IPO on Form S-1, we received net IPO proceeds of approximately $22.2 million. Of these proceeds we used part of them to repay the $13.1 million principal amount of our 16% senior subordinated note together with accrued interest through the date of payment. We used the remaining proceeds to temporarily reduce borrowings under the revolver portion of the Company's old senior secured credit facility. Amounts paid under the facility remained available to be re-borrowed, subject to compliance with the terms of the facility. The Company also issued to the underwriters warrants to purchase up to 141,000 shares of common stock, as additional compensation in the IPO. The warrants are exercisable at a per share exercise price equal to 125% of the public offering price of $9.50 per share, and can be exercised commencing 1 year from the date of the IPO, until the date 5 years from the date of the IPO.

Acquisition of Great Lakes

On August 31, 2015, the Company acquired (the “Acquisition”) the business and substantially all of the assets of Great Lakes Foam Technologies, Inc. (“Great Lakes”), a Michigan based molded polyurethane manufacturer, for total net cash consideration of $11.95 million, with a portion being held in escrow to fund the obligations of Great Lakes and its stockholders to indemnify Unique against certain claims, losses, and liabilities.

Great Lakes manufactures components for application in a wide range of end-markets including the automotive, off-road vehicles, industrial equipment, medical and office equipment industries. Great Lakes is engaged in the manufacture of components from molded polyurethane, including components for automotive applications, industrial equipment, off-road vehicles, office furniture, medical applications and packaging. The Company believes that the acquisition will augment its existing product offerings and potentially enable it to access new customers and increase sales to certain of its existing customers.

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Facility Closure

On October 27, 2015, the Company made the decision to close its manufacturing facility in Murfreesboro, Tennessee. The Company ceased operations at the Murfreesboro facility in January of 2016. Approximately 30 positions were eliminated as a result of the closing.

The Company's decision resulted from the tight labor market in Murfreesboro and the struggle to staff production levels to meet the ongoing growth strategy for the products manufactured at the plant. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition, as the closing did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production that was moved to other facilities within the Company.

The Company provided employees severance pay, health benefits continuation and job search assistance. In the 26 weeks ended April 3, 2016, the Company has reversed approximately ($0.1) million in employee termination costs that were previously recorded and incurred an additional $0.1 million in other costs related to the closure, which primarily consisted of moving existing production equipment from Murfreesboro to other Company facilities. The expenses were recorded to the restructuring expense line in continuing operations in the Company's statement of operations. At this time the Company expects no further future costs related to the facility closure. The Company also intends to sell the building that it owns in Murfreesboro which has a current net book value of $2.0 million, and a current estimated selling price of approximately $2.8 million. The building qualifies as held for sale, is expected to be sold in the next year, and is presented as such in the consolidated balance sheet as a current asset.

Dividend Declaration

On August 16, 2016, our board of directors declared a quarterly cash dividend of $0.15 per common share. The dividend will be payable on September 7, 2016 to shareholders of record at the close of business on August 31, 2016.

Comparison of Results of Operations for the Thirteen and Twenty-Six Weeks Ended July 3, 2016 and the Thirteen and Twenty-Five Weeks Ended June 28, 2015

On April 29, 2016, the Company acquired the business and substantially all of the assets of Intasco Corporation, a Canadian Corporation, for a purchase price of approximately $21.03 million, net of cash acquired at closing. On the same date, the US Buyer, an existing subsidiary of the Company, purchased 100% of the outstanding capital stock of Intasco USA, Inc., for a purchase price of $0.89 million paid by the issuance of 70,797 shares of the Company's common stock, par value $0.001 per share. For the 13 and 26 weeks ended July 3, 2016, our financial results include expenses and fees incurred in connection with the acquisition and results of operations of the Intasco business from April 29, 2016 through July 3, 2016

On August 31, 2015, the Company acquired the business and substantially all of the assets Great Lakes for a cash purchase price of $11.82 million. Following the closing, we made a payment to the seller of $0.13 million as a result of post-closing calculation of net working capital. For the 13 and 26 weeks ended July 3, 2016, our financial results include the expenses and fees incurred in connection with the acquisition and results of operations of the Great Lakes Business from January 3, 2016 through July 3, 2016.

Thirteen Weeks Ended July 3, 2016 and Thirteen Weeks Ended June 28, 2015

Net Sales

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015
	(in thousands)
Net sales	$	42,048	$	35,672

Net sales for the 13 weeks ended July 3, 2016 were approximately $42.05 million compared to $35.67 million for the 13 weeks ended June 28, 2015. For the 13 weeks ended July 3, 2016, net sales included approximately $6.00 million attributable to our increased market penetration and content per vehicle, and new product introductions, including 13 weeks of sales from the Great Lakes acquisition that occurred on August 31, 2015, and 9 weeks of sales from the Intasco acquisition that occurred on April 29, 2016. Other increases in net sales for the 13 weeks ended July 3, 2016 were primarily attributable to a 1.3% overall

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increase in North American vehicle production in such period as compared to production during the 13 weeks ended June 28, 2015.

Cost of Sales

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015
	(in thousands)
Materials	$	21,884	$	18,403
Direct labor and benefits	6,397		5,246
Manufacturing overhead	4,282		3,315
Sub-total	32,563		26,964
Depreciation	394		280
Cost of Sales	32,957		27,244
Gross Profit	$	9,091	$	8,428

The major components of cost of sales are raw materials purchased from third parties, direct labor and benefits, and manufacturing overhead, including facility costs, utilities, supplies, repairs and maintenance, insurance, freight costs of products shipped to customers and depreciation.

Cost of Sales as a percent of Net Sales

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015
Materials	52.1	%	51.6	%
Direct labor and benefits	15.2	%	14.7	%
Manufacturing overhead	10.2	%	9.3	%
Sub-total	77.5	%	75.6	%
Depreciation	0.9	%	0.8	%
Cost of Sales	78.4	%	76.4	%
Gross Profit	21.6	%	23.6	%

Cost of sales as a percentage of net sales for the 13 weeks ended July 3, 2016 increased to 78.4% from 76.4% for the 13 weeks ended June 28, 2015. The increase in cost of sales as a percentage of net sales was attributable to increased costs of material, direct labor and benefits and manufacturing overhead as a percentage of net sales. Material costs increased to 52.1% of net sales for the 13 weeks ended July 3, 2016 from 51.6% for the 13 weeks ended June 28, 2015. Material costs for the 13 weeks ended July 3, 2016 were higher compared to the 13 weeks ended June 28, 2015 primarily due to the amortization of the markup to fair market value of the Intasco inventory acquired in the acquisition. Direct labor and benefit costs as a percentage of net sales was 15.2% for the 13 weeks ended July 3, 2016 compared to 14.7% for the 13 weeks ended June 28, 2015. Labor and benefit costs in the 13 weeks ended July 3, 2016 were higher due to the Company adding manufacturing capabilities to its existing facilities, as well as because of an increase in health insurance claims paid under our self-insured benefits plan. Manufacturing overhead costs as a percentage of net sales was 10.2% for the 13 weeks ended July 3, 2016 compared to 9.3% the 13 weeks ended June 28, 2015. Manufacturing overhead in the 13 weeks ended July 3, 2016 was higher due primarily to rent costs as we added capacity in order to meet expected future demand, increased indirect labor costs as we upgrade our staff, and continuous improvement related costs that we expect to benefit from in future quarters. Depreciation costs in the 13 weeks ended July 3, 2016 were also higher than in the same period last year as we add machine capacity, again to meet expected future demand, and to increase manufacturing capabilities in certain of our facilities.

Gross Profit

As a result of the increase in cost of sales as a percentage of net sales described above, gross profit as a percentage of net sales for the 13 weeks ended July 3, 2016 decreased to 21.6% from 23.6% for the 13 weeks ended June 28, 2015.

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Selling, General and Administrative Expenses

	Thirteen Weeks Ended July 3, 2016			Thirteen Weeks Ended June 28, 2015
	(in thousands, except SG&A as a % of net sales)
SG&A, exclusive of line items below	$	5,521		$	4,476
Transaction expenses	663			—
Subtotal	6,184			4,476
Depreciation and amortization	981			613
SG&A	$	7,165		$	5,089
SG&A as a % of net sales	17.0		%	14.3		%

SG&A as a percentage of net sales for the 13 weeks ended July 3, 2016 increased to 17.0% from 14.3% for the 13 weeks ended June 28, 2015. The increase is primarily related to transaction related expenses, higher professional and consulting fees, and higher amortization costs in the 13 weeks ended July 3, 2016 compared to the 13 weeks ended June 28, 2015 due to the intangible assets acquired in the Great Lakes and Intasco acquisitions.

Operating Income

As a result of the foregoing factors, operating income for the 13 weeks ended July 3, 2016 was $1.93 million compared to operating income of $3.34 million for the 13 weeks ended June 28, 2015.

Non-Operating Expense

Non-operating expense for the 13 weeks ended July 3, 2016 was $0.90 million compared to $0.85 million for the 13 weeks ended June 28, 2015. The change in non-operating expense was primarily driven by an increase in interest expense. Interest expense was approximately $0.87 million for the 13 weeks ended July 3, 2016, compared to $0.85 million for the 13 weeks ended June 28, 2015. The slight increase in interest expense in the 2016 period was due to the refinancing of our debt as part of the Intasco acquisition on April 29, 2016, which resulted in write-off of certain debt financing costs associated with the old credit facility, and a higher principal balance outstanding on our new senior credit facility in the 13 weeks ended July 3, 2016, in addition to an unfavorable mark-to-market adjustment on the new interest rate swap that we entered into just prior to the unexpected result of the BREXIT vote in Europe. These items were partially offset by less interest expense in the 2016 period due to the payoff of our 16% subordinated debt with the proceeds of our IPO in July of 2015.

Income Before Income Taxes

As a result of the foregoing factors, income before income taxes for the 13 weeks ended July 3, 2016 was $1.03 million, compared to $2.49 million for the 13 weeks ended June 28, 2015.

Income Tax Provision

For the 13 weeks ended July 3, 2016, the estimated effective income tax rate of 41.8%, applied to pre-tax income, resulted in income tax expense of $0.43 million. The difference between the actual effective rate and the statutory rate was mainly a result of non-deductible transaction costs related to the Intasco acquisition, which provided $0.05 million of income tax expense which increased our effective tax rate by 4.9%, as well as the effect of state income tax rates. During the 13 weeks ended June 28, 2015, the estimated effective income tax rate of 32.1%, applied to pre-tax income, resulted in income tax expense of $0.80 million. The difference between the actual effective rate and the statutory rate was mainly a result of the domestic production activities deduction, or DPAD, which provided a $0.07 million income tax benefit which reduced our effective tax rate by 2.7%. The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized. The Company has not recorded a tax valuation allowance as of July 3, 2016. The Company will continue to evaluate whether the deferred tax assets will be realizable, and if appropriate, will record a valuation allowance against these assets.

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Net income

As a result of the increased net sales and changes in expenses discussed above, net income for the 13 weeks ended July 3, 2016 was $0.60 million compared to $1.69 million during the 13 weeks ended June 28, 2015.

Twenty-Six Weeks Ended July 3, 2016 and Twenty-Five Weeks Ended June 28, 2015

Net Sales

	Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
	(in thousands)
Net sales	$	82,031	$	68,103

Net sales for the 26 weeks ended July 3, 2016 were approximately $82.03 million compared to $68.10 million for the 25 weeks ended June 28, 2015. The 26 weeks ended July 3, 2016 net sales included approximately $13.00 million attributable to our increased market penetration and content per vehicle, new product introductions, and 26 weeks of sales from the Great Lakes acquisition that occurred on August 31, 2015, and 9 weeks of sales from the Intasco acquisition that occurred on April 29, 2016. Other increases in net sales for the 13 weeks ended July 3, 2016 were primarily attributable to a 2.2% overall increase in North American vehicle production in such period as compared to production during the 25 weeks ended June 28, 2015.

Cost of Sales

	Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
	(in thousands)
Materials	$	41,878	$	35,261
Direct labor and benefits	12,346		9,693
Manufacturing overhead	8,346		6,238
Sub-total	62,570		51,192
Depreciation	770		559
Cost of Sales	63,340		51,751
Gross Profit	$	18,691	$	16,352

The major components of cost of sales are raw materials purchased from third parties, direct labor and benefits, and manufacturing overhead, including facility costs, utilities, supplies, repairs and maintenance, insurance, freight costs of products shipped to customers and depreciation.

Cost of Sales as a percent of Net Sales

	Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Materials	51.1	%	51.8	%
Direct labor and benefits	15.0	%	14.2	%
Manufacturing overhead	10.2	%	9.2	%
Sub-total	76.3	%	75.2	%
Depreciation	0.9	%	0.8	%
Cost of Sales	77.2	%	76.0	%
Gross Profit	22.8	%	24.0	%

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Cost of sales as a percentage of net sales for the 26 weeks ended July 3, 2016 increased to 77.2% from 76.0% for the 25 weeks ended June 28, 2015. The increase in cost of sales as a percentage of net sales was attributable to higher direct labor and benefits and manufacturing overhead as a percentage of net sales, partially offset by lower material costs as a percentage of net sales. Material costs decreased to 51.1% for the 26 weeks ended July 3, 2016 from 51.8% for the 25 weeks ended June 28, 2015. Material costs for the 26 weeks ended July 3, 2016 were lower compared to the 25 weeks ended June 28, 2015 primarily due to favorable product mix, partially offset by the amortization of the markup to fair market value of the Intasco inventory acquired inthe acquisition. Direct labor and benefit costs as a percentage of net sales was 15.0% for the 26 weeks ended July 3, 2016 compared to 14.2% for the 25 weeks ended June 28, 2015. Labor and benefit costs in the 26 weeks ended July 3, 2016 were higher due to an increase in health insurance claims paid under our self-insured benefit plans, as well as an increase in direct and temporary labor hours as a result of a change in product mix and the addition of manufacturing capabilities to some of our existing facilities. Manufacturing overhead costs as a percentage of net sales was 10.2% for the 26 weeks ended July 3, 2016 compared to 9.2% the 25 weeks ended June 28, 2015. Manufacturing overhead in the 26 weeks ended July 3, 2016 was higher due primarily to higher rent costs as we added capacity in order to meet expected future demand, increased indirect labor costs as we upgraded our staff, and continuous improvement related costs that we expect to benefit from in future quarters. Depreciation costs in the 26 weeks ended July 3, 2016 were also higher than last year as we added machine capacity, again to meet expected future demand, and to increase capabilities in certain of our facilities.

Gross Profit

As a result of the increase in cost of sales as a percentage of net sales described above, gross profit as a percentage of net sales for the 26 weeks ended July 3, 2016 decreased to 22.8% from 24.0% for the 25 weeks ended June 28, 2015.

Selling, General and Administrative Expenses

	Twenty-Six Weeks Ended July 3, 2016			Twenty-Five Weeks Ended June 28, 2015
	(in thousands, except SG&A as a % of net sales)
SG&A, exclusive of line items below	$	11,134		$	9,151
Transaction expenses	848			—
Subtotal	11,982			9,151
Depreciation and amortization	1,738			1,181
SG&A	$	13,720		$	10,332
SG&A as a % of net sales	16.7		%	15.2		%

SG&A as a percentage of net sales for the 26 weeks ended July 3, 2016 increased to 16.7% from 15.2% for the 25 weeks ended June 28, 2015. The increase is primarily related to transaction related expenses and professional and consulting fees in the 26 weeks ended July 3, 2016, as well as health insurance claims paid for salaried employees under our self-insured benefits plan.

Restructuring Expenses

Restructuring expenses for the 26 weeks ended July 3, 2016 were $0.04 million. We did not incur restructuring expenses for the 25 weeks ended June 28, 2015. The restructuring expenses for the 26 weeks ended July 3, 2016 were due to the closure of the Murfreesboro facility which was announced in October 2015.

Operating Income

As a result of the foregoing factors, operating income for the 26 weeks ended July 3, 2016 was $4.94 million compared to operating income of $6.02 million for the 25 weeks ended June 28, 2015.

Non-Operating Expense

Non-operating expense for the 26 weeks ended July 3, 2016 was $1.24 million compared to $1.70 million for the 25 weeks ended June 28, 2015. The change in non-operating expense was primarily driven by a decline in interest expense. Interest expense was approximately $1.21 million for the 26 weeks ended July 3, 2016, compared to $1.71 million for the 25 weeks ended June 28, 2015. The decrease in interest expense in the 2016 period was due to the payoff of our 16% subordinated debt

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with the proceeds of our IPO in July of 2015, slightly offset by higher interest expense due to the refinancing of our debt as part of the Intasco acquisition on April 29, 2016, which caused a higher principal balance in our outstanding debt in the 26 weeks ended July 3, 2016.

Income Before Income Taxes

As a result of the foregoing factors, income before income taxes for the 26 weeks ended July 3, 2016 was $3.70 million, compared to $4.32 million for the 25 weeks ended June 28, 2015.

Income Tax Provision

For the 26 weeks ended July 3, 2016, the estimated effective income tax rate of 34.2%, applied to pre-tax income, resulted in income tax expense of $1.27 million. During the 25 weeks ended June 28, 2015, the estimated effective income tax rate of 33.2%, applied to pre-tax income, resulted in income tax expense of $1.44 million. The effective tax rate and statutory rate approximated each other for both periods. The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized. The Company has not recorded a tax valuation allowance as of July 3, 2016. The Company will continue to evaluate whether the deferred tax assets will be realizable, and if appropriate, will record a valuation allowance against these assets.

Net income

As a result of the increased net sales and changes in expenses discussed above, net income for the 26 weeks ended July 3, 2016 was $2.43 million compared to $2.88 million during the 25 weeks ended June 28, 2015.

Non-GAAP Financial Measures

Adjusted EBITDA

We present Adjusted EBITDA (defined below), a measure that is not in accordance with generally accepted accounting principles in the United States of America (non-GAAP), in this document to provide investors with a supplemental measure of our operating performance. We believe that Adjusted EBITDA is a useful performance measure and it is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under generally accepted accounting principles in the United States of America (GAAP) can provide alone. Our board and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for company management. In addition, the financial covenants in our new credit facility are based on Adjusted EBITDA, as calculated below, subject to dollar limitations on certain adjustments.

We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, non-recurring integration expense, non-cash stock awards, transaction fees related to our acquisitions, and restructuring expenses. We believe omitting these items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors’ ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and intangible assets. We believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net income. Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from continuing operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include that: (1) it does not

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reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (2) it does not reflect changes in, or cash requirements for, our working capital needs; (3) it does not reflect income tax payments we may be required to make; and (4) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.

To properly and prudently evaluate our business, we encourage you to review our unaudited consolidated financial statements included elsewhere in this document, our audited consolidated financial statements included in our Annual Report on Form 10-K, and the reconciliation to Adjusted EBITDA from net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net income to Adjusted EBITDA are either (1) non-cash items or (2) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect on-going operating performance.

Thirteen and Twenty-Six Weeks Ended July 3, 2016 and Thirteen and Twenty-Five Weeks Ended June 28, 2015

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
	(in thousands)
Net income	$	599	$	1,692	$	2,433	$	2,885
Plus: Interest expense, net	873		853		1,214		1,713
Plus: Income tax expense	430		801		1,266		1,437
Plus: Depreciation and amortization	1,375		893		2,508		1,740
Plus: Non-cash stock award	47		6		86		12
Plus: Non-recurring integration expenses	57		—		69		—
Plus: Non-recurring step-up of inventory basis to fair market value	279		—		279		—
Plus: Transaction fees	663		—		848		—
Plus: Restructuring expenses	—				35		—
Adjusted EBITDA	$	4,323	$	4,245	$	8,738	$	7,787

Liquidity and Capital Resources

Our principal sources of liquidity are cash flow from operations and borrowings under our New Credit Agreement from our senior lenders. On April 29, 2016 we refinanced our old senior credit facility with a New Credit Agreement, which is described below further and in note 6 to our consolidated financial statements.

Our primary uses of cash are payment of vendors, payroll, operating costs, capital expenditures and debt service. As of July 3, 2016 and January 3, 2016, we had a cash balance of $1.58 million and $0.73 million, respectively. Our excess cash balance is swept daily and applied to reduce borrowings under our revolving line of credit, which remains available for re-borrowing, as needed, subject to compliance with the terms of the facility. As of July 3, 2016 and January 3, 2016, we had $7.48 million and $10.11 million, respectively, available to be borrowed under our revolving credit facility (new and old, respectively), subject to borrowing base restrictions and outstanding letters of credit. At each such date, we were in compliance with all debt covenants. We believe that our sources of liquidity, including cash flow from operations, existing cash and our new revolving credit facility are sufficient to meet our projected cash requirements for at least the next fifty two weeks.

Subsequent to the closing of our IPO, we used proceeds remaining after paying the 16% senior subordinated note to temporarily reduce the outstanding balance on our revolving line of credit. We then financed the acquisition of Great Lakes on August 31, 2015 with borrowings under our then revolving line of credit. We also financed the acquisition of Intasco on April 29, 2016, with borrowings under our $62.00 million New Credit Agreement described below.

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While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and expansion plans, we may elect to pursue additional growth opportunities that could require additional debt or equity financing. If we are unable to secure additional financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities could be materially adversely affected.

Dividends

Our payment of dividends on our common stock in the future will be determined by our board of directors in its sole discretion and will depend on business conditions, our financial condition, earnings, liquidity and capital requirements. Our New Credit Agreement contains financial covenants which may have the effect of precluding or limiting the amounts that we can pay as dividends.

The following table presents cash flow data for the periods indicated.

	Twenty-Six Weeks Ended July 3, 2016			Twenty-Five Weeks Ended June 28, 2015
	(in thousands)
Cash flow data
Cash flow provided by (used in):
Operating activities	$	3,339		$	2,128
Investing activities	(22,536		)	(2,078		)
Financing activities	20,054			(47		)

As a public company, we incur additional general and administrative expenses that we did not incur as a private company, such as, director fees, increased directors and officers liability insurance premiums, investor relation costs, NYSE MKT listing expenses and increased legal and accounting expenses.

Operating Activities

Cash provided by operating activities consists of: net income adjusted for non-cash items, including depreciation and amortization, amortization of deferred financing charges, loss on sale of assets, loss on extinguishment of debt, loss on derivative instruments, bad debt expense, net of recovery, stock option expense, changes in deferred income taxes, accrued and other liabilities, prepaid expenses and other assets, and the effect of working capital changes. The primary drivers of cash inflows and outflows are accounts receivable, inventory, prepaid expenses and other assets, and accounts payable and accrued interest.

During the twenty-six weeks ended July 3, 2016, net cash provided by operating activities was $3.34 million, compared to net cash provided by operating activities of $2.13 million for the twenty-five weeks ended June 28, 2015.

Net cash for the twenty-six weeks ended July 3, 2016 was mainly impacted by net income of $2.43 million and decreases in inventory, as we sold inventory built up at the end of 2015.

Net cash for the twenty-five weeks ended June 28, 2015 was mainly impacted by net income of $2.88 million.

Investing Activities

Cash used in investing activities consists principally of business acquisitions and purchases of property, plant and equipment.

In the twenty-six weeks ended July 3, 2016, we acquired Intasco for a purchase price, net of cash acquired, of $21.03 million. We also made capital expenditures of $1.51 million.

In the twenty-five weeks ended June 28, 2015, we made capital expenditures of $2.08 million, of which $1.33 million was related to the construction of the new facility in Georgia.

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We plan to spend a total of approximately $1.87 million on capital expenditures during fiscal year 2016, which includes the $1.51 million above spent to date.

Financing Activities

Cash flows provided by (used in) financing activities consists primarily of borrowings and payments under our new and old senior credit facility, the repayment of debt assumed through acquisitions, debt issuance costs, proceeds from the exercise of stock options and warrants, and distribution of cash dividends.

In the twenty-six weeks ended July 3, 2016, we had inflows of $20.05 million primarily due to $32.00 million of gross proceeds from our term loans under our new senior credit facility, and $7.63 million net proceeds from our revolving credit facility. These inflows were partially offset by $15.38 million of pay-off of the principal amount of our term loan under our old senior credit facility, and $2.90 million for payments of cash dividends.

As of July 3, 2016, $22.42 million was outstanding under the new revolving credit facility, gross of debt issuance costs.. Borrowings under the new revolving credit facility are subject to a borrowing base and reduced to the extent of letters of credit issued under the new senior credit facility. As of July 3, 2016, the maximum additional available borrowings under the new revolver was $7.48 million. Amounts repaid under the new revolving credit facility will be available to be re-borrowed, subject to compliance with the terms of the facility.

In the twenty-five weeks ended June 28, 2015, we had outflows of $0.76 million of post-acquisition payments related to the acquisition in 2013 of Unique Fabricating, outflows of $0.57 million due to expenses for the expected IPO, and outflows of $0.51 million on payments on our outstanding debt. These outflows were partially offset by net proceeds of $1.48 million on our revolving credit facility.

Old Senior Credit Facility

We maintained a senior credit facility with Citizens Bank, National Association (formerly RBS Citizens, N.A.) pursuant to which we could borrow up to $25.00 million under the revolver and up to $20.00 million under the term loan. The borrower under the facility was Unique Fabricating NA, Inc., and borrowings were guaranteed by the Company and each of our subsidiaries other than Unique Fabricating NA, Inc. The term loan bore interest at the LIBOR rate for a period equal to one month, plus 3.0% to 3.5% per annum.The term loan would have matured in December 2017. The revolver bore interest at the LIBOR rate plus an applicable margin ranging from 2.75% to 3.25%. The half percent range per annum on the term loan and revolver was determined quarterly based on the senior leverage ratio. We were permitted to prepay in part or in full amounts due under the senior credit facility without penalty. Our obligations under the senior credit facility could have been accelerated upon the occurrence of an event of default, which included customary events for a financing arrangement of this type, including, without limitation, payment defaults, defaults in the performance of affirmative or negative covenants (including financial ratio maintenance requirements), bankruptcy or related defaults, defaults on certain other indebtedness, the material inaccuracy of representations or warranties, material adverse changes, and changes related to ownership. In the event of an event of default, the interest rate on the revolver and term loan would have increased by 2.0% per annum plus the then applicable rate. The senior credit facility required that we repay term loan principal annually in an amount equal to 25% of excess cash flow, as defined, for the year ended January 3, 2016 and for each subsequent fiscal year until the total leverage ratio as defined, calculated as of the end of each year was less than 2:00 to 1:00.

Unique Fabricating NA, Inc.'s obligations under the senior credit facility were guaranteed by each of its United States subsidiaries and by Unique Fabricating, Inc. and secured by a first priority security interest in all tangible and intangible assets, including capital stock of the United States subsidiaries of Unique Fabricating NA, Inc. and by a mortgage on our facilities in LaFayette, Georgia, Louisville, Kentucky, Evansville, Indiana, and Fort Smith, Arkansas.

Effective January 14, 2014, in connection with the refinancing of the old senior credit facility in December 2013, and in accordance with the requirements of the senior credit facility, we purchased a derivative financial instrument, in the form of an interest rate swap, for the purpose of hedging certain identifiable transactions in order to mitigate risks related to cash flow variability caused by interest rate fluctuations. The Company elected not to apply hedge accounting for financial reporting purposes. The interest rate swap required us to pay 1.27% fixed interest while receiving a variable base rate of one-month LIBOR. The notional amount of the swap began at $10.00 million and decreased by $0.25 million each quarter until March 31, 2016, when it decreased by $0.31 million per quarter until it would have expired on January 31, 2017.The interest rate swap was recognized at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value were recognized as interest expense in the period incurred.

35

On April 29, 2016, in conjunction with the acquisition of Intasco, the old senior credit facility was repaid and terminated and replaced with a new senior credit facility which is described below. On the date of termination of the old senior credit facility, $15.4 million outstanding was repaid on the Term Loan, and $17.3 million outstanding was repaid on the Revolver. The swap was also terminated and replaced with a new swap described below that became effective on June 30, 2016.

New Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as lender and Administrative Agent and the other lenders, entered into a Credit Agreement (the “New Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.00 million. The New Credit Agreement is a senior secured credit facility and consists of a revolving line of credit of up to $30.00 million (the “New Revolver”) to the US Borrower, a $17.00 million principal amount Term Loan (the “US Term Loan”) to the US Borrower, and a $15.00 million principal Term Loan (the “CA Term Loan”) to the CA Borrower. The borrowings were used to finance the acquisition of Intasco, including working capital adjustments and amounts paid into escrow, plus to repay the Company’s existing senior credit facility, which was terminated as noted above.

The New Revolver, US Term Loan, and CA Term Loan all mature on April 29, 2021 and bear interest at the Company's election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or ii) the LIBOR rate plus an applicable margin ranging from 1.75% to 2.50% in the case of the Base Rate and 2.75% to 3.50% in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds measured quarterly. The effective interest rate as of July 3, 2016 was 3.9603%.

In addition, the New Credit Agreement allows for increases in the principal amount of the New Revolver and US and CA Term Loans not to exceed $10.00 million principal amount, in the aggregate, provided that before and after giving effect to the proposed increase (and any transactions to be consummated using proceeds of the increase), the total leverage and debt service coverage ratio do not exceed specified amounts. The New Credit Agreement also provides for the issuance of letters of credit with a face amount of up to $2.00 million in the aggregate, provided that any letter of credit issued will reduce availability under the New Revolver.

We are permitted to prepay in part or in full the amounts due under the new senior credit facility without penalty, provided that with respect to prepayment of the New Revolver at least $0.1 million remains outstanding. Our obligations under the New Credit Agreement may be accelerated upon the occurrence of an event of default, which include customary events for a financing arrangement of this type, including, without limitation, payment defaults, defaults in the performance of affirmative or negative covenants (including financial ratio maintenance requirements), bankruptcy or related defaults, defaults on certain other indebtedness, the material inaccuracy of representations or warranties, material adverse changes, and changes related to ownership of the U.S. Borrower or Unique Fabricating, Inc. In the event of an event of default, the interest rate on the New Revolver and US Term Loan and CA Term Loan will increase by 3.0% per annum plus the then applicable rate. The New Credit Agreement requires that we repay both the US Term Loan and CA Term Loan principal annually in an amount equal to 25% of excess cash flow, as defined, for the year ended January 1, 2017 and for each subsequent fiscal year until the total leverage ratio, as defined, calculated as of the end of such year is less than 2:00 to 1:00.

The US Borrowers obligations under the New Credit Agreement are guaranteed by each of its United States subsidiaries and by Unique Fabricating, Inc. and secured by a first priority security interest in all tangible and intangible assets, including a pledge of capital stock of the United States subsidiaries of the US Borrower and of 65% of the capital stock of the CA Borrower, and by mortgages on our facilities in LaFayette, Georgia, Louisville, Kentucky, Evansville, Indiana, Fort Smith, Arkansas and Murfreesboro, Tennessee. The US borrower guarantees all of the obligations and liabilities of the CA Borrower. Unique Fabricating, Inc. also pledged all of the capital stock of the US Borrower.

Effective June 30, 2016, as required under the New Credit Agreement, the Company purchased a derivative financial instrument, in the form of an interest rate swap, for the purpose of hedging certain identifiable transactions in order to mitigate risks related to cash flow variability caused by interest rate fluctuations. The Company elected not to apply hedge accounting for financial reporting purposes. The interest rate swap requires the Company to pay a fixed rate of 1.055% while receiving a variable rate of one-month LIBOR. The notional amount at the effective date began at $16.68 million and decreases by $0.32 million each quarter until June 30, 2017, when it begins decreasing by $0.43 million per quarter until June 29, 2018, when it begins decreasing by $0.53 million until it expires on June 28, 2019. The interest rate swap was recognized at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized as interest expense in the period incurred.

36

We must comply with a minimum debt service financial covenant and a senior funded indebtedness to EBITDA covenant, as defined. As of July 3, 2016, we were in compliance with all loan covenants.

The New Credit Agreement also contains customary affirmative covenants, including: (1) maintenance of legal existence and compliance with laws and regulations; (2) delivery of consolidated financial statements and other information; (3) maintenance of properties in good working order; (4) payment of taxes; (5) delivery of notices of defaults, litigation, ERISA events and material adverse changes; (6) maintenance of adequate insurance; and (7) inspection of books and records.

The New Credit Agreement contains customary negative covenants, including restrictions on: (1) the incurrence of additional debt; (2) liens and sale-leaseback transactions; (3) loans and investments; (4) guarantees and hedging agreements; (5) the sale, transfer or disposition of assets and businesses; (6) dividends on, and redemptions of, equity interests and other restricted payments, including dividends and distributions to the issuer by its subsidiaries; (7) transactions with affiliates; (8) changes in the business conducted by us; (9) payment or amendment of subordinated debt and organizational documents; and (10) maximum capital expenditures. The New Credit Agreement prohibits the payment of any dividend, redemption or other payment or distribution by the Borrowers other than distributions to the US Borrower by its subsidiaries, unless after giving effect to the dividend or other distribution, the post distribution DSCR, as defined, is greater than 1.1 to 1.0, and Borrowers remain in compliance with the other financial covenants.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Indemnification Agreements

In the normal course of business, we provide customers with indemnification provisions of varying scope against claims of intellectual property infringement by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ equity or consolidated cash flows.

Contractual Obligations and Commitments

The Company's contractual obligations and commitments outstanding as of July 3, 2016 have changed materially since the amounts as of January 3, 2016 as set forth in our Annual Report on Form 10-K. These obligations and commitments relate to operating leases, future debt payments, and a management services agreement. The material changes relate to the termination of our old senior credit facility which was refinanced with a portion of the borrowing under the New Credit Agreement which is further discussed in Note 6 of notes to our consolidated financial statements and in the Liquidity and Capital Resources section.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions, and judgments involved in the accounting policies that have the most significant impact on our consolidated financial statements are discussed in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K. There have been no material changes to our critical accounting policies or uses of estimates since the date of our Annual Report on Form 10-K.

37

Recently Issued Accounting Pronouncements

Refer to Note 1 to the consolidated financial statements in Part I Item 1 of this Quarterly Report on Form 10-Q.

38

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate and foreign exchange risks.

Interest Rate Fluctuation Risk

Our borrowings under our senior credit facility bear interest at fluctuating rates. In order to mitigate, in part, the potential effects of the fluctuating rates, effective June 30, 2016, we entered into a new interest rate swap with a notional amount initially of $16.68 million, which decreases by $0.32 million each quarter until June 30, 2017, when it begins decreasing by $0.43 million each quarter until June 29, 2018, when it then begins decreasing by $0.53 million per quarter until the swap terminates on June 28, 2019. The interest rate swap requires the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based upon the one month LIBOR rate for a net monthly settlement based on the notional amount in effect. The new swap terminated the old swap that we entered into on January 17, 2014 under our old senior credit facility. See Note 7 of notes to our consolidated financial statements for further information. We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition.

Foreign Currency Risk

Our functional currency is the U.S. dollar. To date, substantially all of our bookings and operating expenses have been denominated in U.S. dollars, therefore we are not currently subject to significant foreign currency risk. However, if our international operations continue to grow, our risks associated with fluctuation in currency rates may become greater. Currency fluctuations or a weakening U.S. dollar can increase the costs of our international expansion. We intend to continue to assess our approach to managing this potential risk. We do not believe that the effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would have had a material impact on our consolidated financial statements. To date, foreign currency transaction gains and losses and exchange rate fluctuations have not been material to our consolidated financial statements. However, in order to mitigate some of the risk that we do have with regard to foreign currency, effective June 29, 2016 we entered into a 1 year foreign currency forward contract to hedge the Mexican Peso. The forward contract has an equivalent USD notional amount of $3.30 million and expires on June 30, 2017. See Note 7 to our consolidated financial statements for further information.

39

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management establishes and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to ensure that the information we disclose under the Exchange Act is properly and timely reported. We provide this information to our Chief Executive Officer and Chief Financial Officers as appropriate to allow for timely decisions.

Our controls and procedures are based on assumptions. Additionally, even effective controls and procedures only provide reasonable assurance of achieving their objectives. Accordingly, we cannot guarantee that our controls and procedures will succeed or be adhered to in all circumstances.

We have evaluated our disclosure controls and procedures, with the participation, and under the supervision, of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, our Chief Executive and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. We currently have a significant deficiency previously identified which has not yet been remediated, but we believe this significant deficiency does not change the effectiveness of our disclosure controls and procedures covered by this report. The significant deficiency was identified at one of our subsidiaries where an individual at the subsidiary had full access to network and financial applications and the ability to post transactions without additional review procedures.

We continue to address the significant deficiency by maintaining review procedures on financial related transactions posted by this individual, but have not yet remediated this significant deficiency. More information concerning this matter can be found in the section, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 3, 2016.

Changes in Internal Control over Financial Reporting

We completed the Intasco acquisition during the thirteen weeks ended July 3, 2016. There were no material changes in the Company's internal controls over financial reporting during the thirteen weeks ended July 3, 2016 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting. As previously reported in our Annual Report on Form 10-K, the Company is integrating Great Lakes into the Company's operations and internal control processes. We will also start to integrate Intasco as well. Specifically, as permitted by SEC rules and regulations, the Company has excluded management's evaluation of internal controls over financial reporting as of July 3, 2016.

40

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended January 3, 2016 filed with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 29, 2016, the Company purchased 100% of the outstanding capital stock of Intasco USA, Inc. a United States based tape manufacturer, for a purchase price of $0.89 million paid by the issuance of 70,797 shares of the Company's common stock, par value $0.001 per share. The shares were issued to the stockholder of Intasco USA, Inc. in reliance on the exemption from the registration requirements of the Securities Act of 1933, pursuant to Section 4(a)(2) thereof.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

41

ITEM 6. EXHIBITS

Exhibit No.	Description
10.1***	Unique Fabricating NA, Inc. and Unique-Intasco Canada, Inc. Credit Agreement, dated as of April 29, 2016 with Citizens Bank, National Association (formerly known as RBS Citizens, N.A.) as Sole Lead Arranger, Bookrunner, and Administrative Agent and the “Lenders”
10.2***	Unique Fabricating, Inc. Amendment No. 1 to 2014 Omnibus Performance Award Plan
10.3*	Asset and Stock Purchase Agreement by and among Unique Fabricating NA, Inc., Buyer, Unique-Intasco Canada, Inc., Buyer and Intasco Corporation, Seller, G.C.C. Holdings LTD., Seller, G. Craig Combe, Seller, The Combe Family Trust, dated as of April 28, 2016
10.4*	Security Agreement dated as of April 29, 2016 between the US Borrowers and Citizens Bank, National Association (formerly known as RBS Citizens, N.A.) as agent for the Lenders
10.5*	Security Agreement dated as of April 29, 2016 between the CA Borrower and Citizens Bank, National Association (formerly known as RBS Citizens, N.A.) as agent for the Lenders
10.6*	Intasco-USA, Inc. Lease Agreement with Combe Investments L.L.C. dated May 1, 2016
10.7*	Unique-Intasco Canada, Inc. Lease Agreement with Combe Investments L.L.C. dated April 29, 2016
31.1*	Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+	XBRL Instance Document
101.SCH+	XBRL Taxonomy Extension Schema Document
101.CAL+	XBRL Taxonomy Calculation Linkbase Document
101.DEF+	XBRL Taxonomy Definition Linkbase Document
101.LAB+	XBRL Taxonomy Label Linkbase Document
101.PRE+	XBRL Taxonomy Presentation Linkbase Document

* Filed herewith.

** Pursuant to Item 601(b)(32)(ii) of Regulation S-K(17 C.F.R 229.601(b)(32)(ii)), this certification is deemed furnished, not filed, for purposes of section 18 of the Exchange Act, nor is it otherwise subject to liability under that section. It will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except if the registrant specifically incorporates it by reference.

*** Previously filed.

+ Filed electronically with the report.

42

SIGNATURES

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

	UNIQUE FABRICATING, INC.
Date: August 16, 2016	By:	/s/ John Weinhardt
		Name: John Weinhardt
		Title:  President and Chief Executive Officer
Date: August 16, 2016	By:	/s/ Thomas Tekiele
		Name: Thomas Tekiele
		Title:  Chief Financial Officer (Principal Financial and Accounting Officer)

43

EX-10.3

Exhibit 10.3

EXECUTION VERSION

ASSET AND STOCK PURCHASE AGREEMENT

by and among

UNIQUE FABRICATING NA, INC., BUYER

UNIQUE-INTASCO CANADA, INC., BUYER

and

INTASCO CORPORATION, SELLER

G.C.C. HOLDINGS LTD., SELLER

G. CRAIG COMBE, SELLER
THE COMBE FAMILY TRUST

Dated as of April 28, 2016

Contents

ARTICLE I DEFINITIONS.......................................................................................1

1.1 Definitions....................................................................................................1

1.2 Other Definitional and Interpretative Provisions.......................................13

ARTICLE II PURCHASE AND SALE OF INTASCO AND INTASCO USA SHARES..............................................................................................14

2.1 Sale and Purchase of Shares; Redemption of Voting Preference Shares and
Non-voting Preference Shares...................................................................14

2.2 Purchase and Sale of the Purchased Assets................................................15

2.3 Purchase Price............................................................................................15

2.4 Purchase Price Adjustment........................................................................16

2.5 Assumption and Non-Assumption of Intasco Liabilities by Canadian Buyer..........................................................................................................18

ARTICLE III CLOSING AND DELIVERIES...........................................................18

3.1 Closing.......................................................................................................18

3.2 Deliveries by Seller....................................................................................19

3.3 Deliveries by Buyer....................................................................................21

ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO SELLER...............................................................................................22

4.1 Organization and Authority........................................................................22

4.2 Capitalization.............................................................................................22

4.3 Subsidiaries................................................................................................23

4.4 No Other Agreements to Purchase.............................................................23

4.5 No Conflict; Required Filings and Consents.............................................23

4.6 Residency...................................................................................................24

4.7 Financial Statements..................................................................................24

4.8 Absence of Certain Changes......................................................................25

4.9 Taxes..........................................................................................................27

4.10 Title to and Sufficiency of Properties........................................................29

4.11 Real Property..............................................................................................30

i    

4.12 Compliance with Laws..............................................................................31

4.13 Permits.......................................................................................................32

4.14 Employee Benefit Plans.............................................................................32

4.15 Material Contracts......................................................................................34

4.16 Legal Proceedings......................................................................................36

4.17 GST Registration.......................................................................................36

4.18 Intellectual Property...................................................................................36

4.19 Insurance....................................................................................................38

4.20 No Expropriation.......................................................................................39

4.21 Personnel....................................................................................................39

4.22 Environmental Matters...............................................................................41

4.23 Customers and Suppliers............................................................................42

4.24 Accounts Receivable..................................................................................43

4.25 Related Party Transactions.........................................................................43

4.26 Books and Records....................................................................................43

4.27 Product Liability and Warranty..................................................................44

4.28 Undisclosed Liabilities...............................................................................44

4.29 Their Respective Certain Business Practices.............................................44

4.30 Directors and Officers................................................................................45

4.31 Dividends...................................................................................................45

4.32 Bank Accounts...........................................................................................45

4.33 No Brokers.................................................................................................45

4.34 Investment Representation.........................................................................45

4.35 Competition Act – Size of Transaction Threshold.....................................46

4.36 Predecessors...............................................................................................46

4.37 Accuracy of Information............................................................................46

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................46

5.1 Organization and Standing.........................................................................46

5.2 Authorization, Validity and Effect.............................................................46

5.3 No Conflict; Required Filings and Consents.............................................47

ii    

5.4 Tax Matters................................................................................................47

5.5 UFAB Shares.............................................................................................47

ARTICLE VI COVENANTS AND AGREEMENTS................................................47

6.1 Interim Operations of Intasco and Intasco USA........................................47

6.2 Access........................................................................................................50

6.3 Books and Records....................................................................................50

6.4 Publicity.....................................................................................................50

6.5 Commercially Reasonable Best Efforts; Cooperation...............................51

6.6 Personnel....................................................................................................51

6.7 Notice of Events.........................................................................................52

6.8 Assistance with Financing.........................................................................52

6.9 No Negotiation...........................................................................................52

6.10 Monthly Financial Statements...................................................................53

6.11 Tax Matters................................................................................................53

6.12 Insurance; Property....................................................................................55

6.13 Satisfaction of Indebtedness......................................................................56

6.14 No Transactions with Affiliates.................................................................56

6.15 Non Assigned Contracts.............................................................................56

6.16 Amalgamation and Reorganization............................................................56

6.17 Additional Tax Matters; Intasco USA........................................................56

6.18 Bulk Sales Act Waiver and Indemnity.......................................................60

ARTICLE VII CONDITIONS TO CLOSING............................................................61

7.1 Conditions to Obligations of the Parties....................................................61

7.2 Conditions to Obligations of Seller............................................................61

7.3 Conditions to Obligations of Buyer...........................................................61

7.4 Frustration of Closing Conditions..............................................................63

ARTICLE VIII TERMINATION OF AGREEMENT...................................................63

8.1 Termination................................................................................................63

8.2 Effect of Termination.................................................................................64

ARTICLE IX REMEDIES.........................................................................................64

iii    

9.1 Survival......................................................................................................64

9.2 Indemnification by Buyer..........................................................................65

9.3 Indemnification by Seller...........................................................................65

9.4 Limitations on Indemnification Payments to the Buyer Indemnitees........66

9.5 Limitations on Indemnification Payments to the Seller Indemnitees........66

9.6 Procedures..................................................................................................67

9.7 Effect of Investigations and Knowledge....................................................70

9.8 Additional Indemnification Provisions......................................................71

ARTICLE X MISCELLANEOUS AND GENERAL...............................................72

10.1 Seller’s Representative...............................................................................72

10.2 Expenses....................................................................................................73

10.3 Successors and Assigns..............................................................................73

10.4 Third Party Beneficiaries...........................................................................73

10.5 Notices.......................................................................................................73

10.6 Complete Agreement.................................................................................74

10.7 Captions.....................................................................................................74

10.8 Amendment................................................................................................75

10.9 Waiver........................................................................................................75

10.10 Governing Law; Forum..............................................................................75

10.11 Waiver of Jury Trial...................................................................................75

10.12 Severability................................................................................................76

10.12 Schedules...................................................................................................76

10.14 Cumulative Remedies................................................................................76

10.15 Joint Drafting.............................................................................................76

10.16 Specific Performance.................................................................................76

10.17 Counterparts...............................................................................................77

10.18 Confidentiality............................................................................................77

iv    

Exhibit A – Form of Employment Agreement

Exhibit B – Escrow Agreement

Exhibit C – Forms of Leases

Exhibit D – Legal Opinion

Exhibit E – Form of Non Competition Agreement

Exhibit F – Form of GCC Redemption Note

Exhibit G – Allocation of Asset Purchase Price

Exhibit H – Amalgamation Agreement

Exhibit I – Employee Assignment of Intellectual Property Rights

Exhibit J – Lease Escrow Agreement

Schedule I – Key Employees

Schedule II – Amalgamation and Reorganization

v    

ASSET AND STOCK PURCHASE AGREEMENT

This ASSET AND STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of April [*], 2016, is made by and among Unique Fabricating NA, Inc., a Delaware Corporation (“Unique” or the “U.S. Buyer”), Unique-Intasco Canada, Inc., a British Columbia corporation (the “Canadian Buyer” and together with U.S. Buyer, the “Buyer”), G.C.C. Holdings Ltd., an Ontario corporation (together with its successor in amalgamation (“Amalco”) that will occur as part of the Amalgamation and Reorganization, as hereinafter defined, “GCC”), Intasco Corporation, an Ontario corporation (“Intasco”), G. Craig Combe (“Combe” and together with GCC and Intasco, the “Seller”)) and The Combe Family Trust, formed by The Combe Family Trust Agreement, dated December 22, 1999, under the laws of Ontario, Canada (the “Old Trust”).

RECITALS

A.    GCC owns one hundred percent (100%) of the outstanding capital stock of Intasco USA.

B.     GCC desires to sell to U.S. Buyer, and U.S. Buyer desires to purchase from GCC, all of the outstanding capital stock of Intasco-USA, Inc., a Michigan corporation (“Intasco USA”).

C.    GCC and 2505710 Ontario Limited (“2505710”) and their respective equity owners will effect a reorganization and amalgamation of GCC and 2505710 to, among other things, form Amalco in accordance with Schedule II hereto (the “Amalgamation and Reorganization”).

D.    Combe is an equity holder of Intasco and exercises control of each of GCC, Intasco and Intasco USA.

E.    Old Trust desires to sell to Canadian Buyer and Canadian Buyer desires to purchase from Old Trust, the Preference Shares (as defined below).

F.    Intasco desires to sell to Canadian Buyer, and Canadian Buyer desires to purchase from Intasco, substantially all of the assets of Intasco, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE IDEFINITIONS

1.1    Definitions.    As used herein, the following terms have the following meanings.

For purposes of this Agreement:

“2505710” has the meaning set forth in the recitals.

“2505712” means 2505712 Ontario Limited.

“Accounts Receivable” means trade receivables, non‑trade receivables and accrued revenues of Intasco and Intasco USA.

“Actions” means any litigation, hearing, suit, claim, complaint, legal proceeding, administrative enforcement proceeding or arbitration proceeding, including, without limitation, any of the foregoing by or before any Governmental Authority.

“Affiliate” of any Person means any other Person which, directly or indirectly, controls or is controlled by that Person, or is under common control with that Person. For the purposes of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes hereof, each of Intasco, Intasco USA (preceding the purchase of the Purchased Shares), GCC and any successor to any of them in the Amalgamation and Reorganization and the Equity Holders shall be deemed to be Affiliates of each other.

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

“Agreement Date” means the date of this Agreement.

“Allocation” has the meaning set forth in Section 6.11(b).

“Amalco” has the meaning set forth in the recitals.

“Amalgamation and Reorganization” has the meaning set forth in the recitals.

“Assets Purchase Price” has the meaning set forth in Section 2.3(b).

“Assumed Liabilities” has the meaning set forth in Section 2.5(a).

“Audited Balance Sheet” has the meaning set forth in Section 4.7.

“Bill of Sale and Assumption Agreements” means the bills of sale, deeds, assignments and other documents (including, as applicable, patent assignments, trademark assignments and copyright assignments) conveying to Canadian Buyer all of the Purchased Assets, which documents shall be in forms and substance satisfactory to Canadian Buyer.

“Bulk Sales Act Statement” has the meaning set forth in Section 7.3(h).

“Business” means the business of Intasco and Intasco USA, including manufacturing, inventing, marketing, developing, selling or distributing interior and exterior

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attachment systems utilizing pressure sensitive films, foams and adhesives for consumer and commercial vehicles.

“Business Day” means any day other than a Saturday, Sunday or a day on which banks in New York, New York or Toronto, Ontario are authorized or obligated by Law or executive order to close.

“Buyer” has the meaning set forth in the preamble.

“Buyer Claim” has the meaning set forth in Section 9.6(b).

“Buyer Claims Notice” has the meaning set forth in Section 9.6(b).

“Buyer Indemnitees” has the meaning set forth in Section 9.3.

“Canadian Buyer” has the meaning set forth in the preamble.

“Cap” has the meaning set forth in Section 9.4(b).

“Cash” as of any time means cash balances on hand in bank accounts at such time plus cash equivalents recorded consistent with past practice.

“Cash Purchase Price” has the meaning set forth in Section 2.3(b).

“CERCLA” has the meaning set forth in the definition of “Environmental Law.”

“Claim” means a Buyer Claim or a Seller Claim, as the context requires.

“Claim Response” has the meaning set forth in Section 9.6(a).

“Cleanup” has the meaning set forth in Section 9.8(f).

“Closing” has the meaning set forth in Section 3.1.

“Closing Date” has the meaning set forth in Section 3.1.

“Closing Working Capital” has the meaning set forth in Section 2.4(a)(ii).

“COBRA” has the meaning set forth in Section 4.14(e).

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“Company Debt” means (a) any Liability of Intasco and/or Intasco USA (i) for borrowed money (including the current portion thereof), (ii) under any reimbursement obligation relating to draws under any letter of credit, bankers’ acceptance or note purchase facility, (iii) for the payment of money relating to leases which, in accordance with GAAP, are required to be classified as capitalized lease obligations, (iv) under any conditional sale or other title retention

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agreement with respect to acquired property, or for all or any part of the deferred purchase price of property, and/or (v) evidenced by any note, bond, debenture or other similar instrument, and (b) any Liability of others described in the preceding clause (a) that Intasco and/or Intasco USA has guaranteed, that is recourse to either or any of their respective assets or that is otherwise its legal liability or that is secured in whole or in part by the assets of either. For purposes of this Agreement, Company Debt also includes any and all accrued interest, success fees, prepayment premiums, make-whole premiums, bank overdrafts or penalties and fees or expenses (including attorneys’ fees) associated with the prepayment of any Company Debt, and for the avoidance of doubt, includes any Company Debt outstanding to Seller.

“Company Employee Plan” means any plan, program, policy, practice, contract, agreement or other arrangement of Intasco or Intasco USA providing for compensation, pension, severance, termination pay, deferred compensation, performance awards, stock or stock-related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA that is maintained, contributed to, or required to be contributed to, by either Intasco or Intasco USA or any ERISA Affiliate for the benefit of any employee, or with respect to which either of Intasco or Intasco USA or any ERISA Affiliate has any liability or obligation.

“Confidential Information” has the meaning set forth in Section 10.18.

“Consent” means any consent, approval, authorization, qualification, waiver, registration or notification required to be obtained from, filed with or delivered to a Governmental Authority or any other Person in connection with the consummation of the transactions provided for herein or in any Related Document.

“Constituent Corporation” means any constituent corporation or any other business entity that entered into any business combination with Intasco, Intasco USA or any Subsidiary of either pursuant to which Intasco, Intasco USA or any Subsidiary is a surviving Person.

“Contract” means any agreement, contract, personal property lease, real property lease, offers or agreements to lease or right to occupy or license real property or any part(s) thereof, capital lease, note, loan, evidence of indebtedness, guaranty, purchase order, customer order, letter of credit, franchise agreement, undertaking, obligation, covenant-not-to-compete, employment agreement, license, instrument, option, obligation, indenture, deed of trust or commitment (i) to which either Intasco or Intasco USA is a party, or (ii) by which either or its respective assets is bound, in each case, whether oral or written.

“Current Assets” means, as of any date, only the following categories of the current assets of Intasco or Intasco USA: (i) trade Accounts Receivable, including rebates receivable (but only to the extent such Accounts Receivable conform to the representations and warranties set forth in Section 4.24 and excluding any Accounts Receivable relating to the sales of goods or services by Intasco or Intasco USA to an Affiliate), (ii) Inventory (but only to the extent such Inventory conforms to the representations and warranties set forth in Section 4.10(b)), and (iii) prepaid expenses

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“Current Liabilities” means, as of any date, the following categories of the current liabilities of Intasco or Intasco USA: (i) trade accounts payable, including rebates payable (but excluding any payable owed by Intasco or Intasco USA to an Affiliate), and (ii) accrued expenses.

“Deductible” has the meaning set forth in Section 9.4(a).

“Dispute Notice” has the meaning set forth in Section 9.6(b).

“Dispute Period” has the meaning set forth in Section 9.6(b).

“Employee” has the meaning set forth in Section 4.21(a).

“Employee Assignment of Intellectual Property Rights” means the assignment in the form of Exhibit I hereto.

“Employment Agreements” means employment and restrictive covenant agreements with each of the Key Employees, substantially in the forms and on the terms of Exhibit A.

“Employee Trust” means the Intasco 2014 Employee Trust, formed by a trust agreement, dated June 27, 2014, under the laws of the Province of Ontario.

“Environmental Law” means any Law, administrative or judicial decision or order, concerning the protection of human health, safety or the environment, including the use, generation, treatment, storage, disposal, Release, transportation or arrangement for transportation of any Hazardous Material. The term “Environmental Laws” includes the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), the Occupational Safety and Health Act of 1970, as amended, the Federal Water Pollution Control Act, as amended, the Federal Resource Conservation and Recovery Act, as amended, the Federal Clean Water Act, as amended, the Toxic Substances Control Act, as amended, the Federal Clean Air Act, as amended, and any and all other comparable state or local or other Laws, and all amendments thereto or regulations promulgated thereunder, relating to the environment, health or safety.

“Environmental Liability” means any Liability or Loss relating to or alleged to relate to any environmental, health or safety matter (including those involving natural resources) or condition existing on or before the Closing Date for which Intasco, Intasco USA or any of their respective Predecessors has (directly, contingently or otherwise) or is alleged to have liability or responsibility, including any Liability or Loss relating to any Environmental Law, Contract, tort, implied or express warranty or strict liability.

“Equity Consideration” has the meaning set forth in Section 2.3(a)(i).

“Equity Holders” means GCC, Old Trust, Employee Trust, New Trust and Combe.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

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“ERISA Affiliate” means any Person under common control with Intasco or Intasco USA within the meaning of Section 414(b) or (c) of the Code, and the regulations issued thereunder.

“Escrow Account” means the escrow account to be held by the Escrow Agent in accordance with the terms of the Escrow Agreement.

“Escrow Agent” means Citibank, N.A.

“Escrow Agreement” means an agreement by and among the Buyer, the Seller Representative and the Escrow Agent, substantially in the form attached hereto as Exhibit B.

“Escrow Fund” means an amount equal to $1,375,000.

“Estimated Working Capital” has the meaning set forth in Section 2.4(a)(i).

“ETA” means the Excise Tax Act (Canada), as amended and any equivalent or corresponding provincial and territorial legislation imposing a similar value added or multi-stage tax.

“Excluded Assets” has the meaning set forth in Schedule 2.2.

“Excluded Liabilities” has the meaning set forth in Section 2.5(c).

“Excluded Representations” has the meaning set forth in Section 9.1(b).

“Existing Leases” means (i) the lease, dated February 1, 2016, between Combe Investments USA Inc. and Intasco-USA Inc. and (ii) the lease, dated February 1, 2016, between Combe Investments Ltd. And Intasco Corporation.

“Financial Statements” has the meaning set forth in Section 4.7(a).

“GAAP” means United States generally accepted accounting principles.

“GCC Redemption Note” has the meaning set forth in Section 2.3(a)(iii).

“Governmental Authority” means any government, quasi-governmental or political subdivision, whether U.S. or Canadian, federal, state, provincial, county, municipal, local, domestic or foreign, or any governmental ministry, agency, branch, department, commission, board, tribunal or bureau or any body exercising or entitled to exercise any administrative, executive, judicial, legislative, quasi-governmental, regulatory or taxing authority or power of any nature or instrumentality of any such government or political subdivision, or any federal, state, provincial, local, domestic or foreign court.

“Hazardous Material” means any toxic, hazardous or dangerous substance or waste, any pollutant or contaminant, including asbestos and asbestos-containing materials, hazardous waste, hazardous material, hazardous substance, petroleum or its products or fractions, petroleum-

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containing materials, radiation and radioactive materials and polychlorinated biphenyls, all as defined, listed, prescribed or prohibited in any Environmental Law.

“HST” means the goods and services tax and harmonized sales tax imposed under the ETA and any equivalent or corresponding tax imposed under any applicable provincial or territorial legislation imposing a similar value added or multi-stage tax.

“I-9 Form” has the meaning set forth in Section 4.21(c).

“Improvements” has the meaning set forth in Section 4.11(a).

“Indemnifiable Claims” means all Actions, known or unknown, pending or threatened at any time (whether before, on or after the Closing Date), to the extent relating to Intasco, Intasco USA and/or the conduct of the Business prior to the Closing.

“Indemnifiable Liabilities” means all Liabilities of Intasco or Intasco USA existing on the Closing Date or primarily attributable to events, conditions, circumstances or periods that occurred or existed prior to the Closing, except for ordinary-course obligations under Contracts of Intasco or Intasco USA to the extent such obligations are by the terms of such Contracts required to be performed or paid after the Closing Date and do not arise out of any pre-Closing breach thereunder by either Intasco or Intasco USA or any Predecessor.

“Indemnified Party” means Buyer Indemnitees and/or Seller Indemnitees, as the context requires.

“Indemnified Taxes” means Taxes payable by the Buyer as a result of the acquisition, holding, redemption, retraction or purchase for cancellation of the Preference Shares, and Taxes of Intasco USA for any taxable year or portion thereof ending on or prior to the Time of Closing.

“Indemnifying Party” has the meaning set forth in Section 9.6(d).

“Insurance Policies” has the meaning set forth in Section 4.19(a).

“Intasco” has the meaning set forth in the preamble.

“Intasco USA Shares” means 5,000 shares of common stock, par value $1.00 per share, of Intasco USA, representing all of the authorized, issued and outstanding shares thereof.

“Intasco USA” has the meaning set forth in the recitals.

“Intellectual Property” means any and all patents, patents pending and patent applications; trademarks, service marks, trade names, corporate names, mask works, service marks, brand names, trade dress, slogans, logos and Internet domain names, websites and browsers and their associated goodwill; inventions, invention studies, discoveries, ideas, processes, formulae, designs, computer programs, models, industrial designs, know-how, confidential information, proprietary information and trade secrets, whether or not patented or patentable; copyrights, writing and other copyrightable works and works in progress, databases, website content and software; all

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other intellectual property rights and foreign equivalent or counterpart rights and forms of protection of a similar or analogous nature or having similar effect in any jurisdiction throughout the word; all registrations and application for registration of any of the foregoing; and any renewals, extensions, continuations, divisionals, reexaminations or reissues or equivalent or counterpart of any of the foregoing in any jurisdiction throughout the world; in each case, that is owned by Intasco or Intasco USA or used by either in the conduct of its business.

“Interim Balance Sheet” has the meaning set forth in Section 4.7(a).

“Interim Financial Statements” has the meaning set forth in Section 4.7(a).

“Inventory” means all inventory, merchandise, finished goods, work in progress and raw materials owned, stored or otherwise held by or on behalf of Intasco or Intasco USA.

“ITA” means the Income Tax Act (Canada), as amended.

“Key Employees” means the employees identified on Schedule I hereto.

“Law” means any law, constitution, statute, by-law, code, ordinance, regulation rule or treaty of any Governmental Authority.

“Lease Escrow Agent” means Citibank, N.A.

“Lease Escrow Agreement” means an agreement by and among the Canadian Buyer, the Landlord with respect to the Leased Real Property in the City of London, and the Lease Escrow Agent, substantially in the form attached hereto as Exhibit J.

“Lease Escrow Fund” an amount equal to $500,000.

“Leased Real Property” means all real property leased or subleased by Intasco or Intasco USA and used in the Business and all buildings, structures and other fixed improvements located on, in or under such real property.

“Leases” means the leases for the Leased Real Property, substantially in the forms attached hereto as Exhibit C.

“Legal Opinion” means the legal opinion of McKenzie Lake Lawyers LLP, counsel to the Seller, substantially in the form of Exhibit D.

“Liabilities” means any debts, liabilities and other obligations of any kind or nature, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured, determined or determinable, several or joint and several, direct or indirect, including those arising under any Law (including any Environmental Law), Action, Order and/or Contract.

“Liens” means any Mortgage, lien, security interest, pledge, attachment, charge, claim, condition, option, right of first refusal, assignment by way of security or other title retention agreement or other similar encumbrance or restriction of any kind or instrument charging, or creating

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a security interest in, or against title to the Purchased Shares, the Preference Shares, the Purchased Assets, the Leased Real Property or any part thereof or interest therein, including any restriction on use, voting, transfer (other than transfer restrictions under applicable Law), receipt of income or exercise of any other attribute of ownership and any lease, option, easement, right of way, servitude, restriction, execution or other charge or encumbrance which encumber title to the Purchased Shares, the Preference Shares, the Purchased Assets, the Leased Real Property or any part thereof or interest therein.

“Losses” or “Loss” has the meaning set forth in Section 9.2.

“Material Adverse Effect” means, with respect to Seller or Intasco USA or Buyer, as applicable, any event change, effect, circumstance, fact, occurrence or development that has had (or would reasonably be expected to have) a material adverse effect on the business, assets, results of operations, prospects or condition (financial or otherwise) of such party and/or, in the case of Intasco, Intasco USA or Buyer, excluding (a) any change, occurrence or development resulting from general business or economic conditions, or (b) any event, change, effect, circumstance, fact, occurrence or development affecting companies in the industry in which it conducts its business generally, in each case so long as such event, change, effect, circumstance, effect, occurrence or development does not disproportionately affect such party or its ability to consummate the transactions contemplated by this Agreement.

“Material Contracts” has the meaning set forth in Section 4.15(b).

“Material Customers” has the meaning set forth in Section 4.23(a).

“Material Permits” has the meaning set forth in Section 4.13.

“Material Suppliers” has the meaning set forth in Section 4.23(b).

“Mortgage” has the meaning set forth in Section 4.11(c).

“New Trust” means The Combe 2014 Family Trust, formed by The Combe 2014 Family Trust Agreement, dated June 27, 2014, under the laws of Ontario, Canada.

“Non-Assigned Contract” has the meaning set forth in Section 6.15.

“Non-Competition Agreements” means agreements in favor of Buyer relating to, among other things, non-competition and non-solicitation, substantially in the form and on the terms of Exhibit E.

“Non-voting Preference Shares” means the non-voting preference shares of Amalco, with a redemption value and liquidation preference of $1.00 per share.

“Notice” has the meaning set forth in Section 9.6(b).

“OBCA” means the Business Corporations Act (Ontario), as amended.

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“Offered Employees” has the meaning set forth in Section 6.6(a).

“Old Trust” has the meaning set forth in the preamble.

“Order” means any decision, order, judgment, ruling, injunction, award, decree, directive or writ of any Governmental Authority.

“Pension Plan” means each Company Employee Plan that is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA or a “registered pension plan” within the meaning of Section 147.1 of theITA.

“Permits” means any federal, state, provincial, county, municipal, local or foreign license, permit, authorization, certificate of authority, qualification or similar document or authority that has been issued or granted by any Governmental Authority to either Intasco or Intasco USA.

“Permitted Liens” means (a) Liens set forth on Schedule 1.1, (b) mechanics’, workmens’, repairmen’s, warehousemen’s, carriers’ or other like Liens arising or incurred in the ordinary course of business consistent with past practice or by operation of Law provided that the underlying obligations are not yet due or delinquent, and (c) with respect to Intellectual Property, licenses granted in the ordinary course of business consistent with past practice and listed on Schedule 1.1; provided, however, that none of the foregoing Liens described in clauses (a), (b) or (c), individually or in the aggregate, impair in any material respect the use and operation or value of the Business or the property to which they relate.

“Pre‑Closing Tax Period” means any Tax period ending on or before the Closing Date and the portion through the end of the Closing Date for any Tax period that includes (but does not end on) the Closing Date.

“Person” means any individual, sole proprietorship, partnership, corporation, limited liability company, joint venture, unincorporated society or association, trust or other legal entity or Governmental Authority.

“Predecessor” means (i) any Person that at any time directly or indirectly conducted in any respect the Business of Intasco or Intasco USA, and (ii) any Constituent Corporation.

“Preference Shares” shall means the 2,000 Voting Preference Shares and 3,000,000 Non-voting Preference Shares purchased by Canadian Buyer from the Old Trust pursuant hereto.

“Preference Shares Purchase Price” has the meaning set forth in Section 2.3(a).

“Product Liabilities” means, with respect to any products (including the Products) previously sold and/or sold as of the Closing Date, and/or services previously provided and/or provided as of the Closing Date, by or on behalf of Intasco, Intasco USA and/or any Predecessor, all Actions and other Liabilities relating to actual or alleged injury, damage, death or other harm, including to any Person, property or business, including (i) any relating to any actual or alleged defect in the design and/or manufacture of a product, and (ii) any product recalls or withdrawals relating thereto.

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“Products” means the products and services of the Business currently or previously sold or provided, as the case may be, including PVE Foam, Double Coated Transfer Tapes, Headliner Transfer Tapes, and Acrylic Foam Permanent Adhesive Tape.

“Property Rights” means, collectively, all easements, leases, licenses, rights of occupation and/or use, and other rights relating to or creating interests in land, whether pursuant to agreement or law, that are required to operate the Business in all material respects as it is currently being operated by Intasco or Intasco USA, as applicable.

“Property Tax” has the meaning set forth in Section 6.17(i).

“Purchase Price” has the meaning set forth in Section 2.3(b).

“Purchased Assets” has the meaning set forth in Section 2.2.

“Purchased Shares” means the Intasco USA Shares.

“Real Estate Assets” means, collectively, without duplication, the Leased Real Property, the Improvements, the Real Property Leases and the Property Rights.

“Real Property Leases” has the meaning set forth in Section 4.11(b).

“Related Documents” means the Leases, the Employment Agreements, the Escrow Agreement, the Non-Competition Agreements, the Reorganization Documents, and all other documents, instruments and agreements entered into in connection with this Agreement and the transactions contemplated hereby.

“Release” means any releasing, spilling, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping of a Hazardous Material into the environment.

“Reorganization Documents” means all documents, instruments, agreements or filings entered into, delivered or filed in connection with the Amalgamation and Reorganization.

“Remaining Disputed Items” has the meaning set forth in Section 2.4(b).

“Representation Termination Date” has the meaning set forth in Section 9.1(b).

“Response Period” has the meaning set forth in Section 9.6(a).

“Responsible Party” has the meaning set forth in Section 9.6(d).

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

“Seller” shall mean Intasco, GCC and Combe, jointly and severally.

“Seller Claim” has the meaning set forth in Section 9.6(a).

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“Seller Claims Notice” has the meaning set forth in Section 9.6(a).

“Seller Indemnitees” has the meaning set forth in Section 9.2.

“Seller Representative” means G. Craig Combe as such Person may be replaced from time to time in accordance with Section 10.1.

“Seller’s Knowledge” means the actual or constructive knowledge of Seller or Intasco USA, after due inquiry.

“Selling Expenses” means all costs, fees and expenses of the Equity Holders, Intasco or Intasco USA or any of their respective Affiliates incurred in connection with the consummation of the transactions contemplated hereby, including the fees and expenses of attorneys, advisors and consultants.

“Settlement Accountant” has the meaning set forth in Section 2.4(b).

“Share Cash Purchase Price” has the meaning set forth in Section 2.3(a)(i).

“Share Purchase Price” has the meaning set forth in Section 2.3(a)(i).

“Shares Equity Consideration” has the meaning set forth in Section 2.3(a)(i).

“Straddle Period” means any Tax period that begins before the Closing Date and ends after the Closing Date.

“Subsidiary” and “Subsidiaries” means, with respect to either Intasco or Intasco USA, any other Person (a) whose board of directors or similar governing body, or a majority thereof, currently may be directly or indirectly elected or appointed by Intasco, Intasco USA or a subsidiary of either, (b) whose management decisions and corporate actions are directly or indirectly subject to the control of Intasco, Intasco USA or a subsidiary of either, or (c) whose voting securities are more than fifty percent (50%) owned, directly or indirectly, by Intasco, Intasco USA or a subsidiary of either. The term “Subsidiary” shall include all subsidiaries of such Subsidiary.

“Target Working Capital” means Working Capital in the amount of $4,000,000 with respect to Intasco and US $525,000 with respect to Intasco USA.

“Tax” means, (i) any and all taxes (whether U.S. or Canadian, federal, state, provincial, local or foreign) including income, alternative or add-on minimum tax, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding, payroll, employment, unemployment, social security, disability, excise, severance, stamp, occupation, premium, property, registration, estimated, capital stock, environmental or windfall profit tax, custom, duty or other tax of any kind whatsoever, together with any interest penalties, additions to tax or additional amounts imposed by any Taxing Authority, and (ii) any amounts described in clause (i) that are payable by any other party for which either Intasco or Intasco USA is liable pursuant to any tax sharing agreement, tax indemnification agreement or other similar agreement.

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“Tax Returns” means all Tax returns, statements, reports and forms required to be filed with any Taxing Authority.

“Taxing Authority” means any Governmental Authority responsible for the administration, assessment, determination, collection or imposition of any Tax.

“Termination Date” has the meaning set forth in Section 8.1(b).

“Time of Closing” has the meaning set forth in Section 3.1.

“Treasury Regulations” means the United States Treasury Regulations promulgated pursuant to the Code.

“U.S. Transfer Tax” has the meaning set forth in Section 6.17(f).

“UFAB” means Unique Fabricating, Inc., a Delaware corporation.

“UFAB Shares” means shares of common stock, par value $.001 per share, of UFAB, which are listed on the NYSE MKT.

“Voting Preference Shares” means the Voting Preference shares of Amalco, each with one vote per share, with a redemption value and liquidation preference of $0.001 per share.

“WARN Act” means the Workers Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state or local Laws.

“Working Capital” as of any particular date means (a) the Current Assets as of such date (excluding any assets related to Taxes) minus (b) the Current Liabilities as of such date, excluding any liabilities for Taxes, in each case calculated in accordance with GAAP applied in a manner (including the basis of calculation of individual line items and the determination of allowances and reserves) consistent with the Interim Balance Sheet, and in accordance with Schedule 2.4(a).

“Working Capital Overage” has the meaning set forth in Section 2.4(a)(i).

“Working Capital Statement” has the meaning set forth in Section 2.4(a)(ii).

“Working Capital Underage” has the meaning set forth in Section 2.4(a)(i).

1.2    Other Definitional and Interpretative Provisions.The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but

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not otherwise defined therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral gender and vice versa. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any Person include the successors and permitted assigns of that Person. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including,” respectively. All references to currency herein shall be to, and all payments required hereunder shall be paid in, Canadian Dollars. All references to any time herein shall refer to Eastern Time in the United States. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Seller or Buyer, whether under any rule of construction or otherwise, as a result of the identity of the party or parties who drafted this Agreement or any provision hereof. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

ARTICLE II
PURCHASE AND SALE OF INTASCO AND INTASCO USA SHARES

2.1    Sale and Purchase of Shares; Redemption of Voting Preference Shares and Non-voting Preference Shares.

(a)    Upon the terms and subject to the conditions set forth in this Agreement, commencing at the Time of Closing, the following transactions will occur in the following order in 60 second intervals commencing immediately following 11:59:00 PM on the Closing Date:

(i)    GCC shall sell, assign, convey, set over, transfer and deliver to U.S. Buyer, and U.S. Buyer shall purchase from GCC, all of GCC’s right, title and interest in and to the Intasco USA Shares, free and clear of all Liens;

(ii)    GCC and 2505710 will amalgamate under the OBCA and continue as one corporation named GCC Holdings Ltd. On the amalgamation, 10,000 Voting Preference Shares, 3,000,000 Non-voting Preference Shares and, 100 Class A voting common shares will be issued to the Old Trust.

(iii)    The Old Trust shall sell, assign, convey, set over, transfer and deliver to Canadian Buyer, and Canadian Buyer shall purchase from the Old Trust, all of Old Trust’s right, title and interest to the Preference Shares, free and clear of all Liens;.

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(iv)    Upon the terms and subject to the conditions set forth in this Agreement, GCC shall purchase and redeem from the Canadian Buyer, and the Canadian Buyer shall sell, assign, convey, set over, transfer and deliver to GCC, all of Canadian Buyer’s right, title and interest in and to the Preference Shares, free and clear of all Liens.

2.2    Purchase and Sale of the Purchased Assets. Upon the terms and subject to the conditions of this Agreement, immediately following the transaction set forth in Section 2.1(a)(iv), Intasco shall sell, convey, transfer, assign and deliver to the Canadian Buyer, and the Canadian Buyer shall purchase from Intasco, free and clear of all Liens other than Permitted Liens, all of Intasco’s right, title and interest in, to and under (including indirect and other forms of beneficial ownership) the assets and properties, of every kind and description, owned, used or held for use primarily in the conduct of the Business, whether real, personal or mixed, tangible or intangible, choate or inchoate, wherever situated, and whether owned, leased or licensed (but, for the avoidance of doubt, excluding any Excluded Assets), all as the same shall exist on the Closing Date (collectively, the “Purchased Assets” as set forth on Schedule 2.2).

2.3    Purchase Price.

(a)    Equity Transactions.

(i)    Subject to the adjustments set forth in Section 2.4, the full consideration for the Purchased Shares (the “Share Purchase Price”) shall be 70,797 UFAB Shares (the “Equity Consideration”); and

(ii)    The full consideration payable by Canadian Buyer for the Preference Shares shall be $3,000,002 payable in cash, by wire transfer to an account designated by the Seller Representative prior to the Closing (the “Preference Shares Purchase Price”);

(iii)    The full consideration payable by GCC to Canadian Buyer as the redemption price for the Preference Shares shall be $3,000,002, payable by delivery by GCC of a note (the “GCC Redemption Note”) in the form of Exhibit E hereto.

(b)    Purchased Assets. Subject to the adjustments set forth in Section 2.4, the full consideration for the Purchased Assets (the “Asset Purchase Price” and together with the Share Purchase Price, the “Purchase Price”) shall be:

(i)    $23,449,998 (such sum, as may be increased or decreased pursuant to Section 2.4, the “Cash Purchase Price”);

(ii)    The delivery by Canadian Buyer to Intasco of the GCC Redemption Note; and

(iii)    The assumption of the Assumed Liabilities.

(c)    At the Closing, (i) Buyer shall pay by wire transfer of immediately available funds (A) to an account the Seller Representative will designate in writing prior to the Closing, the Cash Purchase Price less (x) the amount of the Escrow Fund, (y) the amount of the

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Lease Escrow Fund and (z) any amounts required to repay in full any Company Debt, (B) to the Escrow Agent pursuant to the Escrow Agreement, the amount of the Escrow Fund, and (C) to the Lease Escrow Agent the amount of the Lease Escrow Fund and (ii) Buyer shall deliver the Equity Consideration to the Seller Representative.

2.4    Purchase Price Adjustment.

(a)    Working Capital Statement.

(i)    Not later than three Business days prior to the Closing Date, the Seller Representative shall deliver to Buyer a good faith estimate of the Working Capital for each of Intasco and Intasco USA as of a point in time immediately prior to the Closing, prepared in accordance with Schedule 2.4(a), together with related supporting schedules, calculations and documentation and a calculation of any resulting Working Capital Underage or Working Capital Overage (the “Estimated Working Capital”). If the Estimated Working Capital is less than the Target Working Capital, the Cash Purchase Price paid at Closing shall be reduced by the amount of such shortfall (the “Working Capital Underage”), subject to further adjustment as provided in this Section 2.4. If the Estimated Working Capital is greater than the Target Working Capital, the Cash Purchase Price paid at Closing shall be increased by the amount of such excess (the “Working Capital Overage”), subject to further adjustment as provided in this Section 2.4.

(ii)    Within forty-five (45) days after the Closing Date, Buyer shall cause to be prepared and delivered to the Seller Representative a statement (the “Working Capital Statement”) setting forth the calculation of the Working Capital for each of Intasco and Intasco USA as of the point in time immediately prior to the Closing as of which the Seller Representative calculated Estimated Working Capital (“Closing Working Capital”). The Working Capital Statement shall be prepared in accordance with Schedule 2.4(a).

(b)    Dispute. Within thirty (30) days following receipt by the Seller Representative of the Working Capital Statement, the Seller Representative shall either inform Buyer in writing that the Working Capital Statement is acceptable or deliver written notice to Buyer of any dispute the Seller Representative has with respect to the Working Capital Statement, which written notice shall describe in reasonable detail the items contained in the Working Capital Statement that the Seller Representative disputes and the basis for any such disputes and his calculation of the Closing Working Capital. If the Seller Representative does not notify Buyer of a dispute with respect to any items contained in the Working Capital Statement within such thirty (30) day period, such Working Capital Statement and the Working Capital shall be final, conclusive and binding on the parties. In the event of such notification of a dispute, Buyer and the Seller shall negotiate in good faith to resolve any such dispute. If Buyer and the Seller Representative, notwithstanding such good faith effort, fail to resolve such dispute with respect to one or more items within thirty (30) days after the Seller Representative advises Buyer of its objections, then the items raised in the Seller Representative’s dispute notice that remain in dispute (the “Remaining Disputed Items”) shall be submitted to BDO USA LLP, or if BDO USA LLP is unwilling or unable to serve in such capacity, such other accounting firm as shall be mutually agreed upon by the parties (such accountant, the “Settlement Accountant”), who, acting as an expert and not as an arbitrator, shall resolve the Remaining Disputed Items. If

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the parties are unable to agree upon the selection of the Settlement Accountant within five (5) Business Days after expiration of such thirty (30) day period, the Settlement Accountant shall be appointed by the American Arbitration Association. The Settlement Accountant shall act as an expert and not as an arbitrator. Prior to its engagement, the Settlement Accountant shall agree in writing to resolve the Remaining Disputed Items, but no others, in accordance with the provisions of this Section 2.4 and based upon a review of the parties’ positions and thereby establish the Closing Working Capital. The Settlement Accountant shall make such determination within forty-five (45) days following the submission of the matter to the Settlement Accountant for resolution, and such determinations shall be final, conclusive and binding on the parties absent fraud or arithmetic error. In the event any dispute is submitted to the Settlement Accountant for resolution as provided in this Section 2.4(b), the fees, charges and expenses of the Settlement Accountant shall be paid (i) one-half by Seller and (ii) one-half by Buyer.

(c)    Access. For purposes of complying with the terms set forth in this Section 2.4, each party shall cooperate with and make available to the other parties and their respective representatives and to the Settlement Accountant all information, records, data and working papers and shall permit access to its facilities and personnel of each as may be reasonably required in connection with the preparation and analysis of the Working Capital Statement and the resolution of any disputes in connection therewith.

(d)    Downward Adjustment. If the Closing Working Capital (as finally determined pursuant to Section 2.4(b)) is less than the Estimated Working Capital, then the Asset Purchase Price shall be adjusted downward by the amount of such shortfall, and the amount of such shortfall shall be conclusively deemed to be the joint and severally obligations of each Seller, and the Seller shall pay to Buyer the amount of such shortfall (in U.S. dollars if with respect to Intasco USA and Canadian dollars if with respect to Intasco), within five (5) Business Days from the date on which the Closing Working Capital is finally determined pursuant to Section 2.4(b), by wire transfer of immediately available funds to an account designated in writing by Buyer to the Seller Representative. Notwithstanding anything to the contrary contained herein, the amount of such shortfall shall be paid by Seller directly and shall not be paid out of the Escrow Fund.

(e)    Upward Adjustment. If the Closing Working Capital (as finally determined pursuant to Section 2.4(b)) is greater than the Estimated Working Capital, then the Cash Purchase Price shall be adjusted upward by the amount of such excess and Buyer shall pay an amount in cash equal to such excess to the Seller (in U.S. dollars if with respect to Intasco USA and Canadian dollars if with respect to Intasco). Such amount shall be paid by Buyer within five (5) Business Days from the date on which the Closing Working Capital is finally determined pursuant to Section 2.4(b), by wire transfer of immediately available funds to an account or accounts designated in writing by the Seller’s Representative to Buyer.

(f)    No Adjustment. If the Closing Working Capital (as finally determined pursuant to Section 2.4(b)) is equal to the Estimated Working Capital, there shall be no post-Closing adjustment to the Asset Purchase Price under this Section 2.4.

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2.5    Assumption and Non-Assumption of Intasco Liabilities by Canadian Buyer.

(a)    Except as otherwise provided in this Section 2.5, Canadian Buyer shall, at the Closing, assume and agree to pay, when due and payable, and perform and discharge in accordance with the applicable relevant governing Contracts, only the following Liabilities of Intasco (subject to Sections 2.5(b) and 2.5(c), the “Assumed Liabilities”): (i) all Current Liabilities of a fixed amount on the Working Capital Statement to the extent same are liabilities that would be required to be reflected on a balance sheet of Intasco in accordance with the GAAP, and (ii) Intasco’s respective obligations incurred under Contracts identified on Schedule 2.5(a) and effectively assigned by Intasco to Canadian Buyer, in each case to the extent such obligations referred to in this clause (ii) are related to Intasco’s portion of the Business and are by the terms of any such Contract required to be performed or paid after the Closing Date and do not arise out of or in connection with any pre-Closing breach thereof.

(b)    Notwithstanding Section 2.5(a) above, no Liability or portion thereof shall be an Assumed Liability under Section 2.5(a) to the extent that (i) it is an Environmental Liability and/or a Product Liability, (ii) it is attributable to or relates to events, conditions or circumstances existing on or with respect to or arising from Real Property, (iii) it is attributable to or relates to events, conditions, circumstances or periods that occurred or existed on or prior to the Closing, and/or (iv) such Liability relates to any sale prior to the Closing of any portion of the Business. For the avoidance of doubt, Assumed Liabilities mean the Liabilities that are expressly assumed by Buyer pursuant to the terms of this Section 2.5.

(c)    Notwithstanding anything contained in this Agreement or in any Related Document to the contrary, Buyer shall not assume, undertake, accept, be bound by or otherwise be responsible for any Liabilities of Intasco, any Subsidiary, any Predecessor or any of their Affiliates (whether or not disclosed to Buyer) other than the Assumed Liabilities. “Excluded Liabilities” means all Liabilities that are not Assumed Liabilities including (i) the Selling Expenses, (ii) any Liability of Intasco or any of its Affiliates under all Company Employee Plans, (iii) except to the extent included in calculating Working Capital, any Liability of Intasco with respect to pre-Closing obligations to Employees, including any accrued vacation or sick pay or paid leave or time off from work, and (iv) any Liability of Intasco or any of its Affiliates related to Taxes. Intasco and each Seller agrees to pay, perform and discharge when due and payable the Excluded Liabilities.

ARTICLE III
CLOSING AND DELIVERIES

3.1    Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Sills Cummis & Gross P.C., One Riverfront Plaza, Newark, New Jersey 07102 on the second Business Day following the satisfaction or waiver of each of the conditions set forth in Article VII (other than those conditions that are to be satisfied at the Closing) or on such other date or at such other time and place as the parties mutually agree in writing (the “Closing Date”). All proceedings to be taken and all documents to be executed and delivered by

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all parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed to have been taken nor documents executed or delivered until all have been taken, executed and delivered. The Closing shall be deemed to be effective immediately after 11:59:00 p.m., New York time, on the day of the Closing Date (the “Time of Closing”).

3.2    Deliveries by Seller. At the Closing, GCC or Intasco, as the case may be, shall deliver or cause to be delivered to Buyer the following items:

(a)
Stock certificates representing the Intasco USA Shares to the U.S. Buyer, accompanied by a duly executed stock power in form satisfactory to U.S. Buyer;

(b)    Stock certificates representing the Preference Shares to the Canadian Buyer, accompanied by a duly executed stock power in form satisfactory to Canadian Buyer;

(c)    Termination of the Existing Leases, duly executed by the applicable landlord therender;

(d)    the Leases, duly executed by the applicable landlord thereunder;

(e)    GCC Redemption Note;

(f)    a certificate of the Secretary of State or other applicable Governmental Authority of the respective jurisdictions of incorporation of each of GCC, Intasco, 2505710 and Intasco USA to the existence and, in the case of Intasco USA, good standing of each in such jurisdiction as of the most recent practicable date;

(g)    a certificate of the Secretary of each of GCC, Intasco, Intasco, USA 2505710 and Old Trust, certifying as of the Closing attached copies of the certificate of incorporation and by-laws or other organizational documents (including any shareholder agreements or declarations) of each thereof, certifying and attaching all requisite resolutions or actions of board of directors or similar governing body and stockholders of each, approving the execution and delivery of this Agreement and the Related Documents and the consummation of the transactions contemplated hereby and thereby, and certifying to the incumbency and signatures of the officers or representatives of a Seller, 2505710, Intasco USA or Old Trust executing this Agreement and the Related Documents and any other document relating to the transactions contemplated hereby or thereby;

(h)    a certificate of an officer of GCC and Intasco and of Combe to the effect that the conditions set forth in Sections 7.3(a), 7.3(b), 7.3(i), and 7.3(j) applicable to GCC and Intasco have been satisfied;

(i)    the Escrow Agreement, duly executed by the Seller Representative and the Escrow Agent;

(j)    the Lease Escrow Agreement, duly executed by the Landlord and the Lease Escrow Agent;

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(k)    the Non-Competition Agreement, duly executed by Combe;

(l)    the Employment Agreements, duly executed by each of the Key Employees;

(m)    Employee Assignment of Intellectual Property Rights, duly executed by each of the Key Employees;

(n)    the Legal Opinion;

(o)    Intasco USA shall have delivered to the Buyer: (i) a statement conforming to the requirements of Section 1.897-2(h)(1)(i) of the Treasury Regulations; and (ii) the notification to the Internal Revenue Service required under Section 1.897-2(h)(2) of the Treasury Regulations.

(p)    to the extent required by the Buyer at least two (2) business days prior to Closing, resignations effective as of the Closing of each of the directors and officers of Intasco USA;

(q)    letter issued by each holder of Company Debt not more than five Business Days prior to the Closing Date, which sets forth (A) the amount, if any, required to repay in full all indebtedness owed to such holder on the Closing Date, (B) the wire transfer instructions for the repayment of such Company Debt to such holder, if there is any amount required to be repaid and (C) a release of all Liens granted to such holder or otherwise arising with respect to such Company Debt, effective upon repayment of such indebtedness;

(r)    evidence and documentation that any Person holding security interests or Liens, on behalf of itself its successors, legal representatives and assigns, has terminated, released and discharged its security interest in and to the Intellectual Property in Schedule 4.18, and all other right, title and interest in and to such Intellectual Property, and has assigned or reassigned to the Buyer any and all such right, title and interest that it may have had in such Intellectual Property;

(s)    Purchase Certificate issued by the Workplace Safety and Insurance Board stating that Intasco does not owe any amounts and is not in default under the Workplace Safety and Insurance Act, 1997 (Ontario);

(t)    all documents necessary to comply with any applicable transfer requirement imposed by Environmental Law and evidencing transfer of all licenses required under Environmental Law that are transferrable under Environmental Law;

(u)    true and correct copies of each Consent to be received pursuant to Section 7.3(d) in form and substance reasonably satisfactory to Buyer;

(v)    all books and records of or relating to the Business, Intasco and Intasco USA;

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(w)    certified copies of the articles of amalgamation of Amalco;

(x)    receipt for the Purchase Price and Preference Shares Purchase Price;

(y)    the Bill of Sale and Assumption Agreements;

(z)    the Bulk Sales Act Statement; and

(aa)    all such other documents and instruments as may be reasonably required by the Buyer to complete the purchase and sale of the Purchased Assets, the Preference Shares and the Purchased Shares.

3.3    Deliveries by Buyer. At the Closing, Buyer shall deliver to the Seller Representative the following items:

(a)    the Cash Purchase Price, paid in accordance with Section 2.3(c);

(b)    the Preference Share Purchase Price, paid in accordance with Section 2.3(a)(ii);

(c)    stock certificates registered in the names set forth on Schedule 3.3(a) representing the UFAB Shares;

(d)    stock certificate representing the Preference Shares;

(e)    GCC Redemption Note;

(f)    the Leases, duly executed by Canadian Buyer;

(g)    a certificate of the Secretary of State or other applicable Governmental Authority of the state or other jurisdiction of organization of each Buyer as to the existence of each Buyer and, in respect of Unique, as to the good standing, in such jurisdiction as of the most recent practicable date;

(h)    a certificate of the Secretary of each Buyer, certifying, as of the Closing, attached copies of the certificate of incorporation and by-laws of Buyer, certifying and attaching all requisite resolutions or actions of each Buyer’s board of directors approving the execution and delivery of this Agreement and the Related Documents to which such Buyer is a party and the consummation of the transactions contemplated hereby and thereby, and certifying to the incumbency and signatures of the officers of Buyer executing this Agreement and any Related Documents and any other document relating to the transactions contemplated hereby or thereby;

(i)    certificates of an officer of each Buyer to the effect that the conditions set forth in Sections 7.2(a) and 7.2(b) have been satisfied;

(j)    the Escrow Agreement, duly executed by each Buyer;

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(k)    the Lease Escrow Agreement, duly executed by Canadian Buyer;

(l)    the Employment Agreements, duly executed by Canadian Buyer;

(m)    the Non-Competition Agreement duly executed by Buyer.

(n)    a receipt for the Purchased Assets, the Preference Shares and the Purchased Shares; and

(o)    the Bill of Sale and Assumption Agreements.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

Intasco, GCC and Combe, jointly and severally, hereby represents and warrants to Buyer as follows:

4.1    Organization and Authority. Each of Intasco and Intasco USA is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization. Each of Intasco and Intasco USA has all requisite corporate or power and authority to own its properties and assets and to carry on its business as currently conducted. Each of Intasco and Intasco USA is duly qualified to do business, and is in good standing (where such concept exists in applicable corporate law), in each jurisdiction in which the character of the properties and assets owned or leased by it or in which the conduct of its business requires it to be so qualified. Each such jurisdiction is set forth on Schedule 4.1. Except as set forth on Schedule 4.1, neither Intasco nor Intasco USA has obtained the right to use any fictitious name in any jurisdiction. Seller (and each of them) has all requisite corporate, trust, limited liability company or individual, as the case may be, power and authority to enter into and perform its obligations under this Agreement and all Related Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, and this Agreement and the Related Documents have been duly executed and delivered by Seller (and each of them), pursuant to all necessary authorizations and are or, when executed and delivered will be, the legally valid and binding obligations of the Seller (and each of them), enforceable against it in accordance with its terms.

4.2    Capitalization. As of the date of this Agreement, (i) the entire authorized capital stock of Intasco consists of an unlimited number of Class A Special Shares, an unlimited number of Class B Special Shares, an unlimited number of Class C Special Shares, an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares and an unlimited number of Class C Common Shares, of which 5,500,000 Class A Special Shares, no Class B Special Shares, 100 Class C Special Shares, 75 Class A Common Shares, 25 Class B Common Shares and no Class C Common Shares are issued and outstanding and (ii) the entire authorized capital stock of Intasco USA consists of 5,000 shares of common stock, par value $10 per share, of which 5,000 shares are issued and outstanding. Upon completion of the Amalgamation and Reorganization, the entire authorized capital stock of GCC will consist of an unlimited number of Non-Voting Preference Shares, an unlimited number of Voting Preference Shares and an unlimited

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number of Class A Common Shares, of which 3,000,000 Non-Voting Preference Shares, 10,000 Voting Preference Shares and 100 Class A Common Shares will be issued and outstanding. All of the authorized, issued and outstanding capital stock and other equity securities of any kind or nature (including, without limitation, subscriptions, options, warrants, phantom stock rights and other rights of any kind entitling any Person to acquire or otherwise receive any equity interest) of Intasco USA are owned, beneficially and of record, by GCC, free and clear of all Liens. All of the authorized, issued and outstanding capital stock and other securities of any kind or nature (including without limitation, subscriptions, options, warrants, phantom stock rights and other rights of any kind entitling any Person to acquire or otherwise receive any equity interest) of Intasco are owned beneficially, and of record, by Combe, the Employee Trust and the New Trust. As of the date of this Agreement and upon completion of the Reorganization, all of the authorized, issued and outstanding capital stock and other securities of any kind or nature (including without limitation, subscriptions, options, warrants, phantom stock rights and other rights of any kind entitling any Person to acquire or otherwise receive any equity interest) of GCC are owned beneficially, and of record, by the Old Trust. The delivery of the Purchased Shares and the Preference Shares as provided in this Agreement will convey to Buyer good title thereto, free and clear of any and all Liens. All issued and outstanding shares of capital stock of Intasco and Intasco USA are fully paid and nonassessable and were issued in accordance with all applicable Laws. There are no capital stock or other equity interests of Intasco or Intasco USA held in treasury. There are no voting trusts, proxies or other voting agreements or understandings to which any Seller is a party or by which any Seller or Intasco USA is bound with respect to the voting of the capital stock of either GCC, Intasco or Intasco USA. There are no bonds, debentures, notes or other indebtedness of GCC, Intasco or Intasco USA having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders or holders of equity of either may vote.

4.3    Subsidiaries. GCC has no, and at no time has ever had any, Subsidiary other than Intasco, Intasco USA, 2505710 and 2505712 and none of GCC, Intasco (except as set forth in Schedule 4.3), Intasco USA, 2505710 or 2505712 has, and at no time has ever had, any Subsidiary. GCC does not have any Liabilities. Neither 2505710 nor 2505712 has or has had any operations, assets or Liabilities.

4.4    Other Agreements to Purchase. No Person other than the Buyer has any written or oral agreement or option or any right or privilege (whether by Law, preemptive or contractual) capable of becoming an agreement or option for the purchase or acquisition of the Purchased Shares, the Preference Shares or any securities of Intasco or Intasco USA (whether issued or unissued) or any of the Purchased Assets other than, in respect of the Purchased Assets, pursuant to purchase orders accepted by Intasco in the ordinary course of business.

4.5    No Conflict; Required Filings and Consents.

(a)    Neither the execution and delivery of this Agreement or any Related Document by any Seller nor the consummation of the transactions contemplated herein or therein, nor compliance by any Seller with any of the provisions hereof or thereof will (i) conflict with or result in a breach of any provisions of the certificate of incorporation or by-laws or certificate of formation or operating agreement (or equivalent organizational document

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(including any shareholder agreement or declaration)) or the trust agreement (or other governing instrument) of any of them, (ii) constitute or result in the breach of any term, condition or provision of, or constitute a default under (or an event which, with or without notice, lapse of time or both would constitute a default), or require any Consent under, or give rise to any right of termination, cancellation, modification or acceleration with respect to, or result in the creation or imposition of a Lien upon any property or assets of any Seller, Old Trust or Intasco USA pursuant to any Contract to which it is a party or by which it or any of its properties or assets is subject, or (iii) violate any Order or Law applicable to any Seller, Old Trust or Intasco USA, or any of their respective properties or assets.

(b)    No Consent is required to be obtained by Seller, Old Trust or Intasco USA for the consummation by Seller or Old Trust, as the case may be, of the transactions contemplated by this Agreement or any Related Document.

4.6    Residency. Each Seller is not at the date hereof nor will it be after Closing a non-resident of Canada for the purposes of the ITA.

4.7    Financial Statements.

(a)    Seller has provided to Buyer true and complete copies of (i) the audited combined balance sheets of Intasco and Intasco USA as of January 31, 2014 and 2015 (the “Audited Balance Sheet”) and the related combined statements of income, cash flow statements and statements of changes in stockholders’ equity for the years then ended, (ii) the reviewed combined balance sheet of Intasco and Intasco USA as of October 31, 2015, and the related combined statement of income, cash flow statement and statement of changes in stockholders’ equity for the nine months then ended and (iii) the internally prepared combined balance sheet of Intasco and Intasco USA as of January 31, 2016 (the “Interim Balance Sheet”), and the related combined statement of income, cash flow statement and changes in stockholders equity for the year then ended (the “Interim Financial Statements” and, together with the financials described in clauses (i) and (ii) above, the “Financial Statements”).

(b)    The Financial Statements are true, complete and accurate, have been prepared in accordance with the accrual basis accounting method, consistent with past practice, have been prepared in accordance with GAAP and fairly present the combined assets, liabilities and financial position, the combined results of operations and cash flows of Intasco and Intasco USA as of the dates and for the years and periods indicated. Intasco and Intasco USA have no liabilities, liquidated or contingent or otherwise, that are not reflected on the Financial Statements, other than liabilities incurred after January 31, 2016 in the ordinary course of business consistent with past practice of the same type of liabilities.

(c)    Since the date of the Interim Balance Sheet, there has been no material change in any accounting or tax policies, principles, methods or practices of Intasco and Intasco USA.

(d)    There are no unpaid commitments for capital expenditures by either Intasco or Intasco USA exceeding, individually or in the aggregate, $25,000.

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(e)    There are no non-recurring items of income in any of the Financial Statements constituting statements of income that arise from matters other than the sale of products or the performance of services in the ordinary course of business in excess, individually or in the aggregate, of $25,000.

4.8    Absence of Certain Changes. Except as set forth on Schedule 4.8, since the date of the Interim Balance Sheet, each of Intasco and Intasco USA has conducted its Business and its operations only in the ordinary course of business consistent with past practice and, without limiting the generality of the foregoing, there has not been, occurred or arisen, directly or indirectly, any of the following events:

(a)    material adverse change in the condition (financial or otherwise), assets, liabilities, operations, earnings, business or prospects of the Business;

(b)    the commencement, settlement, notice or, to the Seller’s Knowledge, threat of any Action or, to the Seller’s Knowledge, investigation seeking damages in excess of $10,000 per occurrence or seeking injunctive relief or other equitable remedy against either Intasco or Intasco USA;

(c)    any damage to or destruction or loss of any asset or property of either Intasco or Intasco USA (whether or not covered by insurance) with an aggregate value in excess of $20,000 or any condemnation taking or other similar proceeding;

(d)    termination or amendment (or notice of termination or amendment) of any Material Contract with any customer of either Intasco or Intasco USA representing individually $10,000 or in the aggregate $20,000 or more of the revenues of the Business in any calendar year;

(e)    any termination of or receipt of notice of termination of any Material Contract involving a total remaining commitment by or to either Intasco or Intasco USA of at least $10,000;

(f)    any acquisition, disposition or other transfer by either Intasco or Intasco USA of any asset or property having a value in excess of $20,000 other than in the ordinary course of business consistent with past practice, or any mortgage, pledge or imposition of any Lien (other than Permitted Liens) on any asset or property of either Intasco or Intasco USA or any merger or consolidation with or acquisition of an interest of any Person;

(g)    any payment, discharge or satisfaction by Intasco or Intasco USA of any Lien or payment by Intasco or Intasco USA of any Liability, other than in the ordinary course of business consistent with past practice or as contemplated herein;

(h)    any non-cash dividends or other non-cash distributions declared or paid to the stockholders, members or other equity holders of either Intasco or Intasco USA;

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(i)    (i) any increase (whether in cash, stock or property) from the information set forth in Schedule 4.8(i) in the base salary or other compensation payable or to become payable by either Intasco or Intasco USA to any of its officers, directors, managers, employees or consultants, (ii) any adoption of, increase in the payments to or benefits under, any savings, insurance, pension, retirement or other employee benefit plan, (iii) declaration, payment or commitment or obligation of any kind for the payment by either Intasco or Intasco USA of a severance payment, termination payment, bonus, profit sharing, deferred compensation or other additional salary or compensation to any such person, other than pursuant to the terms of any existing written agreement, policy or plan; or (iv) the making of any loan to, or engagement in any transaction with, any Employee, officer or director of Intasco or Intasco USA;

(j)    any loan to any Person, or any guarantee of any obligation incurred by any Person;

(k)    incurrence of any indebtedness or other material Liabilities, except to the extent reflected in the Financial Statements or incurred after the date of the Interim Balance Sheet in the ordinary course of business consistent with past practice;

(l)    capital expenditures or commitments of Intasco or Intasco USA in excess of $20,000 in the aggregate;

(m)    cancellation of any indebtedness owed to or held by either Intasco or Intasco USA;

(n)    forward purchase commitments in excess of the requirements of the Business for normal operating inventories or at prices higher than the current market price;

(o)    forward sales commitments other than in the ordinary course of business or any failure to satisfy any accepted orders for goods;

(p)    change in accounting or tax practices followed by Intasco or Intasco USA;

(q)    change in Intasco or Intasco USA’s depreciation or amortization policies;

(r)    change in the credit terms offered to customers of, or by suppliers to, the Business;

(s)    write-down of the value of inventory or write-off as uncollectible, discounted or accelerated the payment of any notes or Accounts Receivable;

(t)    to the Seller’s Knowledge, any labor dispute or any activity or proceeding by a labor union or labor representative to organize any employee, owner, director, officer, manager or agent of either Intasco or Intasco USA, or any lockouts, strikes, slowdowns, picketing, work stoppages or, to the Seller’s Knowledge, threats thereof by or with respect to such employees;

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(u)    any material adverse change in the amount, aging or collectability of the Accounts Receivable of either Intasco or Intasco USA or other debts due to either or the allowances with respect thereto or in accounts payable of either from that reflected on the Financial Statements;

(v)    any event that has had or could reasonably be expected to have a Material Adverse Effect; or

(w)    any agreement by any Seller to do any of the things described in the preceding clauses of this Section 4.8 (other than negotiations with Buyer and its representatives and the transactions contemplated by this Agreement).

4.9    Taxes.

(a)    All Tax Returns that are or were required to be filed through the Agreement Date by, or with respect to, GCC, 2505710, Intasco or Intasco USA, either separately or as a member of an affiliated or consolidated group, have been filed on a timely basis in accordance with the Laws, regulations and administrative requirements of the appropriate Taxing Authorities. All such Tax Returns that have been filed were true, correct and complete in all respects. No Taxing Authority in any jurisdiction in which GCC, 25057510, Intasco or Intasco USA does not file Tax Returns has asserted that GCC, Intasco or Intasco USA is, or may be, subject to Tax in that jurisdiction.

(b)    Each of GCC, 2505710, Intasco or Intasco USA has paid all Taxes due and owing by it (whether or not shown on any Tax Returns). All Taxes that each of GCC, 2505710, Intasco or Intasco USA is or was required by Law to withhold, remit or collect have been duly withheld, remitted or collected and, to the extent required, have been paid to the appropriate Taxing Authority.

(c)    There are no deficiencies for Taxes claimed, proposed or assessed by any Taxing Authority regarding any of GCC, 2505710, Intasco or Intasco USA (or any other member of an affiliated or consolidated group of which any of GCC, 2505710, Intasco or Intasco USA is or was a member) that have not yet been fully and finally resolved. There are no pending or, to the Seller’s Knowledge, threatened audits, investigations or claims for or relating to Taxes, and there are no matters under discussion with any Taxing Authority with respect to Taxes, regarding any of GCC, 2505710, Intasco or Intasco USA or any affiliated or consolidated group of which either is or was a member. No extension or waiver of a statute of limitations or limitation period relating to Taxes is currently in effect with respect to any of GCC, 2505710, Intasco or Intasco USA or any affiliated or consolidated group of which either is or was a member.

(d)    There are no Liens for Taxes upon any of the properties or assets of either Intasco or Intasco USA, other than Liens for current Taxes not yet due and payable. None of the property of either Intasco or Intasco USA (i) is “tax-exempt use property” within the meaning of Section 168(h) of the Code, (ii) is “tax-exempt bond financed property” within the

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meaning of Section 168(g) of the Code, or (iii) is subject to a tax benefit transfer lease under the provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954.

(e)    Neither Intasco or Intasco USA (or any affiliated or consolidated group of which either is or was a member) has (i) applied for any tax ruling, (ii) entered into a tax closing agreement with any Governmental Authority, or (iii) been a party to any agreement or arrangement that would result in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code or deferred compensation within the meaning of Section 409A of the Code.

(f)    Neither Intasco or Intasco USA (i) is a party to any tax sharing agreement or similar arrangement; (ii) may be held liable for, or be required to make any contribution with respect to, the Tax Liability of any Person by reason of Treasury Regulation Section 1.1502-6 or any comparable provision of state, local or foreign Law, as a transferee or successor, by contract, or otherwise, and (iii) has either liability under the unclaimed property or abandoned property provisions of any jurisdiction.

(g)    None of the property owned or used by either Intasco or Intasco USA is subject to a lease that is treated as other than an “operating lease” for federal income tax purposes.

(h)    Neither Intasco nor Intasco USA has distributed stock or equity of another Person, nor has had its stock or equity distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code.

(i)    None of the intangible assets owned by either Intasco or Intasco USA was held or used on or before August 10, 1993 by Intasco, Intasco USA or a “related person” within the meaning of Section 197(f)(9)(C) of the Code.

(j)    Neither Intasco or Intasco USA has (i) received notice of any claim from a taxing authority in any jurisdiction (other than a jurisdiction in which the Intasco or Intasco USA regularly files Tax Returns) that it is, or may be, subject to taxation in that jurisdiction; or (ii) participated in any “reportable transaction” as defined in Section 6707A of the Code or Treas. Reg. 1.6011-4.

(k)    None of GCC, 2505710, Intasco or Intasco USA has incurred any liability for Taxes for the period commencing at the beginning of its current fiscal year and ending on or prior to the date hereof, other than Taxes directly arising from the operation of the Business in the ordinary course of business.

(l)    At the time of the amalgamation to occur as part of the Amalgamation and Reorganization, GCC and 2505710 will have a nil refundable dividend tax on hand balance.

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(m)    Each of Old Trust, GCC, 2505710, and Intasco is not a non-resident of Canada for purposes of the ITA.

(n)    None of GCC, 2505710, Intasco or Intasco USA has any liability for Taxes of any other Person including by virtue of contract or statue (including, for greater certainty, under sections 159 or 160 of the ITA (or any similar provision of any Law)).

(o)    Intasco USA has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(p)    Canadian Buyer will be “connected” with GCC immediately before the redemption of the Preference Shares for purposes of the ITA.

4.10    Title to and Sufficiency of Properties.

(a)    Each of Intasco and Intasco USA has good, marketable and freely transferrable title to all of its properties and assets, tangible or intangible, including the properties and assets reflected in the Interim Balance Sheet as being owned by it, free and clear of all Liens except for Permitted Liens (all of which Liens shall be terminated prior to Closing). Each of Intasco and Intasco USA has a valid and enforceable right to use all tangible items of personal property leased by or licensed to it, free and clear of all Liens other than Permitted Liens. Each of Intasco and Intasco USA’s tangible assets are in good working order, operating condition and state of repair, ordinary wear and tear excepted. During the two (2) years preceding the date of this Agreement, there has not been any significant interruption of operation (being more than one day) of the Business due to inadequate maintenance of any of the tangible Purchased Assets or the tangible assets of Intasco USA. The properties and assets, tangible or intangible, of Intasco and Intasco USA are adequate for the conduct of the Business in the manner as currently conducted and in accordance with recent historical practice, are located on the Real Property of Intasco and Intasco USA, and are the only properties and assets used or held for use in the Business.

(b)    The Inventory of each of Intasco and Intasco USA has been recorded on the Interim Balance Sheet in accordance with GAAP applied consistently with the Interim Balance Sheet. None of the Inventory is held on consignment, or otherwise, by third parties. The Inventory consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete items and items of below-standard quality, which have been written off or written down to net realizable value on the Interim Balance Sheet. The Inventory not written off on the Interim Balance Sheet has been priced at the lower of cost or market on a first in, first out basis. The quantities of each item of Inventory constitute sufficient quantities for the normal operation of business of Intasco and Intasco USA in accordance with past practice.

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4.11    Real Property.

(a)    None of Seller or Intasco USA owns any real property. The Leased Real Property is not subject to any sales contract, option, right of first refusal or similar agreement or arrangement with any Person. The buildings, structures and other fixed improvements located on, in or under the Leased Real Property (collectively, the “Improvements”) are, when taken as a whole, adequate and suitable for the purposes for which they are currently being used and Intasco or Intasco USA, as the case may be, has all material rights of ingress and egress for the operation of the Business in the ordinary course. Except as set forth in Schedule 4.11, neither the Improvements nor the operation or maintenance thereof violates any material restrictive covenant, applicable Law, or the terms of any Permit, or encroaches on any property owned by others, where such violation or encroachment would materially adversely affect the value of the Leased Real Property or the operation of the Business. To the Seller’s Knowledge, as at the Closing Date:

(i)        Intasco or Intasco USA will have established adequate reserves for the rectification of any material work orders or orders issued by Government Authorities in respect of the Real Estate Assets and for the payment of any material amounts where the non-payment of which would result in a Lien on the Real Estate Assets;

(ii)    there are no Liens under the Construction Lien Act (Ontario) that have either been registered against the applicable Seller’s interest in the Real Property Leases or of which Seller or Intasco USA has received notice will be so registered, except for any such Lien that is a Permitted Lien;

(iii)        except for ordinary course repairs, improvements and replacements, the Improvements taken as a whole are fit for their existing use in connection with the Business, having regard to their age and condition; and

(iv)        none of Seller or Intasco USA have received written notice of the invalidity of any Property Right that would materially adversely affect the ability of the Seller or Intasco USA, as the case may be, to operate the Business as currently operated.

(b)    Schedule 4.11(b) sets forth each lease, sublease, offer or agreement to lease or right to occupy or license in respect of Leased Real Property or any part(s) thereof or other similar agreement under which either the Intasco or Intasco USA leases or has rights in any real property (each a “Real Property Lease”). True and complete copies of each Real Property Lease have been made available to Buyer by Seller. Either Intasco or Intasco USA has a valid and subsisting leasehold interest in all Leased Real Property free and clear of all Liens other than Permitted Liens. To the Seller’s Knowledge, the Real Property Leases are in good standing and in full force and effect, and none of the Intasco or Intasco USA or, to Seller’s Knowledge, any other party thereto is in breach or default of its obligations thereunder.

(c)    No material permit, license or certificate of occupancy pertaining to the leasing or operation of any Leased Real Property, other than those which are transferable with such property, is required by any Governmental Authority. Neither Intasco, Intasco USA

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nor any other Seller has received a written notice of any pending condemnation proceedings or eminent domain proceedings of any kind, expropriation or similar proceedings against any of the Leased Real Properties and, to the Seller’s Knowledge, none are threatened against any of the Leased Real Properties. Except as set forth in Schedule 4.11, all of the parcels of Leased Real Property are occupied under a valid and current certificate of occupancy or similar permit, a complete and correct list of which is set forth on Schedule 4.11(c)(i). Each such certificate of occupancy or similar permit shall remain in full force and effect after the Closing and permit the occupancy of the Leased Real Property by Buyer. Intasco or Intasco USA, as applicable, has the right to quiet enjoyment of the applicable Leased Real Properties for the full term of the Real Property Leases notwithstanding any mortgage, deed of trust, hypothec, debenture or similar instruments for borrowed money (collectively, “Mortgage”) that is or in the future becomes a Lien against the underlying real property or buildings or other improvements thereon and there is a valid and enforceable nondisturbance agreement with respect to each presently existing Mortgage. Each Mortgage encumbering any Leased Real Property and the related non-disturbance agreement is listed in Schedule 4.11(c)(ii). Except as set forth in Schedule 4.11, Leased Real Property is zoned so as to permit the maintenance and use of the Leased Real Property for the Business as it is used as at the date hereof.

(d)    Except for any exceptions that have not and would not reasonably be expected to have, individually and in the aggregate, a Material Adverse Effect, the roofs, walls, foundations, water, sewer, plumbing, air conditioning and electrical systems and other major structural components of or located on the Leased Real Properties are structurally sound, in reasonably good operating condition, and free from material defects and are fit for their existing use in connection with the Business. Planned capital expenditures in the next twelve (12) months to repair or replace the items described in the preceding sentence are not expected to exceed in the aggregate the amounts therefor set forth in Schedule 4.11(d). Except as set forth in Schedule 4.11, the Leased Real Properties and the operation and maintenance thereof, as now operated and maintained, comply in all material respects, with applicable Laws. The Leased Real Properties are not subject to any rights of way, use restriction, easements, reservations or limitations which would restrict Buyer or Intasco USA from conducting the Business after Closing or increase the costs of operation of such Leased Real Property.

4.12    Compliance with Laws.

(a)    Except as set forth in Schedule 4.12, each of Intasco and Intasco USA is in compliance, and, at all times during the most recent five (5) year period, has been in compliance, in all material respects with all Laws and Orders applicable to it and its business, properties and assets.

(b)    No event has occurred and no circumstances exist that may constitute or result in (with or without notice or lapse of time) a violation of or failure of any laws applicable to the Business, Seller or Intasco USA; and neither Intasco nor Intasco USA has received any written, or to Seller’s Knowledge, oral notification or communication from any Governmental Authority asserting that the either is not in compliance with any Law.

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(c)    No Governmental Authority has indicated to Intasco or Intasco USA in writing an intention to conduct an investigation or review with respect to it, and, to the Seller’s Knowledge, no investigation or review by any Governmental Authority with respect to either Intasco or Intasco USA is pending or threatened.

4.13    Permits. Schedule 4.13 contains a complete list of all material Permits issued to either Intasco or Intasco USA that are currently used by either in connection with the Business, with the expiration dates, if applicable. Each of Intasco and Intasco USA, as the case may be, is in compliance, and, at all times during the most recent ten (10) year period, has been in compliance, in all material respects, with all such Permits (the “Material Permits”), and all Material Permits are in full force and effect. Each of Intasco and Intasco USA holds all Material Permits under any Law necessary for the conduct of the Business in substantially the manner as currently conducted. No Material Permit is subject to revocation or forfeiture by virtue of any existing circumstances. No Consent from any Governmental Authority relating to the execution, delivery or performance of this Agreement or any Related Document is required for either Intasco or Intasco USA to maintain any of its Material Permits. There is with respect to each Material Permit no Action or, to the Seller’s Knowledge, investigation, pending or, to the Seller’s Knowledge, threatened to modify or revoke any Material Permit, and no Material Permit is subject to any outstanding Order or, to the Seller’s Knowledge, investigation, that would reasonably be expected to adversely affect such Permit.

4.14    Employee Benefit Plans.

(a)    Schedule 4.14(a) contains an accurate and complete list and summary of each Company Employee Plan. Neither Intasco nor Intasco USA has made any plan or commitment to establish any new Company Employee Plan, to modify any Company Employee Plan or to enter into any Company Employee Plan.

(b)    Seller has delivered or cause to be delivered to Buyer (i) correct and complete copies of all documents embodying each Company Employee Plan, including all amendments thereto and all related trust documents, (ii) the two (2) most recent annual reports (Form Series 5500 or Annual Information Form and all schedules and financial statements attached thereto), if any, required under ERISA, the Code or any other applicable Law in connection with each Company Employee Plan, (iii) if any Company Employee Plan is funded, the most recent annual and periodic accounting or actuarial valuation of Company Employee Plan assets, (iv) the most recent summary plan description together with any summaries of material modifications thereto, if any, required under ERISA or any other applicable Law with respect to each Company Employee Plan, and (v) the most recent Internal Revenue Service determination or opinion letter issued with respect to each Company Employee Plan that is intended to be qualified under Section 401(a) of the Code.

(c)    Each of Intasco and Intasco USA has performed all obligations required to be performed by it under each Company Employee Plan, and each Company Employee Plan has been established and maintained in all material respects in accordance with its terms and in compliance in all material respects with all applicable Laws and Orders, including, but not limited to, ERISA and the Code. Each Company Employee Plan intended to be qualified under Section 401(a) of the Code has obtained a favorable determination or opinion

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letter as to its qualified status under the Code, or application for such letter shall be timely filed. No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, or other breach of fiduciary responsibility, has occurred with respect to any Company Employee Plan that could reasonably be expected to subject Intasco or Intasco USA (or any officer, director or employee either) to any Tax, penalty or other Liability. There are no Actions pending or, to the Seller’s Knowledge, threatened (other than routine claims for benefits) against any Company Employee Plan or against the assets of any Company Employee Plan. There are no audits, inquiries or proceedings pending or, to the Seller’s Knowledge, threatened by the Internal Revenue Service, the United States Department of Labor or any other Governmental Authority with respect to any Company Employee Plan. Each of Intasco and Intasco USA has timely made all contributions and other payments required by and due under the terms of each Company Employee Plan and all applicable Law.

(d)    Neither Intasco, Intasco USA nor any of either’s respective ERISA Affiliates (i) maintains, sponsors, participates in or contributes to (or has an obligation to contribute to), or in the preceding six (6) calendar years, has maintained or contributed to, any (x) Pension Plan subject to Title IV of ERISA or Section 412 of the Code or which has a “defined benefit provision” within the meaning of Section 147.1 of the ITA, (y) “multiemployer plan” within the meaning of Section (3)(37) of ERISA or any applicable Canadian pension standards legislation, or (z) plan described in Section 413(c) of the Code, or (ii) has incurred any Liability or taken any action and, to the Seller’s Knowledge, no action or event has occurred, that could reasonably be expected to cause any one of them to incur any Liability under Section 412 of the Code or Title IV or ERISA with respect to any “single-employer plan” (as defined in Section 4001(a)(15) of ERISA), or on account or a partial or complete withdrawal (as defined in Sections 4203 and 4205 of ERISA, respectively or any applicable Canadian pension standards legislation) from, or unpaid contributions, with respect to any multiemployer plan.

(e)    All group health plans covering the employees of either Intasco or Intasco USA have been operated in compliance in all material respects with the requirements of Section 4980B of the Code (and any predecessor provisions) and Part 6 of Title I of ERISA (“COBRA”), the provisions of law enacted by the Health Insurance Portability and Accountability Act of 1996, and any applicable similar Law. No Company Employee Plan provides, or reflects or represents any liability to provide, retiree life insurance, retiree health or other retiree employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute.

(f)    The execution of this Agreement and the Related Documents and the consummation of the transactions contemplated hereby and thereby shall not (either alone or in connection with any additional or subsequent events) constitute an event under any Company Employee Plan, trust or loan that will or could reasonably be expected to result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits to or with respect to any employee of either Intasco or Intasco USA.

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(g)    No Company Employee Plan is subject to Section 409A of the Code. All stock options and stock appreciation rights, if any, were granted at an exercise price at least equal to the fair market value of an underlying share of common stock of Intasco or Intasco USA, as applicable, on the date of grant.

(h)    The amount recorded as liabilities on the books and records of Intasco or Intasco USA, in respect of obligations under any Pension Plan has been determined in accordance with GAAP and the material underlying assumptions in determining any such liabilities are set forth in Schedule 4.14(h).

4.15    Material Contracts.

(a)    Set forth in Schedule 4.15(a) is a list of the following Contracts to which either Intasco or Intasco USA is a party or by which it or any of its properties or assets is bound:

(i)    each power of attorney from or to either Intasco or Intasco USA;

(ii)    each Contract, commitment or arrangement relating to the acquisition of substantially all of the assets or capital stock of any business enterprise;

(iii)    each Contract under which either Intasco or Intasco USA is or would reasonably be expected to become obligated to pay in excess of $20,000 in respect of deferred or conditional purchase price (other than ordinary trade terms), indemnification obligations, purchase price adjustments or otherwise;

(iv)    each partnership or joint venture Contract;

(v)    each Contract limiting the right of either Intasco or Intasco USA to engage in or compete with any Person in any business or in any geographical area;

(vi)    each management or consulting Contract that requires Intasco or Intasco USA to make payments equal to more than $20,000 per annum;

(vii)    each Contract with respect to the employment, severance, retention, compensation or termination of any directors, officers, managers, employees or consultants involving the payment of more than $20,000 per annum, and each change of control agreement with any of the directors, officers, employees or consultants of either Intasco or Intasco USA;

(viii)    each collective bargaining agreement or other Contract with any labour union;

(ix)    each Contract with respect to Company Debt having outstanding principal amount in excess of $20,000;

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(x)    each fidelity or surety bond or completion bond;

(xi)    each lease, agreement in the nature of a lease or agreement to lease, whether as lessor or lessee, in respect of personal property having a value individually in excess of $20,000 per annum;

(xii)    each Contract or commitment relating to future capital expenditures and involving future payments or receipts in excess of $20,000 per year;

(xiii)    each Contract or commitment relating to the disposition of assets outside the ordinary course of business consistent with past practice;

(xiv)    each Contract providing for the distribution of product by or on behalf of either Intasco or Intasco USA providing for annual payments in excess of $50,000 and which cannot be terminated on less than one hundred and twenty (120) days’ notice without penalty;

(xv)    each Contract or series of Contracts (not otherwise required to be disclosed in Schedule 4.15(a)) involving payments to or from either Intasco or Intasco USA equal to more than $25,000 per annum or more than $50,000 in the aggregate and which cannot be terminated on less than one hundred and twenty (120) days’ notice without penalty;

(xvi)    each other material Contract pursuant to which either Intasco or Intasco USA is a party or by which either is bound having a term longer than twelve (12) months and which cannot be terminated on less than one hundred and twenty (120) days’ notice without penalty;

(xvii)    each Contract (including outstanding purchase orders) with Material Customers and Material Suppliers;

(xviii)    each material Contract relating to Intellectual Property of either Intasco or Intasco USA and material Intellectual Property of third parties licensed or sublicensed to or used by either Intasco or Intasco USA, including each material Contract relating to the payment of royalties or other payments to or from third parties in respect thereof;

(xix)    each Contract with any Governmental Authority;

(xx)    open purchase orders constituting the twenty (20) largest dollar amounts as of the Agreement Date that are on the customer’s form of purchase order;

(xxi)    any other Contract that is or could reasonably be expected to otherwise be material to the Business or Intasco or Intasco USA; and

(xxii)    each amendment, supplement or modification in respect of any of the foregoing Contracts.

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(b)    The Contracts required to be set forth in Schedule 4.15(a), together with the Real Property Leases, are referred to herein as the “Material Contracts.” The Seller has delivered to Buyer a true and complete copy or, in the case of oral Contracts, a written summary, of each of the Material Contracts. Each of the Material Contracts and Insurance Policies is, and shall be upon the Closing (without requiring the Consent of any third party), in full force and effect and a legally valid and binding agreement of Intasco or Intasco USA, as applicable, and, to the Seller’s Knowledge, against the other parties thereto, and there is no default or breach by either Intasco or Intasco USA, as applicable, or, to the Seller’s Knowledge, any other party, in the timely performance of any obligation to be performed or paid thereunder or any other material provision thereof, and no event has occurred which, with notice or lapse of time, would constitute such a default or breach. Neither Intasco nor Intasco USA nor, to the Seller’s Knowledge, any other party has repudiated any provision of any Material Contract. Each Material Contract that contains a change in control clause or otherwise requires the Consent of any Person in connection with this Agreement or any of the transactions contemplated hereby is appropriately identified as such on Schedule 4.15(b).

4.16    Legal Proceedings. There is no, and for the previous five (5) years there has not been any, Action or Order with respect to Intasco or Intasco USA pending, or to the Seller’s Knowledge, threatened or anticipated: (a) involving, against, related, to or affecting (i) Intasco or Intasco USA, the Business or their respective assets (including, without limitation, Intellectual Property), or (ii) any officers, directors or managers of Intasco or Intasco USA; (b) that, individually or in the aggregate, would be reasonably expected to have the effect of preventing, delaying, making illegal, limiting, enjoining or otherwise interfering with any of the transactions or payments contemplated hereunder; (c) involving the risk of criminal liability; or (d) involving Intasco or Intasco USA as plaintiff, including any derivative suits brought by or on behalf of Intasco or Intasco USA. To the Seller’s Knowledge, neither Intasco or Intasco USA is in breach or default with respect to, or subject to, any Order of any court or other Governmental Authority, and there are no unsatisfied judgments against either, the Business or any of their respective assets. Schedule 4.16 contains a brief summary of all Actions involving, or related to, Intasco or Intasco USA, the Business or the assets of any of either Intasco or Intasco USA in the past five (5) years, including asbestos claims, worker’s compensation claims, wage and hour claims, or discrimination claims (including sex, age, race, national origin, handicap, or veteran status discrimination claims). The Seller has delivered to the Buyer complete and accurate copies of all pleadings, correspondence and other documents relating to the Actions described in Schedule 4.16. All Actions and investigations required to be set forth on Schedule 4.16 (if any) have been timely reported to all applicable insurance carriers and no reservation of rights or denial of coverage has been issued by any such carrier.

4.17    GST Registration. Intasco is a registrant for purposes of subdivision d or Division V of Part IX of the ETA whose registration number is 102499779RT0001.

4.18    Intellectual Property.

(a)    Schedule 4.18(a) sets forth a list of all registered or recorded Intellectual Property and any other material Intellectual Property used or held for use in the Business, and such schedule correctly designates such Intellectual Property as owned by, licensed to or by or

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sublicensed to or by Intasco or Intasco USA (identifying which entity owns, licenses or sublicenses Intellectual Property). Seller delivered to Buyer correct and complete copies of all registrations, licenses, agreements, and other written documentation related to, or evidencing the ownership or right to use, the Intellectual Property set forth on Schedule 4.18(a). The Intellectual Property set forth in Schedule 4.18(a) comprises all Intellectual Property necessary to conduct the Business as currently conducted.

(b)    Except as set forth on Schedule 4.18(b):

(i)    Either Intasco or Intasco USA has good and marketable title to and possesses all right, title, and interest in and to, or a valid and enforceable license to manufacture, use, and sell, as the case may be, all of the Intellectual Property, free and clear of any Liens;

(ii)    the manufacture, use, sale, offer for sale or importation by either Intasco or Intasco USA of any Intellectual Property does not infringe or otherwise violate any rights of any Person;

(iii)    there is no unauthorized use, unauthorized disclosure, infringement, misappropriation or other violation of any Intellectual Property by any Person or any current or former officer, employee, independent contractor or consultant of either Intasco or Intasco USA. Neither Intasco or Intasco USA has received communication of any claim, any cease and desist or equivalent letter, or any other notice of any allegation to the effect that any of the products, apparatus, methods or services made, used, sold, offered for sale, imported or otherwise provided by Intasco or Intasco USA infringes upon, copies, misappropriates or otherwise violates any Intellectual Property from any Person;

(iv)    neither Intasco nor Intasco USA has entered into any Contract to indemnify any Person against any claim of infringement, misappropriation or other violation of Intellectual Property rights;

(v)    neither Intasco or Intasco USA has been charged in any Action with, and has not charged others with, unfair competition, infringement, misappropriation, copying, wrongful use or any other violation or improper or illegal activity with respect to or affecting any Intellectual Property or with claims contesting the validity, ownership or right to make, use, sell, offer for sale, import, license or dispose of any Intellectual Property; and

(vi)    on the Closing Date, the Intellectual Property will be owned or available for use by Buyer or Intasco USA, as the case may be, from and after the Closing on identical terms and conditions as are applicable to them or either of them prior to the Closing, and the consummation of this Agreement and the transactions contemplated hereby will not give rise to any Lien on Intasco’s or Intasco USA’s exclusive rights, title and interest in and to, or the valid and enforceable license to use, as the case may be, the Intellectual Property (or rights thereto).

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(c)    To the Seller’s Knowledge, each of Intasco and Intasco USA has all valid and enforceable rights under the Laws of the relevant jurisdictions necessary to assert a claim of infringement against any unauthorized Persons with respect to the Intellectual Property, as well as any yet-unfiled inventions based on or claiming priority from any of the Intellectual Property and any pending claims in any United States, Canadian or foreign patent application(s) included in the Intellectual Property.

(d)    All rights in all inventions and discoveries related to the Intellectual Property either made, developed or conceived by current or former officers, employees, independent contractors or consultants during the course of their employment or retention by either Intasco or Intasco USA which are used primarily in the Business; or made, written, developed or conceived with the use or assistance of the facilities or resources of Intasco or Intasco USA, and which are the subject of one or more issued patents or patent applications, have been assigned in writing to, or is subject to a duty to assign to, Intasco or Intasco USA, as the case may be, to the extent permitted by applicable Law.

(i)    Intasco and Intasco USA do not have, and have not had in the past, policies that each officer, employee, independent contractor or consultant, employed or retained by either Intasco nor Intasco USA in connection with the Business who develops or utilizes technical information within the scope of his, her or its employment or retention, including proprietary technology, inventions, and other know-how used in the Business, including the computer software, hardware and systems incorporated into the Business, sign or is obligated to sign documents confirming that he, she or it assigns to Intasco or Intasco USA, as applicable, all Intellectual Property rights made, written, developed or conceived by him, her or it during the course of his, her or its employment or retention by either and relating to the Business or made, written, developed or conceived with the use or assistance of the facilities or resources of Intasco or Intasco USA, as applicable.

(ii)    To the extent that ownership of any such rights does not vest in Intasco or Intasco USA by operation of Law, and to the extent that Intasco or Intasco USA or any officer, employee, independent contractor or consultant employed or retained by either has failed to execute such documents, Intasco or Intasco USA, as applicable shall require, to the extent permitted by Law, that all necessary documents be executed before the Closing.

(e)    Intasco and Intasco USA each has taken all reasonable and practicable steps to protect and preserve the confidentiality of trade secrets comprising the Intellectual Property, and to the Seller’s Knowledge, all use by either of trade secrets comprising the Intellectual Property not owned by it has been, and is, pursuant to, and in compliance with, the terms of an agreement between Intasco or Intasco USA, as applicable and the owner of, or party providing, such trade secrets, or is otherwise lawful.

4.19    Insurance.

(a)    Except for deductible amounts set forth in Schedule 4.19(a), the property and assets used to conduct the Business are insured against loss or damages from all insurable hazards or risks on replacement cost basis and such insurance coverage will be

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continued in full force and effect to and including the Closing. Schedule 4.19(a) lists all third party insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors (in their respective capacities as such) of either Intasco or Intasco USA (the “Insurance Policies”) and sets forth, by year, for the current and preceding policy year:

(i)    a description of the policy by insurer, policy number, type of insurance, period of coverage, coverage limits, expiration dates, annual premiums, and a general description of the type of coverage provided;

(ii)    a summary of the loss experience under each policy; and

(iii)    a statement describing each claim under an insurance policy for an amount in excess of $20,000, which sets forth the name of the policy, the claimant, the amount and a brief description of the claim.

(b)    Seller has delivered, or caused to be delivered, to Buyer copies of all Insurance Policies. There is no claim pending under any Insurance Policies as to which coverage has been questioned, denied or disputed by the underwriters of such Insurance Policies. No Insurance Policy will terminate or lapse by reason of any of the transactions contemplated by this Agreement. All Insurance Policies are in full force and effect. All premiums due and payable under all such policies and bonds have been paid, and each of Intasco and Intasco USA is otherwise in compliance in all material respects with the terms of such policies and bonds. There are no historical gaps in coverage under any Insurance Policy and coverage limits under Insurance Policy have not been exhausted or significantly diminished. No Insurance Policy will be modified or cancelled prior to the Closing. To the Seller’s Knowledge, there is no threatened termination of, or material premium increase with respect to, any Insurance Policy. Neither Intasco nor Intasco USA has been refused any insurance with respect to its assets or operations, nor has its coverage been limited, by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance. The Insurance Policies and arrangements identified in this Section 4.19 and the corresponding Schedules hereto are sufficient for compliance with all requirements of Law and the terms of Contracts to which either Intasco or Intasco USA is a party or by which it is bound.

4.20    No Expropriation. No property or asset of Intasco and Intasco USA has been taken or expropriated by any Governmental Authority, nor has any notice or proceeding in respect of thereof been given or commenced, nor is the Seller or Intasco USA aware of any intent or proposal to give any such notice or commence any such proceeding.

4.21    Personnel.

(a)    Schedule 4.21(a)(i) is a complete and accurate list setting forth the name, title, 2015 salary, length of hire, bonus and other compensation amount, projected 2016 salary, bonus and other compensation amount and vacation/sick days for all current employees or independent contractors or consultants (each an “Employee”) of each of Intasco and Intasco USA. Schedule 4.21(a)(ii) lists all Employees on Schedule 4.21(a)(i) who have been absent from work for a period in excess of one month, as well as the reason for their absence. No work

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stoppage or labor strike against either Intasco or Intasco USA is pending or, to the Seller’s Knowledge, threatened. Neither Intasco nor Intasco USA knows of any activities or proceedings of any labor union to organize any employees. There are no Actions, labor disputes, grievances or investigations pending or, to the Seller’s Knowledge, threatened relating to any labor, safety or discrimination matters involving any employee (other than worker’s compensation claims in the ordinary course), including charges of unfair labor practices or discrimination complaints. Since January 1, 2010, neither Intasco nor Intasco USA has engaged in any unfair labor practices within the meaning of the National Labor Relations Act. Neither Intasco or Intasco USA is currently, nor has it been at any time since January 1, 2010 (A) a party to, or bound by, any collective bargaining agreement or union Contract and no collective bargaining agreement is being negotiated by either Intasco or Intasco USA, or (B) subject to any lock-out, strike, slowdown, work stoppage or, to the Seller’s Knowledge, threats thereof by any of its employees. There is no employment agreement, employee benefit or incentive compensation plan or program, severance policy or program or any other plan or program to which either Intasco or Intasco USA is a party (A) that will be triggered or accelerated by reason of or in connection with the execution of this Agreement or the consummation of the transactions contemplated by this Agreement, or (B) which contains “change in control” provisions pursuant to which the payment, vesting or funding of compensation or benefits is triggered or accelerated by reason of or in connection with the execution of or consummation of the transactions contemplated by this Agreement. No existing employee or consultant whose annual salary is in excess of $50,000 (exclusive of bonuses) has given notice to Intasco or Intasco USA, as applicable, to cancel or otherwise terminate such person’s relationship with either.

(b)    Neither Intasco or Intasco USA is liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). Except as set forth on Schedules 4.21(b), there are no pending or, to the Seller’s Knowledge, threatened Actions against either Intasco or Intasco USA under any worker’s compensation or similar policy. Intasco and Intasco USA each has complied with all the provisions of its employee handbook.

(c)    Intasco USA has obtained a completed Employment Eligibility Verification Form I-9 (“I-9 Form”) from each of its current and former Employees and it has completed the employer section(s) of the I-9 Form of each Employee, in accordance with applicable Law. To the Seller’s Knowledge, each Employee is, or at the time of his or her retention by Intasco USA, was, eligible to work in the United States under applicable Law. Intasco USA is, and, at all times during the most recent ten (10) year period, has been in compliance with all Laws pertaining to the completion and maintenance of I-9 Forms for its Employees, including but not limited to all applicable retention requirements.

(d)    Neither Intasco nor Intasco USA is restricted, directly or indirectly, by any Contract from conducting the Business anywhere in the world. Except as may be provided in this Agreement or applicable Law, neither is restricted by Contract from terminating its employees or amending its benefits, and any such termination or amendment of benefits shall

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not require any severance or other payments. All vacation and sick pay has been fully accrued as a liability.

(e)    Schedule 4.21(e) sets forth a list of (i) all Employees who currently receive severance or similar payments from either Intasco or Intasco USA and the dollar amount and other terms of such severance or similar payment; and (ii) any employee to whom severance or similar payments may, as a result of a contractual, statutory or other obligation of either Intasco or Intasco USA, become payable and a good faith estimate the dollar amount of such payment.

4.22    Environmental Matters.

(a)    Each of Intasco, Intasco USA and the Leased Real Property are in compliance, and, at all times during the most recent ten (10) year period have been in compliance, in all material respects with all Environmental Laws applicable to the Business and operations of the Business and the Leased Real Property.

(b)    Each of Intasco and Intasco USA has all Permits required under Environmental Laws to conduct the Business (including those Permits issued in connection with the Leased Real Property), and to own, use and operate the property and assets owned or used by the Business, all of which are described in Schedule 4.22. Each such Permit is valid, subsisting and in good standing, and neither Intasco nor Intasco USA is in default or breach of any such Permit, and no proceeding is pending or threatened in relation to, and no grounds exist to revoke or limit, any Permit. Seller has provided a complete and accurate copy of each such Permit and all amendments thereto to Buyer.

(c)    Neither Intasco or Intasco USA has Released any Hazardous Material at, on, under or from the Leased Real Property, or at, on, under or from any real property formerly owned or operated by it, or a Predecessor, or to which any of them has transported or arranged for the transportation of Hazardous Materials, that could result in material Liability to either Intasco or Intasco USA pursuant to any Environmental Law.

(d)    No building, structure or improvement located on the Leased Real Property is insulated with urea formaldehyde insulation, and none of such buildings or structures contains asbestos, mold or PCBs.

(e)    No underground storage tanks are or have been located on the Leased Real Property.

(f)    Neither Intasco nor Intasco USA has received any written notice, demand letter or complaint or claim under or relating to any Environmental Law.

(g)    There currently are effective all Material Permits required under any Environmental Law that are necessary for the activities of Intasco or Intasco USA, as applicable, and operations at the Leased Real Property; all such Permits are in good standing with no

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pending violations, and Intasco or Intasco USA, as applicable, has timely submitted any applications necessary for the renewal or extension of all such Material Permits.

(h)    Schedule 4.22(h) sets forth a list of all environmental reports, studies, assessments (including Phase I reports, Phase II reports and environmental assessments) with respect to the Leased Real Property or the Business and documents and correspondence in the possession of Seller or Intasco USA or available to any of them and any documents relating to any violation of or liability under Environmental Laws. Seller has delivered to Buyer true and accurate copies of all such reports, studies, assessments, documents and correspondence.

(i)    Hazardous Materials have not been sent or arranged to be sent by either Intasco or Intasco USA or anyone associated with the Business to a site that is listed or proposed for listing on the National Priorities List pursuant to CERCLA, or listed on the Comprehensive Environmental Response Compensation Liability Information System List (as defined in CERCLA) or any similar federal, state or foreign list of sites evidencing significant levels of Hazardous Materials or contamination and/or requiring remediation.

(j)    To the knowledge of Seller after reasonable enquiry, there are no pending or proposed changes to Environmental Laws that would render illegal or restrict the operations of the Business or the use of the Purchased Assets.

4.23    Customers and Suppliers.

(a)    Schedule 4.23(a) sets forth a list of the ten (10) largest customers of the Business, as measured by revenue, for each of fiscal year 2013, fiscal year 2014 and fiscal year 2015, showing the approximate aggregate total receipts by each of Intasco and Intasco USA for each such customer during such period (“Material Customers”). All Material Customers continue to be customers of the Business and neither Intasco or Intasco USA has received written or, to the Seller’s Knowledge, oral notice that any Material Customer intends to terminate its business relationship with Intasco or Intasco USA or to cease to purchase or adversely change in a significant manner the quantity purchased from either of any products or services or the pricing or other material economic terms of its business with either Intasco or Intasco USA.

(b)    Schedule 4.23(b) sets forth a list of the ten (10) largest suppliers of the Business, as measured by costs, for each of fiscal year 2013, fiscal year 2014 and the fiscal year 2015, showing the approximate aggregate total expenditures by each of Intasco or Intasco USA for each such supplier during such period (“Material Suppliers”). Neither Intasco nor Intasco USA has received written, or, to the Seller’s Knowledge, oral notice that any Material Supplier intends to terminate its business relationship with either or to cease to supply or adversely change in a significant manner its price or terms to either of any products or services.

(c)    Within the last twelve (12) months (i) there has been no material adverse change in the relationships of either Intasco or Intasco USA with its (A) Material Suppliers, or (B) Material Customers, and (ii) there has been no incentive or other benefits, time sensitive or otherwise, offered to any distributor or other customer by or on behalf of either Intasco or Intasco USA to induce them to purchase inventory or services in excess of the

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amounts they would purchase in the ordinary course in the absence of any such incentives or benefits.

(d)To Seller’s knowledge, there is no reason to anticipate that the benefits of any relationship with any of the Material Customers or Material Suppliers will not continue after the Closing in substantially the same manner as prior to the date of the Agreement.

4.24    Accounts Receivable. All Accounts Receivable of either Intasco or Intasco USA reflected on the Interim Balance Sheet and those otherwise reflected in the books of either Intasco or Intasco USA after the date of the Interim Balance Sheet represent bona fide transactions made in the ordinary course of business consistent with past practice and will be fully collected at their recorded amounts net of reserves for non-collectability reflected in the Interim Balance Sheet. The aggregate amount of any counter-claims, defenses or offsetting claims that are pending or have been threatened in writing with respect to the Accounts Receivable of either Intasco or Intasco USA reflected on the Interim Balance Sheet does not exceed the aggregate amount of the reserves therefor reflected on the Interim Balance Sheet. All of the Accounts Receivable of either Intasco or Intasco USA relate solely to sales of goods or services to its customers, none of whom are Affiliates of Intasco or Intasco USA. All rebates receivable from vendors of either Intasco or Intasco USA and reflected on the Interim Balance Sheet have been, and all rebates receivable from vendors of Intasco or Intasco USA generated subsequent to the date of the Interim Balance Sheet have been, booked in connection with actual purchases of product in the ordinary course of business consistent with past practice and will be fully collected at their recorded amounts net of reserves for non-collectability reflected in the Financial Statements. Schedule 4.24 contains a complete and accurate aging report of the Accounts Receivable of each of Intasco or Intasco USA as of a recent date. Each such Account Receivable constitutes a valid claim for the full amount against the account debtor free and clear of all Liens. No Account Receivable is the subject of any outstanding dispute, asserted right of setoff or other claim.

4.25    Related Party Transactions. No officer, director, manager or holder of greater than one percent (1%) of any shares of capital stock or other equity interest of either Intasco or Intasco USA (nor any ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership, corporation or other entity controlled by any such Person) has, directly or indirectly, (a) any economic interest in any Person (other than passive investments that do not involve any participation in the management or affairs of such Person) that has engaged in competition with Intasco or Intasco USA, (b) any economic interest in any Person (other than passive investments that do not involve participation in the management or affairs of such Person) that purchases from or sells or furnishes to either Intasco or Intasco USA any services or products, or (c) a beneficial interest in any Contract to which either Intasco or Intasco USA is a party, except in the case of clause (c) in any such Person’s capacity as an officer, director, employee or holder of the capital stock of Intasco or Intasco USA. Schedule 4.25 lists all loans currently outstanding from or to either Intasco or Intasco USA to or by any Employee.

4.26    Books and Records. The books of account and other financial records of Intasco or Intasco USA and the Business have been made available to Buyer and are complete and correct in all material respects and recorded accurately. The minute books of Intasco and Intasco

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USA and any predecessors thereof made available on behalf of Seller to Buyer’s counsel are complete and accurate minute books of Intasco and Intasco USA and any predecessor thereof, reflecting all proceedings of the directors of the Intasco or Intasco USA (and any committees thereof), as applicable, and the shareholders of Intasco or Intasco USA from the date of their respective formation to the date hereof.

4.27    Product Liability and Warranty.

(a)    Other than warranties regarding Products manufactured in accordance with specifications or other warranties pursuant to applicable Law, no Product is subject to any guaranty or warranty given by either Intasco or Intasco USA. (i) Neither Intasco or Intasco USA has Liability arising out of any injury to any Person or property as a result of the ownership, possession or use of any Product; (ii) there are no citations or decisions by any Governmental Authority stating that any Product is defective or unsafe or fails to meet any applicable safety standards promulgated by any Governmental Authority; (iii) neither Intasco or Intasco USA has any material Liability arising out of any injury to any individual or property as a result of the ownership, possession, or use of any product designed, distributed, sold, leased, delivered or placed into the stream of commerce by it; (iv) there is no alleged or actual defect or hazard in the manufacture, design, materials or workmanship, or alleged or actual failure to warn of any of the foregoing, in any Product; and (v) there has not been any occurrence involving any product recall, rework or retrofit relating to any Product. Intasco and Intasco USA each maintains procedures for the removal of Products from its Inventory should it be notified of those conditions described in Section 4.27(a).

(b)    Neither Intasco nor Intasco USA each has been denied product liability insurance coverage during the past ten (10) years.

4.28    Undisclosed Liabilities. Neither Intasco or Intasco USA has any Liabilities (including without limitation any minimum purchasing obligations which have not been fulfilled), except those Liabilities: (a) reflected on the Interim Balance Sheet; (b) incurred since such date in the ordinary course of business consistent with past practice, which are of the same general nature and amount with past practice; or (c) incurred in connection with this Agreement.

4.29    Their Respective Certain Business Practices. Neither Intasco or Intasco USA, and to the Seller’s Knowledge, none of their respective stockholders, members, officers, directors, managers, employees representatives or agents, has offered, promised, authorized or made, directly or indirectly, any unlawful payments to any domestic or foreign governmental official, including any official of an entity owned or controlled by a domestic or foreign government, political party or official thereof or any candidate for political office, with the intent or purpose of: (a) influencing any act or decision of such official in his or her official capacity; (b) inducing such official to do or omit to do any act in violation of the lawful duty of such official; (c) receiving an improper advantage; or (d) inducing such official to use his or her influence with any Governmental Authority to affect or influence any act or decision of such Governmental Authority; in any case in order to assist Intasco or Intasco USA in obtaining or retaining business for or with, or directing business to, any Person.

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4.30    Directors and Officers. Schedule 4.30 sets forth the names and titles of all the officers and directors of each of Intasco and Intasco USA.

4.31    Dividends. Since January 31, 2016, except as expressly disclosed herein, neither Intasco nor Intasco USA has, directly or indirectly, declared or paid any dividends or declared or made any other distribution on any of its shares of any class and has not, directly or indirectly, redeemed, purchased or otherwise acquired any of its outstanding shares of any class or agreed to do so.

4.32    Bank Accounts. All of the bank accounts of Intasco, Intasco USA and Persons with signing authority for such bank accounts are listed on Schedule 4.32. There are no outstanding powers of attorney executed by or on behalf of Intasco or Intasco USA.

4.33    No Brokers. No broker, finder or similar agent has been employed by or on behalf of the Seller or Intasco USA, and no Person with which any of them has had any dealings or communications of any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement or the transactions contemplated hereby or by the Related Documents.

4.34    Investment Representation. In connection with the issuance of the Equity Consideration hereunder, GCC hereby represents and warrants to Buyer that:

(a)    It is an “accredited investor” as defined in Rule 501(a) under the Securities Act and has, by reason of its business and financial experience and the business and financial experience of those advisors retained by it, such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of holding the Equity Consideration such that GCC is sophisticated as contemplated by Rule 506(b)(2)(ii) under the Securities Act.

(b)    It hereby represents that it is acquiring the Equity Consideration hereunder for its own account with the present intention of holding such securities for investment purposes and that it has no intention of selling such securities in a public distribution in violation of the U.S. federal securities laws or any applicable securities laws. It acknowledges that the Equity Consideration has not been registered under the Securities Act or other applicable securities laws and that the Equity Consideration will be issued in reliance on exemptions from the registration requirements of the Securities Act and other applicable statutes and on the Equity Holder’s representations and agreements contained herein. It further acknowledges that the stock certificates representing the Equity Consideration to be issued to it will bear legends referencing restrictions on the transfer thereof under the Securities Act and applicable securities laws.

(c)    It is able to bear the economic risk and lack of liquidity of an investment in UFAB and is able to bear the risk of loss of its entire investment in UFAB, and it fully understands and agrees that it may have to bear the economic risk of its investment for an indefinite period of time because, among other reasons, the Equity Consideration has not been registered under the Securities Act or under any other applicable securities laws and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently

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registered under the Securities Act and under other applicable securities laws or unless an exemption from such registration is available.

(d)    It acknowledges that the issuer of the Equity Consideration is not and does not intend to become a reporting issuer in any jurisdiction of Canada and, accordingly, the securities received as part of the Equity Consideration may only be resold pursuant to an exemption from the prospectus requirement under applicable Canadian provincial securities laws.

4.35    Competition Act – Size of Transaction Threshold. The aggregate value of the assets of Intasco and Intasco USA in Canada, and the gross revenues from sales in or from Canada generated from those assets, do not exceed $87 million, all as determined in accordance with Part IX of the Competition Act (Canada) and the Notifiable Transactions Regulations thereunder.

4.36    Predecessors. Each of the representations and warranties in Article IV shall be deemed to be made with respect to any Predecessors.

4.37    Accuracy of Information. Seller’s representations, warranties or statements contained in this Agreement or the Related Documents or in the Schedules or Exhibits hereto or thereto do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make any of such representations, warranties or statements in light of the circumstances under which they were made not misleading.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to the Seller as follows:

5.1    Organization and Standing. Each Buyer is a corporation duly organized, validly existing and, where the concept of good standing is recognized under corporate law, in good standing under the Laws of its jurisdiction of organization. Each Buyer is duly qualified to do business, and, where the concept of good standing is recognized under corporate law, is in good standing, in each jurisdiction in which the character of the properties owned or leased by it or in which the conduct of its business requires it to be so qualified, except where the failure to be so qualified or to be in good standing would not have a Material Adverse Effect on such Buyer and would not otherwise adversely affect the ability of such Buyer to consummate the transactions contemplated herein or comply with any of the provisions hereof.

5.2    Authorization, Validity and Effect. Each Buyer has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Related Documents to which it is a party, and to consummate the transactions contemplated hereby and thereby, and this Agreement and such Related Documents and the consummation of the transactions contemplated hereby and thereby have been duly executed and delivered by Each Buyer pursuant

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to all necessary authorization and are or, when executed and delivered will be, the legally valid and binding obligations of each Buyer, enforceable against each Buyer in accordance with its terms.

5.3    No Conflict; Required Filings and Consents.

(a)    Neither the execution and delivery of this Agreement or any Related Document by either Buyer, nor the consummation by either Buyer of the transactions contemplated herein or therein, nor compliance by either Buyer with any of the provisions hereof or thereof, will (i) conflict with or result in a breach of any provisions of the certificate of incorporation or by-laws of either such Buyer, (ii) constitute or result in the breach of any term, condition or provision of, or constitute a default under, or require any Consent under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation or imposition of any Lien upon any property or assets of either Buyer, pursuant to any contract to which it is a party or by which it or any of its properties or assets is subject, or (iii) violate any Order or Law applicable to Buyer or any of its properties or assets.

(b)    Except as set forth on Schedule 5.3(b), no Consent is required to be obtained by either Buyer for the consummation by such Buyer of the transactions contemplated by this Agreement or any Related Document.

5.4    Tax Matters. Canadian Buyer is a registrant for purposes of subdivision d or Division V of Part IX of the ETA. Canadian Buyer is not at the date hereof nor will it be after the Closing a non-resident of Canada for the purposes of the ITA.

5.5    UFAB Shares. Upon issuance, the UFAB Shares forming the Equity Consideration will be duly authorized, validly issued and fully paid and nonassessable and will not be subject to any option, call, pre-emptive, subscription or similar rights under any provision of applicable Law. As of the Closing, Buyer will have sufficient authorized but unissued shares or treasury shares of Buyer common stock to meet its obligation to deliver the UFAB Shares under this Agreement. Upon consummation of this Agreement, Seller shall acquire good and valid title to the UFAB Shares.

ARTICLE VI
COVENANTS AND AGREEMENTS

6.1    Interim Operations of Intasco and Intasco USA. Prior to the Time of Closing or the earlier termination of this Agreement, except as may be set forth on Schedule 6.1 or as may be specifically contemplated by this Agreement (including Schedule 6.1): (a) Intasco and Intasco USA shall, and each other Seller shall cause Intasco and Intasco USA to, conduct the Business solely in the ordinary course of business consistent with past practice; (b) the Seller and Intasco USA shall, and shall cause Intasco and Intasco USA to, use commercially reasonable efforts to (i) preserve intact the present business organizations of Intasco and Intasco USA, (ii) keep available the services of Intasco and Intasco USA’s present officers, managers and employees and agents, and (iii) preserve Intasco and Intasco USA’s relationships with customers, suppliers and others having business dealings with it; and (c) except as otherwise expressly contemplated by this

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Agreement, Intasco and Intasco USA shall, and the Seller shall cause Intasco and Intasco USA to (i) manage their financial matters and Working Capital in the ordinary course of business consistent with past practices, and (ii) pay or perform other obligations when due in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, unless Buyer has previously consented in writing, Intasco and Intasco USA shall not, and the Seller shall not permit Intasco and Intasco USA to:

(a)    incur any indebtedness for borrowed money or issue any long-term debt securities or assume, guarantee or endorse such obligations of any other Person, except for indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice under lines of credit existing on the Agreement Date or other indebtedness to be paid off at or prior to Closing;

(b)    except in the ordinary course of business consistent with past practice, (i) acquire or dispose of any property or assets, (ii) mortgage or encumber or otherwise subject to any Lien any properties or assets (other than Permitted Liens), or (iii) cancel or waive any debts owed to or claims or rights held by Intasco or Intasco USA;

(c)    (i) other than in the ordinary course of business consistent with past practice, enter into, modify, amend or, except upon a counter-party’s breach thereof, terminate any Material Contract, or (ii) default in the performance of any material covenant under any Material Contract, which default is not cured within any applicable grace period;

(d)    engage in any transactions with, or enter into any Contracts with, any Affiliates of Intasco or Intasco USA, except to the extent required by Law or expressly required by this Agreement;

(e)    change its fiscal year end inventory, shipping operations or cut-off procedures;

(f)    effectuate a “plant closing” or “mass layoff” (as those terms are defined under the WARN Act) affecting in whole or in part any site of employment, facility, operating unit or employees of Intasco or Intasco USA;

(g)    make capital expenditures in excess of the amounts set forth in the budget contained in Schedule 6.1(g);

(h)    cancel or terminate any insurance policy naming either as a beneficiary or a loss payable payee without obtaining substantially comparable substitute insurance coverage;

(i)    acquire or agree to acquire by merging or consolidating with, or by purchasing the stock or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;

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(j)    increase the rate of compensation or benefits of, or pay or agree to pay any benefit to (including, but not limited to, severance or termination pay), present or former managers, directors, officers, employees or consultants, except as may be required by any existing plan, agreement or arrangement disclosed to Buyer on Schedule 6.1(j);

(k)    enter into, adopt, amend or terminate any agreement relating to the compensation or severance of any employee or consultant of either Intasco or Intasco USA other than in the ordinary course of business consistent with past practice, except to the extent required by Law or any existing Contracts;

(l)    make any change to its accounting (including Tax accounting) methods, principles or practices;

(m)    amend its certificate of incorporation or by-laws or certificate of formation or operating agreement (or equivalent organizational documents);

(n)    except as set forth on Schedule 6.1(n), declare or pay any dividends or distributions or repurchase any shares of capital stock or other equity interests;

(o)    issue or sell any capital stock or other equity interests or options, warrants, calls, subscriptions or other rights to purchase any capital stock or other equity interests of Intasco or Intasco USA or split, combine or subdivide the capital stock or other equity interests of Intasco or Intasco USA;

(p)    take any action that would reasonably be expected to, or fail to take any action that if not taken would reasonably be expected to, result in the occurrence of any event that, if such event had occurred subsequent to the Interim Balance Sheet date and prior to the Agreement Date or the Closing Date, would have been required to have been disclosed on Schedule 4.8; or

(q)    make or grant any bonus or any wage or salary increase to any employee or group of employees, or make or grant any increase in any employee benefit plan or arrangement, or amend or terminate any existing employee benefit plan or arrangement or adopt any new employee benefit plan or arrangement (in each case, other than in the ordinary course of business consistent with past practice) or as required pursuant to the terms of existing agreements or commitments;

(r)    change any Tax elections, amend any Tax returns, change the past practice or reporting position in filing any Tax Returns, or settle any Tax controversies or audits; and

(s)    take any action that is intended or may reasonably be expected to result in any of the representations and warranties set forth in Article IV being or becoming untrue in any material respect; or

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(t)
agree to take any of the actions described in sub-clauses (a) through (s) above.

6.2    Access. Seller and Intasco USA shall forthwith make available to Buyer, its representatives and consultants and, if requested by Buyer, provide a copy to Buyer of, all title documents, Contracts, financial statements, policies, plans, reports, licences, orders, permits, books of account, accounting records and other documents, information and data relating to the Business. Seller and Intasco USA shall afford Buyer, its representatives and consultants every reasonable opportunity to have free and unrestricted access to the Purchased Assets and the Business. At Buyer’s request, each of Seller and Intasco USA shall execute such consents, authorizations and directions as may be necessary to permit any inspection of the Business or any of the Purchased Assets or to enable Buyer, its representatives or consultants to obtain full access to all files and records relating to any of the Purchased Assets maintained by any Governmental Authority. At Buyer’s request, Seller and Intasco USA shall co-operate with Buyer in arranging any such meetings as Buyer may reasonably request with: employees employed in the Business; customers, suppliers, distributors or others who have or have had a business relationship with Seller or Intasco USA in respect of the Business; and auditors, accountants, solicitors or any other Persons engaged or previously engaged to provide services to Seller or Intasco USA who have knowledge of matters relating to the Business or the Purchased Assets. In particular, Seller and Intasco USA shall permit Buyer and Buyer’s representatives or consultants to conduct all such interviews, testing, intrusive investigations, inspections, audits and assessments in respect of environmental and occupational health and safety matters with respect to the Business and the Purchased Assets as Buyer may require, in its sole discretion, to satisfy itself in respect of such matters, and Seller and Intasco USA shall co-operate in all respects therewith including obtaining any required or desirable consent or approval of any landlord. Seller and Intasco USA shall conduct, in co-operation with Buyer or the representatives or consultants of Buyer, such physical review of the equipment of the Business as is necessary so as to enable the confirmation of the values carried on the balance sheet of Seller in respect of such assets, to the reasonable satisfaction of Buyer. The exercise of any rights of inspection by or on behalf of Buyer under this Section 6.2 shall (a) be carried out in such manner as not to interfere unduly with the normal operation of the Business, and (b) not mitigate or otherwise affect the representations and warranties of Intasco, GCC and each Equity Holder hereunder which shall continue in full force and effect as provided in Section 9.1.

6.3    Books and Records. At the Time of Closing, Seller and Intasco USA shall deliver to Buyer all the books and records. Buyer covenants to use reasonable care to preserve the books and records so delivered to it for a period of six years from the Closing, or for such longer period as is required by any applicable Law, and will permit Seller or its authorized representatives reasonable access thereto in connection with the affairs of Seller relating to its matters, but Buyer shall not be responsible or liable to Seller for or as a result of any accidental loss or destruction of or damage to any such books or records.

6.4    Publicity. Except as may be required to comply with the requirements of any applicable Law or the rules and regulations of any stock exchange or national market system, no party may issue any press release or other public announcement prior to the Closing Date relating

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to the subject matter of this Agreement or the transactions contemplated hereby without the prior approval (which approval shall not be unreasonably withheld or delayed) of the other parties hereto.

6.5    Commercially Reasonable Efforts; Cooperation. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use commercially reasonable efforts to take, or cause to be taken, all actions, and use commercially reasonable efforts to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner reasonably practicable, the transactions contemplated by this Agreement and to use commercially reasonable efforts to obtain satisfaction or waiver of the conditions precedent to the consummation of the transactions contemplated hereby and the Related Documents, including (a) obtaining all of the necessary actions or nonactions and Consents from Governmental Authorities and the making of all filings and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an Action, investigation or proceeding by, any Governmental Authority, (b) at the Seller’s sole expense (which expense shall be considered Selling Expenses hereunder), obtaining the Consents from third parties identified on Schedule 6.5, (c) the defending of any Actions and investigations, whether judicial or administrative, challenging this Agreement or any of the Related Documents or the consummation of the transactions contemplated hereby and thereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed, and (iv) the execution and delivery of any additional instruments necessary or advisable to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement and the Related Documents.

6.6    Personnel.

(a)    Seller agrees to provide Buyer with an up-to-date list of the names of the Employees of Intasco at least two and not more than four Business Days prior to the Closing. Buyer shall offer employment to any Employee of Intasco on such list (the “Offered Employees”), other than the Employees listed in Schedule 6.6(a), effective as at the Closing, on substantially the same terms and conditions of employment as are currently applicable to the Employees of Intasco immediately prior to Closing. Seller shall indemnify and hold harmless Buyer from and against all Losses suffered or incurred by Buyer as a result of or arising directly or indirectly out of, in connection with or pursuant to any claims by any employees of the Business, other than claims by Offered Employees of Intasco who accept Buyer’s offers of employment with respect to their employment with Buyer which arise with respect to the time period following Closing. No employee of the Business shall be entitled to any rights under this Section 6.6(a) or under any other provisions of this Agreement. Nothing contained in this Section 6.6 shall restrict or limit Buyer from terminating any Employee, with or without cause, following the Closing Date or modifying the terms of employment of any such Employee (including terminating or modifying any compensation or benefit plans); provided, however, in accordance with and subject to the limitations and conditions in Article IX, Buyer shall indemnify and save Seller harmless of and from all Losses suffered or incurred by Seller as a result of or arising directly or indirectly out of, in connection with or pursuant to any claims by any such Employee as a result of such termination or modification of terms of employment,

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including any claims relating to termination of employment that are based upon the length of service of Offered Employees of Intasco.

(b)    Seller shall employ all of the Offered Employees of Intasco set out in Schedule 6.6(b) until the Closing except for any Offered Employees who prior to the Closing: (i) are terminated for cause; (ii) are terminated with Buyer’s consent, which consent shall not be unreasonably withheld or delayed; (iii) voluntarily resign; or (iv) retire. Seller shall not attempt in any way to discourage any of the Offered Employees of Intasco from accepting any offer of employment to be made by Buyer and shall not solicit the services of any Offered Employees during the five (5) year period following the Closing without the consent in writing of Buyer, which consent may be unreasonably withheld.

6.7    Notice of Events.

(a)    From the Agreement Date until the Closing or the earlier termination of this Agreement, Seller shall promptly notify Buyer in writing if after the Agreement Date, any event occurs, or fails to occur, that has caused or would be reasonably likely to cause (i) any representation or warranty contained in this Agreement or in any Schedule hereto to be untrue or inaccurate as of the Closing Date, or (ii) any material failure on the part of Intasco or Intasco USA or Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or him hereunder. Each such notice shall specify in reasonable detail the relevant facts relating to any such event or failure.

(b)    In the event the Seller notifies Buyer of any such event or failure but the conditions set forth in Section 7.3(a) will still be satisfied, the delivery of any such notice shall be not deemed to have cured any misrepresentation or breach of warranty to the extent so identified and, from and after the Closing Date, each Buyer Indemnitee shall have all claims for indemnification in respect thereof to the extent available under Article IX.

(c)    In the event the Seller notifies Buyer of any such event or failure that would cause the conditions set forth in Section 7.3(a) not to be satisfied and Buyer does not exercise its right to terminate this Agreement on such basis, the delivery of any such notice shall be deemed to have cured any misrepresentation or breach of warranty to the extent so identified and, from and after the Closing Date, no Buyer Indemnitee shall have any claim for indemnification in respect thereof.

6.8    Assistance with Financing. The Seller shall, and Seller shall cause each of Intasco and Intasco USA to, provide reasonable assistance to Buyer in its efforts to arrange for the financing necessary to consummate the transactions contemplated hereby, including, without limitation, (a) facilitating customary due diligence, (b) making senior officers and manager(s) of each of Intasco and Intasco USA reasonably available to meet with prospective financing sources, and (c) executing and delivering, on behalf of each of Intasco and Intasco USA, all notices, documents or certificates reasonably required in connection with such financing.

6.9    No Negotiation. Until such time, if any, as this Agreement is terminated pursuant to Article VIII, the Seller shall not, and the Seller shall cause Intasco or Intasco USA and

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all employees, representatives and agents thereof and of the Seller not to, directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with or provide any information to any Person (other than Buyer or pursuant to Section 6.7(c)) relating to any transaction involving the sale of the business or assets of Intasco or Intasco USA, or any of the capital stock of Intasco or Intasco USA, or any merger, consolidation, business combination or similar transaction involving Intasco or Intasco USA. Seller shall, and shall cause Intasco and Intasco USA to, immediately cease and cause to be terminated all existing negotiations, discussions or activities with any Person (other than Buyer) conducted heretofore relating to any such transaction.

6.10    Monthly Financial Statements. During the period prior to the Closing Date or the earlier termination of this Agreement, within fifteen (15) Business Days after the end of each calendar month, Seller shall deliver, or cause to be delivered, to Buyer an unaudited balance sheet and summary results of operations for such calendar month and for the fiscal year to date for each of Intasco and Intasco USA, which shall be prepared in accordance with the internal accounting standards of Intasco and Intasco USA and procedures consistent with the standards and procedures used in preparation of the Interim Financial Statements.

6.11    Tax Matters.

(a)    Neither Seller, Intasco nor Intasco USA shall, and Seller shall cause Intasco and Intasco USA not to, prior to the Closing Date, make or change any Tax election, adopt or change any method of Tax accounting, file any amended Tax Return, enter into any closing agreement or settle any Tax claim or assessment, surrender any right to claim a referral of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, or take any similar action relating to the filing of any tax return or the payment of any Tax.

(b)    Buyer and Seller agree to allocate and, as applicable, to cause their relevant Affiliates to allocate, the Purchase Price among the Purchased Shares and Purchased Assets in accordance with Exhibit G attached hereto (Exhibit G, the “Allocation”). Neither Seller nor either Buyer shall, and each shall cause its Affiliates not to, take any position inconsistent with the Allocation on any Tax Return or in connection with any Tax Proceeding, except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any similar provision of state, local or foreign Law). The Allocation shall be appropriately adjusted to the extent necessary to reflect any payments made hereunder that represent an adjustment to the purchase price for U.S. federal income tax purposes, including any payment made pursuant to Section 2.7 (to the extent not already reflected in the Allocation delivered by Buyer), and any indemnity payments made pursuant to this Agreement.

(c)    On the Closing Date, Buyer and Intasco shall elect jointly under subsection 167(1) of the ETA, and under any similar provision of any applicable provincial Laws, in the form prescribed for the purposes of subsection 167(1) (or the relevant provincial provision), in respect of the sale and transfer of the Purchased Assets hereunder, and Buyer shall file such election with Canada Revenue Agency (and relevant provincial authority) in the

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prescribed manner and within the time prescribed for filing such election stipulated in the ETA (or relevant provincial legislation), and promptly provide proof of such filing to Seller.

(d)    Buyer shall be liable for and shall pay directly to the appropriate Governmental Body, all federal and provincial sales Taxes (including any retail sales Taxes and land transfer Taxes) and all other Taxes, duties, fees or other like charges of any jurisdiction properly payable by a purchaser in connection with the transfer of the Purchased Assets by Seller to Buyer.

(e)    Buyer and Intasco agree to elect jointly in the prescribed form under section 22 of the ITA as to the sale of the accounts receivable and other assets described in section 22 of the ITA and to designate in such election an amount equal to the portion of the Asset Purchase Price allocated to such assets as the consideration paid by Buyer therefor.

(f)    GCC shall take commercially reasonable efforts to minimize any taxes payable by the Buyer under Part IV of the ITA in connection with any dividend paid or deemed to be paid on the Preference Shares.

(g)    By no later than February 28, 2017, Seller Representative shall provide the Buyer with such information relating to any refund or reduction of Taxes under subsection 129(1) of the ITA to which GCC is entitled in connection with any dividend paid or deemed to have been paid on the Preference Shares as is sufficient to allow Buyer to compute any taxes payable by the Buyer under Part IV of the ITA in connection with any dividend paid or deemed to be paid on the Preference Shares.

(h)    If GCC is entitled to a refund or reduction of Taxes under subsection 129(1) of the ITA in connection with any dividend paid or deemed to have been paid on the Preference Shares as provided in Section 2.1(iii), GCC will pay to the Buyer by no later than March 31, 2017, the amount of Indemnified Taxes payable by the Purchaser under Part IV of the ITA in connection with such dividend.

(i)    The Buyer will give written notice to Seller Representative within 30 days after receipt of any written notice or inquiry, (including, without limitation, any actual or proposed assessment or reassessment of Indemnified Taxes) from any taxing authority or other third party that may give rise to claim for indemnity hereunder, such notice to set forth such information with respect thereto as is then available to the Buyer; provided that the failure by any Buyer to deliver such notice within such time shall not limit any of the rights of the Buyer hereunder, except to the extent (and only to the extent) that the failure by the Buyer to give such notice prejudices the ability of Seller to object to or otherwise defend or undertake proceedings in respect of any assessment or reassessment or proposed assessment or reassessment or increases any amount payable by the Seller hereunder.

(j)    Seller will have the right, at its cost and expense and using the counsel of its choosing, to undertake and control any proceedings or objection or other defence of any assessment or reassessment or proposed assessment or reassessment relating to any Indemnified Taxes that may give rise to a claim for indemnity hereunder, and, in such case,

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Intasco will pursue any such proceedings or objection or other defence in a timely manner and in good faith. The Buyer will provide to Intasco any information with respect to the Indemnified Taxes as may become available to the Buyer, and the Buyer will cooperate with Seller to the extent reasonably requested in the conduct of all proceedings or objection or other defence relating to any such assessment or reassessment or proposed assessment or reassessment and related inquiries or investigations. While Seller is pursuing any proceeding or objection or other defence relating to any such assessment or reassessment or proposed assessment or reassessment, the Buyer will not have any right to settle any such proceeding or objection or other defence.

(k)    If, within 30 days after having received the notice referred to above, Seller does not notify Buyer that it intends to undertake any proceedings or objection or other defence of any such assessment or reassessment or proposed assessment or reassessment, the Buyer will have the right to undertake and control any proceedings or objection or other defence of the assessment or reassessment or proposed assessment or reassessment using counsel of its own choice. If, pursuant hereto, Seller undertakes any proceedings or objection or other defence of any such assessment or reassessment or proposed assessment or reassessment, the Buyer will be able to cease to defend, settle or otherwise dispose of any such proceeding or objection or other defence without the consent of Seller, provided that the Buyer has consulted with Intasco with respect to such proposed cessation, settlement or other disposition.

(l)    If following a final determination having been made by a taxing authority or a court of competent jurisdiction that there exists a liability for Indemnified Taxes (other than a liability for Indemnified Taxes described in Section 6.11(h) where all rights to object or to appeal from the determination have been exhausted or have expired, Seller will promptly (and, in any event, within 30 days of the time that the Buyer notifies the Intasco of the requirement to make the payment) pay the amount of such Indemnified Taxes, as the case may be, to the Buyer. To the extent that the Buyer becomes entitled to a refund or reduction of Indemnified Taxes, the Buyer will promptly (and, in any event, within 30 days of the time that the receipt of such refund or becoming aware of such reduction) pay the amount of such refunded Indemnified Taxes to the Buyer. The Buyer will take all reasonable steps and give all reasonable assistance to mitigate any Indemnified Taxes, including, without limitation, making any elections under the ITA or any applicable provincial income tax legislation, provided that the Buyer will not be required to declare or pay any dividend to reduce refundable Taxes payable by it under Part IV of the ITA.

(m)    Subsections 6.11(j), (k) and (l) shall apply to all Taxes other than U.S. federal, state and local Taxes.

6.12    Insurance; Property. From the Agreement Date to the Closing Date, each of Intasco and Intasco USA shall, and Seller shall cause Intasco and Intasco USA to, maintain its existing Insurance Policies or obtain substantially similar coverage on presently insured property (real, personal, and mixed) owned or leased by Intasco or Intasco USA; and all such property shall be used, operated, maintained, and repaired in the ordinary course of business consistent with past practice.

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6.13    Satisfaction of Indebtedness. At or prior to Closing, Seller shall have paid or otherwise satisfied (or caused to be paid or otherwise satisfied) or otherwise make arrangements with respect to Company Debt, such that each of Intasco and Intasco USA shall have no Company Debt or any Company Debt shall be satisfied, defeased or discharged as of the Closing Date.

6.14    No Transactions with Affiliates. Without the prior written consent of Buyer from the Agreement Date to the Closing Date, neither Intasco or Intasco USA shall enter into any contract, agreement, arrangement or transaction between either and any of its Affiliates, including, without limitation, Seller or any Employee of Intasco or Intasco USA, including employment contracts or collective bargaining agreements.

6.15    Non Assigned Contracts. In the event and to the extent Intasco is not able to obtain any third party consent required to transfer and assign in full to Canadian Buyer any and all of its rights, title and interest in and to any Contract (other than a Contract that is an Excluded Asset or an Excluded Liability) (a “Non-Assigned Contract”), notwithstanding the provisions of Section 2.1, and Buyer does not exercise its right to terminate this Agreement, such non-assignment shall not constitute a breach of this Agreement (but may constitute a failure of a condition) and shall not constitute a transfer and assignment of such Non-Assigned Contract, and Intasco shall hold such Non-Assigned Contract in trust for the benefit of Canadian Buyer pending such time as the Non-Assigned Contract can be transferred to Canadian Buyer; provided, however, that until such Non-Assigned Contract is assigned to Canadian Buyer and if Intasco is otherwise in material compliance with this Section 6.15 (including by providing the benefits of such Non-Assigned Contract to Buyer in accordance with this Section 6.15), then Canadian Buyer shall be responsible for causing the performance in all material respects of all obligations of Intasco under such Non-Assigned Contract, including payment obligations to the extent Canadian Buyer shall be notified reasonably in advance thereof. Intasco, without further consideration therefor from Buyer, shall pay, assign and remit to Buyer immediately after receipt thereof all monies, rights and other consideration or payments received in respect of any such Non-Assigned Contract. Following the Closing, Intasco shall manage such Non-Assigned Contract as reasonably directed by Buyer. Intasco shall use its reasonable best efforts to obtain any required third party consents and assign and transfer in full all of its right, title and interest in and to each Non-Assigned Contract as soon as practicable after the Closing. Upon the receipt of any such consent, Intasco shall promptly assign and transfer all of its right, title and interest in and to such Non-Assigned Contract to Canadian Buyer in full, without payment of further consideration by Buyer, and Canadian Buyer shall assume such Non-Assigned Contract (to the extent required under this Agreement with respect to any Assumed Liability) and receive all such right, title and interest in and to such Non-Assigned Contract.

6.16    Amalgamation and Reorganization. Seller shall effect the amalgamation in Section 2.1(a)(ii) in accordance with the Amalgamation Agreement attached hereto as Exhibit H. All other agreements, documents or instruments executed or filed in connection with the Amalgamation and Reorganization shall be in form and substance satisfactory to Buyer, in its sole discretion, and shall not be so executed or filed without Buyer’s prior written consent.

6.17    Additional Tax Matters; Intasco USA.

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(a)    Seller shall be liable for and shall pay, reimburse, indemnify, defend and hold harmless the Buyer Indemnitees for, from and against, all Losses and Taxes, without duplication, relating to, resulting from or arising out of: (i) Taxes imposed on Intasco USA and any Taxes for which Intasco USA may be liable pursuant to Treasury Regulations Section 1.1502-6 or any similar provision of state, local, or foreign Law as a result of Intasco USA having been included in a combined, consolidated, affiliated, unified or group Tax Return or having had its Tax liability calculated on a combined, consolidated, unified, group or affiliated basis for Pre-Closing Tax Periods; (ii) Taxes imposed on Intasco USA, or for which Intasco USA may be liable, for any Pre-Closing Tax Periods and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date; (iii) any breach or inaccuracy of any representation or warranty set forth in this Agreement to the extent relating to Taxes or Tax matters; (iv) any breach or nonperformance of any covenant set forth in this Agreement to the extent relating to Taxes or Tax matters; (v) Taxes imposed with respect to all transactions occurring on the Closing Date, all of the transactions contemplated by this Agreement and all liabilities and obligations under the agreements that are required to be terminated pursuant to Section 6.17(h); (vi) all U.S. Transfer Taxes; and (vii) all liability for Taxes of a Person other than Intasco USA imposed on Intasco USA or for which Intasco USA may be liable as a transferee, successor in interest, by contract, under applicable Law, or otherwise; in each of the above cases, together with any fees and expenses (including attorney’s and accountant’s fees) incurred in connection therewith (including with respect to the defense, investigation, remediation, settlement, or compromise of any such matter).

(b)    Except as otherwise provided in Sections 6.17(c) and 6.17(f), on or prior to the Closing Date, Seller shall cause Intasco USA to prepare and file on a timely basis (taking into account all valid extensions) all Tax Returns of Intasco USA due for all Tax periods ending on or prior to the Closing Date (each, a “Pre-Closing Tax Return”), and each such Pre-Closing Tax Return shall be prepared in a manner consistent with past custom and practice except as otherwise required by applicable Law or fact. Seller shall provide a copy of each such Pre-Closing Tax Return, together with all supporting documentation and workpapers, to the Buyer for the Buyer’s review and reasonable comment at least thirty (30) days prior to the due date (taking into account all valid extensions) for filing such Pre-Closing Tax Return. The Seller shall include any reasonable comments provided in writing by the Buyer to the Seller at least seven (7) days prior to the due date (taking into account all valid extensions) for filing such Pre-Closing Tax Return. The Seller shall pay all Taxes due with respect to such Pre-Closing Tax Returns. Pre-Closing Tax Returns of Intasco USA which are not filed prior to the Closing Date shall be prepared and filed by the Buyer as provided in Section 16.17(c).

(c)    Except as otherwise provided in Section 6.17(f), the Buyer shall cause Intasco USA to prepare and file on a timely basis (taking into account all valid extensions) all Intasco USA Tax Returns due for all Straddle Periods (each, a “Straddle Tax Return”), and all Pre-Closing Tax Returns of Intasco USA which were not filed by the Seller on or prior to the Closing Date. Each such Tax Return shall be prepared in a manner consistent with past custom and practice except as otherwise required by applicable Law or fact. The Buyer shall provide a copy of each such Tax Return, together with all supporting documentation and workpapers, to the Seller Representative for his review and reasonable comment at least thirty (30) days prior to

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the due date (taking into account all valid extensions) for filing such Tax Return. The Buyer shall include any reasonable comments provided in writing by the Seller Representative to the Buyer at least five (5) days prior to the due date (taking into account all valid extensions) for filing such Tax Return. Prior to or after the filing of any such Tax Return, the Buyer may provide to the Seller Representative a statement (a “Tax Due Statement”) setting forth the amount of Taxes shown on such Straddle Tax Return that is the responsibility of the Seller pursuant to Section 6.17(g). Within five (5) days of receiving a Tax Due Statement, the Seller shall pay to the Buyer the amount of Taxes shown as due on the Pre-Closing Tax Return and the amount of Taxes set forth on the Tax Due Statement applicable to such Straddle Tax Return that is the responsibility of the Seller pursuant to Section 6.17(g).

(d)    The parties hereto shall, and shall cause each of their Affiliates to, provide each other with such assistance as may reasonably be requested by the others in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to liabilities for Taxes of or with respect to Intasco USA. Such assistance shall include making employees available on a mutually convenient basis to provide additional information or explanation of material provided hereunder and shall include providing copies of relevant tax returns and supporting material. The party requesting assistance hereunder shall reimburse the assisting party for reasonable out-of-pocket expenses incurred in providing assistance. The Buyer shall, and, following the Closing, shall cause Intasco USA to, retain to all books and records with respect to Tax matters relating to Intasco USA for any Pre-Closing Tax Period for the full period of any statute of limitations of the respective Pre-Closing Tax Period (and, to the extent notified by the Seller Representative, any extensions thereof). Seller shall give prompt written notice to the Buyer if Seller (or any Affiliate of Seller) receives any communication or notice with respect to any audit, review, examination, assessment, investigation, or administrative or judicial proceeding relating to the Taxes of or attributable to Intasco USA that, if pursued successfully, could result in or give rise to, or could reasonably be expected to result in or give rise to, liability of Intasco USA, the Buyer, or any of their Affiliates for Taxes. Each party further agrees, upon request, to use commercially reasonable efforts 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 Tax (including any U.S. Transfer Tax) that could be imposed on any such party (or its Affiliates), including with respect to the transactions contemplated hereby.

(e)    Each of the Seller and the Buyer agrees to give prompt written notice to the other if it or any of its Affiliates receives any communication or notice with respect to any audit, review, examination, assessment, or any other administrative or judicial proceeding with the purpose or effect of re-determining Taxes of or with respect to Intasco USA (including any administrative or judicial review of any claim for refund) for which the other may be required to provide indemnification pursuant to this Agreement (a “Tax Contest”). Any failure to promptly notify the Seller Representative (in the case of the Seller) or the Buyer, as the case may be, of a Tax Contest shall not relieve such party of any liability with respect to such Tax Contest pursuant to this Agreement except to the extent such party was prejudiced as a result thereof.

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(i)    With respect to any Tax Contest for a Tax period ending on or before the Closing Date with respect to Intasco USA, Seller shall have the right to control and defend against such Tax Contest with counsel of its choice reasonably satisfactory to the Buyer if (A) settlement of, or an adverse judgment with respect to, such Tax Contest is not in the good faith judgment of the Seller Representative likely to establish a precedential custom or practice materially adverse to the ongoing Tax position of the Buyer Indemnitees, and (B) the Seller Representative continuously conducts the defense of such Tax Contest actively and diligently; provided that so long as the Seller Representative is conducting the defense of the Tax Contest in accordance with this Section 6.17(e)(i), (X) the Buyer may retain separate co-counsel at its sole cost and expense and participate in the defense of such Tax Contest, and (Y) the Seller Representative will not settle or consent to the entry of any order, ruling, decision, or other similar determination or finding with respect to such Tax Contest without the prior written consent of the Buyer (which consent shall not be unreasonably withheld, conditioned, or delayed).

(ii)    With respect to any a Tax Contest for a Straddle Period or a Tax Contest with respect to Intasco USA for which any condition in Section 6.17(e)(i) is or becomes unsatisfied, the Buyer will have the right to control and defend against such Tax Contest with counsel of its choice; provided that so long as the Buyer is conducting the defense of such Tax Contest in accordance with this Section 6.17(e)(ii), (A) the Seller Representative may retain separate co-counsel at its sole cost and expense and participate in the defense of such Tax Contest and assume joint control of such Tax Contest with the Buyer with respect to any Tax items in such Tax Contest for which the Seller would be required to provide indemnification pursuant to this Agreement for the resulting Tax liability, and (B) the Buyer will not settle or consent to the entry of any order, ruling, decision, or other similar determination or finding with respect to any Tax items in such Tax Contest for which Seller would be required to provide indemnification pursuant to this Agreement for the resulting Tax liability without the prior written consent of the Seller Representative (which consent shall not be unreasonably withheld, conditioned, or delayed).

(iii)    Subsection 6.17(e) shall apply to all U.S. federal, state and local Taxes only.

(f)    All United States federal, state and local and other United States transfers, sales, use, excise, value added, transfer, stamp, documentary, filing, recordation, registration, real estate transfer, or similar Taxes, charges, or fees applicable to, imposed upon or arising out of the transactions contemplated by this Agreement (“U.S. Transfer Taxes”) shall be borne 50% by the Seller and 50% by the Buyer. The party primarily or customarily responsible for filing the applicable Tax Return with respect to an applicable U.S. Transfer Tax (the “Filing Party”) shall prepare and timely file (taking into account any valid extensions), or cause to be prepared and timely filed (taking into account any valid extensions), such Tax Return, and the Filing Party shall make timely payment (taking into account any valid extensions) of such U.S. Transfer Taxes set forth on such Tax Return, subject to reimbursement from Seller or the Buyer, as the case may be, of its share of such U.S. Transfer Taxes as set forth in the prior sentence within five (5) days after receiving written notice from the Filing Party that such U.S. Transfer

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Taxes were paid. Seller and the Buyer shall cooperate in the preparation of any necessary Tax Returns and other related documentation with respect to Transfer Taxes. Seller and the Buyer agree to use their commercially reasonable efforts to mitigate, reduce or eliminate any U.S. Transfer Taxes.

(g)    For purposes of Section 6.17(c) the portion of Taxes attributable to a Straddle Period that are allocated to the Seller for the Pre-Closing Tax Period of such Straddle Period shall be determined as follows:

(i)    In the case of any real property, personal property, ad valorem and similar Taxes (“Property Tax”), the amount of such Property Tax attributable to the Pre-Closing Tax Period of such Straddle Period shall be deemed to be the amount of such Property Tax for the entire Straddle Period, multiplied by a fraction, the numerator of which is the number of days in such Straddle Period ending on and including the day before the Closing Date, and the denominator of which is the number of total days in the entire Straddle Period.

(ii)    In the case of any Tax that is based on income, sales, revenue, production or similar items, or other Taxes not described in Section 6.17(g)(i), the amount any such Tax that is attributable to the Pre-Closing Tax Period of such Straddle Period shall be determined based on an interim closing of the books as of the end of the Closing Date (i.e., the amount that would be payable for the portion of the Straddle Period determined as if Intasco USA filed a Tax Return for the portion of the Straddle Period ending at the end of the Closing Date); provided, that the amount of any exemptions, allowances, or deductions determined on an annual or periodic basis (including amortization and depreciation deductions) that shall be allocated to the Pre-Closing Tax Period of such Straddle Period shall be determined by multiplying the total amount of such exemptions, allowances, or deductions by a fraction, the numerator of which is the number of days in such Straddle Period ending on and including the day before the Closing Date and the denominator of which is the number of total days in the entire Straddle Period.

(h)    All Tax sharing, Tax allocation agreement, Tax indemnity, or any similar written or unwritten agreement, arrangement, understanding, or practice relating to Taxes involving Intasco USA shall be terminated as of the Closing Date and, after the Closing Date, Intasco USA shall not be bound thereby or have any liability thereunder.

6.18    Bulk Sales Act Waiver and Indemnity. Buyer hereby waives compliance by Seller under the Bulk Sales Act (Ontario) in connection with the sale by Seller to Buyer of the Purchased Assets, and Seller hereby covenants and agrees to indemnify and save harmless Buyer from and against any and all Losses suffered or incurred by Buyer as a result of or arising from the failure of Seller to comply with the requirements of such legislation in respect of the purchase and sale of the Purchased Assets, save and except to the extent that any such claim arises by virtue of the non-payment of any Assumed Liabilities.

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ARTICLE VII
CONDITIONS TO CLOSING

7.1    Conditions to Obligations of the Parties. The respective obligations of the parties to consummate the transactions contemplated by this Agreement are subject to the condition that there must not be in effect any Law or Order that prohibits the sale of the Purchased Assets to Buyer or the consummation of the transactions contemplated by this Agreement.

7.2    Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver (if permitted by applicable Law) at or prior to the Closing of each of the following additional conditions:

(a)    The representations and warranties of Buyer set forth in Article V of this Agreement shall be true and correct in all material respects as of the Agreement Date and as of the Closing Date as though made at such time (except that those representations and warranties that address matters only as of a particular date, other than the Agreement Date or the Closing Date, need only be true and correct in all material respects as of such date), except for representations and warranties containing a materiality qualification, which must be true and correct in all respects, in all cases without giving effect to any investigation of, updating or supplements to, or knowledge with respect to, the information contained in the Schedules attached hereto.

(b)    Buyer shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

(c)    Since the Agreement Date, there shall not have been commenced any Action by any third party or Governmental Authority or any Action threatened in writing by any third party or Governmental Authority seeking damages or other relief in connection with any of the transactions contemplated by this Agreement.

(d)    The Seller Representative shall have received the items required by Section 3.3 of this Agreement.

7.3    Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver (if permitted by applicable Law) at or prior to the Closing of each of the following conditions:

(a)    The representations and warranties of the Seller set forth in Article IV of this Agreement shall be true and correct in all material respects as of the Agreement Date and as of the Closing Date as though made at such time (except that those representations and warranties that address matters only as of a specified date, other than the Agreement Date or the Closing Date, need only be true and correct in all material respects as of such date), except for the representations and warranties containing a materiality qualification, which must be true in all respects, in all cases without giving effect to any investigation of, updating or supplements to,

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or knowledge with respect to, the information contained in the Schedules attached hereto and without giving effect to any information provided pursuant to Section 6.7(a).

(b)    The Seller and Intasco USA shall have performed in all material respects all obligations re quired to be performed by them under this Agreement at or prior to the Closing Date.

(c)    Buyer shall have received or waived the requirement that it receive the items, or any of them, required by Section 3.2 of this Agreement.

(d)    Buyer shall have received, or waived the requirement that it receive any of the Consents set forth in Schedule7.3(d), which Consents shall be in full force and effect.

(e)    Intasco and Intasco USA shall have terminated all of the existing Real Property Leases, each termination in form and substance satisfactory to Buyer.

(f)`    Since the Agreement Date, there shall not have occurred, and Intasco and Intasco USA and the Business shall not have suffered, any event or events which have had, or would reasonably be expected to have, a Material Adverse Effect on the Intasco, Intasco USA or the Business.

(g)    There shall have been obtained from all appropriate Governmental Authorities and third parties such Permits or Consents as are required to be obtained by Seller to permit the change of ownership of the Purchased Assets and the Purchased Shares contemplated hereby, in each case in form and substance satisfactory to Buyer, acting reasonably.

(h)    Intasco shall have delivered to Buyer the statement and affidavit of Intasco required under section 4 of the Bulk Sales Act (Ontario) and dated as of the Closing Date, setting forth the names and addresses of the unsecured trade creditors and the secured trade creditors of Intasco and the amount of the indebtedness or liability due, owing, payable, or accruing due, or to become due and payable, by Intasco to each of them, and, with respect to the claims of the secured trade creditors, the nature of their security and whether their claims are due or, in the event of sale, become due on the date fixed for the completion of the sale, in the same form attached hereto as Schedule 7.3(h) (the “Bulk Sales Act Statement”).

(i)    Since the Agreement Date, there must not have been commenced any Action by any third party or Governmental Authority or any Action threatened in writing by any third party or Governmental Authority seeking damages or other relief in connection with any of the transactions contemplated by this Agreement.

(j)    As of the Closing, the key management of the Business (comprised of the Key Employees, and the key salespersons of the Business, shall have each remained substantially intact, including with respect to the absence of actual resignations not yet effective or threatened resignations.

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(k)    Buyer shall have received financing in connection with the transactions contemplated by this Agreement on terms and conditions satisfactory to it in its sole discretion in an amount equal to or greater than the amount of $27,000,000; and

(l)    Buyer shall have completed due diligence with respect to Intasco, Intasco USA and the Business, the results of which are satisfactory to Buyer in its sole discretion.

7.4    Frustration of Closing Conditions. No party may rely on the failure of any condition set forth in Section 7.1, Section 7.2 or Section 7.3, as the case may be, to be satisfied if such failure was to any extent caused by such party’s failure to comply with its obligations pursuant to this Agreement.

ARTICLE VIII
TERMINATION OF AGREEMENT

8.1    Termination. Notwithstanding any other provision of this Agreement, this Agreement may be terminated at any time prior to the Closing:

(a)    by the mutual written consent of Buyer and the Seller Representative;

(b)    by Buyer or the Seller Representative, upon written notice to the other, if the transactions contemplated by this Agreement have not been consummated on or prior to [*], 2016 or such later date, if any, as Buyer and the Seller Representative agree upon in writing (the “Termination Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b) is not available to (i) Buyer, if Buyer’s failure to comply with its obligations under this Agreement results in or is the primary cause of the failure of the transactions contemplated by this Agreement to be consummated by such time, or (ii) the Seller Representative, if the failure to comply with the obligations under any provision of this Agreement by the Seller Representative or Intasco or Intasco USA results in or is the primary cause of the failure of the transactions contemplated by this Agreement to be consummated by such time;

(c)    by Buyer or the Seller Representative, upon written notice to the other party, if a Governmental Authority of competent jurisdiction has issued an Order permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement, and such Order has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(c) is not available to (i) Buyer, if Buyer’s failure to comply with its obligations under any provision of this Agreement results in or is the primary cause of such Order or Buyer is not then in compliance with its obligations under Section 6.5, and (ii) the Seller Representative, if failure to comply with the obligations under any provision of this Agreement by any of the Seller Representative, Intasco or Intasco USA results in or is the primary cause of such Order or such Person is not then in compliance with its obligations under Section 6.5;

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(d)    by the Seller Representative, if Buyer (i) has breached any of its covenants or other agreements contained in this Agreement to be complied with by it such that the closing condition set forth in Section 7.2(b) would not be satisfied or (ii) there exists a breach of any representation or warranty of Buyer contained in this Agreement such that the closing condition set forth in Section 7.2(a) would not be satisfied, and in the case of either (i) or (ii) above, such breach is not cured within thirty (30) days after receipt of written notice thereof or is incapable of being cured by Buyer by the Termination Date; or

(e)    by Buyer, if any Seller, (i) has breached any of its covenants or other agreements contained in this Agreement to be complied with by it or him such that the closing conditions set forth in Section 7.3(b) would not be satisfied, or (ii) there exists a breach of any representation or warranty of Intasco, Intasco USA or any other Seller contained in this Agreement such that the closing conditions set forth in Section 7.3(a) would not be satisfied, and in the case of either (i) or (ii) above, such breach is not cured within thirty (30) days after receipt of written notice thereof or is incapable of being cured by any such Seller.

8.2    Effect of Termination. In the event of termination of this Agreement pursuant to Section 8.1 by either Buyer and/or the Seller Representative, this Agreement shall become void and have no effect, without any liability or obligation on the part of the parties hereto, other than the provisions of Section 8.2 and Article X which shall survive any termination of this Agreement; provided, however, that nothing herein shall relieve any party from any liability for any breach by such party of this Agreement.

ARTICLE IX
REMEDIES

9.1    Survival. The representations, warranties, covenants and agreements of the Seller, on the one hand, and Buyer, on the other hand, contained in this Agreement (including the Schedules and Exhibits attached hereto and the certificates delivered pursuant hereto) shall survive the Closing Date to the extent specified below:

(a)    All covenants and agreements contained in this Agreement and the Related Documents (including the Schedules and Exhibits attached hereto and the certificates delivered pursuant hereto) that contemplate performance thereof following the Closing Date shall survive the Closing Date in accordance with their terms.

(b)    The representations and warranties contained in this Agreement and in the Related Documents (including the Schedules and Exhibits attached hereto and thereto and the certificates delivered pursuant hereto and thereto) shall survive the Closing Date until the date that is twenty-four (24) months following the Closing Date (the “Representation Termination Date”), at which point such representations and warranties and any right to assert a claim for indemnification on account thereof terminate, it being understood and agreed that claims made within such period are not required to be resolved, and actions relating thereto are not required to be commenced, within such period; provided, however, that (i) the representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.5, 4.10 and 4.33 (the

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“Excluded Representations”) shall survive the Closing and shall continue in full force and effect forever, (ii) the representations and warranties contained in Section 4.9 shall survive the Closing Date until the expiration of the applicable statutes of limitations plus sixty (60) days, (iii) the representations and warranties contained in Sections 4.14, 4.22 and 4.29 shall survive the Closing Date until the sixth anniversary following the Closing Date, and (iv) to the extent any Related Document provides that the representations and warranties stated therein survive for a different period, then the survival provisions of the Related Document shall control as to such representations and warranties contained in such Related Document.

9.2    Indemnification by Buyer. Buyer shall indemnify, defend and hold harmless Seller and its successors and permitted assigns, and the officers, directors, managers, members, partners, stockholders, owners, employees, agents and representatives of each of the foregoing, and their heirs and personal representatives (collectively, the “Seller Indemnitees”) from and against, and shall pay to the Seller Indemnitees the amount of, any and all loss, Liability, damage or expense (including reasonable legal fees and expenses, but excluding incidental, consequential or punitive damages or any liability for lost profits or the like or any damages or liability based on multiple of profits, multiple of cash flow or similar valuation methodology, in each case to the extent not covered by insurance) (collectively, “Losses” and each a “Loss”) of the Seller Indemnitees arising from or in connection with (a) any breach of or inaccuracy in the representations and warranties of Buyer contained in this Agreement or any Related Document (including the Schedules and Exhibits attached hereto or thereto and the certificates delivered pursuant hereto or thereto), as of the Agreement Date or the Closing Date (as though made at such time except that those representations and warranties that address matters only as of a particular date, other than the Agreement Date or the Closing Date, must be true and correct as of such date) (it being agreed that solely for the purposes of this Section 9.2, such representations and warranties shall be interpreted without giving effect to any limitations or qualifications as to “materiality” including, without limitation, the words “material”, “Material Adverse Effect” or any other materiality qualifications), (b) any breach of the covenants or agreements of Buyer contained in this Agreement or any Related Document (including the Schedules and Exhibits attached hereto or thereto and the certificates delivered pursuant hereto or thereto).

9.3    Indemnification by Seller. Each Seller, jointly and severally, shall indemnify, defend, and hold harmless Buyer, its Affiliates and their respective successors and permitted assigns, and the officers, directors, managers, members, partners, stockholders, owners, employees, agents and representatives of each of the foregoing, and their heirs and personal representatives (collectively, the “Buyer Indemnitees”), from and against, and shall pay to the Buyer Indemnitees the amount of, any and all Losses of the Buyer Indemnitees arising from or in connection with: (a) any breach of or inaccuracy in the representations and warranties of Intasco, Intasco USA or any other Seller contained in this Agreement or in any Related Document (including the Schedules and Exhibits attached hereto or thereto and the certificates delivered pursuant hereto or thereto) as of the Agreement Date or the Closing Date (as though made at such time except that those representations and warranties that address matters only as of a particular date, other than the Agreement Date or the Closing Date, must be true and correct as of such date ) (it being agreed that solely for the purposes of this Section 9.3, such representations and warranties shall be interpreted without giving effect to any limitations or qualifications as to “materiality” including, without

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limitation, the words “material”, “Material Adverse Effect” or any other materiality qualifications); (b) any breach of the covenants or agreements of Intasco, Intasco USA or any other Seller contained in this Agreement or any Related Document (including the Schedules and Exhibits attached hereto or thereto and the certificates delivered pursuant hereto or thereto); (c) all Indemnifiable Claims, Indemnified Taxes and Indemnifiable Liabilities, (d) operations of the Business up to the Closing and (e) any claims, Actions or Liabilities, pending or threatened at any time, attributable or relating to or arising from the Reorganization, or any of the transactions effected thereby or any of the documents, instruments or agreements prepared in connection therewith.

9.4    Limitations on Indemnification Payments to the Buyer Indemnitees. Notwithstanding anything herein to the contrary, the right of Buyer Indemnitees to indemnification is limited as follows:

(a)    The Buyer Indemnitees shall be entitled to indemnification pursuant to Section 9.3(a) if and only if the aggregate amount of all indemnifiable claims pursuant to Section 9.3(a) exceeds $150,000 (the “Deductible”) and, in such event, indemnification shall be made by the Seller for all corresponding Losses in excess of the Deductible; provided, however, that the Deductible shall not apply to Losses incurred by Buyer Indemnitees based upon any breach of or inaccuracy in any of the Excluded Representations, Section 4.9 or Sections 4.14, 4.22 or 4.29 or based upon any breach of Section 6.13.

(b)    The aggregate maximum liability of the Seller (inclusive of amounts recovered by the Buyer Indemnitees from the Escrow Account) for indemnification pursuant to Section 9.3(a) shall be $4,000,000 (the “Cap”); provided, however, that the Cap shall not apply to Losses incurred by Buyer Indemnitees based upon any breach of or inaccuracy in any of the Excluded Representations, Section 4.9 or Sections 4.14, 4.22 or 4.29 or based upon any breach of Section 6.13 or any claim for Indemnified Taxes.

(c)    Regardless of whether any claim could have been and/or is successfully or unsuccessfully brought under Section 9.3(a), (i) the obligations of Seller to indemnify, defend and hold harmless pursuant to Section 9.3(other than Section 9.3 (a)) are not limited as to time, (ii) the obligations of the Seller to indemnify, defend and hold harmless pursuant to Section 9.3(other than Section 9.3(a)) are not reduced by or subject to the Deductible, and (iii) Losses for which an indemnification right exists pursuant to Section 9.3 (other than Section 9.3(a)) shall not be included when computing, and shall not be subject to, the Cap.

9.5    Limitations on Indemnification Payments to the Seller Indemnitees. Notwithstanding anything in this Agreement to the contrary, the right of Seller Indemnitees to indemnification is limited as follows:

(a)    The Seller Indemnitees shall be entitled to indemnification pursuant to Section 9.2(a) if and only if the aggregate amount of all indemnifiable claims pursuant to Section 9.2 (a) exceeds the Deductible and, in any such event, indemnification shall be made by Buyer for all corresponding Losses in excess of the Deductible. Before seeking any recourse against the Seller pursuant to Section 9.2, Buyer shall first seek recourse against the Escrow Fund.

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(b)    The amount of any Losses for which Buyer is required to indemnify Seller Indemnitees pursuant to this Agreement shall be reduced by any realized Tax benefit of the Seller Indemnitees’ Taxes arising from the claim, loss or damage for which the indemnity is being paid.

(c)    The aggregate maximum liability of Buyer for indemnification pursuant to Section 9.2 (a) shall be an amount equal to the Cap.

9.6    Procedures.

(a)    Notice of Losses by Seller Indemnitees. Subject to the limitations set forth in this Article IX, as soon as reasonably practicable after a Seller Indemnitee reasonably believes in good faith that he or it has, or based on facts or circumstances then in existence reasonably believes in good faith that he or it will have, a claim for indemnification under this Article IX (a “Seller Claim”), the Seller Representative shall give written notice thereof (a “Seller Claims Notice”) to Buyer. A Seller Claims Notice must describe a Seller Claim in reasonable detail, and indicate the amount (estimated, as necessary) of the Loss that has been or is reasonably expected to be suffered by the applicable Seller Indemnitee. No delay in or failure to give a Seller Claims Notice by the Seller Representative to Buyer pursuant to this Section 9.6(a) shall adversely affect the applicable Seller Indemnitee’s right to indemnification pursuant to this Agreement except to the extent Buyer is materially prejudiced thereby. Buyer shall respond to the Seller Representative (a “Claim Response”) within thirty (30) days (the “Response Period”) after the date that a Seller Claims Notice is received by Buyer. Any Claim Response must specify whether or not Buyer disputes Seller Claim described in Seller Claims Notice. If Buyer fails to give a Claim Response within the Response Period, Buyer shall be deemed not to dispute the Seller Claim described in the related Seller Claims Notice. If Buyer elects not to dispute a Seller Claim described in a Seller Claims Notice, whether by failing to give a timely Claim Response or otherwise, then the amount of Losses alleged in such Seller Claims Notice shall be conclusively deemed to be an obligation of Buyer, and Buyer shall pay, in cash, to the Seller Representative within five (5) days after the last day of the applicable Response Period the amount specified in Seller Claims Notice. If Buyer delivers a Claim Response within the Response Period indicating that it disputes one or more of the matters identified in Seller Claims Notice, Buyer and the Seller Representative shall promptly meet and use their reasonable efforts to settle the dispute. If Buyer and the Seller Representative are able to reach agreement with respect to all or any portion of Losses, within thirty (30) days after the conclusion of the Response Period, the amount of Losses, if any, agreed upon shall conclusively be deemed an obligation of Buyer, and Buyer shall pay in cash to the Seller Representative within five (5) days of such agreement the amount of Losses so agreed upon. If Buyer and the Seller Representative are unable to reach agreement within thirty (30) days after the conclusion of the Response Period, then either Buyer or the Seller Representative may commence an Action to seek resolution of such Seller Claim, subject to the limitations set forth in this Article IX.

(b)    Notice of Losses by Buyer Indemnitees. Subject to the limitations set forth in this Article IX, as soon as reasonably practicable after a Buyer Indemnitee reasonably believes in good faith that he, she or it has, or based on facts or circumstances then in existence

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reasonably believes in good faith that he, she or it will have, a claim for indemnification under this Article IX (a “Buyer Claim”), Buyer shall give written notice thereof (a “Buyer Claims Notice” and, together with a Seller Claims Notice, a “Notice”) to the Seller Representative. A Buyer Claims Notice must describe a Buyer Claim in reasonable detail and indicate the amount (estimated, as necessary) of the Loss that has been or is reasonably expected to be suffered by the applicable Buyer Indemnitee, all to the extent known. No delay in or failure to give a Buyer Claims Notice by Buyer to the Seller Representative pursuant to this Section 9.6(b) shall adversely affect the applicable Buyer Indemnitee’s right to indemnification pursuant to this Agreement except to the extent Seller is materially prejudiced thereby. If Buyer has not received from the Seller Representative notice in writing that the Seller Representative objects to Buyer Claim (or the amount of Losses set forth in Buyer Claims Notice) asserted in such Buyer Claims Notice (a “Dispute Notice”) by the thirtieth (30^th) day following receipt by the Seller Representative of Buyer Claims Notice (the “Dispute Period”), then the amount of Losses alleged in such Buyer Claims Notice shall be conclusively deemed to be an obligation of Seller, and Buyer and the Seller Representative shall instruct the Escrow Agent in writing to, and the Escrow Agent shall, pay to Buyer from the Escrow Account the amount of Losses specified in Buyer Claims Notice subject to the limitations contained in this Article IX. If (i) such Buyer Claims Notice is delivered to the Seller Representative after the Representation Termination Date with respect to claims which survive such date, or (ii) to the extent such Buyer Claims Notice contemplates Losses in excess of Escrow Funds then available in the Escrow Account (after giving effect to any other pending claims under this Article IX and after deduction from such amount of any pending or potential claims under Section 2.4), and if, during the Dispute Period, Buyer has not received from the Seller Representative a Dispute Notice, then the amount of Losses alleged in such Buyer Claims Notice in excess of amounts, if any, payable from Escrow Funds shall be deemed to be a joint and general obligation of each Seller, and Buyer may recover such amount from any Seller in the aggregate in cash, within five (5) days of Buyer’s request, subject to the limitations contained in this Article IX.

(c)    Resolution of Buyer Claims. If the Seller Representative delivers a Dispute Notice to Buyer within the Dispute Period, Buyer and the Seller Representative shall promptly meet and use their reasonable efforts to settle the dispute. If Buyer and the Seller Representative are able to reach agreement within thirty (30) days after Buyer receives such Dispute Notice, and to the extent the amount of the Escrow Funds (after giving effect to any other pending claims under this Article IX and after deduction from such amount of any pending or potential claims under Section 2.4) equal or exceed the amount of the Losses agreed to be paid with respect to Buyer Claims Notice, then Buyer and the Seller Representative shall deliver a joint written instruction to the Escrow Agent setting forth such agreement and instructing the Escrow Agent to pay to Buyer such amount from the Escrow Account. To the extent the amount of such agreed upon Losses exceeds the amount of the Escrow Funds (after giving effect to any other pending claims under this Article IX and after deduction from such amount of any pending or potential claims under Section 2.4) then available in the Escrow Account, then such excess shall be deemed to be a joint and several obligation of each Seller, and Buyer may recover from any Seller in the aggregate such excess amount in cash, within five (5) days of Buyer’s request, subject to the limitations set forth in this Article IX. If Buyer and the Seller Representative are unable to reach agreement within thirty (30) days after Buyer receives any Dispute Notice, then

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either Buyer or the Seller Representative (in the names and for the benefit of each Seller) may commence an Action to seek resolution of such Buyer Claim, and to be paid amounts due hereunder, as provided herein, subject to the limitations set forth in this Article IX. For all purposes of this Article IX, Buyer and the Seller Representative shall cooperate with and make available to the other party and its representatives all information, records and data, and shall permit reasonable access to its facilities and personnel, as may be reasonably required in connection with the resolution of such disputes.

(d)    Opportunity to Defend Third Party Claims. In the event of any claim by a third party against a Buyer Indemnitee or Seller Indemnitee for which indemnification is available hereunder, the Seller Representative, if indemnification of Buyer Indemnitees is available, or Buyer, if indemnification of Seller Indemnitees is available (each an “Indemnifying Party”), has the right, exercisable by written notice to Buyer or the Seller Representative, as applicable, within sixty (60) days of receipt of a Notice from Buyer or the Seller Representative, as applicable, to assume and conduct the defense of such claim (in the names of, and for the benefit of, the Indemnified Party) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided, that the Indemnifying Party shall not be permitted to assume or conduct the defense of any claim if the Indemnified Party is also a party to the Action, there is a conflict of interest between the positions of the Indemnifying Party and the Indemnified Party in conducting the defense of such claims such that there may be one or more legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, and the Indemnified Party shall have determined in good faith that such different or additional defenses would make it inappropriate for the Indemnifying Party to assume or conduct the defense of such claim. Notwithstanding the foregoing, if an Indemnified Party reasonably determines in good faith that there is a reasonable probability that an Action to defend a third party claim may adversely affect him, her or its or his, her or its Affiliates other than as a result of monetary damages for which he, she or it would be entitled to indemnification under this Agreement, the Indemnified Party may, by notice to the Indemnifying Party, assume the right to defend, compromise or settle such Action, but the Indemnifying Party shall not be bound by any determination of an Action so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld), and the Indemnifying Party shall be entitled, at the Indemnifying Party’s cost and expense, to participate in the defense of the third party claim. If the Indemnifying Party has assumed such defense as provided in this Section 9.6(d), the Indemnifying Party shall not be liable for any legal expenses subsequently incurred by any Indemnified Party in connection with the defense of such claim; provided, that if there is a conflict of interest between the positions of the Indemnifying Party and the Indemnified Party in conducting the defense of such claims such that there may be one or more legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, and the Indemnified Party shall have determined in good faith that such different or additional defenses would make it inappropriate for one counsel to represent both parties, the Indemnified Party shall be entitled, at the Indemnifying Party’s cost, risk and expense, to retain one firm of separate counsel of his, her or its own choosing (along with any required local counsel) to participate in the defense of the third party claim. If the Indemnifying Party elects to assume the defense of a claim, the Indemnified Party may, at its own cost and expense, participate in the investigation, trial and

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defense of such claim. If the Indemnifying Party does not assume the defense of any third party claim in accordance with this Section 9.6(d) within fourteen (14) days after delivery of a Buyer Claims Notice in connection with any such claim, the Indemnified Party may defend such claim at the sole cost of the Indemnifying Party. The Indemnified Party shall not consent to a settlement of any such claim without the prior written consent of the Indemnifying Party (such consent not to be unreasonably withheld or delayed). Except with the prior written consent of the Indemnified Party (such consent not to be unreasonably withheld or delayed), no Indemnifying Party, in the defense of any such claim, shall consent to the entry of any judgment or enter into any settlement that (i) provides for injunctive or other nonmonetary relief adversely affecting the Indemnified Party, (ii) includes a finding or admission of a violation of Law or the rights of any third party or which would otherwise form the basis of liability to any third party or (iii) does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In any such third party claim, the party responsible for the defense of such claim (the “Responsible Party”) shall, to the extent reasonably requested by the other party, keep such other party informed as to the status of such claim, including, without limitation, all settlement negotiations and offers.

(e)    Releases from the Escrow Account. The funds held under the Escrow Agreement shall be released in accordance with the terms and subject to the conditions set forth in the Escrow Agreement.

9.7    Effect of Investigations and Knowledge.

(a)    Notwithstanding any investigation or other review conducted or capable of being conducted, or any information received or knowledge obtained or capable of being obtained, prior to and/or after the execution of this Agreement or the Closing Date, from or by or on behalf of any party or other Person, except to the extent set forth in Section 6.7(c), (i) all representations and warranties made by each party in this Agreement or in any Related Document shall survive the Closing, subject only to Section 9.1, and (ii) Buyer shall be entitled to rely upon the representations and warranties, covenants and other provisions set forth herein and therein.

(b)    Without limiting the generality of Section 9.7(a), except to the extent set forth in Section 6.7(c), the parties confirm and agree that any actual knowledge learned of any inaccuracy in any actual or deemed representation or of any breach or any actual or deemed warranty as of the Agreement Date and/or at any time thereafter to the Closing Date (whether by reason of any updating of information contained in the Schedules attached hereto or otherwise) shall not in any manner reduce, limit, impair or otherwise affect the right to indemnification under this Agreement. The preceding sentence shall apply whether or not the inaccuracy or breach and/or the facts relating thereto are disclosed orally or otherwise. Accordingly, no party shall have the right to assert or shall assert defenses such as estoppel, non-reliance and waiver, in connection with the matters described in Section 9.7(a) or in this Section 9.7(b), except to the extent provided in Section 6.5(c) hereof. Buyer’s knowledge as of the Agreement Date and/or the Closing Date shall not in any respect reduce, limit, impair or otherwise affect any of the

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rights of Buyer Indemnitees to be indemnified, defended and held harmless, pursuant to Sections 9.3(b) through (e).

(c)    If the Closing occurs then, for all purposes of this Article IX, the representations and warranties contained in (i) Article IV by Seller shall conclusively be deemed to have been made again at the Closing except that those representations and warranties that address matters only as of a particular date, other than the Agreement Date or the Closing Date, must be true and correct as of such date by them without any further writing, and (ii) in Article V, by Buyer shall conclusively be deemed to have been made again at the Closing by it without any further writing, in each case, except as set forth in Section 6.7(c), without giving effect to any disclosure made, orally or otherwise, with respect to any inaccuracy of breach of any actual or deemed representation or warranty.

9.8    Additional Indemnification Provisions.

(a)    Each party’s obligation under this Agreement is unique. If any party should breach its covenants under this Agreement, the parties each acknowledge that it would be impracticable to measure the resulting damages; accordingly, the nonbreaching party or parties, in addition to any other available rights or remedies they may have under the terms of this Agreement, may sue in equity for specific performance, and each party expressly waives the defense that a remedy in damages will be adequate.

(b)    All indemnification payments made pursuant to this Article IX shall be treated as an adjustment to the Purchase Price unless otherwise required by Law.

(c)    The parties hereto hereby consent to the non-exclusive jurisdiction of any court in which a claim is brought against any Buyer Indemnitee for purposes of any claim that any Buyer Indemnitee may have under this Agreement with respect to such claim or the matters alleged therein, and agree that process may be served on them with respect to such a claim anywhere in the world.

(d)    The waiver of any condition shall not in any manner affect any right to indemnification provided by this Agreement, including waivers relating to the accuracy of any representations or warranties or the performance or observance of any covenant or other agreement.

(e)    The provisions of this Article IX shall be enforceable regardless of the basis on which Liability is asserted, including strict liability.

(f)    If any remediation or other cleanup (collectively, “Cleanup”) at any Real Property is required and Seller is responsible in whole or part therefor under this Article IX, then (i) such Cleanup shall be performed so as to minimize any suspension, interference or other disruption of Buyer’s operations (and any Losses relating to any such suspension, interference or other disruption of such operations, whether or not so minimized, shall also be indemnified by Seller), and (ii) Buyer shall have the right to approve the detailed plan to effect the Cleanup, such approval not to be unreasonably withheld, including the Persons who will perform the Cleanup,

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and the Cleanup shall not be initiated without Buyer’s prior written consent, provided that Seller shall have no obligation to effect any Cleanup beyond that required by Law except to the extent any Cleanup is also the subject of any representation or warranty hereunder.

ARTICLE X
MISCELLANEOUS AND GENERAL

10.1    Seller’s Representative.

(a)    The Seller Representative is hereby constituted and appointed as agent and attorney-in-fact for and on behalf of each Seller. Without limiting the generality of the foregoing, the Seller Representative has full power and authority, on behalf of each Seller and its, his or her successors and assigns, to (i) interpret the terms and provisions of this Agreement and the Related Documents, (ii) execute and deliver and receive deliveries of all agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement and the Related Documents, (iii) receive service of process in connection with any claims under this Agreement, the Related Documents or the Escrow Agreement, (iv) agree to, negotiate, enter into settlements and compromises of such claims, assume the defense of claims, and demand arbitration and comply with Orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the Seller Representative for the accomplishment of the foregoing, (v) make any payment or pay any expenses under or in connection with this Agreement and any Related Document, (vi) give and receive notices and communications, (vii) authorize delivery to any Buyer Indemnitee of the Escrow Funds or any portion thereof, (viii) object to such deliveries, (ix) distribute the Escrow Funds and any earnings and proceeds thereon, and (x) take all actions necessary or appropriate in the judgment of the Seller Representative on any Seller in connection with this Agreement and the Escrow Agreement, including, without limitation, entering into amendments hereof and thereof.

(b)    The Seller Representative shall not be liable to any Seller for any act done or omitted under this Agreement as Seller Representative while acting in good faith, and any act taken or omitted to be taken pursuant to the advice of counsel shall be conclusive evidence of such good faith.

(c)    From and after the Closing Date, Buyer and the Escrow Agent shall be entitled to deal exclusively with the Seller Representative on all matters pertaining to the rights and obligations of Seller (and each of them) under this Agreement and the Escrow Agreement. A decision, act, consent or instruction of the Seller Representative constitutes a decision of each Seller. Such decision, act, consent or instruction is final, binding and conclusive upon each Seller and the Escrow Agent may rely upon any such decision, act, consent or instruction of the Seller Representative for all purposes of this Agreement and the Escrow Agreement. Notices or communications to or from the Seller Representative shall constitute notice to or from each Seller for all purposes of this Agreement and the Escrow Agreement. If the Seller Representative shall die, become disabled or otherwise be unable to fulfill his

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responsibilities hereunder, then the Seller by [majority vote] shall promptly appoint a successor to the Seller Representative. In addition, the Seller (including the Seller Representative) may replace the Seller Representative from time to time pursuant to a written consent executed by Combe. Any successor to the Seller Representative shall become the “Seller Representative” for all purposes under this Agreement, effective upon written notice given to Buyer and the other parties hereto.

10.2    Expenses. Except as set forth in this Agreement, all costs and expenses (including all legal, accounting, broker, finder or investment banker fees) incurred in connection with this Agreement and the transactions contemplated hereby are to be paid, in the case of Seller or the Seller Representative, by Seller, and in the case of Buyer, by Buyer.

10.3    Successors and Assigns. This Agreement is binding upon and inures to the benefit of the parties hereto and their respective successors and assigns, and neither this Agreement nor any rights or obligations hereunder are assignable by any party without the prior written consent of the other parties hereto; provided that (a) Buyer shall have the right to collaterally assign its rights under this Agreement as security in connection with any financing incurred in connection with the transactions contemplated by this Agreement, and (b) Buyer shall have the right to assign any or all of its rights and obligations under this Agreement to any Affiliate. For purposes hereof, successors and assigns shall include any beneficiaries of any trust that is an Equity Holder or any other Person to which distributions are made by any such trust (all such beneficiaries or other Person to which distributions are made to be jointly and severally liable for the obligations of the Equity Holder making such distribution to the extent of such distributions) including if the trust making such distribution is not terminated, dissolved or liquidated in connection with such distribution or otherwise.

10.4    Third Party Beneficiaries. Each party hereto intends that this Agreement does not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto and, for purposes of Article IX, the Seller Indemnitees and the Buyer Indemnitees.

10.5    Notices. Any notice or other communication provided for herein or given hereunder to a party hereto must be in writing and sent by facsimile transmission (electronically confirmed), delivered in person, mailed by first class registered or certified mail, postage prepaid, or sent by Federal Express or other overnight courier of national reputation, addressed as follows:

If to Canadian Buyer:

Unique-Intasco Canada, Inc.

c/o Unique Fabricating NA, Inc.

800 Standard Parkway

Auburn Hills, Michigan 48326

Fax: _____________________

Attention: John Weinhardt, President

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If to US Buyer:

Unique Fabricating NA, Inc.

800 Standard Parkway

Auburn Hills, Michigan 48326

Fax: _____________________

Attention: John Weinhardt, President

and with a copy to:

Sills Cummis & Gross P.C.

One Riverfront Plaza

Newark, New Jersey 07102

Fax: (973) 643-6500

Attention: Ira A. Rosenberg, Esq.

If to the Seller Representative:

G. Craig Combe

510 McGregor Avenue

London, Ontario, N6J 2S9

Fax: ___________________

with a copy to:

McKenzie Lake Lawyers LLP

1800-140 Fullarton Street

London, Ontario, N6A 5P2

Fax: 519-672-2674

Attention: Donald S. Bryant

or to such other address with respect to a party as such party notifies the other in writing as above provided.

10.6    Complete Agreement. This Agreement and the Schedules and Exhibits hereto and the other documents delivered by the parties in connection herewith contain the complete agreement between and among the parties hereto with respect to the transactions contemplated hereby and thereby and supersede all prior agreements and understandings between the parties hereto with respect thereto.

10.7    Captions. The captions contained in this Agreement are for convenience of reference only and do not form a part of this Agreement.

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10.8    Amendment. This Agreement may be amended or modified only by an instrument in writing duly executed by the Seller Representative and Buyer.

10.9    Waiver. Seller Representative and Buyer may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) at any time at or prior to the Closing Date, waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or (c) waive compliance with any of the agreements or conditions contained herein, to the extent permitted by applicable Law. Any agreement to any such extension or waiver shall be valid only if set forth in a writing signed by the Seller Representative and Buyer.

10.10    Governing Law; Forum.

(a)    This Agreement and, except to the extent otherwise provided in any Related Document, each Related Document, is to be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its rules of conflict of laws other than Section 5-1401 of the New York General Obligations Law.

(b)    Any Action brought by any party or any of its Affiliates arising in whole or in part under or in connection with this Agreement or, except to the extent provided in any Related Document, any Related Document may only be instituted in a federal or state court in New York County, New York, and each party waives any claim or objection that it may now or hereafter have to the laying of venue of any such proceeding, and agrees not to assert that venue should properly lie in any other location. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder in Canadian dollars into US Dollars then the parties agree, to the fullest extent permitted by law, that the rate of exchange shall be the rate at which in accordance with normal banking procedures, any party could purchase US dollars with Canadian dollars at the buying spot rate of exchange in the New York foreign exchange market on the Business Day immediately preceding that on which any such judgment, or any relevant part thereof, is given.

(c)    Each party hereby (i) consents to service of process in any Action between or among the parties arising in whole or in part under or in connection with this Agreement or any Related Document in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 10.5 above, shall constitute good and valid service of process in any such Action, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.

10.11    Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER

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SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT AND THAT ANY SUCH PROCEEDING WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

10.12    Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

10.13    Schedules. Notwithstanding anything to the contrary in the Schedules to this Agreement or any cover page thereto, to the extent any one or more provisions in any Schedule conflicts with the provisions of this Agreement (including this Section 10.13) the provisions of this Section 10.13 and the other provisions of this Agreement shall control (including, without limitation, that no effect shall be given to any purported materiality or knowledge qualifications in any of the Schedules).

10.14    Cumulative Remedies. All rights and remedies of any party hereto are cumulative of each other and of every other right or remedy such party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies.

10.15    Joint Drafting. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other agreements and documents to be executed by the parties in connection herewith. In the event an ambiguity or question of intent or interpretation arises, this Agreement and the other agreements and documents to be executed by the parties hereto in connection herewith shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement and the other agreements and documents to be executed by the parties in connection with this Agreement.

10.16    Specific Performance. Each of the parties hereto acknowledges that the rights of each party to consummate the transactions contemplated hereby are unique and recognize and affirm that in the event of a breach of this Agreement by any party, money damages may be inadequate and the non-breaching party may have no adequate remedy at law. Accordingly, the parties hereto agree that such non-breaching party shall have the right, in addition to any other rights and remedies existing in their favor at law or in equity, to enforce its rights and the breaching party’s obligations hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security).

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10.17    Counterparts. This Agreement may be executed in any number of counterparts, and counterpart signature pages may be delivered by PDF format, each of which shall be deemed an original but all of which shall constitute but one instrument.

10.18    Confidentiality. From and after the Closing Date, Seller shall maintain in strict confidence, and not, directly or indirectly, use, disclose or otherwise exploit any of the Confidential Information to any Person, except to pursue its rights under this Agreement or the Related Documents. In the event that Seller is required by Law to disclose any Confidential Information, Seller shall notify Buyer promptly of the request or requirement so that Buyer may seek, at its expense, an appropriate protective order or waive compliance with the provisions of this Section 10.18. Upon the request and at the expense of Buyer, Seller shall assist Buyer in obtaining such protective order. If, in the absence of a protective order or the receipt of a waiver hereunder Seller is compelled to disclose any Confidential Information to any Governmental Authority or else stand liable for contempt, Seller may disclose the Confidential Information to the Governmental Authority; provided, however, that Seller shall use reasonable best efforts to obtain, at the request, and at the expense, of Buyer, an Order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Buyer shall designate. As used herein, “Confidential Information” shall mean any nonpublic or confidential information relating to Buyer its Affiliates, the Products or the Business, except to the extent that such information shall have become public knowledge other than through improper disclosure by the Seller.

[Signatures on Following Page]

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IN WITNESS WHEREOF, Buyer and the Seller have caused this Agreement to be executed as of the day and year first above written.

BUYER:

UNIQUE-INTASCO CANADA, INC.

By: /s/ John Weinhardt            

Name: John Weinhardt

Title: President

UNIQUE FABRICATING NA, INC.

By: /s/ John Weinhardt            

Name: John Weinhardt

Title: President

SELLER:

G.C.C. HOLDINGS LTD.

By: /s/ G. Craig Combe            

Name: G. Craig Combe

Title: President

INTASCO CORPORATION

By: /s/ G. Craig Combe            

Name: G. Craig Combe

Title: President

/s/    G. Craig Combe            

G. Craig Combe

THE COMBE FAMILY TRUST

By: /s/ Gordon Craig Combe        

Name: Gordon Craig Combe

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Schedule 2.2

“Purchased Assets” means all of the assets of every kind and nature, real, personal and mixed, tangible or intangible, wherever located, owned by, used by or held for use by the Intasco, including any and all of the following assets, except, and only except, the herein defined Excluded Assets:

(a)    Accounts and Instruments. All accounts, instruments and chattel paper (as such terms are defined in the UCC), including all Accounts Receivable.

(b)    Inventory. All Inventory.

(c)    Intellectual Property. All rights in and to all United States, Canadian and foreign patents, tradenames, trademarks, corporate names, service marks, copyrights, domain names and/or applications therefor and the like, and all other intellectual property of any kind or nature, whether arising under statute, common law or otherwise, registered or unregistered, including, without limitation, the Intellectual Property.

(d)    Customer and Supplier Information. All current or historical information relating to customers and suppliers, including all customer lists, mailing lists, customer price lists, customer files, customer account histories, suppliers lists, suppliers price lists and other correspondence and other recorded knowledge relating to customers or suppliers. Customers include distributors.

(e)    Goodwill. All of the goodwill of Intasco.

(f)    Machinery, Equipment, Fixtures and Supplies. All machinery and equipment, molds, office equipment, accessories, tools, vehicles, spare parts, fixtures, furniture, supplies relating to the foregoing, other supplies, including packaging and office supplies and other similar personal property.

(g)    Proprietary Technology; Other Information. All proprietary technology, including all know‑how, trade secrets, quality control standards, reports, including test reports, processes, market research and other data, computer software and programs, formulae, inventions and other ideas, current and historical information relating to products purchased or sold by Intasco or contemplated to be purchased or sold, including all sales literature, sales data and other related information, including correspondence and recorded knowledge, and all other current and historical information relating to the Purchased Assets, including employee records and other information pertaining to the Business, and the media thereon.

(h)    Permits; Contract Rights; Prepaid Assets; Certain Insurance Policies; Other Assets. All of the following: (i) all Permits; (ii) all of the rights under all Contracts; (iii)  Intasco’s website(s); (iv) all prepaid or deferred expenses, including all advertising and promotional materials, catalogs and labels; (v) all warranties, guarantees and rights of indemnity, at common law, by contract or otherwise; (vi) all other rights relating to the other Purchased Assets, including all guaranties, security agreements and other collateral in respect of any such

assets and claims now existing or hereafter arising relating thereto; (vii) all rights to receive proceeds of insurance awards payable on or after the Closing Date with respect to loss of any Purchased Asset; (viii) all claims and other causes of action inuring to Intasco’s benefit; and (ix) without limiting the generality of this Schedule 2.2, all other assets of Intasco except to the extent same constitute Excluded Assets.

(i)    The following vehicles: 2011 Jeep Grand Cherokee and 2014 Jeep Grand Cherokee.

Notwithstanding the preceding provisions of this Schedule 2.2, the Purchased Assets shall not include any of the following assets existing on the Closing Date except to the extent such assets are reflected in the Closing Working Capital (as finally determined pursuant to Section 2.4) (the “Excluded Assets”):

(a)    Cash. Subject to the Target Working Capital requirement, all cash, certificates of deposit, money market accounts, marketable securities and other similar securities and/or cash equivalents of Intasco.

(b)    Tax Refunds. All claims made or which may be made by Intasco to any Governmental Authority, to the extent same does not adversely affect Buyer, relating to refunds for Taxes with respect to any period occurring prior to the Closing Date.

(c)    Certain Corporate Records. Corporate minutes, seals, stock ledgers and stock transfer books of Intasco.

(d)    Non-Assignable Assets. Contracts requiring consent to Intasco’s transfer of same and as to which such consent is not obtained prior to the Closing Date provided that this clause (d) shall not in any manner reduce or otherwise alter the rights of Buyer under this Agreement.

(e)    Real Property. All rights (other than rights under the Leases) with respect to Leased Real Property and Improvements.

(f)    The following vehicles: 2013 Audi Quattro, 2014 Audi Truck/Van, 2001 Mercedes Benz and 2014 Jeep Grand Cherokee Sport.

Terms (whether or not capitalized) defined in the Agreement to which this Schedule 2.2 is attached and not defined in this Schedule 2.2 shall have the meanings ascribed to such terms in the Agreement. Capitalized terms defined in this Schedule and not defined in the Agreement to which this Schedule 2.2 is attached shall in the Agreement have the meanings ascribed to such terms in this Schedule 2.2.

2

Schedule I

Claudine Andrews

Lisa LeGras

Steve McNeil

David Rodenburg

Jeffrey Saunders

EX-10.4

Exhibit 10.4

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this "Agreement"), dated as of April 29, 2016, is entered into by and between UNIQUE FABRICATING NA, INC., a Delaware corporation ("US Borrower"), UNIQUE-CHARDAN, INC., a Delaware corporation, UNIQUE MOLDED FOAM TECHNOLOGIES, INC., a Delaware corporation, UNIQUE PRESCOTECH, INC., a Delaware corporation, UNIQUE FABRICATING REALTY, LLC a Michigan limited liability company, and UNIQUE FABRICATING SOUTH, INC., a Michigan corporation,(collectively called, together with US Borrower and each of the other person which becomes a debtor hereunder from time to time (together with the US Borrowers, the "Debtors" and each referred to herein as a "Debtor"), and CITIZENS BANK, , NATIONAL ASSOCIATION, a national banking association, as agent (the "Agent") for the Lenders (as defined below);

WITNESSETH THAT:

WHEREAS, the Debtors are (or will be with respect to after-acquired property) the legal and beneficial owner and the holder of the Collateral (as defined in Section 1 hereof); and

WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to time be restated, amended, modified or supplemented, the "Credit Agreement") of even date herewith by and among US Borrower, Unique-Intasco Canada, Inc., a British Columbia corporation (“CA Borrower”, called together with US Borrower, “Borrowers” and each of them referred to as “Borrower”), the Agent, the Lenders now or hereafter party thereto (the "Lenders") and the Guarantors now or hereafter party to the Guaranty as defined therein (the "Guarantors"), the Agent and the Lenders have agreed to make certain loans and other extensions of credit to the Borrowers; and

WHEREAS, the obligation of the Agent and the Lenders to make loans under the Credit Agreement is subject to the condition, among others, that the Credit Parties secure the Indebtedness to the Agent and the Lenders under the Credit Agreement, the other Loan Documents and otherwise as more fully described herein in the manner set forth herein.

NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

1.Terms which are used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement, and the rules of construction set forth in the Credit Agreement shall apply to this Agreement. The following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

(a)     "Code" means the Uniform Commercial Code as in effect in the State of Michigan on the date hereof and as amended from time to time except to the extent that the conflict of law rules of such Uniform Commercial Code shall apply the Uniform Commercial Code as in effect from time to time in any other state to specific property or other matters.

(b)    "Collateral" means all of each Debtor's right, title and interest in, to and under the following described property of such Debtor (each capitalized term used in this Section 1(b) shall have in this Agreement the meaning given to it by the Code):

1

(i)    all now existing and hereafter acquired or arising Accounts, Goods, Health Care Insurance Receivables, General Intangibles, Payment Intangibles, Deposit Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper), Documents, Instruments, Software, Investment Property, Letters of Credit, Letter of Credit Rights, advices of credit, money, Commercial Tort Claims as listed on Schedule B hereto (as such Schedule is amended or supplemented from time to time), Equipment, As-Extracted Collateral, Inventory, Fixtures, and Supporting Obligations, together with all products of and Accessions to any of the foregoing and all Proceeds of any of the foregoing (including, without limitation, all insurance policies and proceeds thereof);

(ii)    to the extent, if any, not included in clause (i) above, each and every other item of personal property and fixtures, whether now existing or hereafter arising or acquired, including, without limitation, all licenses, contracts and agreements, and all collateral for the payment or performance of any contract or agreement, together with all products and Proceeds (including all insurance policies and proceeds) of any Accessions to any of the foregoing; and

(iii)    all present and future business records and information, including computer tapes and other storage media containing the same and computer programs and software (including, without limitation, source code, object code and related manuals and documentation and all licenses to use such software) for accessing and manipulating such information;

provided, that, "Collateral" shall not include Excluded Property.

(c)    "Excluded Property" means (i) any permit or license or any contractual obligation entered into by a Debtor (A) that prohibits or requires the consent of any Person which has not been obtained as a condition to the creation by such Debtor of a Lien on any right, title or interest in such permit, license or contractual obligation or (B) to the extent that any Law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the Code or any other Law, and (ii) any "intent to use" Trademark applications for which a statement of use has not been filed (but only until such statement is filed); provided, however, "Excluded Property" shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

(d)    "Law" means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any governmental entity, agency, division of department, foreign or domestic.

(e)    "Receivables" means all of the Collateral, except Equipment, Inventory and Fixtures.

(f)    "Permitted Liens" shall have the meaning provided in the Credit Agreement.

(g)    "Secured Obligations" shall mean and include the following: (i) all now existing and hereafter arising Indebtedness, obligations, and liabilities, whether for principal, interest, fees, expenses or otherwise of the Borrowers (or either of them) or any of the other Debtors to the Agent, the Lenders, or any Affiliate thereof, under the Credit Agreement, the Notes or any of the other Loan Documents, as any of the same or any one or more of them may from time to time be amended, restated, modified, or supplemented, together with any and all extensions, renewals, refinancings, and refundings thereof in

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whole or in part (and including obligations, liabilities, and indebtedness arising or accruing after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to the Borrowers (or either of them) and/or any of the other Debtors or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such obligation, liability or indebtedness is not enforceable or allowable in such proceeding, and including all obligations, liabilities and indebtedness arising from any extensions of credit under or in connection with the Loan Documents from time to time, regardless whether any such extensions of credit are in excess of the amount committed under or contemplated by the Loan Documents or are made in circumstances in which any condition to extension of credit is not satisfied); (ii) all indebtedness, loans, obligations, expenses and liabilities of the Borrowers (or either of them) and/or any of the other Debtors to the Agent, any Lender or any Affiliate thereof; and (iii) any sums advanced by the Agent or the Lenders or which may otherwise become due pursuant to the provisions of the Credit Agreement, the Notes, this Agreement, or any other Loan Documents or pursuant to any other document or instrument at any time delivered to the Agent in connection therewith, including commitment, letter of credit, agent or other fees and charges, and indemnification obligations under any such document or instrument, together with all interest payable on any of the foregoing, whether such sums are advanced or otherwise become due before or after the entry of any judgment for foreclosure or any judgment on any Loan Document or with respect to any default under any of the Secured Obligations.

2.    As security for the due and punctual payment and performance of the Secured Obligations in full, each Debtor hereby agrees that the Agent and the Lenders shall have, and each Debtor hereby grants to and creates in favor of the Agent for the benefit of itself and the Lenders, a continuing first priority lien on and security interest under the Code in and to the Collateral subject only to Permitted Liens. Without limiting the generality of Section 4 below, each Debtor further agrees that with respect to each item of the Collateral as to which (i) the creation of a valid and enforceable security interest is not governed exclusively by the Code, or (ii) the perfection of a valid and enforceable first priority security interest therein under the Code cannot be accomplished either by the Agent taking possession thereof or by the filing in appropriate locations of appropriate Code financing statements executed by such Debtor, such Debtor will at its expense execute and deliver to the Agent and hereby does authorize the Agent to execute and file such documents, agreements, notices, assignments and instruments and take such further actions as may be requested by the Agent from time to time for the purpose of creating a valid and perfected first priority Lien on such item, subject only to Permitted Liens, enforceable against such Debtor and all third parties to secure the Secured Obligations.

3.    Each Debtor represents and warrants to the Agent and the Lenders that (a) the Debtors have good and marketable title to the Collateral, (b) except for the security interest granted to and created in favor of the Agent for the benefit of itself and the Lenders hereunder and Permitted Liens, all the Collateral is free and clear of any Lien, (c) the Debtors will use commercially reasonable efforts to defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein, (d) each Account is genuine and enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors, and the Debtors will defend the same against all claims, demands, recoupment, setoffs, and counterclaims at any time asserted, (e) at the time any Account becomes subject to this Agreement, each such Account will be a good and valid Account representing a bona fide sale of goods or services by the Debtors and such goods will have been shipped to the respective account debtors or the services will have been performed for the respective account debtors (or for those on behalf of whom the account debtors are obligated on the Accounts), and no such Account, which constitutes an Eligible Account, will at such time be subject to any claim for credit, allowance, setoff, recoupment, defense, counterclaim or adjustment by any account debtor or otherwise, (f) the exact legal name of each Debtor is as set forth on the signature page hereto, and (g) the

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state of incorporation, formation or organization as applicable, of each Debtor is as set forth on Schedule A hereto. Further, such Debtor represents and warrants that (i) this Agreement creates a valid security interest in favor of the Agent, for the benefit of itself and the Lenders hereunder, in the Collateral, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity and (ii) the security interests granted hereunder in favor of the Agent, for the benefit of itself and the Lenders, will constitute a first priority security interest (subject only to Permitted Liens) and will be perfected, with respect to the Collateral of such Debtor, upon the proper filing of the financing statements in the jurisdiction of the state of formation of such Debtor as indicated on Schedule A hereto, and with respect to Collateral which cannot be perfected by the filing of a financing statement, upon taking of the other steps contemplated by this Agreement and the other Financing Documents.

4.    Each Debtor will faithfully preserve and protect the Agent's security interest in the Collateral as a prior perfected security interest under the Code, superior and prior to the rights of all third Persons, except for holders of Permitted Liens, and will do all such other acts and things and will, upon request therefor by the Agent, execute, deliver, file and record, and each Debtor hereby authorizes the Agent to so file, all such other documents and instruments, including, without limitation, financing statements, security agreements, assignments and documents and powers of attorney with respect to the Collateral, and pay all filing fees and taxes related thereto, as the Agent in its reasonable discretion may deem necessary or advisable from time to time in order to attach, continue, preserve, perfect, and protect said security interest (including the filing at any time or times after the date hereof of financing statements under, and in the locations advisable pursuant to, the Code); and, each Debtor hereby irrevocably appoints the Agent, its officers, employees and agents, or any of them, as attorneys-in-fact for each Debtor to execute, deliver, file and record such items for such Debtor and in the Debtor's name, place and stead to preserve, continue, perfect and protect said security interest. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement.

5.    Each Debtor covenants and agrees that:

(a)    it will defend the Agent's and the Lenders' right, title and lien on and security interest in and to the Collateral and the Proceeds thereof against the claims and demands of all Persons whomsoever, other than a holder of Permitted Liens and any Person claiming a right in the Collateral pursuant to an agreement between such Person and the Agent;

(b)    it will not suffer or permit to exist on any Collateral any Lien except for Permitted Liens;

(c)    it will not take or omit to take any action, the taking or the omission of which would reasonably be expected to result in a material alteration (except as permitted by the Credit Agreement) or impairment of the Collateral or of the Agent's rights under this Agreement;

(d)    it will (i) except for such Collateral delivered to the Agent pursuant to this Section or otherwise now or hereafter under the control of the Agent, obtain and maintain sole and exclusive possession of the Collateral (other than Collateral in transit or Collateral kept in accordance with (ii) below), (ii) maintain its chief executive office and keep the Collateral (other than Collateral in transit) and all records pertaining thereto at the locations specified on the Security Interest Data Summary attached hereto as Schedule A, unless it shall have given the Agent prior notice and taken any action reasonably requested by the Agent to maintain its security interest therein, (iii) notify the Agent if an Account becomes evidenced or secured by an Instrument or Chattel Paper and deliver to the Agent upon the Agent's request therefor all Collateral consisting of Instruments and Chattel Paper immediately upon the

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Debtor's receipt of a request therefor, (iv) deliver to the Agent possession of all Collateral the possession of which is required to perfect the Agent's Lien thereon or security interest therein or the possession of which grants priority over a Person filing a financing statement with respect thereto, (v) execute control agreements and cause other Persons to execute acknowledgments in form and substance satisfactory to the Agent evidencing the Agent's control with respect to all Collateral, the control or acknowledgment of which perfects the Agent's security interest therein, including Letters of Credit, Letter of Credit Rights, Electronic Chattel Paper, Deposit Accounts and Investment Property, and (vi) keep materially accurate and complete books and records concerning the Collateral and such other books and records as the Agent may from time to time reasonably require;

(e)    it will promptly furnish to the Agent such information and documents relating to the Collateral as the Agent may reasonably request, including, without limitation, all invoices, Documents, contracts, Chattel Paper, Instruments and other writings pertaining to such Debtor's contracts or the performance thereof, all of the foregoing to be certified upon request of the Agent by an authorized officer of such Debtor;

(f)    it shall immediately notify the Agent if any Account arises out of contracts with the United States or any department, agency or instrumentality thereof or any one or more of the states of the United States or any department, agency, or instrumentality thereof, and will execute any instruments and take any steps required by the Agent so that all monies due and to become due under such contract shall be assigned to the Agent and notice of the assignment given to and acknowledged by the appropriate government agency or authority under the Federal Assignment of Claims Act;

(g)    it will not change its state of incorporation, formation or organization, as applicable, without providing thirty (30) days' prior written notice to the Agent;

(h)    it will not change its name without providing thirty (30) days' prior written notice to the Agent;

(i)    it shall preserve its current existence as a corporation, partnership or a limited liability company, as applicable, and except as permitted by the Credit Agreement, shall not (i) in one, or a series of related transactions, merge into or consolidate with any other entity, the survivor of which is not the Debtor, or (ii) sell all or substantially all of its assets;

(j)    if such Debtor shall at any time acquire a commercial tort claim, as defined in the Code, the Debtor shall immediately notify the Agent in a writing signed by such Debtor of the details thereof and grant to the Agent for the benefit of itself and the Lenders in such writing, a security interest therein and in the Proceeds thereof, with such writing to be in form and substance satisfactory to the Agent and such writing shall constitute a supplement to Schedule B hereto;

(k)    it hereby authorizes the Agent to, at any time and from time to time, file in any one or more jurisdictions, financing statements that describe the Collateral, together with continuation statements thereof and amendments thereto, without the signature of such Debtor and which contain any information required by the Code or any other applicable statute applicable to such jurisdiction for the sufficiency or filing office acceptance of any financing statements, continuation statements, or amendments. Each Debtor agrees to furnish any such information to the Agent promptly upon request. Any such financing statements, continuation statements, or amendments may be signed by Agent on behalf of such Debtor if the Agent so elects and may be filed at any time in any jurisdiction; and

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(l)    it shall at any time and from time to time take such steps as the Agent may reasonably request as are necessary for the Agent to insure the continued perfection of the Agent's and the Lenders' security interest in the Collateral with the same priority required hereby and the preservation of its rights therein.

6.    The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Agent takes such action for that purpose as the Debtor shall request in writing; provided that such requested action will not, in the judgment of the Agent, impair the security interest in the Collateral created hereby or the Agent's and the Lenders' rights in, or the value of, the Collateral; provided, further, that such written request is received by the Agent in sufficient time to permit the Agent to take the requested action.

7.    The pledge, security interests and other Liens and the obligation of each Debtor hereunder shall not be discharged until payment in full of the Secured Obligations. The pledge, security interests, and other Liens and the Obligations of each Debtor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by Agent, or any other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Debtor or which would otherwise operate as a discharge of the Debtor as a matter of law or equity. Without limiting the generality of the foregoing, each Debtor hereby agrees and acknowledges that the pledge, security interests, and other Liens given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following at any time and from time to time:

(a)    Any lack of genuineness, legality, validity, enforceability, or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document or any of the Secured Obligations and regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan Documents, or any rights of the Agent or any other Person with respect thereto;

(b)    Any increase, decrease, or change in the amount, nature, type or purpose of any of the Secured Obligations (whether or not contemplated by the Loan Documents as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Loan Documents; or any amendment, modification or supplement to, or refinancing or refunding of, any Loan Document or any of the Secured Obligations;

(c)    Any failure to assert any breach of or default under any Loan Document or any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against any Debtor or any other Person under or in connection with any Loan Document or any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Debtor; or any application of collections (including collections resulting from realization upon any direct or indirect security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured Obligations or, if any collections are applied to Secured Obligations, any application to particular Secured Obligations;

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(d)    Any taking, exchange, amendment, modification, supplement, termination, subordination, release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Agent or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by Agent or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Collateral). As used in this Agreement, "direct or indirect security" for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;

(e)    Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the existing structure or existence of, any Debtor or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Debtor or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by Agent or the Debtor or by any other Person in connection with any such proceeding;

(f)    Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Debtor or any other Person with respect to any Loan Document or any of the Secured Obligations; or any discharge by operation of law or release of any Debtor or any other Person from the performance or observance of any Loan Document or any of the Secured Obligations; or

(g)    Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a guarantor or a surety, including each Debtor, excepting only full, strict, payment in full of the Secured Obligations.

8.    Each Debtor hereby waives any and all defenses which such Debtor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like, and each Debtor hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in the immediately preceding section hereof. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable law, each Debtor hereby further waives each of the following:

(a)    All notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve any rights against such Debtor, including the following: any notice of any event or circumstance described in the immediately preceding section hereof; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of the Debtors or any other Person to comply with any Loan Document or any of the Secured Obligations or any requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of the Debtors or any other Person;

(b)    Any right to any marshalling of assets, to the filing of any claim against such Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to

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the exercise against such Debtor or any other Person of any other right or remedy under or in connection with any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any requirement of promptness or diligence on the part of the Agent or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Loan Document, and any requirement that such Debtor receive notice of any such acceptance; and

(c)    Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including anti-deficiency laws, "one action" laws or the like), or by reason of any election of remedies or other action or inaction by the Agent (including commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of the Collateral for any of the Secured Obligations), which results in denial or impairment of the right of the Agent to seek a deficiency against such Debtor or any other Person or which otherwise discharges or impairs any of the Secured Obligations.

9.    (a)    At any time and from time to time whether or not an Event of Default then exists and without prior notice to or consent of any Debtor, the Agent may, at its option and for the benefit of itself and the Lenders, take such actions as the Agent deems appropriate (i) to attach, perfect, continue, preserve and protect the Agent's and the Lenders' security interest in, or Lien on, the Collateral, (ii) to inspect, audit and verify the Collateral, including reviewing all of each Debtor's books and records and copying and making excerpts therefrom and (iii) to add all liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Agent for the benefit of the Agent and the Lenders within ten (10) days after demand; provided that so long as no Default or Event of Default has occurred and is continuing, Debtor shall not be obligated to reimburse Agent for more than one such inspection in any calendar year; provided further however, Debtor shall be obligated to reimburse Agent for all inspections performed after the occurrence and during the continuance of a Default or Event of Default.

(b)    At any time and from time to time while an Event of Default exists and is continuing and without prior notice to or consent of any Debtor, the Agent may, at its option and for the benefit of itself and the Lenders, take such action as the Agent deems appropriate (i) to maintain, repair, protect and insure the Collateral, (ii) to perform, keep, observe and render true and correct any and all covenants, agreements, representations and warranties of the Debtors hereunder, and (iii) to add all liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Agent for the benefit of the Agent and the Lenders within ten (10) days after demand.

10.    While there exists any Event of Default under the Credit Agreement:

(a)    The Agent shall have, and may exercise, all the rights and remedies available to a secured party under the Code in effect at the time, and such other rights and remedies as may be provided at Law and as set forth below, including, without limitation, the ability to (i)  take possession immediately, with or without notice, demand, or legal process, of any all of the Collateral wherever found, and for such purposes, enter upon any premises upon which the Collateral may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble the Collateral and deliver it to the Agent or to any place designated by the Agent at the Debtors' expense, (iii) take over and collect all of any Debtor's Receivables and all other Collateral, and to this end each Debtor hereby appoints the Agent, its officers, employees

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and agents, as its irrevocable, true and lawful attorneys-in-fact with all necessary power and authority to (1) receive, open and dispose of all mail addressed to any Debtor and notify postal authorities to change the address for delivery thereof to such address as the Agent may designate, (2) demand payment of the Receivables, (3) enforce payment of the Receivables by legal proceedings or otherwise, (4) exercise all of any Debtor's rights and remedies with respect to the collection of the Receivables, (5) settle, adjust, compromise, extend or renew the Receivables, (6) settle, adjust or compromise any legal proceedings brought to collect the Receivables, (7) to the extent permitted by applicable Law, sell or assign the Receivables upon such terms, for such amounts and at such time or times as the Agent deems advisable, (8) discharge and release the Receivables, (9) take control, in any manner, of any item of payment or Proceeds from any account debtor, (10) prepare, file and sign any Debtor's name on any proof of claim in relief proceeding or similar document against any account debtor, (11) prepare, file and sign any Debtor's name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (12) do all acts and things necessary, in the Agent's sole discretion, to fulfill each Debtor's obligations to the Agent or the Lenders under the Credit Agreement, Loan Documents or otherwise, (13) endorse the name of any Debtor upon any check, Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Receivables or Inventory, (14) use any Debtor's stationery and sign such Debtor's name to verifications of the Receivables and notices thereof to account debtors, (15) access and use the information recorded on or contained in any data processing equipment or computer hardware or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to which any Debtor has access, (iv) demand, sue for, collect, compromise and give acquittances for any and all Collateral, (v) prosecute, defend or compromise any action, claim or proceeding with respect to any of the Collateral, and (vi) take such other action as the Agent may deem appropriate, including extending or modifying the terms of payment of any Debtor's debtors. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to or arising from or connected with any of the rights or remedies exercised by the Agent pursuant to this Agreement, except claims for physical damage to the Collateral, Persons or other property arising from gross negligence or willful misconduct by the Agent.

(b)    The Agent shall have the right to lease, sell or otherwise dispose of all or any of the Collateral at public or private sale or sales for cash, credit or any combination thereof, with such notice as may be required by Law (it being agreed by the Debtors that, in the absence of any contrary requirement of Law, ten (10) days' prior notice of a public or private sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash or on credit, all as the Agent, in its sole discretion, may deem advisable. Such sales may be adjourned from time to time with or without notice. The Agent shall have the right to conduct such sales on any Debtor's premises or elsewhere and shall have the right to use any Debtor's premises without charge for such sales for such time or times as the Agent may see fit. The Agent may purchase all or any part of the Collateral at public or, if permitted by Law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Secured Obligations.

(c)    Each Debtor, at its cost and expense (including the cost and expense of any of the following referenced consents, approvals, etc.), will promptly execute and deliver or cause the execution and delivery of all applications, certificates, instruments, registration statements, and all other documents and papers the Agent may request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, accreditation, or authorization of any other official body or other Person necessary or appropriate for the effective exercise of any rights hereunder or under the other Loan Documents. Without limiting the generality of the foregoing, each Debtor agrees that in the event the Agent on behalf of itself and/or the Lenders shall exercise its rights hereunder or pursuant to the other

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Loan Documents, to sell, transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in connection with any of the Collateral, each Debtor shall execute and deliver (or cause to be executed and delivered) all applications, certificates, assignments and other documents that the Agent requests, to facilitate such actions and shall otherwise promptly, fully, and diligently cooperate with the Agent and any other Persons in making any application for the prior consent or approval of any official body or any other Person to the exercise by the Agent on behalf of itself and/or the Lenders of any such rights relating to all or any of the Collateral. Furthermore, because each Debtor agrees that the remedies at law, of the Agent on behalf of itself and/or the Lenders, for failure of such Debtor to comply with this subsection (c) would be inadequate, and that any such failure would not be adequately compensable in damages, each Debtor agrees that this Subsection (c) may be specifically enforced.

(d)    The Agent may request, without limiting the rights and remedies of the Agent on behalf of itself and the Lenders otherwise provided hereunder and under the other Loan Documents, that each Debtor do any of the following: (i) give the Agent on behalf of itself and the Lenders specific assignments of the accounts receivable of the Debtors after such accounts receivable come into existence, and schedules of such accounts receivable, the form and content of such assignment and schedules to be reasonably satisfactory to Agent, and (ii) in order to better secure the Agent on behalf of itself and the Lenders, to the extent permitted by Law, enter into such lockbox agreements and establish such lockbox accounts as the Agent may require, all at the sole expense of the Debtors and shall direct all payments from all payors due to each Debtor, to such lockbox accounts.

(e)    Nothing in this Agreement waives any duty of the Agent or any right of Debtor which cannot be waived under Section 9-602 of the Code or other mandatory provisions of applicable Law which cannot be waived.

11.    The Lien on and security interest in the Collateral granted to and created in favor of the Agent by this Agreement shall be for the benefit of the Agent and the Lenders. Each of the rights, privileges, and remedies provided to the Agent hereunder or otherwise by Law with respect to the Collateral shall be exercised by the Agent only for its own benefit and the benefit of the Lenders, and any of the Collateral or Proceeds thereof held or realized upon at any time by the Agent shall be applied as set forth in the Credit Agreement. Each Debtor shall remain liable to the Agent and the Lenders for, and shall pay to the Agent for the benefit of itself and the Lenders, any deficiency which may remain after such sale or collection.

12.    If the Agent repossesses or seeks to repossess any of the Collateral pursuant to the terms hereof following the occurrence and during the continuance of an Event of Default, then to the extent it is commercially reasonable for the Agent to store any Collateral on any premises of any Debtor, such Debtor hereby agrees to lease to the Agent on a month-to-month tenancy for a period not to exceed ninety (90) days at the Agent's election, at a rental rate equal to One Dollar ($1.00) per month (if such Debtor owns the premises), and at the current rental rate per month (if such Debtor leases the premises), the premises on which the Collateral is located; provided it is located on premises owned or leased by such Debtor.

13.    Upon payment in full of the Secured Obligations and termination of the Credit Agreement, this Agreement shall terminate and be of no further force and effect, and the Agent shall thereupon promptly return to such Debtor such of the Collateral and such other documents delivered by the Debtor or obtained by the Agent hereunder as may then be in the Agent's possession, subject to the rights of third parties. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Following a sale of assets permitted under the Credit Agreement, the Agent shall also promptly return to such Debtor such of the Collateral and such other

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documents delivered by the Debtor or obtained by the Agent hereunder as may then be in the Agent's possession, subject to the rights of third parties.

14.    No failure or delay on the part of the Agent in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Agent hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default. All waivers under this Agreement must be in writing. The rights and remedies of the Agent under this Agreement are cumulative and in addition to any rights or remedies which it may otherwise have, and the Agent may enforce any one or more remedies hereunder successively or concurrently at its option.

15.    All notices, statements, requests and demands given to or made upon either party hereto in accordance with the provisions of this Agreement shall be given or made as provided in the Credit Agreement.

16.    Each Debtor agrees that as of the date hereof, all information contained on the Security Interest Data Summary attached hereto as Schedule A is accurate and complete and contains no omission or misrepresentation. Each Debtor shall promptly notify the Agent of any changes in the information set forth thereon.

17.    Each Debtor acknowledges that the provisions hereof giving the Agent rights of access to books, records and information concerning the Collateral and such Debtor's operations and providing the Agent access to such Debtor's premises are intended to afford the Agent with immediate access to current information concerning the Debtor and its activities, including without limitation, the value, nature and location of the Collateral so that the Agent can, among other things, make an appropriate determination after the occurrence of an Event of Default, whether and when to exercise its other remedies hereunder and at Law, including, without limitation, instituting a replevin action should the Debtor refuse to turn over any Collateral to the Agent. Each Debtor further acknowledges that should such Debtor at any time fail to promptly provide such information and access to the Agent, such Debtor acknowledges that the Agent would have no adequate remedy at Law to promptly obtain the same. Each Debtor agrees that the provisions hereof may be specifically enforced by the Agent and waives any claim or defense in any such action or proceeding that the Agent has an adequate remedy at Law.

18.    This Agreement shall be binding upon, and inure to the benefit of, the Agent, the Lenders and their respective successors and assigns, and the Debtor and each of its respective successors and assigns, except that the Debtors may not assign or transfer its obligations hereunder or any interest herein.

19.    This Agreement shall be deemed to be a contract under the laws of the State of Michigan and for all purposes shall be governed by, and construed in accordance with, the laws of said State excluding its rules relating to conflicts of law.

20.    Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

21.    Each Debtor hereby irrevocably submits to the nonexclusive jurisdiction of any Michiganstate or federal court sitting in Oakland County, in any action or proceeding arising out of or relating to this Agreement, and each Debtor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Michiganstateor federal court. Each Debtor hereby waives to the

11

fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of any such action or proceeding. Each Debtor hereby appoints the process agent identified below (the "Process Agent") as its agent to receive on behalf of such party and its respective property service of copies of the summons and complaint and any other process which may be served in any action or proceeding. Such service may be made by mailing or delivering a copy of such process to the Debtor in care of the Process Agent at the Process Agent’s address, and each Debtor hereby authorizes and directs the Process Agent to receive such service on its behalf. Each Debtor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions (or any political subdivision thereof) by suit on the judgment or in any other manner provided at law. Each Debtor further agrees that it shall, for so long as any commitment or any obligation of any Credit Party to any Lender remains outstanding, continue to retain Process Agent for the purposes set forth in this Section 22. The Process Agent for each Debtor shall be Unique Fabricating NA, Inc., with an office on the date hereof as set forth in the Credit Agreement. The Process Agent hereby accepts the appointment of Process Agent by the Debtors and agrees to act as Process Agent on behalf of the Debtors.

22.    EXCEPT AS PROHIBITED BY LAW, EACH DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING THERETO.

23.    This Agreement may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same instrument. Each Debtor acknowledges and agrees that a telecopy transmission to the Agent or any Lender of the signature pages hereof purporting to be signed on behalf of the Debtor shall constitute effective and binding execution and delivery hereof by such Debtor.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement as of the day and year first above set.

UNIQUE FABRICATING NA, INC.

By:                            ______________________

Its:    ______________________                

UNIQUE-CHARDAN, INC.

By:                            ______________________

Its:    ______________________                

UNIQUE MOLDED FOAM TECHNOLOGIES, INC.

By:                            ______________________

Its:    ______________________                

UNIQUE PRESCOTECH, INC.

By:                            ______________________

Its:    ______________________                

UNIQUE FABRICATING REALTY, LLC

By:                            ______________________

Its:    ______________________                

UNIQUE FABRICATING SOUTH, INC.

By:                            ______________________

Its:    ______________________                

CITIZENS BANK, NATIONAL ASSOCIATION

as Agent

By:

Michael Farley                

Its:    Senior Vice President    

SCHEDULES

TO

SECURITY AGREEMENT

All defined terms used in these Schedules shall have the meanings ascribed to them in the above-referenced Security Agreement, as amended as of the date hereof, unless otherwise defined herein. Materials attached hereto are incorporated by reference herein and made a part hereof.

SCHEDULE A

TO

SECURITY AGREEMENT

Security Interest Data Summary

1.    Debtors’ Jurisdictions of Organization; Chief Executive Office; EIN and Org ID

Legal Name	Jurisdiction of Organization	Chief Executive Office	Federal EIN	State-issued Organizational ID
Unique Fabricating NA, Inc.	Delaware	800 Standard Parkway Auburn Hills, Michigan 48326	52-2108349	2915564
Unique-Chardan, Inc.	Delaware	800 Standard Parkway, Auburn Hills, Michigan 48326	46-4688350	5472526
Unique Molded Foam Technologies, Inc.	Delaware	800 Standard Parkway, Auburn Hills, Michigan 48326	47-4893749	5810058
Unique Prescotech, Inc.	Delaware	800 Standard Parkway, Auburn Hills, Michigan 48326	46-4169729	5435085
Unique Fabricating Realty, LLC	Michigan	800 Standard Parkway, Auburn Hills, Michigan 48326	N/A	B2094F
Unique Fabricating South, Inc.	Michigan	800 Standard Parkway, Auburn Hills, Michigan 48326	38-3299868	360750

2. Debtors’ Trade names: None.     

3. All of the Debtors’ personal property which has not been delivered to the Agent pursuant to the terms of this Agreement or the Credit Agreement is now, and will be at all future times, located at the Debtors’ chief executive office as described in Paragraph 1 above, except as specified below:

Debtor Tenant	Address	Collateral Location	Record Location
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	2000 N. New York Ave., Evansville, Indiana 47711	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	1900 N. New York Ave., Evansville, Indiana 47711	800 Standard Parkway Auburn Hills, Michigan 48326

Debtor Tenant	Address	Collateral Location	Record Location
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	1001 West Oak Street, Louisville, Kentucky 40210	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	1124 Haley Rd., Murfreesboro, Tennessee 37129	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	3233 South Zero St., Fort Smith, Arkansas 72908	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	935 West Oak Street, Louisville, Kentucky 40203	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	1421 N. Garvin Street, Evansville, Indiana 47711	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	2900 S. 7th Street, Louisville, Kentucky 40216	800 Standard Parkway Auburn Hills, Michigan 48326
Unique Fabricating South, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	300 West McCarter Road, Lafayette, Georgia 30728	800 Standard Parkway Auburn Hills, Michigan 48326
Unique Fabricating South, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	301 West McCarter Road, LaFayette, Georgia 30728	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Chardan, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	705 South Union Street, Bryan, Ohio 43506	800 Standard Parkway Auburn Hills, Michigan 48326
Unique Molded Foam Technologies, Inc.	800 Standard Parkway Auburn Hills, Michigan 48326	13221 Allman Road, Concord, Michigan 49237	800 Standard Parkway Auburn Hills, Michigan 48326

4. All of the Debtors’ real property is located in the following counties:

Owner	County	Address
Joslyn-Collier I LLC Tenant: Unique Fabricating NA, Inc.	Oakland	800 Standard Parkway Auburn Hills, Michigan 48326
Unique-Prescotech, Inc.	Vanderburgh	2000 N. New York Ave., Evansville, Indiana 47711
Unique-Prescotech, Inc.	Vanderburgh	1900 N. New York Ave., Evansville, Indiana 47711
Unique-Prescotech, Inc.	Jefferson	1001 West Oak Street, Louisville, Kentucky 40210
Unique-Prescotech, Inc.	Rutherford	1124 Haley Rd., Murfreesboro, Tennessee 37129
Unique-Prescotech, Inc.	Sebastian	3233 South Zero St., Fort Smith, Arkansas 72908
GML Properties, LLC Tenant: Unique-Prescotech, Inc.	Jefferson	935 West Oak Street, Louisville, Kentucky 40203
Garvin Street Warehouse, LLC Tenant: Unique-Prescotech, Inc.	Vanderburgh	1421 N. Garvin Street, Evansville, Indiana 47711
Parker Commercial Storage & Distribution, Inc. Tenant: Unique-Prescotech, Inc.	Jefferson	2900 S. 7th Street, Louisville, Kentucky 40216
Unique Fabricating South, Inc.	Walker	300 West McCarter Road, Lafayette, Georgia 30728
Unique Fabricating South, Inc.	Walker	301 West McCarter Road, LaFayette, Georgia 30728
Chardan Properties, LLC Tenant: Unique-Chardan, Inc.	Williams	705 South Union Street, Bryan, Ohio 43506
BMAC Properties, LLC Tenant: Unique Molded Foam Technologies, Inc.	Jackson	13221 Allman Road, Concord, Michigan 49237

5.    All of the Debtors’ books and records, including those relating to accounts payable and accounts receivable, are kept at the Debtors’ chief executive office as described in Paragraph 1 above, except as specified below:

None.

SCHEDULE B

TO

SECURITY AGREEMENT

Commercial Tort Claims

None.

EX-10.5

Exhibit 10.5

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”), dated as of April 29, 2016, is entered into by and among UNIQUE-INTASCO CANADA, INC., a British Columbia corporation (the “CA Borrower”), each of the other persons which becomes a debtor hereunder from time to time (together with the CA Borrower, the “Debtors” and each referred to herein as a “Debtor”), and CITIZENS BANK, NATIONAL ASSOCIATION, a national banking association, as agent (the “Agent”) for the Lenders (as defined below);

WITNESSETH THAT:

WHEREAS, the Debtors are (or will be with respect to after-acquired property) the legal and beneficial owners and the holders of the Collateral (as defined in Section 1 hereof); and

WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to time be restated, amended, modified or supplemented, the “Credit Agreement”) of even date herewith by and among the CA Borrower, Unique Fabricating NA, Inc., a Delaware corporation (the “US Borrower”, and together with the CA Borrower, the “Borrowers” and each referred to herein as a “Borrower”), the Agent, the lenders now or hereafter party thereto (the “Lenders”) and the guarantors now or hereafter party to the Guaranty as defined therein, the Agent and the Lenders have agreed to make certain loans and other extensions of credit to the Borrowers; and

WHEREAS, the obligation of the Agent and the Lenders to make loans and other extensions of credit to the Borrowers under the Credit Agreement is subject to the condition, among others, that the Debtors secure the Secured Obligations (as defined in Section 1 hereof) by granting security interests in the Collateral as more fully described herein in the manner set forth herein.

NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

1.Terms which are used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement, and the rules of construction set forth in the Credit Agreement shall apply to this Agreement. The following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

(a)    “Collateral” means all of each Debtor's right, title and interest in, to and under the following described property of such Debtor:

(i)    all existing and hereafter acquired (whether by amalgamation or otherwise) assets, property and undertaking, and including, without limitation, the assets, property and undertaking of the kinds described below:

(A)     all inventory of the Debtor (“Inventory”), including goods held for sale or lease or furnished or to be furnished under a contract of service or that are raw materials, work in progress or materials used or consumed, or finished goods;

(B)    all goods which are not inventory or consumer goods (“Equipment”), including furniture, fixtures, equipment, machinery, plant, tools, vehicles and other tangible personal property and Serial Numbered Goods;

(C)    all Computer Hardware and Software Collateral;

(D)    all money and all debts and choses in action which are now due or which may hereafter become due to the Debtor and all claims of any kind which the Debtor now has or may hereafter have, including claims against the Crown and claims under insurance policies (together with the Collateral of the types described in paragraphs (F) and (K) below, “Receivables”);

(E)    all Intellectual Property;

(F)    all chattel paper;

(G)    all warehouse receipts, bills of lading and other documents of title, whether negotiable or not;

(H)    all Investment Property, including the Pledged Securities;

(I)    all rights, contracts, instruments, licences, permits, consents, leases, policies, approvals, performance bonds, purchase orders, plans and specifications, all as may be amended or replaced from time to time;

(J)    all real and immoveable property, both freehold and leasehold, together with all buildings, erections and fixtures thereon;

(K)    all rents, present or future, under any lease or agreement to lease any part of the lands of the Debtor or any building or structure now or hereafter constructed or located on such lands, income derived from any tenancy, use or occupation thereof and any other income and profit derived therefrom;

(L)    all intangibles;

(M)    with respect to the Collateral of the types described in paragraphs (A) through (L) inclusive, all books, accounts, invoices, letters, documents and other records in any form, including all data in electronic form, evidencing or relating thereto and all rights and benefits in respect thereof;

(N)    with respect to the Collateral of the types described in paragraphs (A) through (M) inclusive, all substitutions and replacements thereof and increases, additions and accessions thereto; and

(O)    with respect to all of the Collateral, all proceeds therefrom including personal property in any form or fixtures derived directly or indirectly from any dealing with such property or proceeds therefrom and any insurance or other payment as indemnity or compensation for loss of or damage to such property or any right to such

2

payment, and any payment made in total or partial discharge or redemption of an intangible, chattel paper, instrument or security;

provided, that, “Collateral” shall not include Excluded Property.

(b)    “Computer Hardware and Software Collateral” means:

(i)    all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware;

(ii)    all software programs (including both source code, object code and all related applications and data files), whether now owned, licensed or leased by the Debtor, designed for use on the computers and other electronic data processing hardware described in paragraph (i) above;

(iii)    all firmware associated with the hardware and software described in the preceding paragraphs (i) and (ii);

(iv)    all documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such hardware, software and firmware described in the preceding paragraphs (i) through (iii); and

(v)    all rights with respect to all of the foregoing, including, without limitation, any and all copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing.

(c)    “Excluded Property” means (i) any permit or licence or any contractual obligation entered into by a Debtor (A) that prohibits or requires the consent of any Person which has not been obtained as a condition to the creation by such Debtor of a Lien on any right, title or interest in such permit, license or contractual obligation, or (B) to the extent that any Law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the PPSA or any other Law, and (ii) any "intent to use" trademark applications for which a statement of use has not been filed (but only until such statement is filed); provided, however, that “Excluded Property” shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

(d)    “Intellectual Property” means all trade secrets, research data, designs, proprietary know-how, drawings and studies, instruction manuals, concepts, methods, procedures, processes, technical information, specifications and materials, technology or proprietary information used in or relating to the Debtor’s business, and all patents, patent applications and registrations, websites, domain names, web pages, design, look and feel, copyrights, copyright applications and registrations, logos, trade names, trade-marks, trade-mark applications and registrations and industrial designs, including all related codes, specifications, documentation revisions, enhancements and modifications, and all other intellectual

3

property rights owned by the Debtor or used under license from third parties, including the right to sue for any infringement of any of the Debtor’s intellectual property rights.

(e)    “Investment Property” means all or any part of any present or future interest of the Debtor in present and after acquired investment property, including all securities, securities accounts and futures accounts, all of the present and future security entitlements of the Debtor as an entitlement holder of such security entitlements, and all proceeds of any such property.

(f)    “Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any governmental entity, agency, division of department, foreign or domestic.

(g)    “Lien” shall have the meaning provided in the Credit Agreement.

(h)    “Loan Documents” shall have the meaning provided in the Credit Agreement.

(i)    “Permitted Liens" shall have the meaning provided in the Credit Agreement.

(j)    “Pledged Securities” means all the securities now or in the future held by the Debtor, whether certificated or uncertificated, including all warrants and options, and any substitutions, additions and proceeds arising out of any consolidation, subdivision, reclassification, conversion, stock dividend or similar increase or decrease in or alteration of the capital of such issuers or any other event and any securities acquired pursuant to the exercise of a right or offer by the Debtor.

(k)    “PPSA” means the Personal Property Security Act (Ontario) and the regulations or Minister's orders thereunder, as from time to time in effect; provided, however, that if attachment, perfection or priority of the security interests of the Agent (or its agent), on behalf of itself and the other Lenders in any Collateral are governed by the personal property security laws of any Canadian jurisdiction other than the province of Ontario, “PPSA” shall mean those personal property security laws in such other jurisdiction for the purposes of the provisions hereof relating to such attachment, perfection or priority and for the definitions related to such provisions.

(l)    “Secured Obligations” shall mean and include all existing and hereafter arising indebtedness, obligations, and liabilities, whether for principal, interest, fees, expenses or otherwise of the CA Borrower or any of the other Debtors to the Agent or the Lenders under the Credit Agreement, any of the other Loan Documents or any other document or instrument entered into or delivered in connection therewith, as any of the same or any one or more of them may from time to time be amended, restated, modified, or supplemented, together with any and all extensions, renewals, refinancings, and refundings thereof in whole or in part.

(m)     “Serial Numbered Goods” means motor vehicles, trailers, mobile homes, aircraft, boats and outboard motors.

2.    In this Agreement, the words “accessions”, “account”, “account debtor”, “certificated security”, “chattel paper”, “consumer goods”, “control”, “document of title”, “equipment”, “fixtures”, “futures account”, “goods”, “instrument”, “intangible”, “inventory”, “investment property”, “money”, “option”, “proceeds”, “receiver”, “security”, “securities account”, “security entitlement” and “uncertificated security” shall have the same meanings as their defined meanings where they are defined in the PPSA.

4

3.    As general and continuing security for the due and punctual payment and performance of the Secured Obligations, each Debtor hereby mortgages, charges, assigns, transfers, pledges and grants to and creates in favor of the Agent, for the benefit of itself and the Lenders, a fixed and specific mortgage and charge and a first priority Lien on and security interest under the PPSA in and to the Collateral, subject only to Permitted Liens. Without limiting the generality of Section 8 below, each Debtor agrees that with respect to each item of the Collateral as to which (i) the creation of a valid and enforceable security interest is not governed exclusively by the PPSA, or (ii) the perfection of a valid and enforceable first priority security interest therein under the PPSA cannot be accomplished either by the Agent taking possession thereof or by the filing in appropriate locations of appropriate financing statements under the PPSA, such Debtor will at its expense execute and deliver to the Agent and hereby does authorize the Agent to execute and file such documents, agreements, notices, assignments and instruments and take such further actions as may be requested by the Agent from time to time for the purpose of creating a valid and perfected first priority Lien on such item, subject only to Permitted Liens, enforceable against such Debtor and all third parties to secure the Secured Obligations.

4.    Each Debtor agrees that the Agent and the Lenders have given value and that the Liens and security interests created by this Agreement are intended to attach (a) with respect to the Collateral that is now in existence, upon execution of this Agreement, and (b) with respect to the Collateral that comes into existence in the future, upon the Debtor acquiring rights in the Collateral or the power to transfer rights in the Collateral to the Agent. In each case, the parties do not intend to postpone the attachment of any Lien or security interest created by this Agreement.

5.    The Liens and the security interests created by this Agreement do not and shall not extend to, and Collateral shall not include, the last day of the term of any lease or sub-lease, oral or written, or any agreement therefor, now held or hereafter acquired by any Debtor, but any such Debtor shall stand possessed of such last day in trust to assign the same as the Agent shall direct.

6.    Each Debtor represents and warrants to the Agent and the Lenders that (a) the Debtors have good and marketable title to the Collateral, (b) except for the security interest granted to and created in favor of the Agent for the benefit of itself and the Lenders hereunder and Permitted Liens, all the Collateral is free and clear of any Lien, (c) the Debtors will use commercially reasonable efforts to defend the Collateral against all claims and demands of all Persons at any time claiming any interest therein, other than a holder of Permitted Liens (d) each account is genuine and enforceable in accordance with its terms, except as may be limited by applicable Laws and by general principals of equity, and the Debtors will defend the same against all claims, demands, recoupment, setoffs, and counterclaims at any time asserted, (e) at the time any account becomes subject to this Agreement, each such account will be a good and valid account representing a bona fide sale of goods or services by the Debtors and such goods will have been shipped to the respective account debtors or the services will have been performed for the respective account debtors (or for those on behalf of whom the account debtors are obligated on the accounts), and no such account will at such time be subject to any claim for credit, allowance, setoff, recoupment, defense, counterclaim or adjustment by any account debtor or otherwise, (f) the exact legal name of each Debtor is as set forth on the signature page hereto, and (g) the jurisdiction of incorporation, formation or organization, as applicable, of each Debtor is as set forth on Schedule A hereto. Further, each Debtor represents and warrants that (i) this Agreement creates a valid security interest in favor of the Agent, for the benefit of itself and the Lenders, in the Collateral, except as may be limited by applicable Laws and by general principles of equity, and (ii) the security interests granted hereunder in favor of the Agent, for the benefit of itself and the Lenders, will constitute a first priority security interest (subject only to Permitted Liens) and will be perfected, with respect to the Collateral of such Debtor, upon the proper filing of the financing statements in each jurisdiction where the Collateral is

5

located, and with respect to Collateral which cannot be perfected by the filing of a financing statement, upon taking of the other steps contemplated by this Agreement and the other Loan Documents.

7.    The Liens created by this Agreement extend to the ultimate balance of the Secured Obligations, regardless of any intermediate payment or discharge of the Secured Obligations in whole or in part. Without limiting the generality of the foregoing, the Secured Obligations may include advances and re-advances under revolving credit facilities, which permit borrowing, repayment of all or part of the amount borrowed and re-borrowing of amounts previously paid.

8.    Each Debtor will faithfully preserve and protect the Agent's security interest in the Collateral as a prior perfected security interest under the PPSA, superior and ranking prior to the rights of all other Persons, except for holders of Permitted Liens, and will do all such acts and things and will, upon request therefor by the Agent, execute, deliver, file and record, and each Debtor hereby authorizes the Agent to so file, all such other documents and instruments, including, without limitation, financing statements, security agreements, assignments and documents and powers of attorney with respect to the Collateral, and pay all filing fees and taxes related thereto, as the Agent in its reasonable discretion may deem necessary or advisable from time to time in order to attach, continue, preserve, perfect, and protect said security interest (including the filing at any time or times after the date hereof of financing statements under, and in the locations advisable pursuant to, the PPSA); and, each Debtor hereby irrevocably appoints the Agent, its officers, employees and agents, or any of them, as attorneys-in-fact for each Debtor to execute, deliver, file and record such items for such Debtor and in the Debtor's name, place and stead to preserve, continue, perfect and protect said security interest. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement.

9.    Each Debtor covenants and agrees that:

(a)    it will defend the Agent's and the Lenders' Lien on and security interest in and to the Collateral against the claims and demands of all Persons, other than a holder of Permitted Liens, and any Person claiming a right in the Collateral pursuant to an agreement between such Person and the Agent;

(b)    it will not suffer or permit to exist on any Lien on the Collateral, other than the security interests created by this Agreement and Permitted Liens;

(c)    it will not take or omit to take any action, the taking or the omission of which would reasonably be expected to result in a material alteration (except as permitted by the Credit Agreement) or impairment of the Collateral or of the Agent's rights under this Agreement;

(d)    it will (i) except for such Collateral delivered to the Agent pursuant to this Section 9(d) or otherwise under the control of the Agent, obtain and maintain sole and exclusive possession of the Collateral (other than Collateral in transit or Collateral kept in accordance with paragraph (ii) below), (ii) maintain its chief executive office and keep the Collateral (other than Collateral in transit) and all records pertaining thereto at the locations specified in Schedule A, unless it shall have given the Agent prior notice and taken any action reasonably requested by the Agent to maintain its security interest therein, (iii) notify the Agent if an account becomes evidenced or secured by an instrument or chattel paper and deliver to the Agent upon the Agent's request therefor all Collateral consisting of instruments and chattel paper immediately upon the Debtor's receipt of a request therefor, (iv) deliver to the Agent all Collateral the possession of which is required to perfect the Agent's Lien thereon or security interest therein or the possession of which grants priority over a Person filing a financing statement with respect thereto, (v) execute control agreements and cause other Persons to execute acknowledgments in form and

6

substance satisfactory to the Agent evidencing the Agent's control with respect to all Collateral, the control or acknowledgment of which perfects the Agent's security interest therein, including letters of credit, letter of credit rights, electronic chattel paper, deposit accounts and Investment Property, and (vi) keep materially accurate and complete books and records concerning the Collateral and such other books and records as the Agent may from time to time reasonably require;

(e)    it will promptly furnish to the Agent such information and documents relating to the Collateral as the Agent may reasonably request, including, without limitation, all invoices, documents, contracts, chattel paper, instruments and other writings pertaining to such Debtor's contracts or the performance thereof, all of the foregoing to be certified upon request of the Agent by an authorized officer of such Debtor;

(f)    it shall immediately notify the Agent if any account arises out of contracts with the governments of the United States or Canada or any department, agency or instrumentality of either of them or any one or more of the states of the United States or any one or more of the provinces or territories of Canada or any department, agency, or instrumentality of any of them, and will execute any instruments and take any steps required by the Agent so that all monies due and to become due under such contract shall be assigned to the Agent and notice of the assignment given to and acknowledged by the appropriate government agency or authority under the Federal Assignment of Claims Act or the Financial Administration Act (Canada), as applicable;

(g)    it will not change its jurisdiction of incorporation, formation or organization, as applicable, without providing thirty (30) days' prior written notice to the Agent;

(h)    it will not change its name without providing thirty (30) days' prior written notice to the Agent;

(i)    it shall preserve its current existence as a corporation, partnership or a limited liability company, as applicable, and except as permitted by the Credit Agreement, shall not (i) in one, or a series of related transactions, merge into or consolidate with any other entity, the survivor of which is not one of the Borrowers or another Debtor, or (ii) sell all or substantially all of its assets to any Person or Persons other than to one of the Borrowers or another Debtor;

(j)    it hereby authorizes the Agent to, at any time and from time to time, file in any one or more jurisdictions, financing statements that describe the Collateral, together with continuation statements thereof and amendments thereto, without the signature of such Debtor and which contain any information required by the PPSA or any other applicable statute applicable to such jurisdiction for the sufficiency or filing office acceptance of any financing statements, continuation statements, or amendments. Each Debtor agrees to furnish any such information to the Agent promptly upon request. Any such financing statements, continuation statements, or amendments may be signed by Agent on behalf of such Debtor if the Agent so elects and may be filed at any time in any jurisdiction; and

(k)    it shall at any time and from time to time take such steps as the Agent may reasonably request as are necessary for the Agent to ensure the continued perfection of the Agent's and the Lenders' security interest in the Collateral with the same priority required hereby and the preservation of its rights therein.

10.    The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Agent takes such action for that purpose as the Debtor shall request

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in writing; provided that such requested action will not, in the judgment of the Agent, impair the security interest in the Collateral created hereby or the Agent's and the Lenders' rights in, or the value of, the Collateral; provided, further, that such written request is received by the Agent in sufficient time to permit the Agent to take the requested action.

11.    So long as no Event of Default has occurred and is continuing: (a) the Debtors may exercise all rights to vote and to exercise all rights of conversion or retraction or other similar rights with respect to any Pledged Securities, provided that no such exercise, in the reasonable opinion of the Agent, will have an adverse effect on the value of such Pledged Securities; and (b) the Debtors shall be entitled to receive all dividends (whether paid or distributed in cash, securities or other property) and interest declared and paid or distributed in respect of the Pledged Securities. Upon the occurrence of an Event of Default and during the continuance thereof: (w) no proxy granted by the Agent (or its agent) to any of the Debtors in respect of the Pledged Securities shall thereafter be effective; (x) the Debtors shall have no rights to vote or take any other action with respect to any Pledged Securities; (y) the Agent may, but shall not be obligated to, vote and take all other action with respect to any Pledged Securities; and (z) the Debtors shall cease to be entitled to receive any dividends or interest, whether declared or payable before or after the occurrence of a Default or an Event of Default, in respect of the Pledged Securities and such dividends or interest shall be received by the Debtors in trust and paid to the Agent for the benefit of itself and the Lenders.

12.    The pledge, security interests and other Liens and the obligation of each Debtor hereunder shall not be discharged until payment in full of the Secured Obligations. The pledge, security interests, and other Liens and the obligations of each Debtor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by Agent or the Lenders in the exercise any of its rights or remedies under this Agreement or any of the other Loan Documents. Without limiting the generality of the foregoing, each Debtor hereby agrees and acknowledges that the pledge, security interests, and other Liens given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following at any time and from time to time:

(a)    Any increase, decrease, or change in the amount, nature, type or purpose of any of the Secured Obligations (whether or not contemplated by the Loan Documents as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Loan Documents; or any amendment, modification or supplement to, or refinancing or refunding of, any Loan Document or any of the Secured Obligations;

(b)    Any failure to assert any breach of or default under any Loan Document or any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against any Debtor or any other Person under or in connection with any Loan Document or any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Debtor; or any application of collections (including collections resulting from realization upon any direct or indirect security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to the Secured Obligations or, if any collections are applied to the Secured Obligations, any application to particular Secured Obligations;

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(c)    Any taking, exchange, amendment, modification, supplement, termination, subordination, release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Agent or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by Agent or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Collateral). As used in this Agreement, "direct or indirect security" for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;

(d)    Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the existing structure or existence of, any Debtor or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Debtor or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by Agent or the Debtor or by any other Person in connection with any such proceeding;

(e)    Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Debtor or any other Person with respect to any of the Loan Documents or any of the Secured Obligations; or

(f)    Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a borrower, a guarantor or a surety, including each Debtor, excepting only full, strict, payment in full of the Secured Obligations.

13.    Each Debtor hereby waives any and all defenses which such Debtor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like, and each Debtor hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in Section 12. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable Law, each Debtor hereby further waives each of the following:

(a)    All notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve any rights against such Debtor, including the following: any notice of any event or circumstance described in Section 12; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of the Debtors or any other Person to comply with any Loan Document or any of the Secured Obligations or any requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of the Debtors or any other Person;

(b)    Any right to any marshalling of assets, to the filing of any claim against such Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to the exercise against such Debtor or any other Person of any other right or remedy under or in connection with any Loan Document or any of the Secured Obligations or any direct or indirect security for any of

9

the Secured Obligations; any requirement of promptness or diligence on the part of the Agent or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; and any requirement of acceptance of this Agreement or any other Loan Document, and any requirement that such Debtor receive notice of any such acceptance; and

(c)    Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including anti-deficiency laws, "one action" laws or the like), or by reason of any election of remedies or other action or inaction by the Agent (including commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of the Collateral for any of the Secured Obligations), which results in denial or impairment of the right of the Agent to seek a deficiency against such Debtor or any other Person or which otherwise discharges or impairs any of the Secured Obligations.

14.    (a)    At any time and from time to time whether or not an Event of Default has occurred and is continuing and without prior notice to or consent of any Debtor, the Agent may, at its option and for the benefit of itself and the Lenders, take such actions as the Agent deems appropriate (i) to attach, perfect, continue, preserve and protect the Agent's and the Lenders' security interest in, or Lien on, the Collateral, (ii) to inspect, audit and verify the Collateral, including reviewing each Debtor's books and records and copying and making excerpts therefrom, and (iii) to add all liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Agent for the benefit of the Agent and the Lenders within ten (10) days after demand; provided that so long as no Default or Event of Default has occurred and is continuing, the Debtor shall not be obligated to reimburse Agent for more than one such inspection in any calendar year; provided further however, that the Debtor shall be obligated to reimburse the Agent for all inspections performed after the occurrence and during the continuance of a Default or Event of Default.

(b)    At any time and from time to time while an Event of Default has occurred and is continuing and without prior notice to or consent of any Debtor, the Agent may, at its option and for the benefit of itself and the Lenders, take such action as the Agent deems appropriate (i) to maintain, repair, protect and insure the Collateral, (ii) to perform, keep, observe and render true and correct any and all covenants, agreements, representations and warranties of the Debtors hereunder, and (iii) to add all liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Agent for the benefit of the Agent and the Lenders within ten (10) days after demand.

15.    While any Event of Default under the Credit Agreement has occurred and is continuing:

(a)    The Agent shall have, and may exercise, all the rights and remedies available to a secured party under the PPSA, and such other rights and remedies as may be provided at Law and as set forth below, including, without limitation, the ability to (i) take possession immediately, with or without notice, demand, or legal process, of any or all of the Collateral wherever found, and for such purposes, enter upon any premises upon which the Collateral may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble the Collateral and deliver it to the Agent or to any place designated by the Agent at the Debtors' expense, (iii) take over and collect all of any Debtor's Receivables and all other Collateral, and to this end each Debtor hereby appoints the Agent, its officers, employees and agents, as its irrevocable, true and lawful attorneys-in-fact with all necessary power and authority to (1) receive, open and dispose of all mail addressed to any Debtor and notify postal authorities to change the address

10

for delivery thereof to such address as the Agent may designate, (2) demand payment of the Receivables, (3) enforce payment of the Receivables by legal proceedings or otherwise, (4) exercise all of any Debtor's rights and remedies with respect to the collection of the Receivables, (5) settle, adjust, compromise, extend or renew the Receivables, (6) settle, adjust or compromise any legal proceedings brought to collect the Receivables, (7) to the extent permitted by applicable Law, sell or assign the Receivables upon such terms, for such amounts and at such time or times as the Agent deems advisable, (8) discharge and release the Receivables, (9) take control, in any manner, of any item of payment or proceeds from any account debtor, (10) prepare, file and execute on behalf of any Debtor a proof of claim in relief proceeding or similar document against any account debtor, (11) prepare, file and execute on behalf of any Debtor a notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (12) do all acts and things necessary, in the Agent's sole discretion, to fulfill each Debtor's obligations to the Agent or the Lenders under the Credit Agreement, the other Loan Documents or otherwise, (13) endorse on behalf of any Debtor any cheque, chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Receivables or Inventory, (14) use any Debtor's stationery and execute on behalf of any Debtor verifications of the Receivables and notices thereof to account debtors, (15) access and use the information recorded on or contained in any data processing equipment or computer hardware or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to which any Debtor has access, (iv) demand, sue for, collect, compromise and give acquittances for any and all Collateral, (v) prosecute, defend or compromise any action, claim or proceeding with respect to any of the Collateral, and (vi) take such other action as the Agent may deem appropriate, including extending or modifying the terms of payment of any Debtor's debtors. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to or arising from or connected with any of the rights or remedies exercised by the Agent pursuant to this Agreement, except claims for physical damage to the Collateral, Persons or other property arising from gross negligence or willful misconduct by the Agent.

(b)    The Agent shall have the right to lease, sell or otherwise dispose of all or any of the Collateral at public or private sale or sales for cash, credit or any combination thereof, with such notice as may be required by Law (it being agreed by the Debtors that, in the absence of any contrary requirement of Law, ten (10) days' prior notice of a public or private sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash or on credit, all as the Agent, in its sole discretion, may deem advisable. Such sales may be adjourned from time to time with or without notice. The Agent shall have the right to conduct such sales on any Debtor's premises or elsewhere and shall have the right to use any Debtor's premises without charge for such sales for such time or times as the Agent may see fit. The Agent may purchase all or any part of the Collateral at public or, if permitted by Law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Secured Obligations.

(c)    Each Debtor, at its cost and expense (including the cost and expense of any of the following referenced consents, approvals, etc.), will promptly execute and deliver or cause the execution and delivery of all applications, certificates, instruments, registration statements, and all other documents and papers the Agent may request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, accreditation, or authorization of any other official body or other Person necessary or appropriate for the effective exercise of any rights hereunder or under the other Loan Documents. Without limiting the generality of the foregoing, each Debtor agrees that in the event the Agent on behalf of itself and/or the Lenders shall exercise its rights hereunder or pursuant to the other Loan Documents, to sell, transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in connection with any of the Collateral, each Debtor shall execute and deliver (or cause to be

11

executed and delivered) all applications, certificates, assignments and other documents that the Agent requests, to facilitate such actions and shall otherwise promptly, fully, and diligently cooperate with the Agent and any other Persons in making any application for the prior consent or approval of any official body or any other Person to the exercise by the Agent on behalf of itself and/or the Lenders of any such rights relating to all or any of the Collateral. Furthermore, because each Debtor agrees that the remedies at law, of the Agent on behalf of itself and/or the Lenders, for failure of such Debtor to comply with this subsection (c) would be inadequate, and that any such failure would not be adequately compensable in damages, each Debtor agrees that this Subsection (c) may be specifically enforced.

(d)    The Agent may request, without limiting the rights and remedies of the Agent on behalf of itself and the Lenders otherwise provided hereunder and under the other Loan Documents, that each Debtor do any of the following: (i) give the Agent on behalf of itself and the Lenders specific assignments of the accounts receivable of the Debtors after such accounts receivable come into existence, and schedules of such accounts receivable, the form and content of such assignment and schedules to be reasonably satisfactory to Agent, and (ii) in order to better secure the Agent on behalf of itself and the Lenders, to the extent permitted by Law, enter into such lockbox agreements and establish such lockbox accounts as the Agent may require, all at the sole expense of the Debtors and shall direct all payments from all payors due to each Debtor, to such lockbox accounts.

(e)    Nothing in this Agreement waives any duty of the Agent or any right of Debtor which cannot be waived under the PPSA or other mandatory provisions of applicable Law which cannot be waived.

(f)    The Agent may institute proceedings in any court of competent jurisdiction for the appointment of a receiver (which term includes a receiver and manager) of the Collateral or may make an appointment in writing of any Person to be a receiver of the Collateral. The Agent may remove any receiver appointed by the Agent and appoint another in its place, and may determine the remuneration of any receiver, which may be paid from the proceeds of the Collateral in priority to other Secured Obligations. Any receiver appointed by the Agent shall, to the extent permitted by applicable Law, have all of the rights, benefits and power of the Agent and the Lenders under this Agreement, the PPSA or otherwise. Any receiver shall be deemed the agent of the Debtor, and the Lenders shall not be in any way responsible for any misconduct or negligence of any receiver.

16.    The Lien on and security interest in the Collateral granted to and created in favor of the Agent by this Agreement shall be for the benefit of the Agent and the Lenders. Each of the rights, privileges, and remedies provided to the Agent hereunder or otherwise by Law with respect to the Collateral shall be exercised by the Agent only for its own benefit and the benefit of the Lenders, and any of the Collateral or proceeds thereof held or realized upon at any time by the Agent shall be applied as set forth in the Credit Agreement. Each Debtor shall remain liable to the Agent and the Lenders for, and shall pay to the Agent for the benefit of itself and the Lenders, any deficiency which may remain after such sale or collection.

17.    If the Agent repossesses or seeks to repossess any of the Collateral pursuant to the terms hereof following the occurrence and during the continuance of an Event of Default, then to the extent it is commercially reasonable for the Agent to store any Collateral on any premises of any Debtor, such Debtor hereby agrees to lease to the Agent on a month-to-month tenancy for a period not to exceed ninety (90) days at the Agent's election, at a rental rate equal to One Dollar ($1.00) per month (if such Debtor owns the premises), and at the current rental rate per month (if such Debtor leases the premises), the premises on which the Collateral is located; provided it is located on premises owned or leased by such Debtor.

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18.    Upon payment in full of the Secured Obligations and termination of the Credit Agreement, this Agreement shall terminate and be of no further force and effect, and the Agent shall thereupon promptly return to such Debtor any Collateral and such other documents delivered by the Debtor or obtained by the Agent hereunder as may then be in the Agent's possession, subject to the rights of third parties. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Following a sale of assets permitted under the Credit Agreement, the Agent shall also promptly return to the applicable Debtors such Collateral and such other documents delivered by the Debtors or obtained by the Agent hereunder as may then be in the Agent's possession, subject to the rights of third parties.

19.    No failure or delay on the part of the Agent in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Agent hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default. All waivers under this Agreement must be in writing. The rights and remedies of the Agent under this Agreement are cumulative and in addition to any rights or remedies which it may otherwise have, and the Agent may enforce any one or more remedies hereunder successively or concurrently at its option.

20.    All notices, statements, requests and demands given to or made upon either party hereto in accordance with the provisions of this Agreement shall be given or made as provided in the Credit Agreement.

21.    Each Debtor agrees that as of the date hereof, all information contained on Schedule A hereto is accurate and complete and contains no omission or misrepresentation. Each Debtor shall promptly notify the Agent of any changes in the information set forth thereon.

22.    Each Debtor acknowledges that the provisions hereof giving the Agent rights of access to books, records and information concerning the Collateral and such Debtor's operations and providing the Agent access to such Debtor's premises are intended to afford the Agent with immediate access to current information concerning the Debtor and its activities, including without limitation, the value, nature and location of the Collateral so that the Agent can, among other things, make an appropriate determination following the occurrence and during the continuance of an Event of Default, whether and when to exercise its other remedies hereunder and at Law, including, without limitation, instituting a replevin action should the Debtor refuse to turn over any Collateral to the Agent. Each Debtor further acknowledges that should such Debtor at any time fail to promptly provide such information and access to the Agent, such Debtor acknowledges that the Agent would have no adequate remedy at Law to promptly obtain the same. Each Debtor agrees that the provisions hereof may be specifically enforced by the Agent and waives any claim or defense in any such action or proceeding that the Agent has an adequate remedy at Law.

23.    This Agreement shall be binding upon, and inure to the benefit of, the Agent, the Lenders and their respective successors and assigns, and the Debtors and each of their respective successors and assigns, except that the Debtors may not assign or transfer its obligations hereunder or any interest herein other that in connection with the assignment or transfer of the Credit Agreement or with the prior written consent of the Agent.

24.    This Agreement shall be deemed to be a contract under the laws of the Province of Ontario and the laws of Canada applicable therein and for all purposes shall be governed by, and construed in accordance with, the laws of said Province excluding its rules relating to conflicts of law.

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25.    Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

26.    Each Debtor hereby irrevocably submits to the nonexclusive jurisdiction of the courts of the Province of Ontario, in any action or proceeding arising out of or relating to this Agreement, and each Debtor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such courts. Each Debtor hereby waives to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of any such action or proceeding. Each Debtor hereby appoints the process agent identified below (the "Process Agent") as its agent to receive on behalf of such party and its respective property service of copies of the summons and complaint and any other process which may be served in any action or proceeding. Such service may be made by mailing or delivering a copy of such process to the Debtor in care of the Process Agent at the Process Agent’s address, and each Debtor hereby authorizes and directs the Process Agent to receive such service on its behalf. Each Debtor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions (or any political subdivision thereof) by suit on the judgment or in any other manner provided at law. Each Debtor further agrees that it shall, for so long as any commitment or any obligation of any Credit Party to any Lender remains outstanding, continue to retain Process Agent for the purposes set forth in this Section 26. The Process Agent for each Debtor shall be Unique Fabricating NA, Inc. (the US Borrower), which has an office on the date hereof as set forth in the Credit Agreement.

27.    EXCEPT AS PROHIBITED BY LAW, EACH DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING THERETO.

28.    This Agreement may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same instrument. Each Debtor acknowledges and agrees that a telecopy transmission to the Agent or any Lender of the signature pages hereof purporting to be signed on behalf of the Debtor shall constitute effective and binding execution and delivery hereof by such Debtor.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement as of the day and year first above set.

UNIQUE-INTASCO CANADA, INC.

By:                            ______________________

Its:    ______________________                

CITIZENS BANK, NATIONAL ASSOCIATION

as Agent

By:

Michael Farley                

Its:    Senior Vice President                

SCHEDULES

TO

SECURITY AGREEMENT

All defined terms used in these Schedules shall have the meanings ascribed to them in the above-referenced Security Agreement, as amended as of the date hereof, unless otherwise defined herein. Materials attached hereto are incorporated by reference herein and made a part hereof.

SCHEDULE A

TO

SECURITY AGREEMENT

Security Interest Data Summary

1.    Debtors’ Jurisdictions of Organization; Registered Office; and Corporate Number

Legal Name	Jurisdiction of Organization	Registered Office	Corporate Number
Unique-Intasco Canada, Inc.	British Columbia	1600-925 West Georgia Street, Vancouver BC V6C 3L2 Canada	773927926

2. Debtors’ Trade names: None.    

3. All of the Debtors’ personal property which has not been delivered to the Agent pursuant to the terms of this Agreement or the Credit Agreement is now, and will be at all future times, located at the Debtors’ chief executive office as described in Paragraph 1 above, except as specified below:

Debtor Tenant	Address	Collateral Location	Record Location
Unique-Intasco Canada, Inc.	510 McGregor Avenue, London, Ontario	510 McGregor Avenue, London, Ontario	510 McGregor Avenue, London, Ontario
Unique-Intasco Canada, Inc.	510 McGregor Avenue, London, Ontario	505 McGregor Avenue, London, Ontario	510 McGregor Avenue, London, Ontario

4. All of the Debtors’ real property is located in the following counties:

Owner	County	Address
Combe Investment Ltd. Tenant: Intasco Corporation, Inc.	Middlesex	510 McGregor Avenue, London, Ontario
Combe Investment Ltd. Tenant: Intasco Corporation, Inc.	Middlesex	505 McGregor Avenue, London, Ontario

5.    All of the Debtors’ books and records, including those relating to accounts payable and accounts receivable, are kept at the Debtors’ registered office as described in Paragraph 1 above, except as specified below:

800 Standard Parkway, Auburn Hills, Michigan 48326

EX-10.6

Exhibit 10.6

LEASE AGREEMENT(NNN)Basic Lease Information

Lease Date:	May 1, 2016
Landlord:	Combe Investments L.L.C., a Michigan corporation(“Landlord”)
Landlord’s Address:	505 McGregor Ave. London, ON
Tenant:	Intasco-USA, Inc., a Michigan corporation (“Tenant”)
Tenant’s Address:	800 Standard Parkway Auburn Hills, Michigan 48326
Land:	Lots 14, 15 and 16, Runnels Water Street Plat, according to the plat thereof as recorded in Liber 16 of Plats, page 156, St. Clair County Records, and that part of Lot 7 Boynton’s Plat commencing at the most Southerly corner; thence North 58 degrees 24 minutes East 111.7 feet; thence North 31 degrees 42 minutes West 119.95 feet; thence South 58 degrees 43 minutes West 118.5 feet; thence South 34 degrees 57 minutes East 120.65 feet to the point of beginning. Part of Lot 7, Boynton’s Plat of Subdivision of Lots 6, 7, 8, according to the plat thereof as recorded in Liber C of Plats, page 22, St. Clair County Records, Township 6 North, Range 17 East, City of Port Huron, St. Clair County, Michigan, more fully described as: Commencing at the Southwesterly corner of said Lot 7; thence North 58 degrees 24 minutes 00 seconds East 111.83 feet along the Southerly line of said Lot 7 to the point of beginning; thence North 58 degrees 24 minutes 00 seconds East 51.34 feet along said Southerly line of Lot 7 thence North 32 degrees 12 minutes 54 seconds West (Previously recorded as North 31 degrees 33 minutes 43 seconds West) 90.00 feet; thence South 58 degrees 24 minutes 00 seconds West 50.64 feet parallel with said South line of Lot 7; thence South 31 degrees 46 minutes 27 seconds East 90.00 feet to the point of beginning.
Building:	The building (“Building”) located on the Land, which consists of 18,000 rentable square feet, as more particularly shown on the site plan annexed hereto as Exhibit A (“Site Plan”).

Premises:	The premises (“Premises”) are the entire Building and Land.
Premises Address:	125 Runnels Street, Port Huron, Michigan
Term:	Two (2) years commencing on May 1, 2016 (“Commencement Date”), through and including April 30, 2018 (“Expiration Date”), subject to the Option to Renew.
Base Rent (3):	Tenant shall pay Base Rent during the initial two (2) year Term of the Lease as follows:

Lease Year	Annual Base Rent	Monthly Base Rent
1	$48,000.00	$4,000.00
2	$48,960.00	$4,080.00

Additional Rent: Any one or all of the following, as appropriate, are referred to as “Tenant’s Share”:

* Tenant’s Share of Real Estate Tax Expenses (6.2): 100%

*Tenant’s Share of Utility Expenses (7): 100%

Permitted Uses (9):	Warehouse, manufacturing, industrial and office.
Parking Area:	Tenant shall have the exclusive right to use all parking spaces in the parking area at the Premises.
Broker (38):	NONE, for Landlord. NONE, for Tenant.
Tenant’s Insurance:	As provided in Section 12
Option to Renew:	As provided in Exhibit B annexed

TABLE OF CONTENTS

Page

1. Premises...................................................................................................................1

2. Adjustment of Commencement Date; Condition of the Premises...........................1

3. Rent..........................................................................................................................1

4. Intentionally Omitted...............................................................................................2

5. Landlord’s Work......................................................................................................2

6. Additional Rent........................................................................................................2

7. Utilities.....................................................................................................................3

8. Late Charges............................................................................................................4

9. Use of Premises........................................................................................................4

10. Alterations and Additions; and Surrender of Premises............................................4

11. Repairs and Maintenance.........................................................................................6

12. Insurance..................................................................................................................6

13. Waiver of Subrogation.............................................................................................8

14. Limitation of Liability and Indemnity......................................................................8

15. Assignment and Subleasing.....................................................................................8

16. Ad Valorem Taxes; Waiver of Distraint...................................................................9

17. Subordination...........................................................................................................9

18. Right of Entry.........................................................................................................10

19. Estoppel Certificate................................................................................................10

20. Tenant’s Default.....................................................................................................11

21. Remedies for Tenant’s Default...............................................................................11

22. Holding Over..........................................................................................................12

23. Landlord’s Default.................................................................................................13

24. Waiver....................................................................................................................13

25. Casualty Damage...................................................................................................13

26. Condemnation........................................................................................................14

27. General Provisions.................................................................................................14

28. Signs.......................................................................................................................15

29. Brokerage Commission..........................................................................................15

30. Quiet Enjoyment....................................................................................................16

31. OFAC Compliance.................................................................................................16

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LEASE AGREEMENT

DATE: This Lease Agreement is made and entered into as of the Lease Date set forth on Page 1. The Basic Lease Information set forth beginning on Page 1 is incorporated herein as if fully set forth herein. The Basic Lease Information set forth beginning on Page 1 and this Lease Agreement is and shall be construed as a single instrument and are referred to herein, collectively, as the “Lease”. In the event of any conflict between the Basic Lease Information and the remainder of this Lease Agreement, the Basic Lease Information shall supersede and control.

1.Premises.

1.1    In consideration of the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord hereby leases the Premises to Tenant, together with the exclusive right to use the parking areas of the Premises (the “Parking Area”), upon the terms and conditions set forth in this Lease.

2.Adjustment of Commencement Date; Condition of the Premises.

2.1    The word “Term” whenever used herein refers to the initial term of this Lease and any extension thereof.

2.2    By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises in good condition and state of repair, subject to Tenant’s rights to make objections to latent defects in the Building, of which the Premises is a part, which Landlord shall be obligated to repair at no cost to Tenant.

2.3    In the event, following Tenant’s written request, Landlord permits Tenant to occupy the Premises prior to the Commencement Date, such occupancy shall be at Tenant’s sole risk and subject to all the provisions of this Lease, including but not limited to Tenant’s obligation to obtain and maintain insurance required pursuant to this Lease and to deliver insurance certificates as required herein. In addition to the foregoing, Landlord shall have the right to impose such reasonable additional conditions on Tenant’s early entry as Landlord shall deem appropriate.

3.Rent.

3.1    Tenant agrees to pay Landlord, without prior notice or demand, or abatement, offset, deduction, claim or counterclaim (except as expressly provided herein), the Base Rent described in the Basic Lease Information, payable in advance at Landlord’s address specified in the Basic Lease Information on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the balance of the Term of the Lease. In addition to the Base Rent set forth in the Basic Lease Information, Tenant shall pay Landlord in advance on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the balance of the Term of this Lease, as Additional Rent, Tenant’s Share of Real Estate Tax Expenses and Tenant’s Share of Utility Expenses (except those utilities which are directly metered to the Premises and paid by Tenant), when and as provided in Sections 6 and 7 below. The term “Rent” whenever used herein

refers to the aggregate of all Base Rent and Additional Rent due pursuant to this Lease. The Rent for any fractional part of a calendar month at the commencement or expiration of the Lease Term shall be a prorated amount of the Rent for a full calendar month based upon the actual days of such month.

4.Intentionally Omitted.

5.Landlord’s Work. Tenant hereby accepts the Premises as suitable for Tenant’s intended use and it shall be, on the Commencement Date, in good operating order, condition and repair (including the heating, ventilation and air conditioning systems exclusively serving the Premises [the “HVAC System”] which shall be in good working order as of the Commencement Date), and otherwise in “AS IS” condition.

6.Additional Rent. The costs and expenses described in this Section 6 and all other sums, charges, costs and expenses specified in this Lease other than Base Rent are to be paid by Tenant to Landlord as additional rent (collectively, “Additional Rent”).

6.1    Real Estate Tax Expenses.

6.1.1    In addition to the Base Rent, Tenant shall pay Tenant’s Share of Real Estate Tax Expenses now or hereafter assessed or levied against the Premises or Tenant’s personal property. The term “Real Estate Tax Expenses” shall mean and include, without limitation, any form of tax and assessment (general, special, supplemental, ordinary or extraordinary), commercial rental tax, payments under any improvement bond or bonds, license fees, license tax, business license fee, rental tax, transaction tax, levy, or penalty imposed by any authority having the direct or indirect power of tax (including, but not limited to, any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement district thereof) as against any legal or equitable interest of Landlord in the Building, and/or the Land, as against Landlord’s right to rent, or as against Landlord’s business of leasing the Premises or the occupancy of Tenant and/or any other tax, fee, or excise, however described, including, but not limited to, any value added tax, or any tax imposed in substitution (partially or totally) of any tax previously included within the definition of real property taxes, or any additional tax the nature of which was previously included within the definition of real property taxes. The term “Real Estate Tax Expenses” shall not include any franchise, estate, inheritance, net income, transfer, or excess profits tax imposed upon Landlord. Landlord represents that, as of the Lease Date, the Premises constitutes a separate tax parcel that does not include any property not located therein.

6.1.2    Tenant may, in its own name or in Landlord’s name, take any reasonable action in order to contest any tax or other assessment with respect to the Premises. At no cost to Landlord, Landlord will execute any reasonable documents relating to any such tax contest provided that (a) Tenant shall hold Landlord harmless from any liability therefor, and (b) Landlord shall have the right to approve any settlement with the applicable taxing authorities. Any refunds or rebates of amounts paid hereunder shall belong to Tenant and Landlord shall reasonably aid Tenant in obtaining any such refund or rebate, provided that the cost of obtaining the same shall be paid by Tenant.

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6.2    Payment of Expenses. Landlord shall estimate Tenant’s Share of Real Estate Tax Expenses for the calendar year in which the Lease commences. Commencing on the Commencement Date, one twelfth (1/12th) of the estimated amount of Tenant’s Share of Real Estate Tax Expenses shall be paid by Tenant to Landlord, as Additional Rent, and thereafter on the first (1st) day of each month throughout the remaining months of such calendar year. Thereafter, Landlord may estimate Tenant’s Share of Real Estate Tax Expenses as of the beginning of each calendar year during the Term of this Lease and Tenant shall pay one twelfth (1/12th) of such estimated amount as Additional Rent hereunder on the first (1st) day of each month during such calendar year and Landlord may follow this process for each ensuing calendar year throughout the Term of this Lease. Tenant’s obligation to pay Tenant’s Share of Real Estate Tax Expenses during the Term shall survive the expiration or earlier termination of this Lease.

6.3    Annual Reconciliation. By April 30th of each calendar year, or as soon thereafter as reasonably possible, Landlord shall furnish Tenant with an accounting of actual Real Estate Tax Expenses, and all Utility Expenses. Within thirty (30) days of Landlord’s delivery of such accounting, Tenant shall pay to Landlord the amount of any underpayment. Landlord shall credit the amount of any overpayment by Tenant toward the next estimated monthly installment(s) falling due, or where the Term of the Lease has expired, refund the amount of overpayment to Tenant within thirty (30) days following such accounting.

6.4    Audit. After delivery to Landlord of at least thirty (30) days prior written notice, Tenant, at its sole cost and expense, through a reputable independent auditor designated by Tenant, shall have the right to examine and/or audit the books and records evidencing Real Estate Tax Expenses and/or Utility Expenses for the previous one (1) calendar year, during Landlord’s reasonable business hours, but not more frequently than once during any calendar year. Any such independent auditor designated by Tenant may not be compensated on a contingency fee basis. Landlord and Tenant shall use their best efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such costs and expenses. If Landlord and Tenant agree that Landlord’s calculation of Tenant’s Share of Real Estate Tax Expenses and/or Utility Expenses for the inspected calendar year was incorrect, the parties shall enter into a written agreement confirming such error and Tenant shall either be (i) entitled to a credit against future installment(s) of Rent for said overpayment (or a refund of any overpayment if the Term has expired) or (ii) obligated to promptly pay to Landlord the amount of any underpayment, as the case may be. If Landlord disputes Tenant’s audit results, the matter shall be submitted to an independent firm of certified public accountants mutually acceptable to both Landlord and Tenant. The decision of such independent certified public accountant shall be binding upon both Landlord and Tenant. In the event that the results of any such independent certified public accountant determine that Tenant’s Share of Real Estate Tax Expenses and/or Utility Expenses, as charged, exceeded the actual amount of Tenant’s Share of Real Estate Tax Expenses and/or Utility Expenses, as the case may be, by more than three percent (3%), Landlord shall pay Tenant the cost of Tenant’s audit.

7.Utilities. In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay as Additional Rent, one hundred (100%) percent of all charges for gas and electric for which direct meters shall be installed at the Premises by Landlord (at its sole cost) as of the Commencement

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Date, and Tenant shall arrange for such accounts to be placed in the name of and billed directly to Tenant. In addition, Tenant shall pay Tenant’s Share of the cost of all water, standby water charges, sewer use, and sewer discharge fees, and other utilities provided to the Premises (“Utility Expenses”), which Tenant shall pay to Landlord, as Additional Rent, without prior notice or demand, on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the Term of this Lease. Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated amount of Tenant’s Share of Utility Expenses on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the Term of this Lease and any reconciliation thereof shall be substantially in the same manner as specified in Section 6.4 above.

7.1 Maintenance.    In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay as Additional Rent, one hundred (100%) of all charges for all snowplowing and landscaping charges related to the Premises.

8.Late Charges. Any and all sums or charges set forth in this Section 8 are considered part of Additional Rent. Tenant acknowledges that late payment, which shall be the tenth (10th) business day of each month or any time thereafter by Tenant to Landlord of Base Rent or Additional Rent for Real Estate Tax Expenses and/or Utility Expenses and the tenth (10th) business day after written demand by Landlord for all other sums due, will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Therefore, if any installment of Rent or any other sum due from Tenant is not received by Landlord when due as aforesaid, then Tenant shall promptly pay to Landlord all of the following, as applicable: (a) interest on such delinquent amount at the rate equal to the prime lending rate announced by the Wall Street Journal from time to time plus three percent (3%) for the time period such payments are delinquent as a late charge for every month or portion thereof that such sums remain unpaid, and (b) the amount of fifty dollars ($50) relating to checks for which there are not sufficient funds. If Tenant delivers to Landlord a check for which there are not sufficient funds, Landlord may, at its sole option, require Tenant to replace such check with a cashier’s check for the amount of such check and all other charges payable hereunder. The parties agree that this late charge and the other charges referenced above represent a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. Acceptance of any late charge or other charges shall not constitute a waiver by Landlord of Tenant’s Default with respect to the delinquent amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other breach of Tenant under this Lease.

9.Use of Premises. The Premises are to be used solely for the purposes and uses specified in the Basic Lease Information and for no other uses or purposes. The use of the Premises by Tenant and its employees, representatives, agents, invitees, licensees, subtenants, customers, guests or contractors (collectively, “Tenant’s Representatives”), and the operations conducted at the Premises, shall be subject to, and at all times in compliance with any and all applicable laws, codes, regulations, and ordinances (“Legal Requirements”).

10.Alterations and Additions; and Surrender of Premises.

10.1    Alterations and Additions: Tenant shall not install any signs, fixtures, improvements, nor make or permit any other alterations or additions to the Premises without the

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prior written consent of Landlord, which consent shall not be unreasonably withheld conditioned or delayed. Notwithstanding the foregoing, Tenant shall not be required to obtain Landlord’s prior written consent with respect to (a) any alterations which are non-structural (i.e., do not affect (i) the exterior of the Building, (ii) the Building foundation, (iii) the structural elements of the Building, or (iv) the Building systems (the mechanical, electrical, sanitary, plumbing, heating, ventilation or other service systems of the Building)) and (b) have an estimated cost equal to or less than $150,000, either individually or in the aggregate (“Permitted Alterations”). As to any proposed alteration or addition, including, without limitation, Permitted Alterations, Tenant shall deliver at least ten (10) days prior notice to Landlord, from the date Tenant intends to commence construction, and, if a building permitted is required in connection with such alteration or addition, sealed plans and specifications along with such notice with respect to Permitted Alterations and along with any request for consent if Landlord consent is required. In all events, Tenant shall obtain all permits, licenses, certificates and approvals prior to commencing any of such work and deliver a copy of same to Landlord. All alterations and additions, including, without limitation, Permitted Alterations, shall be installed at Tenants cost and expense, by a licensed contractor reasonably approved by Landlord, in compliance with all applicable Legal Requirements. Tenant shall keep the Premises and the property on which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. Tenant agrees that in the event any mechanics’ or construction liens or a notice of any nature or kind whatsoever is filed against the Premises, Tenant shall forthwith proceed to obtain an effective cancellation or discharge of such lien by payment, deposit or bond satisfactory to Landlord in its sole discretion. Throughout the performance of any alterations or additions, Tenant shall carry, or cause its contractors to carry, workers’ compensation insurance in statutory limits, “Builder’s Risk” insurance reasonably satisfactory to Landlord, and commercial general liability insurance, with completed operation endorsement, for any occurrence in or about the Building, under which Landlord and its managing agent and any ground lessors and mortgagees, whose names and addresses are or have been furnished to Tenant, shall be named as additional insureds, in such limits and with such insurers as Landlord may reasonably require (collectively, the “Insurance Requirements”). All alterations, additions and improvements performed by or on behalf of Tenant, including without limitation, Permitted Alterations, shall be removed by Tenant prior to the expiration or earlier termination of this Lease, and the Premises restored to the condition existing on the date of this Lease; however, if Tenant provides Landlord with a written request either prior to the performance of the Permitted Alterations, or contemporaneously with its written request for consent for permission to make an alteration, addition or improvement, as the case may be, for a determination whether the alteration, addition or improvement, including without limitation, Permitted Alterations, can remain at the Premises, Landlord shall advise Tenant within ten (10) business days after receipt whether the item in issue may remain. If Landlord fails to respond within the ten (10) business day period, then it shall be deemed a determination by Landlord that removal and restoration is not required.

10.2    Surrender of the Premises: Prior to the expiration or earlier termination of this Lease, Tenant shall surrender and deliver up the Premises, together with the fixtures (other than trade fixtures, which Tenant may remove), to Landlord in good condition and repair, except for reasonable wear and tear. Upon such termination of this Lease, Tenant may remove all tenant signage, trade fixtures, furniture, furnishings and personal property prior to the expiration or earlier

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termination of this Lease. Tenant shall repair any damage caused by the installation or removal of such signs, trade fixtures, furniture, furnishings, fixtures and personal property.

11.Repairs and Maintenance.

11.1    Tenant’s Repairs and Maintenance Obligations: Except for those portions of the Building to be maintained by Landlord, as provided in Section 11.2 below, Tenant shall, at Tenant’s sole cost and expense, keep and maintain the interior, non-structural portions of the Building and the Parking Area in good, clean and safe condition, including, but not limited to, repairing any damage caused by Tenant or Tenant’s Representatives and replacing any property so damaged by Tenant or Tenant’s Representatives. Without limiting the generality of the foregoing, Tenant shall be solely responsible for maintaining and repairing: (a) all mechanical systems, and the HVAC System, exclusively serving the Premises, (b) all plumbing systems and equipment, and electrical systems, wiring and equipment exclusively serving and located within the Premises, (c) all interior lighting within the Premises, (d) all glass, windows, window frames, window casements, skylights, interior and exterior doors, door frames and door closers within or a part of the Premises, (e) all roll-up doors, ramps and dock equipment within or serving the Premises, including without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights, (f) all tenant signage, (g) security systems installed by Tenant, and (h) all partitions, fixtures, equipment, interior painting, and interior walls and floors of the Premises.

11.2    Landlord’s Repairs and Maintenance Obligations: Except for the obligations of Tenant set forth in Section 11.1 above, Landlord agrees to keep in good repair and condition (at Landlord’s sole cost and expense), the roof, roof membranes, exterior walls of the Building, and all other structural elements of the Building.

12.Insurance.

12.1    Types of Insurance: Tenant shall, during the Lease Term, procure at its expense and keep in force the following insurance:

(1)    Commercial general liability insurance naming the Additional Insureds (as hereinafter defined) as an additional insured against any and all claims for bodily injury and property damage occurring in, or about the Premises arising out of Tenant’s use and occupancy thereof. Such insurance shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a One Million Dollar ($1,000,000) aggregate limit and excess umbrella liability insurance in the amount of Three Million Dollars ($3,000,000). Such liability insurance shall be primary and not contributing to any insurance available to Landlord and Landlord’s insurance shall be in excess thereto. In no event shall the limits of such insurance be considered as limiting the liability of Tenant under this Lease.

(2)    Personal property insurance insuring all equipment, trade fixtures, permitted alterations and additions, inventory, fixtures, and personal property of Tenant located on or in the Premises for perils covered by the causes of loss – special form (all risk) and in addition, coverage for wind and boiler and machinery (if applicable). Such insurance

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shall be written on a replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the foregoing.

(3)Workers’ compensation insurance in accordance with statutory law and employers’ liability insurance with a limit of not less than $1,000,000 per accident, $1,000,000 disease policy limit and $1,000,000 disease limit each employee.

12.2    Insurance Policies: The policies required to be maintained by Tenant shall be with companies rated A-X or better in the most current issue of A.M. Best’s Insurance Ratings Guide. Insurers shall be licensed to do business in the state in which the Premises are located and domiciled in the USA. Any deductible amounts under any insurance policies required hereunder shall not exceed $50,000. Certificates of insurance (certified copies of the policies may be required) shall be delivered to Landlord prior to the Commencement Date and annually thereafter at least thirty (30) days prior to the policy expiration date. Tenant shall have the right to provide insurance coverage which it is obligated to carry pursuant to the terms hereof in a blanket policy, provided such blanket policy expressly affords coverage to the Premises and to Landlord as required by this Lease.

12.3    Additional Insureds and Coverage: Landlord, any property management company and/or agent of Landlord for the Premises, the Building or the Land, and any lender(s) of Landlord having a lien against the Premises, the Building or the Land and any ground lessor of Landlord, and such other persons as Landlord shall from time to time designate upon notice to Tenant, shall be named as additional insureds under all of the policies required in Section 12.1 above (the “Additional Insureds”). Additionally, such policies shall provide for severability of interest. All insurance to be maintained by Tenant shall, except for workers’ compensation and employer’s liability insurance, be primary, without right of contribution from insurance maintained by Landlord. Any umbrella/excess liability policy (which shall be in “following form”) shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall not limit Tenant’s liability under this Lease. It is the parties’ intention that the insurance to be procured and maintained by Tenant as required herein shall provide coverage for any and all damage or injury arising from or related to Tenant’s operations of its business and/or Tenant’s or Tenant’s Representatives’ use of the Premises and/or any of the areas within the Building and Land, whether such events occur within the Premises or in any other areas of the Building or the Land. It is not contemplated or anticipated by the parties that the aforementioned risks of loss be borne by Landlord’s insurance carriers, rather it is contemplated and anticipated by Landlord and Tenant that such risks of loss be borne by Tenant’s insurance carriers pursuant to the insurance policies procured and maintained by Tenant as required herein.

12.4    Landlord’s Building Casualty Coverage: At all times during the Term, Landlord shall maintain special form property insurance covering the full replacement cost of the Building, with such insurance generally carried by prudent owners of similar properties in the general vicinity of the Building. Landlord will include in its fire and casualty insurance policies covering the Building, clauses pursuant to which the companies that issue the policies either or both (i) waive all rights of subrogation against Tenant with respect to losses payable under those policies, and (ii)

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agree that those policies shall not be invalidated if the insured party waives in writing, before a loss occurs, any and all right of recovery against any party for losses covered by those policies.

13.Waiver of Subrogation. Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties’ property, to the extent that such loss or damage is insured by an insurance policy (or in the event either party elects to self-insure, the foregoing not being deemed a consent by Landlord to Tenant self-insuring, which may be done only with the consent of Landlord, which may be given or withheld in its sole discretion) required to be in effect at the time of such loss or damage. Each party shall obtain a waiver of subrogation endorsement and provide a copy thereof to the other upon request. The waiver of subrogation endorsement shall be satisfactory to Landlord in its sole discretion.

14.Limitation of Liability and Indemnity.

14.1    Except to the extent of damage resulting from the negligence or willful misconduct of Landlord (or its agents, employees or contractors), Tenant agrees to protect, defend (with counsel acceptable to Landlord) and hold Landlord and Landlord’s lenders, partners, members, property management company (if other than Landlord), agents, directors, officers, employees, representatives, contractors, shareholders, members, successors and assigns and each of their respective partners, members, directors, employees, representatives, agents, contractors, shareholders, successors and assigns (collectively, the “Indemnitees”) harmless and indemnify the Indemnitees from and against all liabilities, damages, claims, losses, judgments, charges, penalties, fines and expenses (including, but not limited to, reasonable attorneys’ fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly, (i) Tenant’s or Tenant’s Representatives’ use of the Premises, (ii) the conduct of Tenant’s business at or about the Premises, (iii) from any activity, work or thing done, permitted or suffered by Tenant in or about the Premises, and/or (iv) any liability for injury to person or property caused by Tenant or Tenant’s Representatives.

14.2    Notwithstanding the foregoing or anything in this Lease to the contrary, if any portion of the Premises cannot be occupied by Tenant for the normal conduct of Tenant’s business for five (5) consecutive business days as the result of any interruption of any Landlord service over which Landlord has control, any work performed by Landlord (or its agents, employees or contractors) or any default by Landlord under this Lease, then commencing on the fifth (5th) business day and ending on the date such portion may be so occupied by Tenant, the Rent shall abate in proportion to the portion of the Premises which cannot be so occupied.

15.Assignment and Subleasing.

15.1    In General.    Tenant shall not assign, mortgage, hypothecate, encumber, grant any license or concession, pledge or otherwise transfer this Lease (collectively, “assignment”), in whole or in part, whether voluntarily or involuntarily or by operation of law, nor sublet or permit occupancy by any person other than Tenant of all or any portion of the Premises, without the consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any request for Landlord’s approval shall be in writing, accompanied by: (a) a statement of the terms of the proposed assignment, subletting or license; and (b) information reasonably required to allow the Landlord to

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assess the business, finances and management of the proposed assignee, subtenant or licensee. Landlord shall respond in writing to any Tenant request within thirty (30) days after Tenant has delivered a complete request for Landlord’s approval. If Landlord has not responded within such thirty-day period, Tenant’s request for approval of the requested assignment, subletting or license shall be deemed approved. Landlord’s disapproval of any such request shall be in writing specifying the reasons therefor.

15.2    No Approval Required. Notwithstanding the provisions of Section 15.1, Tenant shall have the right to assign this Lease or sublet the Premises in whole or part to a “Permitted Occupant” (as defined below), without Landlord’s consent. The term “Permitted Occupant” shall mean any entity which, in every case, will use the Premises solely for the Permitted Uses, and (a) that directly or indirectly controls, is controlled by or is under common control with Tenant (“control” shall mean the direct or indirect ownership of fifty percent (50%) or more of all classes of voting interests); (b) with or into which Tenant is merged or consolidated; or (c) that acquires all or substantially all of Tenant’s assets.

16.Ad Valorem Taxes; Waiver of Distraint.

Prior to delinquency, Tenant shall pay all taxes and assessments levied upon trade fixtures, alterations, additions, improvements, inventories and personal property located and/or installed on or in the Premises by, or on behalf of, Tenant. Landlord hereby waives any right of distraint it may have, whether statutory or at common law, whether such lien may presently exist or may be created in the future, against Tenant’s personal property, trade fixtures, equipment, and other personalty and goods located at the Premises.

17.Subordination. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any bona fide mortgagee or deed of trust beneficiary with a lien on all or any portion of the Premises or any ground lessor with respect to the land of which the Premises are a part, the rights of Tenant under this Lease and this Lease shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building or the land upon which the Building is situated, or both and (ii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Building, the Land, ground leases or underlying leases, or Landlord’s interest or estate in any of said items is specified as security. Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or any beneficiary shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination and upon the request of such successor to Landlord, attorn to and become the Tenant of the successor in interest to Landlord, provided such successor in interest will agree in writing acceptable to Tenant not disturb Tenant’s use, occupancy or quiet enjoyment of the Premises so long as Tenant is not in Default of the terms and provisions of this Lease. Landlord hereby represents that as of the Lease Date there is no underlying ground lease or mortgage affecting the Premises.

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18.Landlord’s Environmental Obligations and Indemnity.

18.1    Landlord warrants and represents to Tenant that, to Landlord’s actual knowledge, (a) the Premises does not now contain any Hazardous Materials (as defined below) in violation or exceedance of applicable Legal Requirements or any abandoned, decommissioned or active, underground or aboveground storage tanks; (b) Landlord and its agents, employees and tenants have not caused or permitted any Hazardous Materials to be released, discharged or deposited on, in, under, from or in the vicinity of the Premises in violation of applicable Legal Requirements; and (c) there are no Hazardous Materials on, in, from or under the Land that will have a negative impact upon the conduct of Tenant’s business or the safety and health of its employees, customers, licensees or invitees. To the extent Hazardous Materials are discovered at, on, in, under or emanating from the Premises after the Lease Date that were not introduced to the Premises by Tenant, Landlord shall, at its sole cost and expense remediate such Hazardous Materials to meet Legal Requirements, which obligation shall be performed in compliance with applicable Legal Requirements (with the extent and means of remediation being confirmed in writing by the Michigan Division of Environmental Quality, as applicable) and this Lease. As used herein, “Hazardous Materials” shall mean any materials or substances regulated under Legal Requirements related to the protection of human health and the environment, including hazardous substances, hydrocarbons, hazardous materials, toxic substances, hazardous wastes, asbestos, polychlorinated biphenyls, radioactive materials, natural gas, natural gas liquids, liquefied natural gas, synthetic gas, oil, petroleum, petroleum based derivatives, urea formaldehyde, or other materials whether solid, liquid, vapor or gas, which could adversely impact on the physical environment or adversely affect human health or safety.

18.2    Landlord further covenants and agrees to indemnify, defend, protect and hold Tenant harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys’ and experts’ fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against Tenant and arising from or out of any actual or alleged (to the extent arising from third party demands or claims) Legal Requirements related to the protection of human health and the environment, including Hazardous Materials on, in, under or affecting all or any portion of the Premises (other than any Hazardous Materials introduced by Tenant during the Term). Such indemnification shall extend to, without limitation, (a) the costs of removal of any and all Hazardous Materials from all or any portion of the Premises, (b) additional costs required to take necessary precautions to protect against the release of Hazardous Materials on, in, under or affecting the Premises into the air, any body of water, any other public domain or any surrounding areas; (c) costs of compliance with all applicable Legal Requirements, and (d) any additional construction costs incurred by Tenant on account of such Hazardous Materials.

19.Estoppel Certificate. Tenant shall execute (and acknowledge if required by any lender or ground lessor) and deliver to Landlord, within ten (10) business days after Landlord provides such to Tenant, a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification), the date to which the Rent and other charges are paid in advance, if any, acknowledging that there are not, to Tenant’s knowledge, any uncured

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defaults on the part of Landlord hereunder or specifying such defaults as are claimed, and such other matters as Landlord may reasonably require. Any such statement may be conclusively relied upon by Landlord and any prospective purchaser or encumbrance of the Premises.

20.Tenant’s Default. The occurrence of any one or more of the following events shall, at Landlord’s option, constitute a material default (“Default”) by Tenant of the provisions of this Lease:

20.1    The failure by Tenant to make any payment of Base Rent, Additional Rent or any other payment required hereunder on the date said payment is due, following ten (10) days written notice to Tenant with an opportunity to cure on the part of Tenant;

20.2    The failure by Tenant to observe, perform or comply with any of the terms, conditions, covenants or provisions of this Lease (except failure to make any payment of Base Rent and/or Additional Rent) and such failure is not cured within the time period required under the provisions of this Lease, or if no such time period is provided then within thirty (30) days of Tenant’s receipt of written notice of such failure from Landlord, provided that if such failure cannot reasonably be cured within the aforementioned time period (if any) or such thirty (30) days period as the case may be, as determined solely by Landlord, Tenant shall not be in Default as a result of such failure provided that Tenant has promptly commenced the cure of such failure and is diligently and continuously prosecuting such cure to completion;

20.3    The making of a general assignment by Tenant for the benefit of creditors, the filing of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant’s creditors seeking the rehabilitation, liquidation, or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief of debtors and, in the case of an involuntary action, the failure to remove or discharge the same within sixty (60) days of such filing, the appointment of a receiver or other custodian to take possession of substantially all of Tenant’s assets or this leasehold; or

20.4    Tenant’s insolvency or inability to pay Tenant’s debts or failure generally to pay Tenant’s debts when due, any court entering a decree or order directing the winding up or liquidation of Tenant or of substantially all of Tenant’s assets, Tenant taking any action toward the dissolution or winding up of Tenant’s affairs, the cessation or suspension of Tenant’s use of the Premises, or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets or this leasehold which attachment, execution or other judicial seizure is not vacated, released, rescinded, or otherwise terminated within sixty (60) days.

21.Remedies for Tenant’s Default.

21.1    Landlord reserves the right to re-enter and to again possess and enjoy the Premises upon a Default by Tenant.

21.2    In the event of Tenant’s Default under this Lease, Landlord may terminate Tenant’s right to possession of the Premises by any lawful means, in which case Tenant shall immediately surrender possession of the Premises to Landlord. In the event of Tenant’s Default under this Lease, Landlord may terminate this Lease on ten (10) business days’ written notice to Tenant. Upon Landlords’ termination of Tenant’s right to possession of the Premises or Landlord’s termination

11

of this Lease, Landlord shall have the immediate right of reentry. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 21 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant. If Landlord relets the Premises or any portion thereof, (i) Tenant shall be liable immediately to Landlord for all reasonable and actual costs Landlord incurs in reletting the Premises or any part thereof, including, without limitation, reasonable broker’s commissions, expenses of cleaning, redecorating, and further improving the Premises and other similar costs for such tenancy (collectively, the “Reletting Costs”), and (ii) the rent received by Landlord from such reletting shall be applied as Landlord may elect, to the payment of: first, any indebtedness from Tenant to Landlord other than Base Rent or Additional Rent; second, all reasonable and actual costs including maintenance, incurred by Landlord in reletting; and, third, Base Rent, Additional Rent, and all other sums due under this Lease. Any and all of the Reletting Costs shall be fully chargeable to Tenant and shall not be prorated or otherwise amortized in relation to any new lease for the Premises or any portion thereof. In no event shall Tenant be entitled to any excess rent received by Landlord, or the application of such excess rent to any Rent due from Tenant to Landlord or any damages suffered by Landlord as a result of a Tenant Default. Reletting may be for a period shorter or longer than the remaining Term of this Lease. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease shall not constitute a termination of Tenant’s right to possession or a termination of this Lease. Following the date Landlord obtains possession of the Premises due to a Default by Tenant hereunder, Landlord must use commercially reasonable efforts to mitigate damages.

21.3    Upon the expiration or earlier termination of this Lease or of Tenant’s right to possession of the Premises, Tenant shall remove its personal property from the Premises. Any such property of Tenant not removed from the Premises shall be conclusively deemed to have been forever abandoned by Tenant and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit, at Landlord’s cost and expense.

21.4    The foregoing rights and remedies of Landlord are not exclusive; they are cumulative and in addition to any rights and remedies existing under applicable Legal Requirements, in equity or otherwise, and to any remedies Landlord may have under bankruptcy laws or laws affecting creditor’s rights generally. Notwithstanding any provision of this Lease to the contrary (including, without limitation, Section 22 hereof), in no event shall Tenant be liable for consequential, punitive or special damages arising from its Default hereunder.

21.5    The waiver by Landlord of any Default of any provision of this Lease in any one or more instances shall not be deemed or construed a waiver of any other Default by Tenant hereunder or of any subsequent Default of this Lease, except for the Default specified in the waiver. Landlord shall not be deemed to have waived any Default unless Landlord does so in writing, regardless of the passage of time.

22.Holding Over. If Tenant holds possession of the Premises after the expiration of the Term of this Lease with Landlord’s consent, Tenant shall become a tenant from month-to-month upon the terms and provisions of this Lease, provided the monthly Rent during such hold over period

12

shall be 150% of the Rent due on the last month of the Lease Term, payable in advance on or before the first day of each month. Acceptance by Landlord of the monthly Rent without the additional percentage increase of Rent shall not be deemed or construed as a waiver by Landlord of any of its rights to collect the increased amount of the Rent as provided herein at any time. Such month-to-month tenancy shall not constitute a renewal or extension for any further term. All options, if any, granted under the terms of this Lease shall be deemed automatically terminated and be of no force or effect during said month-to-month tenancy. Tenant shall continue in possession until such tenancy shall be terminated by either Landlord or Tenant giving written notice of termination to the other party at least thirty (30) days prior to the effective date of termination. This paragraph shall not be construed as Landlord’s permission for Tenant to hold over. Acceptance of Rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.

23.Landlord’s Default. Landlord shall not be deemed in default of this Lease unless Landlord fails within a reasonable time to perform an obligation required to be performed by Landlord hereunder following its receipt of written notice specifying with detail the default by Landlord. For purposes of this provision, a reasonable time shall not be less than ten (10) days after receipt by Landlord of written notice specifying the nature of the obligation Landlord has not performed; provided, however, that if the nature of Landlord’s obligation is such that more than ten (10) days after receipt of written notice is reasonably necessary for its performance, then Landlord shall not be in default of this Lease if performance of such obligation is commenced within such ten (10) day period and thereafter diligently pursued to completion.

24.Waiver. No delay or omission in the exercise of any right or remedy of Landlord on any Default by Tenant shall impair such a right or remedy or be construed as a waiver. The subsequent acceptance of Rent by Landlord after Default by Tenant of any covenant or term of this Lease shall not be deemed a waiver of such Default, and shall not prevent Landlord from maintaining an action based on such Default. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent and other sums due hereunder shall be deemed to be other than on account of the earliest Rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or other sum or pursue any other remedy provided in this Lease. No failure, partial exercise or delay on the part of the Landlord in exercising any right, power or privilege hereunder shall operate as a waiver thereof. Landlord shall not be deemed to have waived any right or remedy available to Landlord unless Landlord does so in writing, setting forth with particularity the right or remedy waived.

25.Casualty Damage. If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the Building or the Premises shall be so damaged by fire or other casualty that substantial alteration or reconstruction of the Building or the Premises (i.e., requiring a restoration period of more than 180 days) shall, in Landlord’s reasonable opinion, be required (whether or not the Premises shall have been damaged by such fire or other casualty), Landlord or Tenant may, at their option, terminate this Lease by notifying the other in writing of such termination within forty-five (45) days after the date of such damage, in which event the Rent shall be abated as of the date of such damage. If neither Landlord nor Tenant elects to terminate this Lease as aforesaid, and provided insurance proceeds are available

13

to fully repair the damage, Landlord shall within 180 days after the date of such damage repair and restore the Premises and the Building (except that Landlord shall not be responsible for delays outside its control) to substantially the same condition in which it was immediately prior to the happening of the casualty, failing which, Tenant may terminate this Lease; provided, Landlord shall not be required to rebuild, repair, or replace any part of Tenant’s furniture, furnishings, fixtures and/or equipment removable by Tenant or any improvements, alterations or additions installed by or for the benefit of Tenant under the provisions of this Lease. Landlord shall not in any event be required to spend for such work an amount in excess of the insurance proceeds (excluding any deductible) actually received by Landlord as a result of the fire or other casualty. Landlord shall not be liable for any inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of use of any part of the Premises by the Tenant or loss of Tenant’s personal property resulting in any way from such damage or the repair thereof, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a fair diminution of Rent during the time and to the extent the Premises are unfit for occupancy.

26.Condemnation. If ten (10%) percent or more of the Premises, or any portion of the Building, is condemned by eminent domain, inversely condemned or sold in lieu of condemnation for any public or quasi-public use or purpose (“Condemned”), then Tenant may terminate this Lease as of the date when physical possession of the Premises is taken and title vests in such condemning authority, and Rent shall be abated to the date of termination in proportion to the portion of the Premises that Tenant no longer occupies. Tenant shall not because of such condemnation assert any claim against Landlord or the condemning authority for any compensation because of such condemnation, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate of interest or other interest of Tenant. Notwithstanding the foregoing, Tenant shall be entitled to file a separate claim against the taking authority for any taking of Tenant’s personal property or any fixtures that Tenant is entitled to remove upon the expiration hereof, and of moving expenses, so long as such claim is payable separately to Tenant and does not diminish the claim of Landlord. If Tenant does not elect to terminate this Lease, Landlord shall, if necessary, promptly proceed to restore the Premises or the Building to substantially its same condition prior to such partial condemnation, allowing for the reasonable effects of such partial condemnation, and a proportionate allowance shall be made to Tenant, as reasonably determined by Landlord, for the Rent corresponding to the time during which, and to the part of the Premises of which, Tenant is deprived on account of such partial condemnation and restoration.

27.General Provisions.

27.1    Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, legal representatives and permitted assigns of the parties hereto.

27.2    Severability. Any provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provisions hereof and such other provision shall remain in full force and effect.

27.3    Choice of Law. This Lease shall be governed by, and construed in accordance with, the laws of the State of Michigan.

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27.4    Entire Agreement. This Lease supersedes any prior agreements, representations, negotiations or correspondence between the parties, and contains the entire agreement of the parties on matters covered. No other agreement, statement or promise made by any party, that is not in writing and signed by all parties to this Lease, shall be binding. All Exhibits attached to this Lease are incorporated in this Lease as if set forth at length herein.

27.5    Warranty of Authority. Each person executing this Lease on behalf of a party represents and warrants that (i) such person is duly and validly authorized to do so on behalf of the entity it purports to so bind, and (ii) if such party is a partnership, corporation or trustee, that such partnership, corporation or trustee has full right and authority to enter into this Lease and perform all of its obligations hereunder. Tenant hereby warrants that this Lease is valid and binding upon Tenant and enforceable against Tenant in accordance with its terms. Landlord hereby warrants that this Lease is valid and binding upon Landlord and enforceable against Landlord in accordance with its terms.

27.6    Notices. Any and all notices and demands required or permitted to be given hereunder to Landlord shall be in writing and shall be sent: (a) by United States certified mail, return receipt requested, postage prepaid; (b) by personal delivery; or (c) by overnight courier for next business day delivery, addressed to Landlord at 505 McGregor Ave., London, with a copy to __________________ (if sent by United States certified mail, return receipt requested, postage prepaid) or ______________ (if sent by personal delivery or by overnight courier), Attention: ______________. Any and all notices and demands required or permitted to be given hereunder to Tenant shall be in writing and shall be sent: (i) by United States certified mail, return receipt requested, postage prepaid; (ii) by personal delivery; or (iii) by overnight courier, all of which shall be addressed to Tenant at the Premises with a copy to c/o Unique Fabricating NA, Inc., 800 Standard Parkway, Auburn Hills, Michigan 48326, Attention: John Weinhardt, President. Notice and/or demand shall be deemed given upon the earlier of actual receipt or the third day following deposit in the United States mail or the next business day following sending by overnight courier for next business day delivery. Notice may be sent by counsel for either party and shall be deemed as effective as if sent by the party itself. Either party may change its notice address by notice to the other party in accordance with the terms of this Section 28.6.

27.7    Waiver of Jury Trial. The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way related to this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises or the Building and/or any claim of injury, loss or damage.

28.    Signs. Tenant shall be permitted to erect any signs and graphics of every kind visible in or from public view or corridors or the exterior of the Building and elsewhere at the Premises, to the maximum extent permitted by law, subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall deliver to Landlord for its approval reasonably detailed sign specifications and/or drawings, and if Landlord approves of such signage, Tenant shall install same at its sole cost and expense, and in compliance with any

15

applicable Legal Requirements. Tenant shall remove all such signs and graphics prior to the expiration or earlier termination of this Lease.

29.    Brokerage Commission. Landlord and Tenant each represents and warrants for the benefit of the other that it has had no dealings with any real estate broker, agent or finder in connection with the Premises and/or the negotiation of this Lease, except for the Broker(s) (as set forth on Page 1), and that it knows of no other real estate broker, agent or finder who is or might be entitled to a real estate brokerage commission or finder’s fee in connection with this Lease or otherwise based upon contacts between the claimant and Tenant. Each party shall indemnify and hold harmless the other from and against any and all liabilities or expenses arising out of claims made for a fee or commission by any real estate broker, agent or finder in connection with the Premises and this Lease other than Broker(s), if any, resulting from the actions of the indemnifying party. Any real estate brokerage commission or finder’s fee payable to the Broker(s) in connection with this Lease shall be payable by landlord and shall only be payable and applicable to the extent of the initial Term of the Lease and to the extent of the Premises as same exist as of the date on which Tenant executes this Lease.

30.    Quiet Enjoyment. Landlord covenants with Tenant, upon the paying of Rent and observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, and during the periods that Tenant is not otherwise in Default of any of the terms or provisions of this Lease, and subject to the terms, conditions and covenants of this Lease, that Tenant shall and may peaceably and quietly hold, occupy and enjoy the Premises, every day of the year and at all times, during the Term of this Lease, without interference by Landlord.

31.    OFAC Compliance.

31.1    Landlord and Tenant each represents and warrants that (a) Landlord or Tenant, as the case may be, and each person or entity owning an interest in Landlord or Tenant, as the case may be, is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (b) none of the funds or other assets of Landlord or Tenant, as the case may be, constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined), (c) no Embargoed Person has any interest of any nature whatsoever in Landlord or Tenant, as the case may be, (whether directly or indirectly), and (d) none of the funds of Landlord or Tenant, as the case may be, have been derived from any unlawful activity with the result that the investment in Landlord or Tenant, as the case may be, is prohibited by law or that the Lease is in violation of law. The term “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the

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result that the investment in Landlord or Tenant, as the case may be, is prohibited by law or Tenant is in violation of law.

31.2    Landlord and Tenant, as the case may be, each covenants and agrees (a) to comply with all Legal Requirements relating to money laundering, anti-terrorism, trade embargos and economic sanctions, and (b) to immediately notify the other in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Landlord or Tenant, as the case may be, has a reasonable basis to believe that they may no longer be true or have been breached. Tenant covenants not to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under the Lease.

31.3    Notwithstanding anything herein to the contrary, Tenant acknowledges that Tenant’s inclusion on the List during the Lease Term shall be a Default of the Lease and Tenant covenants that Tenant shall not permit the Premises or any portion thereof to be used or occupied by any person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient basis), and any such use or occupancy of the Premises by any such person or entity shall be a material default of the Lease.

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IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date referenced on Page 1 of this Lease.

LANDLORD:

COMBE INVESTMENTS LTD.

By: /s/ G. Craig Combe        

Name: G. Craig Combe Title: President

TENANT:

UNIQUE-INTASCO CANADA, INC.

By: /s/ John Weinhardt        

Name: John Weinhardt

Title: President

Signature Page to Lease Agreement

EXHIBIT A

SITE PLAN

A-1

EXHIBIT B

OPTION TO RENEW

Tenant is granted one (1) option to renew as follows:

(a)     Provided there shall not have been a Default under this Lease at the time of the exercise of the “Renewal Option” (as hereinafter defined), Tenant shall have the option (the “Renewal Option”), to extend the term of this Lease for an additional periods of two (2) years (the “Renewal Term”), provided that Tenant shall give notice (the “Election Notice”) to Landlord not less than six (6) months prior to the Expiration Date (the “Election Notice Period”) of its exercise of the Renewal Option. If the Renewal Option is not exercised within the Election Notice Period, then Tenant’s Renewal Option shall thereafter automatically be void and of no further force or effect.

(b)     Upon Landlord’s receipt of a timely Election Notice, the Lease automatically shall be extended without the necessity of the execution of an extension agreement or other written instrument, upon the same terms, conditions and covenants set forth in this Lease, except that Base Rent during the first year of each Renewal Term shall be equal to the lesser of (a) the fair market rental value of the Premises as of the commencement of the Renewal Term (determined as provided for in subparagraph (c) below) or (b) 102% of the Base Rent for the last year of the initial 2-year term of this Lease. In addition to the Annual Base Rent, during the Renewal Term Tenant shall continue to pay all additional rent provided for in the Lease.

(c)     The fair market rental value of the Premises, for the Renewal Term, shall be determined by two (2) appraisers selected within thirty (30) days of Landlord’s receipt of Tenant’s particular Election Notice; one (1) selected by Tenant, one (1) selected by Landlord. Within such thirty (30) day period, each of Landlord and Tenant shall notify the other of the name and address of the appraiser selected by each. Within sixty (60) days of the expiration of such thirty (30) day period, each appraiser shall make an independent appraisal of the fair market rental value of the Premises, and within such sixty (60) day period shall (on the same day, the date to be selected by both appraisers), mail their appraisal to each other and each of the parties. If the two appraisals are within four (4%) percent of each other, the fair market rental value shall be equal to the sum obtained by adding the two appraisals and dividing the total in half. If the two appraisals are not within four (4%) percent of each other, then the appraisers shall be notified and shall, within ten (10) days thereafter, select a third impartial appraiser and simultaneously notify the parties of the name and address of the third appraiser. The third appraiser shall then make an independent appraisal in order to determine the fair market rental value of the Premises, which determination shall be made by the third appraiser within forty-five (45) days following the selection of the third appraiser, and shall on the same day, mail that appraisal to each of Landlord and Tenant. The two of the three appraisals made which are the closest to each other shall be added together and the total divided in half and the amount then obtained shall be deemed the fair market rental value for the Premises. If the two appraisers are unable to agree upon the selection of a third appraiser within the time period provided, then either Landlord or Tenant, on behalf of both, may on notice to the other, apply to a court of competent jurisdiction in the State of Michigan to make the appointment, and the other party shall not question the court’s jurisdiction or selection. The appraisal of the third appraiser selected by the court shall be made within forty-five (45) days of appointment by the court, and pursuant to the

B-1

provisions of this paragraph. Each of Landlord and Tenant shall pay the fees and expenses of the appraiser selected by each, and shall share equally the fees and expenses of the third appraiser, if required. Each appraiser shall be a real estate appraiser having at least fifteen (15) years’ experience in appraising real estate in St. Clair County in the State of Michigan, and shall also be a member of the Member of the Appraisal Institute. If, for any reason, the fair market rental value has not been determined by commencement of the Renewal Term, then pending that determination, Tenant shall pay the Base Rent paid by Tenant to Landlord during the immediately preceding Lease year, and any additional amount determined to be due shall be paid within fifteen (15) days following that determination.

B-2

EX-10.7

Exhibit 10.7

LEASE AGREEMENT(NNN)Basic Lease Information

Lease Date:	April 29, 2016
Landlord:	Combe Investments Ltd. An Ontario corporation (“Landlord”)
Landlord’s Address:	505 McGregor Ave. London, ON
Tenant:	Unique-Intasco-Canada, Inc., (“Tenant”)
Tenant’s Address:	_________________________ _________________________ _________________________
Land:	PIN 08397-0083 (LT) PART OF LOT 31, CONCESSION 1, DESIGNATED AS PARTS 4 AND 5, PLAN 33R-12360, T/G ROW OVER PART 6, PLAN 33R-12360 AS IN 318992, T/G ROW OVER PART 3, PLAN 33R-12360 AS IN LT408385, S/T ROW OVER PART 4, PLAN 33R-12360 AS IN LT408385, CONSENT OF COMMITTEE OF ADJUSTMENT ATTACHED TO LT408385; LONDON/WESTMINSTER ("509 Land") PIN 08397-0056 (LT) PT LT 31, CON 1, PART 1, 33R6483; LONDON/WESTMINSTER ("510 Land") (509 Land and 510 Land are hereinafter collectively referred to as the "Land").
Building:	The building ("509 Building") located on the 509 Land The building ("510 Building") located on the 510 Land, (509 Building and 510 Building are hereinafter collectively referred to as the "Building").

Premises:	The 509 premises ("509 Premises") are the entire 509 Building and 509 Land. The 510 premises ("510 Premises") are the entire 510 Building and 510 Land. (509 Premises and 510 Premises are hereinafter collectively referred to as the "Premises").
Premises Address:	509 Premises: 509-505 McGregor Avenue, London, Ontario 510 Premises: 510 McGregor Avenue, London, Ontario
Term:	Five (5) years commencing on May 1, 2016 ("Commencement Date"), through and including April 30, 2021 ("Expiration Date"), subject to the Option to Renew.
Base Rent (3):	Tenant shall pay Base Rent during the three (3) year Term of the Lease as follows:

Lease Year	Annual Base Rent	Monthly Base Rent
1	$201,000.00	$16,750.00
2	$205,020.00	$17,085.00
3	$205,020.00	$17,085.00
4	$209,120.40	$17,426.70
5	$209,020.40	$17,426.70

Additional Rent: Any one or all of the following, as appropriate, are referred to as “Tenant’s Share”:

* Tenant’s Share of Real Estate Tax Expenses (6.2): 100%

* Tenant’s Share of Utility Expenses (7): 100%

Uses (9):	Warehouse, manufacturing, industrial and office.
Parking Area:	Tenant shall have the exclusive right to use all parking spaces in the parking area at the Premises.
Broker (30):	NONE, for Landlord. NONE, for Tenant.
Tenant’s Insurance:	As provided in Section 12
Option to Renew:	As provided in Exhibit A annexed

TABLE OF CONTENTS

Page

1. Premises...................................................................................................................1

2. Adjustment of Commencement Date; Condition of the Premises...........................1

3. Rent..........................................................................................................................1

4. Intentionally Omitted...............................................................................................2

5. Landlord’s Work......................................................................................................2

6. Additional Rent........................................................................................................2

7. Utilities.....................................................................................................................4

8. Late Charges............................................................................................................4

9. Use of Premises........................................................................................................4

10. Alterations and Additions; and Surrender of Premises............................................5

11. Repairs and Maintenance.........................................................................................6

12. Insurance..................................................................................................................6

13. Waiver of Subrogation.............................................................................................8

14. Limitation of Liability and Indemnity......................................................................8

15. Assignment and Subleasing.....................................................................................8

16. HST; Waiver of Distraint.........................................................................................9

17. Subordination...........................................................................................................9

18. Landlord’s Environmental Obligations and Indemnity..........................................10

19. Estoppel Certificate................................................................................................11

20. Tenant’s Default.....................................................................................................11

21. Remedies for Tenant’s Default...............................................................................12

22. Holding Over..........................................................................................................13

23. Landlord’s Default.................................................................................................13

24. Waiver....................................................................................................................13

25. Casualty Damage...................................................................................................14

26. Expropriation.........................................................................................................14

27. Zoning....................................................................................................................14

28. General Provisions.................................................................................................15

29. Signs.......................................................................................................................16

30. Brokerage Commission..........................................................................................16

31. Quiet Enjoyment....................................................................................................17

i

TABLE OF CONTENTS

(continued)

Page

32. Compliance With Legal Requirements..................................................................17

33. Registration............................................................................................................17

ii

LEASE AGREEMENT

DATE: This Lease Agreement is made and entered into as of the Lease Date set forth on Page 1. The Basic Lease Information set forth beginning on Page 1 is incorporated herein as if fully set forth herein. The Basic Lease Information set forth beginning on Page 1 and this Lease Agreement is and shall be construed as a single instrument and are referred to herein, collectively, as the "Lease". In the event of any conflict between the Basic Lease Information and the remainder of this Lease Agreement, the Basic Lease Information shall supersede and control.

1.Premises.

1.1    In consideration of the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord hereby leases the Premises to Tenant, together with the exclusive right to use the parking areas of the Premises (the "Parking Area"), upon the terms and conditions set forth in this Lease.

2.Adjustment of Commencement Date; Condition of the Premises.

2.1    The word “Term” whenever used herein refers to the initial term of this Lease and any extension thereof.

2.2    By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises in good condition and state of repair, subject to Tenant’s rights to make objections to latent defects in the Building, of which the Premises is a part, which Landlord shall be obligated to repair at no cost to Tenant.

2.3    In the event, following Tenant’s written request, Landlord permits Tenant to occupy the Premises prior to the Commencement Date, such occupancy shall be at Tenant’s sole risk and subject to all the provisions of this Lease, including but not limited to Tenant’s obligation to obtain and maintain insurance required pursuant to this Lease and to deliver insurance certificates as required herein. In addition to the foregoing, Landlord shall have the right to impose such reasonable additional conditions on Tenant’s early entry as Landlord shall deem appropriate.

3.Rent.

3.1    Tenant agrees to pay Landlord, without prior notice or demand, or abatement, offset, deduction, claim or counterclaim (except as expressly provided herein), the Base Rent described in the Basic Lease Information, payable in advance at Landlord’s address specified in the Basic Lease Information on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the balance of the Term of the Lease. In addition to the Base Rent set forth in the Basic Lease Information, Tenant shall pay Landlord in advance on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the balance of the Term of this Lease, as Additional Rent, Tenant’s Share of Real Estate Tax Expenses and Tenant’s Share of Utility Expenses (except those utilities which are directly metered to the Premises and paid by Tenant), when and as provided in Sections 6 and 7 below. The term “Rent” whenever used herein

refers to the aggregate of all Base Rent and Additional Rent due pursuant to this Lease. The Rent for any fractional part of a calendar month at the commencement or expiration of the Term shall be a prorated amount of the Rent for a full calendar month based upon the actual days of such month. Tenant shall pay to Landlord HST and all other similar taxes charged by any federal, provincial or municipal government on all Base Rent and Additional Rent (collectively, "Rent").

4.Intentionally Omitted.

5.Landlord’s Work. Tenant hereby accepts the Premises as suitable for Tenant's intended use and it shall be, on the Commencement Date, in good operating order, condition and repair (including the heating, ventilation and air conditioning systems exclusively serving the Premises (the "HVAC System") which shall be in good working order as of the Commencement Date), and otherwise in "AS IS" condition.

6.Additional Rent. The costs and expenses described in this Section 6 and all other sums, charges, costs and expenses specified in this Lease other than Base Rent are to be paid by Tenant to Landlord as additional rent (collectively, “Additional Rent”).

6.1    Real Estate Tax Expenses.

6.1.1    In addition to the Base Rent, Tenant shall pay Tenant's Share, of Real Estate Tax Expenses now or hereafter assessed or levied against the Premises or Tenant's personal property. The term "Real Estate Tax Expenses" shall mean the aggregate of all taxes, rates, duties, levies, fees, charges (including local improvement charges incurred subsequent to the Commencement Date) and assessments whatsoever, imposed, assessed, levied or charged against the Premises or any part thereof or any fixtures, equipment or improvements thereto from time to time by any lawful taxing or assessing authority, whether school, municipal, regional, provincial, federal, parking, utilities or otherwise, including extraordinary and special assessments, and any taxes or other amounts which are imposed in lieu of any of the foregoing, and any taxes (other than rental taxes) on real property rents or receipts of such (as opposed to a tax on such rents as part of the income of Landlord), any taxes based, in whole or in part, upon the value of the Premises or any part or parts thereof, any commercial concentration or similar levy in respect of the Premises excluding taxes on the income or profits of Landlord except to the extent that they are levied in lieu of the foregoing and excluding interest and penalties incurred as a result of the late payment by Landlord of Real Estate Tax Expenses or any instalment(s) thereof unless such penalties are a direct result of late payment of Real Estate Tax Expenses by Tenant as required hereunder. The term "Real Estate Tax Expenses" shall not include any franchise, estate, inheritance, net income, transfer, or excess profits tax imposed upon Landlord. Landlord represents that, as of the Lease Date, each of the 509 Premises and the 510 Premises constitutes a separate tax parcel that does not include any property not located therein.

6.1.2    Tenant may, in its own name or in Landlord's name, take any reasonable action in order to contest any tax or other assessment with respect to the Premises. At no cost to Landlord, Landlord will execute any reasonable documents relating to any such tax contest provided that (a) Tenant shall hold Landlord harmless from any liability therefor, and (b) Landlord shall have the right to approve any settlement with the applicable taxing authorities. Any refunds or rebates

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of amounts paid hereunder shall belong to Tenant and Landlord shall reasonably aid Tenant in obtaining any such refund or rebate, provided that the cost of obtaining the same shall be paid by Tenant.

6.2    Payment of Expenses. Landlord shall estimate Tenant's Share of Real Estate Tax Expenses for the calendar year in which the Lease commences. Commencing on the Commencement Date, one twelfth (1/12th) of the estimated amount of Tenant's Share of Real Estate Tax Expenses shall be paid by Tenant to Landlord, as Additional Rent, and thereafter on the first (1st) day of each month throughout the remaining months of such calendar year. Thereafter, Landlord may estimate Tenant's Share of Real Estate Tax Expenses as of the beginning of each calendar year during the Term of this Lease and Tenant shall pay one twelfth (1/12th) of such estimated amount as Additional Rent hereunder on the first (1st) day of each month during such calendar year and Landlord may follow this process for each ensuing calendar year throughout the Term of this Lease. Tenant's obligation to pay Tenant's Share of Real Estate Tax Expenses during the Term shall survive the expiration or earlier termination of this Lease.

6.3    Annual Reconciliation. By April 30th of each calendar year, or as soon thereafter as reasonably possible, Landlord shall furnish Tenant with an accounting of actual Real Estate Tax Expenses, and all Utility Expenses. Within thirty (30) days of Landlord’s delivery of such accounting, Tenant shall pay to Landlord the amount of any underpayment. Landlord shall credit the amount of any overpayment by Tenant toward the next estimated monthly installment(s) falling due, or where the Term of the Lease has expired, refund the amount of overpayment to Tenant within thirty (30) days following such accounting.

6.4    Audit. After delivery to Landlord of at least thirty (30) days prior written notice, Tenant, at its sole cost and expense, through a reputable independent auditor designated by Tenant, shall have the right to examine and/or audit the books and records evidencing Real Estate Tax Expenses and/or Utility Expenses for the previous one (1) calendar year, during Landlord's reasonable business hours, but not more frequently than once during any calendar year. Any such independent auditor designated by Tenant may not be compensated on a contingency fee basis. Landlord and Tenant shall use their best efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such costs and expenses. If Landlord and Tenant agree that Landlord's calculation of Tenant's Share of Real Estate Tax Expenses and/or Utility Expenses for the inspected calendar year was incorrect, the parties shall enter into a written agreement confirming such error and Tenant shall either be (i) entitled to a credit against future installment(s) of Rent for said overpayment (or a refund of any overpayment if the Term has expired) or (ii) obligated to promptly pay to Landlord the amount of any underpayment, as the case may be. If Landlord disputes Tenant's audit results, the matter shall be submitted to an independent firm of certified public accountants mutually acceptable to both Landlord and Tenant. The decision of such independent certified public accountant shall be binding upon both Landlord and Tenant. In the event that the results of any such independent certified public accountant determine that Tenant's Share of Real Estate Tax Expenses and/or Utility Expenses, as charged, exceeded the actual amount of Tenant's Share of Real Estate Tax Expenses and/or Utility Expenses, as the case may be, by more than three percent (3%), Landlord shall pay Tenant the cost of Tenant's audit.

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7.    Utilities. In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay as Additional Rent, one hundred (100%) percent of all charges for gas and electric for which direct meters shall be installed at the Premises by Landlord (at its sole cost) as of the Commencement Date, and Tenant shall arrange for such accounts to be placed in the name of and billed directly to Tenant. In addition, Tenant shall pay Tenant's Share of the cost of all water, standby water charges, sewer use, and sewer discharge fees, and other utilities provided to the Premises ("Utility Expenses"), which Tenant shall pay to Landlord, as Additional Rent, without prior notice or demand, on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the Term of this Lease. Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated amount of Tenant's Share of Utility Expenses on the Commencement Date and thereafter on the first (1st) day of each month, in advance, throughout the Term of this Lease and any reconciliation thereof shall be substantially in the same manner as specified in Section 6.4 above.

7.1 Maintenance.    In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay as Additional Rent, one hundred (100%) of all charges for all snowplowing and landscaping charges related to the Premises.

8. Late Charges. Any and all sums or charges set forth in this Section 8 are considered part of Additional Rent. Tenant acknowledges that late payment, which shall be the tenth (10th) business day of each month or any time thereafter by Tenant to Landlord of Base Rent or Additional Rent for Real Estate Tax Expenses and/or Utility Expenses and the tenth (10th) business day after written demand by Landlord for all other sums due, will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Therefore, if any installment of Rent or any other sum due from Tenant is not received by Landlord when due as aforesaid, then Tenant shall promptly pay to Landlord all of the following, as applicable: (a) interest on such delinquent amount at the rate equal to the prime lending rate charged by any Canadian chartered bank designated by Landlord from time to time plus three percent (3%) for the time period such payments are delinquent as a late charge for every month or portion thereof that such sums remain unpaid, and (b) the amount of fifty dollars ($50) relating to checks for which there are not sufficient funds. If Tenant delivers to Landlord a check for which there are not sufficient funds, Landlord may, at its sole option, require Tenant to replace such check with a cashier's check for the amount of such check and all other charges payable hereunder. The parties agree that this late charge and the other charges referenced above represent a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. Acceptance of any late charge or other charges shall not constitute a waiver by Landlord of Tenant's Default with respect to the delinquent amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other breach of Tenant under this Lease.

9.    Use of Premises. The Premises are to be used solely for warehouse, manufacturing, industrial and office uses and for no other uses or purposes. The use of the Premises by Tenant and its employees, representatives, agents, invitees, licensees, subtenants, customers, guests or contractors (collectively, "Tenant's Representatives"), and the operations conducted at the Premises, shall be subject to, and at all times in compliance with any and all applicable laws, codes, regulations, and ordinances ("Legal Requirements") other than the City of London zoning by-law applicable to the Premises.

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10.    Alterations and Additions; and Surrender of Premises.

10.1    Alterations and Additions: Tenant shall not install any signs, fixtures, improvements, nor make or permit any other alterations or additions to the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld conditioned or delayed. Notwithstanding the foregoing, Tenant shall not be required to obtain Landlord's prior written consent with respect to (a) any alterations which are non-structural (i.e., do not affect (i) the exterior of the Building, (ii) the Building foundation, (iii) the structural elements of the Building, or (iv) the Building systems (the mechanical, electrical, sanitary, plumbing, heating, ventilation or other service systems of the Building)) and (b) have an estimated cost equal to or less than $150,000, either individually or in the aggregate ("Permitted Alterations").As to any proposed alteration or addition, including, without limitation, Permitted Alterations, Tenant shall deliver at least ten (10) days prior notice to Landlord, from the date Tenant intends to commence construction, and, if a building permitted is required in connection with such alteration or addition, sealed plans and specifications along with such notice with respect to Permitted Alterations and along with any request for consent if Landlord consent is required. In all events, Tenant shall obtain all permits, licenses, certificates and approvals prior to commencing any of such work and deliver a copy of same to Landlord. All alterations and additions, including, without limitation, Permitted Alterations, shall be installed at Tenants cost and expense, by a licensed contractor reasonably approved by Landlord, in compliance with all applicable Legal Requirements. Tenant shall keep the Premises and the property on which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. Tenant agrees that in the event any mechanics' or construction liens or a notice of any nature or kind whatsoever is filed against the Premises, Tenant shall forthwith proceed to obtain an effective cancellation or discharge of such lien by payment, deposit or bond satisfactory to Landlord in its sole discretion. Throughout the performance of any alterations or additions, Tenant shall carry, or cause its contractors to carry, workers' compensation insurance in statutory limits, "Builder's Risk" insurance reasonably satisfactory to Landlord, and commercial general liability insurance, with completed operation endorsement, for any occurrence in or about the Building, under which Landlord and its managing agent and any ground lessors and mortgagees, whose names and addresses are or have been furnished to Tenant, shall be named as additional insureds, in such limits and with such insurers as Landlord may reasonably require (collectively, the "Insurance Requirements"). All alterations, additions and improvements performed by or on behalf of Tenant, including without limitation, Permitted Alterations, shall be removed by Tenant prior to the expiration or earlier termination of this Lease, and the Premises restored to the condition existing on the date of this Lease; however, if Tenant provides Landlord with a written request either prior to the performance of the Permitted Alterations, or contemporaneously with its written request for consent for permission to make an alteration, addition or improvement, as the case may be, for a determination whether the alteration, addition or improvement, including without limitation, Permitted Alterations, can remain at the Premises, Landlord shall advise Tenant within ten (10) business days after receipt whether the item in issue may remain. If Landlord fails to respond within the ten (10) business day period, then it shall be deemed a determination by Landlord that removal and restoration is not required.

10.2    Surrender of the Premises: Prior to the expiration or earlier termination of this Lease, Tenant shall surrender and deliver up the Premises, together with the fixtures (other than

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trade fixtures, which Tenant may remove), to Landlord in good condition and repair, except for reasonable wear and tear. Upon such termination of this Lease, Tenant may remove all tenant signage, trade fixtures, furniture, furnishings and personal property prior to the expiration or earlier termination of this Lease. Tenant shall repair any damage caused by the installation or removal of such signs, trade fixtures, furniture, furnishings, fixtures and personal property.

11.    Repairs and Maintenance.

11.1    Tenant’s Repairs and Maintenance Obligations: Except for those portions of the Building to be maintained by Landlord, as provided in Section 11.2 below, Tenant shall, at Tenant's sole cost and expense, keep and maintain the interior, non-structural portions of the Building and the Parking Area in good, clean and safe condition, including, but not limited to, repairing any damage caused by Tenant or Tenant's Representatives and replacing any property so damaged by Tenant or Tenant's Representatives. Without limiting the generality of the foregoing, Tenant shall be solely responsible for maintaining and repairing: (a) all mechanical systems, and the HVAC System, exclusively serving the Premises, (b) all plumbing systems and equipment, and electrical systems, wiring and equipment exclusively serving and located within the Premises, (c) all interior lighting within the Premises, (d) all glass, windows, window frames, window casements, skylights, interior and exterior doors, door frames and door closers within or a part of the Premises, (e) all roll-up doors, ramps and dock equipment within or serving the Premises, including without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights, (f) all tenant signage, (g) security systems installed by Tenant, and (h) all partitions, fixtures, equipment, interior painting, and interior walls and floors of the Premises.

11.2    Landlord’s Repairs and Maintenance Obligations: Except for the obligations of Tenant set forth in Section 11.1 above, Landlord agrees to keep in good repair and condition (at Landlord’s sole cost and expense), the roof, roof membranes, exterior walls of the Building, and all other structural elements of the Building.

12.    Insurance.

12.1    Types of Insurance: Tenant shall, during the Term, procure at its expense and keep in force the following insurance:

(1)    Commercial general liability insurance naming the Additional Insureds (as hereinafter defined) as an additional insured against any and all claims for bodily injury and property damage occurring in, or about the Premises arising out of Tenant's use and occupancy thereof. Such insurance shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a One Million Dollar ($1,000,000) aggregate limit and excess umbrella liability insurance in the amount of Three Million Dollars ($3,000,000). Such liability insurance shall be primary and not contributing to any insurance available to Landlord and Landlord's insurance shall be in excess thereto. In no event shall the limits of such insurance be considered as limiting the liability of Tenant under this Lease.

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(2)    Personal property insurance insuring all equipment, trade fixtures, permitted alterations and additions, inventory, fixtures, and personal property of Tenant located on or in the Premises for perils covered by the causes of loss – special form (all risk) and in addition, coverage for wind and boiler and machinery (if applicable). Such insurance shall be written on a replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the foregoing.

(3)    Workers' compensation insurance in accordance with statutory law and employers' liability insurance with a limit of not less than $1,000,000 per accident, $1,000,000 disease policy limit and $1,000,000 disease limit each employee.

12.2    Insurance Policies: The policies required to be maintained by Tenant shall be with companies rated A-X or better in the most current issue of A.M. Best's Insurance Ratings Guide. Insurers shall be licensed to do business in the Province in which the Premises are located and domiciled in Canada. Any deductible amounts under any insurance policies required hereunder shall not exceed $50,000. Certificates of insurance (certified copies of the policies may be required) shall be delivered to Landlord prior to the Commencement Date and annually thereafter at least thirty (30) days prior to the policy expiration date. Tenant shall have the right to provide insurance coverage which it is obligated to carry pursuant to the terms hereof in a blanket policy, provided such blanket policy expressly affords coverage to the Premises and to Landlord as required by this Lease.

12.3    Additional Insureds and Coverage: Landlord, any property management company and/or agent of Landlord for the Premises, the Building or the Land, and any lender(s) of Landlord having a lien against the Premises, the Building or the Land and any ground lessor of Landlord, and such other persons as Landlord shall from time to time designate upon notice to Tenant, shall be named as additional insureds under all of the policies required in Section 12.1 above (the "Additional Insureds"). Additionally, such policies shall provide for severability of interest. All insurance to be maintained by Tenant shall, except for workers' compensation and employer's liability insurance, be primary, without right of contribution from insurance maintained by Landlord. Any umbrella/excess liability policy (which shall be in "following form") shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall not limit Tenant's liability under this Lease. It is the parties' intention that the insurance to be procured and maintained by Tenant as required herein shall provide coverage for any and all damage or injury arising from or related to Tenant's operations of its business and/or Tenant's or Tenant's Representatives' use of the Premises and/or any of the areas within the Building and Land, whether such events occur within the Premises or in any other areas of the Building or the Land. It is not contemplated or anticipated by the parties that the aforementioned risks of loss be borne by Landlord's insurance carriers, rather it is contemplated and anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant to the insurance policies procured and maintained by Tenant as required herein.

12.4    Landlord’s Building Casualty Coverage: At all times during the Term, Landlord shall maintain special form property insurance covering the full replacement cost of the Building, with such insurance generally carried by prudent owners of similar properties in the general vicinity

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of the Building. Landlord will include in its fire and casualty insurance policies covering the Building, clauses pursuant to which the companies that issue the policies either or both (i) waive all rights of subrogation against Tenant with respect to losses payable under those policies, and (ii) agree that those policies shall not be invalidated if the insured party waives in writing, before a loss occurs, any and all right of recovery against any party for losses covered by those policies. In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay as Additional Rent, one hundred (100%) percent of all charges incurred by Landlord for insurance required by this clause 12.4.

13.    Waiver of Subrogation. Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties' property, to the extent that such loss or damage is insured by an insurance policy (or in the event either party elects to self-insure, the foregoing not being deemed a consent by Landlord to Tenant self-insuring, which may be done only with the consent of Landlord, which may be given or withheld in its sole discretion) required to be in effect at the time of such loss or damage. Each party shall obtain a waiver of subrogation endorsement and provide a copy thereof to the other upon request. The waiver of subrogation endorsement shall be satisfactory to Landlord in its sole discretion.

14.    Limitation of Liability and Indemnity.

14.1    Except to the extent of damage resulting from the negligence or willful misconduct of Landlord (or its agents, employees or contractors), Tenant agrees to protect, defend (with counsel acceptable to Landlord) and hold Landlord and Landlord's lenders, partners, members, property management company (if other than Landlord), agents, directors, officers, employees, representatives, contractors, shareholders, members, successors and assigns and each of their respective partners, members, directors, employees, representatives, agents, contractors, shareholders, successors and assigns (collectively, the "Indemnitees") harmless and indemnify the Indemnitees from and against all liabilities, damages, claims, losses, judgments, charges, penalties, fines and expenses (including, but not limited to, reasonable legal fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly, (i) Tenant's or Tenant's Representatives' use of the Premises, (ii) the conduct of Tenant's business at or about the Premises, (iii) from any activity, work or thing done, permitted or suffered by Tenant in or about the Premises, and/or (iv) any liability for injury to person or property caused by Tenant or Tenant's Representatives.

14.2    Notwithstanding the foregoing or anything in this Lease to the contrary, if any portion of the Premises cannot be occupied by Tenant for the normal conduct of Tenant's business for five (5) consecutive business days as the result of any interruption of any Landlord service over which Landlord has control, any work performed by Landlord (or its agents, employees or contractors) or any default by Landlord under this Lease, then commencing on the fifth (5th) business day and ending on the date such portion may be so occupied by Tenant, the Rent shall abate in proportion to the portion of the Premises which cannot be so occupied.

15.    Assignment and Subleasing.

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15.1    In General.    Tenant shall not assign, mortgage, hypothecate, encumber, grant any license or concession, pledge or otherwise transfer this Lease (collectively, "assignment"), in whole or in part, whether voluntarily or involuntarily or by operation of law, nor sublet or permit occupancy by any person other than Tenant of all or any portion of the Premises, without the consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any request for Landlord's approval shall be in writing, accompanied by: (a) a statement of the terms of the proposed assignment, subletting or license; and (b) information reasonably required to allow the Landlord to assess the business, finances and management of the proposed assignee, subtenant or licensee. Landlord shall respond in writing to any Tenant request within thirty (30) days after Tenant has delivered a complete request for Landlord's approval. If Landlord has not responded within such thirty-day period, Tenant's request for approval of the requested assignment, subletting or license shall be deemed approved. Landlord's disapproval of any such request shall be in writing specifying the reasons therefor.

15.2    No Approval Required. Notwithstanding the provisions of Section 15.1, Tenant shall have the right to assign this Lease or sublet the Premises in whole or part to a "Permitted Occupant" (as defined below), without Landlord's consent; provided that Tenant shall remain liable to the Landlord for the performance and observance of the Tenant’s covenants under this Lease. The term "Permitted Occupant" shall mean any entity which, in every case, will use the Premises solely for the Uses, and (a) that directly or indirectly controls, is controlled by or is under common control with Tenant ("control" shall mean the direct or indirect ownership of fifty percent (50%) or more of all classes of voting interests); (b) with or into which Tenant is merged or consolidated; or (c) that acquires all or substantially all of Tenant's assets.

16.    HST; Waiver of Distraint.

Prior to delinquency, Tenant shall pay all taxes and assessments levied upon trade fixtures, alterations, additions, improvements, inventories and personal property located and/or installed on or in the Premises by, or on behalf of, Tenant. Landlord hereby waives any right of distraint it may have, whether statutory or at common law, whether such lien may presently exist or may be created in the future, against Tenant's personal property, trade fixtures, equipment, and other personalty and goods located at the Premises.

17.    Subordination. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any bona fide mortgagee or deed of trust beneficiary with a lien on all or any portion of the Premises or any ground lessor with respect to the land of which the Premises are a part, the rights of Tenant under this Lease and this Lease shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building or the land upon which the Building is situated, or both and (ii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Building, the Land, ground leases or underlying leases, or Landlord's interest or estate in any of said items is specified as security. Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or any beneficiary shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying lease terminates for any

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reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination and upon the request of such successor to Landlord, attorn to and become the Tenant of the successor in interest to Landlord, provided such successor in interest will agree in writing acceptable to Tenant not disturb Tenant's use, occupancy or quiet enjoyment of the Premises so long as Tenant is not in Default of the terms and provisions of this Lease. Landlord hereby represents that as of the Lease Date there is no underlying ground lease or mortgage affecting the Premises, except for a mortgage with The Toronto-Dominion Bank (the "Lender"), as the mortgagee, registered against title the 509 Land. Within thirty (30) days following the Commencement Date, Landlord agrees to deliver to Tenant a subordination, non-disturbance and attornment agreement, signed by the Lender, in form and substance approved by Tenant.

18.    Landlord’s Environmental Obligations and Indemnity.

18.1    Landlord warrants and represents to Tenant that, to Landlord’s actual knowledge, (a) the Premises does not now contain any Hazardous Materials (as defined below) in violation or exceedance of applicable Legal Requirements or any abandoned, decommissioned or active, underground or aboveground storage tanks; (b) Landlord and its agents, employees and tenants have not caused or permitted any Hazardous Materials to be released, discharged or deposited on, in, under, from or in the vicinity of the Premises in violation of applicable Legal Requirements; and (c) there are no Hazardous Materials on, in, from or under the Land that will have a negative impact upon the conduct of Tenant’s business or the safety and health of its employees, customers, licensees or invitees. To the extent Hazardous Materials are discovered at, on, in, under or emanating from the Premises after the Lease Date that were not introduced to the Premises by Tenant, Landlord shall, at its sole cost and expense remediate such Hazardous Materials to meet Legal Requirements; which obligation shall be performed in compliance with applicable Legal Requirements (with the extent and means of remediation being confirmed in writing by a Qualified Person, as established under Legal Requirements) and this Lease. As used herein, “Hazardous Materials” shall mean any materials or substances regulated under Legal Requirements related to the protection of human health and the environment, including hazardous substances, hydrocarbons, hazardous materials, toxic substances, hazardous wastes, asbestos, polychlorinated biphenyls, radioactive materials, natural gas, natural gas liquids, liquefied natural gas, synthetic gas, oil, petroleum, petroleum based derivatives, urea formaldehyde, or other materials whether solid, liquid, vapor or gas, which could adversely impact on the physical environment or adversely affect human health or safety. For the purpose of this Section 18.1, "Qualified Person" means a qualified person as defined under the Environmental Protection Act (Ontario).

18.2    Landlord further covenants and agrees to indemnify, defend, protect and hold Tenant harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys’ and experts’ fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against Tenant and arising from or out of any actual or alleged (to the extent arising from third party demands or claims) Legal Requirements related to the protection of human health and the environment, including Hazardous Materials on, in, under or affecting all or any portion of the

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Premises (other than any Hazardous Materials introduced by Tenant during the Term). Such indemnification shall extend to, without limitation, (a) the costs of removal of any and all Hazardous Materials from all or any portion of the Premises, (b) additional costs required to take necessary precautions to protect against the release of Hazardous Materials on, in, under or affecting the Premises into the air, any body of water, any other public domain or any surrounding areas; (c) costs of compliance with all applicable Legal Requirements, and (d) any additional construction costs incurred by Tenant on account of such Hazardous Materials.

19.    Estoppel Certificate. Tenant shall execute (and acknowledge if required by any lender or ground lessor) and deliver to Landlord, within ten (10) business days after Landlord provides such to Tenant, a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification), the date to which the Rent and other charges are paid in advance, if any, acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or specifying such defaults as are claimed, and such other matters as Landlord may reasonably require. Any such statement may be conclusively relied upon by Landlord and any prospective purchaser or encumbrance of the Premises.

20.    Tenant’s Default. The occurrence of any one or more of the following events shall, at Landlord’s option, constitute a material default (“Default”) by Tenant of the provisions of this Lease:

20.1    The failure by Tenant to make any payment of Base Rent, Additional Rent or any other payment required hereunder on the date said payment is due, following ten (10) days written notice to Tenant with an opportunity to cure on the part of Tenant;

20.2    The failure by Tenant to observe, perform or comply with any of the terms, conditions, covenants or provisions of this Lease (except failure to make any payment of Base Rent and/or Additional Rent) and such failure is not cured within the time period required under the provisions of this Lease, or if no such time period is provided then within thirty (30) days of Tenant's receipt of written notice of such failure from Landlord, provided that if such failure cannot reasonably be cured within the aforementioned time period (if any) or such thirty (30) days period as the case may be, as determined solely by Landlord, Tenant shall not be in Default as a result of such failure provided that Tenant has promptly commenced the cure of such failure and is diligently and continuously prosecuting such cure to completion;

20.3    Tenant becomes bankrupt or insolvent or takes the benefit of any statute for bankrupt or insolvent debtors or makes any proposal, assignment or arrangement with its creditors, or any steps are taken or proceedings commenced by any person for the dissolution, winding-up or other termination of Tenant's existence or the liquidation of its assets;

20.4    A trustee, receiver, receiver and manager or like person is appointed with respect to the business or assets of Tenant;

20.5    Tenant makes a sale in bulk of all or a substantial portion of its assets other than in conjunction with an assignment approved by Landlord or to a Permitted Occupant; or

20.6    This Lease or any of Tenant's assets are taken under a writ of execution.

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21.    Remedies for Tenant’s Default.

21.1    Landlord reserves the right to re-enter and to again possess and enjoy the Premises upon a Default by Tenant.

21.2    In the event of Tenant’s Default under this Lease, Landlord may terminate Tenant’s right to possession of the Premises by any lawful means, in which case Tenant shall immediately surrender possession of the Premises to Landlord. In the event of Tenant's Default under this Lease, Landlord may terminate this Lease on ten (10) business days' written notice to Tenant. Upon Landlords' termination of Tenant's right to possession of the Premises or Landlord's termination of this Lease, Landlord shall have the immediate right of reentry. No reentry or taking possession of the Premises by Landlord pursuant to this Section 21 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant. If Landlord relets the Premises or any portion thereof, (i) Tenant shall be liable immediately to Landlord for all reasonable and actual costs Landlord incurs in reletting the Premises or any part thereof, including, without limitation, reasonable broker's commissions, expenses of cleaning, redecorating, and further improving the Premises and other similar costs for such tenancy (collectively, the "Reletting Costs"), and (ii) the rent received by Landlord from such reletting shall be applied as Landlord may elect, to the payment of: first, any indebtedness from Tenant to Landlord other than Base Rent or Additional Rent; second, all reasonable and actual costs including maintenance, incurred by Landlord in reletting; and, third, Base Rent, Additional Rent, and all other sums due under this Lease. Any and all of the Reletting Costs shall be fully chargeable to Tenant and shall not be prorated or otherwise amortized in relation to any new lease for the Premises or any portion thereof. In no event shall Tenant be entitled to any excess rent received by Landlord, or the application of such excess rent to any Rent due from Tenant to Landlord or any damages suffered by Landlord as a result of a Tenant Default. Reletting may be for a period shorter or longer than the remaining Term of this Lease. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession or a termination of this Lease. Following the date Landlord obtains possession of the Premises due to a Default by Tenant hereunder, Landlord must use commercially reasonable efforts to mitigate damages.

21.3    Upon the expiration or earlier termination of this Lease or of Tenant’s right to possession of the Premises, Tenant shall remove its personal property from the Premises. Any such property of Tenant not removed from the Premises shall be conclusively deemed to have been forever abandoned by Tenant and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit, at Landlord’s cost and expense.

21.4    The foregoing rights and remedies of Landlord are not exclusive; they are cumulative and in addition to any rights and remedies existing under applicable Legal Requirements, in equity or otherwise, and to any remedies Landlord may have under bankruptcy laws or laws affecting creditor’s rights generally. Notwithstanding any provision of this Lease to the contrary (including, without limitation, Section 22 hereof), in no event shall Tenant be liable for consequential, punitive or special damages arising from its Default hereunder.

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21.5    The waiver by Landlord of any Default of any provision of this Lease in any one or more instances shall not be deemed or construed a waiver of any other Default by Tenant hereunder or of any subsequent Default of this Lease, except for the Default specified in the waiver. Landlord shall not be deemed to have waived any Default unless Landlord does so in writing, regardless of the passage of time.

22.    Holding Over. If Tenant holds possession of the Premises after the expiration of the Term of this Lease with Landlord's consent, Tenant shall become a tenant from month-to-month upon the terms and provisions of this Lease, provided the monthly Rent during such hold over period shall be 150% of the Rent due on the last month of the Term, payable in advance on or before the first day of each month. Acceptance by Landlord of the monthly Rent without the additional percentage increase of Rent shall not be deemed or construed as a waiver by Landlord of any of its rights to collect the increased amount of the Rent as provided herein at any time. Such month-to-month tenancy shall not constitute a renewal or extension for any further term. All options, if any, granted under the terms of this Lease shall be deemed automatically terminated and be of no force or effect during said month-to-month tenancy. Tenant shall continue in possession until such tenancy shall be terminated by either Landlord or Tenant giving written notice of termination to the other party at least thirty (30) days prior to the effective date of termination. This paragraph shall not be construed as Landlord's permission for Tenant to hold over. Acceptance of Rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.

23.    Landlord’s Default. Landlord shall not be deemed in default of this Lease unless Landlord fails within a reasonable time to perform an obligation required to be performed by Landlord hereunder following its receipt of written notice specifying with detail the default by Landlord. For purposes of this provision, a reasonable time shall not be less than ten (10) days after receipt by Landlord of written notice specifying the nature of the obligation Landlord has not performed; provided, however, that if the nature of Landlord's obligation is such that more than ten (10) days after receipt of written notice is reasonably necessary for its performance, then Landlord shall not be in default of this Lease if performance of such obligation is commenced within such ten (10) day period and thereafter diligently pursued to completion.

24.    Waiver. No delay or omission in the exercise of any right or remedy of Landlord on any Default by Tenant shall impair such a right or remedy or be construed as a waiver. The subsequent acceptance of Rent by Landlord after Default by Tenant of any covenant or term of this Lease shall not be deemed a waiver of such Default, and shall not prevent Landlord from maintaining an action based on such Default. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent and other sums due hereunder shall be deemed to be other than on account of the earliest Rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or other sum or pursue any other remedy provided in this Lease. No failure, partial exercise or delay on the part of the Landlord in exercising any right, power or privilege hereunder shall operate as a waiver thereof. Landlord shall not be deemed to have waived any right or remedy available to Landlord unless Landlord does so in writing, setting forth with particularity the right or remedy waived.

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25.    Casualty Damage. If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the Building or the Premises shall be so damaged by fire or other casualty that substantial alteration or reconstruction of the Building or the Premises (i.e., requiring a restoration period of more than 180 days) shall, in Landlord's reasonable opinion, be required (whether or not the Premises shall have been damaged by such fire or other casualty), Landlord or Tenant may, at their option, terminate this Lease by notifying the other in writing of such termination within forty-five (45) days after the date of such damage, in which event the Rent shall be abated as of the date of such damage. If neither Landlord nor Tenant elects to terminate this Lease as aforesaid, and provided insurance proceeds are available to fully repair the damage, Landlord shall within 180 days after the date of such damage repair and restore the Premises and the Building (except that Landlord shall not be responsible for delays outside its control) to substantially the same condition in which it was immediately prior to the happening of the casualty, failing which, Tenant may terminate this Lease; provided, Landlord shall not be required to rebuild, repair, or replace any part of Tenant's furniture, furnishings, fixtures and/or equipment removable by Tenant or any improvements, alterations or additions installed by or for the benefit of Tenant under the provisions of this Lease. Landlord shall not in any event be required to spend for such work an amount in excess of the insurance proceeds (excluding any deductible) actually received by Landlord as a result of the fire or other casualty. Landlord shall not be liable for any inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of use of any part of the Premises by the Tenant or loss of Tenant's personal property resulting in any way from such damage or the repair thereof, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a fair diminution of Rent during the time and to the extent the Premises are unfit for occupancy.

26.    Expropriation. If ten (10%) percent or more of the Premises, or any portion of the Building, is taken for any public or quasi-public use or purpose under any statute or by right of expropriation, or purchases under threat of such taking ("Expropriation"), then Tenant may terminate this Lease as of the date when physical possession of the Premises is taken and title vests in such expropriating authority, and Rent shall be abated to the date of termination in proportion to the portion of the Premises that Tenant no longer occupies. Tenant shall not because of such Expropriation assert any claim against Landlord or the expropriating authority for any compensation because of such Expropriation, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate of interest or other interest of Tenant. Notwithstanding the foregoing, Tenant shall be entitled to file a separate claim against the taking authority for any taking of Tenant's personal property or any fixtures that Tenant is entitled to remove upon the expiration hereof, and of moving expenses, so long as such claim is payable separately to Tenant and does not diminish the claim of Landlord. If Tenant does not elect to terminate this Lease, Landlord shall, if necessary, promptly proceed to restore the Premises or the Building to substantially its same condition prior to such partial expropriation, allowing for the reasonable effects of such partial expropriation, and a proportionate allowance shall be made to Tenant, as reasonably determined by Landlord, for the Rent corresponding to the time during which, and to the part of the Premises of which, Tenant is deprived on account of such partial expropriation and restoration.

27.    Zoning.

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27.1    Notwithstanding anything in this Lease to the contrary, Landlord covenants and agrees to indemnify, defend, protect and hold Tenant and Tenant's directors and officers (collectively, the "Tenant Indemnitees") harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys’ and experts’ fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against the Tenant Indemnitees and arising from the use of the Premises: (a) not being permitted under the City of London zoning by-law; (b) not constituting a legal non-conforming use and/or legal non-complying use; and/or (c) being non-compliant with the applicable zoning regulations.

27.2    In the event of any notice of violation, enforcement proceeding, order or action made by any government, regulatory authority, government department, agency, commission, board, tribunal or court having jurisdiction, or any municipality, district or other subdivision thereof, arising from or in any way related to use of the Premises: (a) not being permitted under the City of London zoning by-law; (b) not constituting a legal non-conforming use and/or legal non-complying use; and/or (c) being non-compliant with the applicable zoning regulations, Tenant may terminate this Lease upon giving a written notice (the "Termination Notice") of such termination to Landlord. Tenant's Termination Notice shall specify the date that the Lease will be terminated (the "Early Termination Date"), which date shall be at least 10 days after the date on which the Termination Notice is given. If the Termination Notice is given then this Lease shall terminate on the Early Termination Date and Tenant shall deliver vacant possession of the Premises to Landlord in accordance with all applicable provisions in this Lease. Tenant shall be responsible for the payment of all Rent up to and including the Early Termination Date. For greater certainty, Landlord acknowledges and agrees that Tenant shall have no obligation to pay any Rent due after the Early Termination Date.

28.    General Provisions.

28.1    Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, legal representatives and permitted assigns of the parties hereto.

28.2    Severability. Any provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provisions hereof and such other provision shall remain in full force and effect.

28.3    Choice of Law. This Lease shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein.

28.4    Entire Agreement. This Lease supersedes any prior agreements, representations, negotiations or correspondence between the parties, and contains the entire agreement of the parties on matters covered. No other agreement, statement or promise made by any party, that is not in writing and signed by all parties to this Lease, shall be binding. All Exhibits attached to this Lease are incorporated in this Lease as if set forth at length herein.

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28.5    Warranty of Authority. Each person executing this Lease on behalf of a party represents and warrants that (i) such person is duly and validly authorized to do so on behalf of the entity it purports to so bind, and (ii) if such party is a partnership, corporation or trustee, that such partnership, corporation or trustee has full right and authority to enter into this Lease and perform all of its obligations hereunder. Tenant hereby warrants that this Lease is valid and binding upon Tenant and enforceable against Tenant in accordance with its terms. Landlord hereby warrants that this Lease is valid and binding upon Landlord and enforceable against Landlord in accordance with its terms.

28.6    Notices. Any and all notices and demands required or permitted to be given hereunder to Landlord shall be in writing and shall be sent: (a) by Canadian certified mail, return receipt requested, postage prepaid; (b) by personal delivery; or (c) by overnight courier for next business day delivery, all of which shall be addressed to Landlord at 505 McGregor Avenue, London, Ontario Attention: G. Craig Combe. Any and all notices and demands required or permitted to be given hereunder to Tenant shall be in writing and shall be sent: (i) by Canadian certified mail, return receipt requested, postage prepaid; (ii) by personal delivery; or (iii) by overnight courier, all of which shall be addressed to Tenant at the Premises with a copy to c/o Unique Fabricating NA, Inc., 800 Standard Parkway, Auburn Hills, Michigan 48326, Attention: John Weinhardt, President. Notice and/or demand shall be deemed given upon the earlier of actual receipt or the third day following deposit in Canadian mail or the next business day following sending by overnight courier for next business day delivery. Notice may be sent by counsel for either party and shall be deemed as effective as if sent by the party itself. Either party may change its notice address by notice to the other party in accordance with the terms of this Section 28.6.

28.7    Waiver of Jury Trial. The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way related to this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises or the Building and/or any claim of injury, loss or damage.

28.8    All dollar amounts in this Lease are in Canadian dollars.

29.    Signs. Tenant shall be permitted to erect any signs and graphics of every kind visible in or from public view or corridors or the exterior of the Building and elsewhere at the Premises, to the maximum extent permitted by law, subject to Landlord's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall deliver to Landlord for its approval reasonably detailed sign specifications and/or drawings, and if Landlord approves of such signage, Tenant shall install same at its sole cost and expense, and in compliance with any applicable Legal Requirements. Tenant shall remove all such signs and graphics prior to the expiration or earlier termination of this Lease.

30.    Brokerage Commission. Landlord and Tenant each represents and warrants for the benefit of the other that it has had no dealings with any real estate broker, agent or finder in connection with the Premises and/or the negotiation of this Lease, except for the Broker(s) (as set forth on Page 1), and that it knows of no other real estate broker, agent or finder who is or might be entitled to a real estate brokerage commission or finder's fee in connection with this Lease or otherwise based

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upon contacts between the claimant and Tenant. Each party shall indemnify and hold harmless the other from and against any and all liabilities or expenses arising out of claims made for a fee or commission by any real estate broker, agent or finder in connection with the Premises and this Lease other than Broker(s), if any, resulting from the actions of the indemnifying party. Any real estate brokerage commission or finder's fee payable to the Broker(s) in connection with this Lease shall be payable by landlord and shall only be payable and applicable to the extent of the initial Term of the Lease and to the extent of the Premises as same exist as of the date on which Tenant executes this Lease.

31.    Quiet Enjoyment. Landlord covenants with Tenant, upon the paying of Rent and observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, and during the periods that Tenant is not otherwise in Default of any of the terms or provisions of this Lease, and subject to the terms, conditions and covenants of this Lease, that Tenant shall and may peaceably and quietly hold, occupy and enjoy the Premises, every day of the year and at all times, during the Term of this Lease, without interference by Landlord.

32.    Compliance With Legal Requirements. Landlord and Tenant, as the case may be, each covenants and agrees (a) to comply with all Legal Requirements relating to money laundering, anti-terrorism, trade embargos and economic sanctions, and (b) to immediately notify the other in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Landlord or Tenant, as the case may be, has a reasonable basis to believe that they may no longer be true or have been breached.

33.    Registration. Tenant agrees with Landlord not to register this Lease against the Premises or any part thereof in any form without written consent of Landlord, except that at Tenant's request, Tenant may register a notice of lease against the Building which describes the parties, the Term, and any extension rights thereof, and the other minimum information required under the applicable legislation, but the notice of lease must be in form satisfactory to Landlord, acting reasonably. Tenant shall remove and discharge at Tenant's expense the registration of such a notice at the expiry or the earlier termination of the Term.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date referenced on Page 1 of this Lease.

LANDLORD:

COMBE INVESTMENTS LTD.

By: /s/ G. Craig Combe        

Name: G. Craig Combe Title: President

TENANT:

UNIQUE-INTASCO CANADA, INC.

By: /s/ JohnWeinhardt        

Name: John Weinhardt

Title: President

Signature Page to Lease Agreement

EXHIBIT A

OPTION TO RENEW

Tenant is granted one (1) option to renew as follows:

(a)     Provided there shall not have been a Default under this Lease at the time of the exercise of the Renewal Option (as hereinafter defined), Tenant shall have the option (the "RenewalOption"), to extend the term of this Lease for an additional period of five (5) years (the "RenewalTerm"), provided that Tenant shall give notice (the "Election Notice") to Landlord not less than six (6) months prior to the Expiration Date (the "Election Notice Period") of its exercise of the Renewal Option. If the Renewal Option is not exercised within the Election Notice Period, then Tenant's Renewal Option shall thereafter automatically be void and of no further force or effect.

(b)     Upon Landlord's receipt of a timely Election Notice, the Lease automatically shall be extended without the necessity of the execution of an extension agreement or other written instrument, upon the same terms, conditions and covenants set forth in this Lease, except as set out below and except that Base Rent during the Renewal Term shall be equal to the fair market rental value of the Premises as of the commencement of the Renewal Term (determined as provided for in subparagraph (c) below); provided that such fair market rental value shall not be less than the Base Rent during the last year of the initial term. In addition to the Base Rent, during the Renewal Term Tenant shall continue to pay all additional rent provided for in the Lease.

(c)     The fair market rental value of the Premises, for the Renewal Term, shall be determined by two (2) appraisers selected within thirty (30) days of Landlord's receipt of Tenant's particular Election Notice; one (1) selected by Tenant, one (1) selected by Landlord. Within such thirty (30) day period, each of Landlord and Tenant shall notify the other of the name and address of the appraiser selected by each. Within sixty (60) days of the expiration of such thirty (30) day period, each appraiser shall make an independent appraisal of the fair market rental value of the Premises, and within such sixty (60) day period shall (on the same day, the date to be selected by both appraisers), mail their appraisal to each other and each of the parties. If the two appraisals are within four (4%) percent of each other, the fair market rental value shall be equal to the sum obtained by adding the two appraisals and dividing the total in half. If the two appraisals are not within four (4%) percent of each other, then the appraisers shall be notified and shall, within ten (10) days thereafter, select a third impartial appraiser and simultaneously notify the parties of the name and address of the third appraiser. The third appraiser shall then make an independent appraisal in order to determine the fair market rental value of the Premises, which determination shall be made by the third appraiser within forty-five (45) days following the selection of the third appraiser, and shall on the same day, mail that appraisal to each of Landlord and Tenant. The two of the three appraisals made which are the closest to each other shall be added together and the total divided in half and the amount then obtained shall be deemed the fair market rental value for the Premises. If the two appraisers are unable to agree upon the selection of a third appraiser within the time period provided, then either Landlord or Tenant, on behalf of both, may on notice to the other, apply to a court of competent jurisdiction in the Province of Ontario to make the appointment, and the other party shall not question the court's jurisdiction or selection. The appraisal of the third appraiser selected by the court shall be made within forty-five (45) days of appointment by the court, and pursuant to the

A-1

provisions of this paragraph. Each of Landlord and Tenant shall pay the fees and expenses of the appraiser selected by each, and shall share equally the fees and expenses of the third appraiser, if required. Each appraiser shall be a real estate appraiser having at least fifteen (15) years' experience in appraising real estate in the Greater Toronto Area in the Province of Ontario, and shall also be a member of the Member of the Appraisal Institute of Canada. If, for any reason, the fair market rental value has not been determined by commencement of the Renewal Term, then pending that determination, Tenant shall pay the Base Rent paid by Tenant to Landlord during the immediately preceding Lease year, and any additional amount determined to be due shall be paid within fifteen (15) days following that determination.

(d)     In the event that the Tenant exercises the Renewal Option, the provisions of Section 27 of the Lease shall no longer apply during the Renewal Term.

(e)     In the event of any notice of violation, enforcement proceeding, order or action made by any government, regulatory authority, government department, agency, commission, board, tribunal or court having jurisdiction, or any municipality, district or other subdivision thereof, arising from or in any way related to use of the Premises during the Renewal Term: (a) not being permitted under the City of London zoning by-law; (b) not constituting a legal non-conforming use and/or legal non-complying use; and/or (c) being non-compliant with the applicable zoning regulations (each, a "Zoning Violation"), Tenant may terminate the Lease upon giving a Termination Notice to Landlord. Tenant's Termination Notice shall specify the date that the Lease will be terminated (the "Renewal Term Early Termination Date"), which date shall be at least 120 days after the date on which the Termination Notice is given. If the Termination Notice is given then, subject to paragraph (f) below, the Lease shall terminate on the Renewal Term Early Termination Date and Tenant shall deliver vacant possession of the Premises to Landlord in accordance with all applicable provisions in the Lease. Subject to Tenant's right of set-off set out in paragraph (g) below, Tenant shall be responsible for the payment of all Rent up to and including the Renewal Term Early Termination Date. For greater certainty, Landlord acknowledges and agrees that Tenant shall have no obligation to pay any Rent due after the Renewal Term Early Termination Date.

(f)     If Tenant delivers a Termination Notice to Landlord during the Renewal Term, Tenant may, at any time prior to the Renewal Term Early Termination Date, deliver a second written notice to Landlord stating that the Zoning Violation has been resolved and that it no longer desires to terminate the Lease. Upon the delivery of such second notice, the Termination Notice shall automatically be deemed to be void and of no further force and effect.

(g)     From and after the occurrence of a Zoning Violation, Tenant shall be entitled to set off any Rent payable during the Renewal Term against any all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys’ and experts’ fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against the Tenant Indemnitees (collectively, "Claims") and arising from a Zoning Violation.

(h)     During the Renewal Term, Landlord shall covenant and agree to indemnify, defend, protect and hold the Tenant Indemnitees harmless against and from any and all Claims arising from

A-2

a Zoning Violation in excess of the amount Tenant is entitled to set off in accordance with paragraph (g) above.

(i)     In the event that charges are laid against the Tenant by the City of London in respect of a Zoning Violation and a conviction is obtained against the Tenant, the parties agree that this Lease shall terminate and be at an end on the date of such conviction; provided that it is understood and agreed that the Landlord will indemnify the Tenant Indemnitees in respect of any and all Claims arising from such conviction. The provisions of this paragraph (i) shall survive the termination of this Lease.

A-3

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350.

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

I, John Weinhardt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Unique Fabricating, Inc..;

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date: August 16, 2016	By:	/s/ John Weinhardt
		Name: John Weinhardt
		Title:  President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350.

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

I, Thomas Tekiele, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Unique Fabricating, Inc..;

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date: August 16, 2016	By:	/s/ Thomas Tekiele
		Name: Thomas Tekiele
		Title:  Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350.

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Under 18 U.S.C. section 1350, adopted by section 906 of the Sarbanes-Oxley Act of 2002, in connection with the attached periodic report, the undersigned each certify that (i) the periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: August 16, 2016	By:	/s/ John Weinhardt
		Name: John Weinhardt
		Title:  President and Chief Executive Officer
Date: August 16, 2016	By:	/s/ Thomas Tekiele
		Name: Thomas Tekiele
		Title:  Chief Financial Officer (Principal Financial and Accounting Officer)

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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Document and Entity Information - shares	6 Months Ended
	Jul. 03, 2016	Aug. 12, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Unique Fabricating, Inc.
Entity Central Index Key	0001617669
Document Type	10-Q
Document Period End Date	Jul. 03, 2016
Amendment Flag	false
Current Fiscal Year End Date	--01-01
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,700,823
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

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Consolidated Balance Sheets - USD ($)	Jul. 03, 2016	Jan. 03, 2016
Current assets
Cash and cash equivalents	$ 1,584,045	$ 726,898
Accounts receivable – net	26,649,319	20,480,186
Inventory – net	16,022,274	14,585,611
Prepaid expenses and other current assets:
Prepaid expenses and other	1,276,129	1,494,697
Refundable taxes	182,763	55,477
Deferred tax asset		1,063,721
Assets held for sale	2,033,327	2,033,327
Total current assets	47,747,857	40,439,917
Property, plant, and equipment – net	20,300,544	18,761,178
Goodwill	28,871,179	19,213,958
Intangible assets– net	25,820,620	20,139,213
Other assets
Investments – at cost	1,054,120	1,054,120
Deposits and other assets	125,172	120,742
Deferred tax asset	131,651
Deferred tax asset		0
Total assets	124,051,143	99,729,128
Current liabilities
Accounts payable	12,745,665	11,430,662
Current maturities of long-term debt	2,415,100	2,519,069
Accrued compensation	2,832,829	2,283,833
Other accrued liabilities	1,409,289	1,159,028
Other liabilities	10,848	0
Total current liabilities	19,413,731	17,392,592
Long-term debt – net of current portion	29,197,790	13,906,993
Line of credit-net	22,085,413	14,595,093
Other long-term liabilities
Deferred tax liability	4,545,204
Deferred tax liability		5,774,452
Other liabilities	181,179	46,874
Total liabilities	75,423,317	51,716,004
Stockholders’ Equity
Common stock, $0.001 par value – 15,000,000 shares authorized and 9,699,932 and 9,591,860 issued and outstanding at July 3, 2016 and January 3, 2016, respectively	9,700	9,592
Additional paid-in-capital	45,432,793	44,352,188
Retained earnings	3,185,333	3,651,344
Total stockholders’ equity	48,627,826	48,013,124
Total liabilities and stockholders’ equity	$ 124,051,143	$ 99,729,128

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Jul. 03, 2016	Jan. 03, 2016
Statement of Financial Position [Abstract]
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	9,699,932	9,591,860
Common stock, shares outstanding	9,699,932	9,591,860

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Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Income Statement [Abstract]
Net sales	$ 42,048,220	$ 35,672,173	$ 82,030,724	$ 68,102,680
Cost of sales	32,956,982	27,244,229	63,339,540	51,750,874
Gross profit	9,091,238	8,427,944	18,691,184	16,351,806
Selling, general, and administrative expenses	7,164,986	5,088,876	13,719,587	10,332,313
Restructuring expenses			35,054	0
Operating income	1,926,252	3,339,068	4,936,543	6,019,493
Non-operating income (expense)
Investment income	0	230	0	230
Other income (expense), net	(23,741)	7,027	(23,692)	14,321
Interest expense	(872,954)	(853,335)	(1,214,076)	(1,712,689)
Total non-operating expense, net	(896,695)	(846,078)	(1,237,768)	(1,698,138)
Income – before income taxes	1,029,557	2,492,990	3,698,775	4,321,355
Income tax expense	430,385	801,090	1,265,952	1,436,718
Net income	$ 599,172	$ 1,691,900	$ 2,432,823	$ 2,884,637
Net income per share
Basic earnings per share (in USD per share)	$ 0.06	$ 0.25	$ 0.25	$ 0.43
Diluted earnings per share (in USD per share)	0.06	0.24	0.25	0.41
Cash dividends declared per share (in USD per share)	$ 0.15	$ 0	$ 0.30	$ 0

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Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Total	Common Stock	Additional Paid-In Capital	Retained Earnings
Stockholders' Equity, beginning balance (shares) at Jan. 04, 2015	4,324,599
Stockholders' Equity, beginning balance at Jan. 04, 2015	$ 16,591,935	$ 4,325	$ 13,723,456	$ 2,864,154
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,884,637			2,884,637
Stock option expense	12,309		12,309
Reduction for accretion on redeemable stock	$ (1,364,031)			(1,364,031)
Stockholders' Equity, ending balance (shares) at Jun. 28, 2015	4,324,599
Stockholders' Equity, ending balance at Jun. 28, 2015	$ 18,124,850	4,325	13,735,765	4,384,760
Stockholders' Equity, beginning balance (shares) at Jan. 03, 2016	9,591,860
Stockholders' Equity, beginning balance at Jan. 03, 2016	$ 48,013,124	9,592	44,352,188	3,651,344
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,432,823			2,432,823
Stock option expense	$ 85,998		85,998
Exercise of warrants and options for common stock (shares)	37,275
Exercise of warrants and options for common stock	$ 103,989	37	103,952
Common stock issued for purchase of Intasco USA, Inc. (shares)	70,797
Common stock issued for purchase of Intasco USA, Inc.	$ 890,726	71	890,655
Cash dividends paid	$ (2,898,834)			(2,898,834)
Stockholders' Equity, ending balance (shares) at Jul. 03, 2016	9,699,932
Stockholders' Equity, ending balance at Jul. 03, 2016	$ 48,627,826	$ 9,700	$ 45,432,793	$ 3,185,333

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015
Cash flows from operating activities
Net income	$ 2,432,823	$ 2,884,637
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,507,750	1,739,541
Amortization of debt issuance costs	61,517	155,226
(Gain) loss on sale of assets	(717)	14,330
Loss on extinguishment of debt	60,202	0
Bad debt expense	(190,993)	(642)
Loss on derivative instrument	145,153	2,925
Stock option expense	85,998	12,309
Deferred income taxes	(394,800)	41,574
Changes in operating assets and liabilities that provided (used) cash:
Accounts receivable	(3,832,058)	(3,142,546)
Inventory	1,049,118	(1,243,984)
Prepaid expenses and other assets	161,046	(248,191)
Accounts payable	834,462	1,873,471
Accrued and other liabilities	419,501	39,534
Net cash provided by operating activities	3,339,002	2,128,184
Cash flows from investing activities
Purchases of property and equipment	(1,507,867)	(2,079,527)
Proceeds from sale of property and equipment	3,000	1,797
Acquisition of Intasco, net of cash acquired	(21,030,795)	0
Net cash used in investing activities	(22,535,662)	(2,077,730)
Cash flows from financing activities
Net change in bank overdraft	337,878	309,074
Proceeds from debt	32,000,000	0
Payments on debt and in-kind interest	(1,234,415)	(508,962)
Debt issuance costs	(514,441)	0
Proceeds from revolving credit facilities	7,634,630	1,479,466
Pay-off of debt assumed through business acquisitions	(15,375,000)	0
Expenses of in process equity offering	0	(571,803)
Post acquisition payments for Unique Fabricating	0	(755,018)
Proceeds from exercise of stock options and warrants	103,989	0
Distribution of cash dividends	(2,898,834)	0
Net cash provided by (used in) financing activities	20,053,807	(47,243)
Net increase (decrease) in cash and cash equivalents	857,147	3,211
Cash and cash equivalents – beginning of period	726,898	756,044
Cash and cash equivalents – end of period	1,584,045	759,255
Supplemental disclosure of cash flow Information – cash paid for
Interest	878,826	1,233,275
Income taxes	1,478,140	1,176,528
Supplemental disclosure of cash flow Information – non cash activities for
Common stock issued for purchase of Intasco USA, Inc.	890,726	0
Accretion on redeemable common stock	$ 0	$ 1,364,031

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Nature of Business and Significant Accounting Policies

6 Months Ended

Jul. 03, 2016

Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Nature of Business and Significant Accounting Policies

Nature of Business — UFI Acquisition, Inc. (UFI), a Delaware corporation, was formed on January 14, 2013, for the purpose of acquiring Unique Fabricating, Inc. and its subsidiaries (Unique Fabricating) (collectively, the “Company” or “Unique”) on March 18, 2013. The Company operates as one operating and reportable segment to fabricate and broker foam and rubber products, which are primarily sold to original equipment manufacturers (OEMs) and tiered suppliers in the automotive, appliance, water heater and heating, ventilation and air conditioning (HVAC) industries. In September 2014, UFI changed its name to Unique Fabricating, Inc. which is now the parent company of the consolidated group. As a result of the name change, the subsidiary previously named Unique Fabricating, Inc. became Unique Fabricating NA, Inc.

Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying Consolidated Financial Statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of such financial statements. The interim results for the periods presented may not be indicative of the Company's actual annual results.

Principles of Consolidation — The Consolidated Financial Statements include the accounts of the Company and all subsidiaries over which the Company exercises control. All intercompany transactions and balances have been eliminated upon consolidation.

Initial Public Offering—On July 7, 2015, the Company completed its initial public offering of 2,702,500 shares of common stock at a price to the public of $9.50 per share (the "IPO"), including 352,500 shares subject to an over-allotment option granted to the underwriters. After underwriting discounts, commissions, and approximate fees and expenses of the offering, as set forth in our registration statement for the IPO on Form S-1, the Company received net IPO proceeds of approximately $22.2 million. Of these proceeds the Company used a portion to pay all of the $13.1 million principal amount of our 16% senior subordinated note, together with accrued interest through the date of payment. The Company used the remaining proceeds to temporarily reduce borrowings under the revolver portion of its senior secured credit facility. The Company also issued to the underwriters warrants to purchase up to 141,000 shares of common stock, as additional compensation in the IPO. The warrants are exercisable at a per share exercise price equal to 125% of the initial public offering price of $9.50 per share, and can be exercised commencing 1 year from the date of the IPO, until the date 5 years from the date of the IPO. The warrants have an aggregate grant date fair value of $336,300 and have been classified as equity and incremental direct costs associated with the IPO.

Fiscal Years — The Company’s quarterly periods end on the Sunday closest to the end of the quarterly period. The quarterly and year to date period, which was 13 and 26 weeks, respectively, during 2016, ended on July 3, 2016, and the quarterly and year to date period, which was 13 and 25 weeks, respectively, during 2015, ended on June 28, 2015. Fiscal year 2015 ended on Sunday, January 3, 2016.

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

Accounts Receivable — Accounts receivable are stated at the invoiced amount and do not bear interest. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in the existing accounts receivable. Management determines the allowance based on historical write-off experience and an understanding of individual customer payment history and financial condition. Management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered. The allowance for doubtful accounts was $716,502 and $734,230 at July 3, 2016 and January 3, 2016, respectively.

Inventory — Inventory is stated at the lower of cost or market, with cost determined on the first in, first out method (FIFO). Inventory acquired as part of a business combination is recorded at its estimated fair value at the time of the business combination. The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments.

Valuation of Long-Lived Assets — The carrying value of long-lived assets held for use is periodically evaluated when events or circumstances warrant such a review. The carrying value of a long-lived asset held for use is considered impaired when the anticipated separately identifiable undiscounted cash flows from the asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The Company determined that no impairment indicators were present and all originally assigned useful lives remained appropriate during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Property, Plant, and Equipment — Property, plant, and equipment purchases are recorded at cost. Property, plant, and equipment acquired as part of a business combination are recorded at estimated fair value at the time of the business combination. Depreciation is calculated using the straight line method over the estimated useful life of each asset. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the period of the related leases. Upon retirement or disposal, the initial cost or valuation and accumulated depreciation are removed from the accounts, and any gain or loss is included in net income. Repair and maintenance costs are expensed as incurred.

Intangible Assets — The Company does not hold any intangible assets with indefinite lives. Identifiable intangible assets recognized as part of a business combination are recorded at their estimated fair value at the time of the business combination. Acquired intangible assets subject to amortization are amortized on a straight line basis, which approximates the pattern in which the economic benefit of the respective intangible is realized, over their respective estimated useful lives. Amortizable intangible assets are reviewed for impairment whenever events or circumstances indicate that the related carrying amount may be impaired. The remaining useful lives of intangible assets are reviewed to determine whether events and circumstances warrant a revision to the remaining period of amortization. The Company determined that no impairment indicators were present and all originally assigned useful lives remained appropriate during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Goodwill — Goodwill represents the excess of the acquisition cost of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed from business combinations at the date of acquisition. Goodwill is not amortized, but rather is assessed at least on an annual basis for impairment. If it is determined that it is more likely than not that the fair value is greater than the carrying value of a reporting unit then a qualitative assessment may be used for the annual impairment test. Otherwise, a two-step process is used. The first step requires estimating the fair value of each reporting unit compared to its carrying value. If the carrying value exceeds the estimated fair value, a second step is performed in order to determine the implied fair value of the goodwill. If the carrying value of the goodwill exceeds its implied fair value then goodwill is deemed impaired and is written down to its implied fair value.

There were no impairment charges recognized during the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively.

Debt Issuance Costs — Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as debt discount, as a reduction of the noted debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt.

At July 3, 2016 and January 3, 2016, debt issuance costs were $336,408 and $192,098, respectively, while amounts paid to or on behalf of lenders presented as debt discounts were $302,210 and $98,452, respectively. On April 29, 2016, the Company refinanced its existing term loan and revolving debt facility with new term loans and a new revolving debt facility which are further described in Note 6. The Company reviewed this refinancing for extinguishment accounting and concluded that $60,202 of the $160,111 remaining issuance costs not amortized on the old revolving debt facility qualified for extinguishment and were recognized as a loss on extinguishment immediately. The remaining $99,909 of unamortized issuance costs not extinguished on the old revolving debt facility and all of the $92,508 of remaining unamortized debt discounts on the old term loan did not meet extinguishment accounting and were therefore carried forward to the new revolving debt facility and term loans.

In July of 2015, the 16% senior subordinated note was entirely paid off with the IPO proceeds. On the date paid off, $386,552 of debt discounts remained to be amortized. The Company concluded that the 16% senior subordinated note and related debt discounts qualified for extinguishment accounting and the debt discounts were recognized as a loss on extinguishment immediately in the third quarter of 2015. The extinguishment was recognized as part of interest expense in the consolidated statements of operations.

Amortization expense has been recognized as a component of interest expense which includes both debt issuance costs and debt discounts in the amounts of $36,737 and $61,517 for the 13 and 26 weeks ended July 3, 2016, respectively, and $80,956 and $155,226 for the 13 and 25 weeks ended June 28, 2015, respectively.

Investments — Investments in entities in which the Company has less than a 20 percent interest or is not able to exercise significant influence are carried at cost. Dividends received are included in income, except for those dividends received in excess of the Company’s proportionate share of accumulated earnings, which are applied as a reduction of the cost of the investment. Impairment losses due to a decline in the value of the investment that is other than temporary are recognized when incurred. No dividend income or impairment loss was recognized for the 13 and 26 weeks ended July 3, 2016, respectively, and 13 and 25 weeks ended June 28, 2015, respectively.

Accounts Payable — Under the Company’s cash management system, checks issued but not yet presented to the Company’s bank frequently result in overdraft balances for accounting purposes and are classified as accounts payable on the consolidated balance sheets. Accounts payable included $2,050,139 and $2,403,498 of checks issued in excess of available cash balances at July 3, 2016 and January 3, 2016, respectively.

Stock Based Compensation — The Company accounts for its stock based compensation using the fair value of the award estimated at the grant date of the award. The Company estimates the fair value of awards, consisting of stock options, using the Black Scholes option pricing model. Compensation expense is recognized in earnings using the straight line method over the vesting period, which represents the requisite service period.

Revenue Recognition — Revenue is recognized by the Company upon shipment to customers when the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sale price is fixed and determinable. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Shipping and Handling — Shipping and handling costs are included in costs of sales as they are incurred.

Income Taxes — A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the period. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between financial reporting and tax accounting measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized.

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement with the relevant tax authority. The Company assesses all tax positions for which the statute of limitations remain open. The Company had no unrecognized tax benefits as of July 3, 2016 and January 3, 2016. The Company recognizes any penalties and interest when necessary as income tax expense. There were no penalties or interest recorded during the 13 and 26 and 13 and 25 weeks ended July 3, 2016 and June 28, 2015, respectively.

Foreign Currency Adjustments — The Company’s functional currency for all operations worldwide is the United States dollar. Nonmonetary assets and liabilities of foreign operations are remeasured at historical rates and monetary assets and liabilities are remeasured at exchange rates in effect at the end of each reporting period. Income statement accounts are remeasured at average exchange rates for the year. Gains and losses from remeasurement of foreign currency financial statements into United States dollars are classified in operating income in the consolidated statements of operations.

Concentration Risks — The Company is exposed to various significant concentration risks as follows:

Customer and Credit — During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, respectively, the Company’s sales were derived from customers principally engaged in the North American automotive industry. Company sales directly and indirectly to General Motors Company (GM), FCA US, LLC (Chrysler), and Ford Motor Company (Ford) as a percentage of total net sales were: 12, 11, and 13 percent, respectively during the 13 weeks ended July 3, 2016; 12, 12, and 13 percent, respectively, during the 26 weeks ended July 3, 2016; 15, 15, and 15 percent, respectively during the 13 weeks ended June 28, 2015; and 15, 16, and 15 percent, respectively, during the 25 weeks ended June 28, 2015. No Tier 1 supplier represented more than 10 percent of direct Company sales for any period noted above. No suppliers accounted for more than 10 percent of direct accounts receivable as of July 3, 2016 and January 3, 2016.

Labor Markets — At July 3, 2016, of the Company’s hourly plant employees working in the United States manufacturing facilities, 29 percent were covered under a collective bargaining agreement which expires in August 2016 while another 5 percent were covered under a separate agreement that expires in January 2017.

Foreign Currency Exchange — The expression of assets and liabilities in a currency other than the Company's functional currency, which is the United States dollar, gives rise to exchange gains and losses when such assets and obligations are paid in another currency. Foreign currency exchange rate adjustments (i.e., differences between amounts recorded and actual amounts owed or paid) are reported in the consolidated statements of operations as the foreign currency fluctuations occur. Foreign currency exchange rate adjustments are reported in the consolidated statements of cash flows using the exchange rates in effect at the time of the cash flows. At July 3, 2016, the Company’s exposure to assets and liabilities denominated in another currency was not significant. To the extent there is a fluctuation in the exchange rates, the amount of local currency to be paid or received to satisfy foreign currency obligations in 2016 may increase or decrease.

International Operations — The Company manufactures and sells products outside of the United States primarily in Mexico and Canada. Foreign operations are subject to various political, economic and other risks and uncertainties inherent in foreign countries. Among other risks, the Company’s operations are subject to the risks of: restrictions on transfers of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; political conditions; and governmental regulations. During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, 11, 11, 12 and 12 percent, respectively, of the Company’s production occurred in Mexico. During the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015, 8, 4, 0, and 0 percent, respectively, of the Company's production occurred in Canada. Sales derived from customers located in Mexico, Canada, and other foreign countries were 12, 8, and 2 percent, respectively during the 13 weeks ended July 3, 2016, 12, 6, and 1 percent, respectively during the 26 weeks ended July 3, 2016, 13, 4, and 2 percent, respectively during the 13 weeks ended June 28, 2015, and 13, 4, and 1 percent, respectively, during the 25 weeks ended June 28, 2015, of the Company’s total sales.

Derivative Financial Instruments — All derivative instruments are required to be reported on the consolidated balance sheets at fair value unless the transactions qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. See Note 7 for further information regarding the Company's derivative instrument makeup.

Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (the “ASU”). Previously, such costs were required to be presented as a non-current asset in an entity's balance sheet and amortized into interest expense over the term of the related debt instrument. The changes implemented by the ASU require that debt issuance costs be presented in the entity's balance sheet as a direct deduction from the carrying value of the related debt liability. The amortization of debt issuance costs remains unchanged per the ASU. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied this change to the current and prior periods in the financial statements for comparable purposes. Debt issuance costs are no longer disclosed separately by the Company in the balance sheet and are now shown as a direct deduction from the carrying value of the related debt liability.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes most of the existing guidance on revenue recognition in ASC Topic 605, Revenue Recognition, and establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606): Deferral of the Effective Date, to defer implementation of ASU 2014-09 by one year. The guidance is now currently effective for fiscal years beginning after December 15, 2018 and is to be applied retrospectively at the entity's election either to each prior reporting period presented or with the cumulative effect of application recognized at the date of initial application. The ASU allows for early adoption for fiscal years beginning after December 15, 2016, and the Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The ASU requires an entity to measure inventory at the lower of cost and net realizable value, simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2016, and is to be applied prospectively with early adoption permitted.The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Currently, deferred income tax liabilities and assets are required to be separated into current and non-current amounts in an entity's balance sheet. The changes implemented by the ASU require that all deferred income tax liabilities and assets are to be classified as non-current on the balance sheet. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods only in the consolidated financial statements. Deferred taxes are now shown as non-current by the Company in the balance sheet.

In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in Topic 850. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with current guidance. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09), to simplify the accounting for share-based payment transactions. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017. The Company early adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods in the consolidated financial statements. Excess tax benefits are no longer disclosed in the consolidated statements of cash flows as a result of this early adoption.

We do not expect that any other recently issued accounting pronouncements will have a material impact on our consolidated financial statements.

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Business Combinations

6 Months Ended

Jul. 03, 2016

Business Combinations [Abstract]

Business Combinations

Business Combinations

2016

On April 29, 2016, Unique-Intasco Canada, Inc. (the “Canadian Buyer”), a newly formed subsidiary of the Company, acquired the business and substantially all of the assets of Intasco Corporation, a Canadian based tape manufacturer, for a purchase price of $21,049,045 in cash at closing. On the same date, Unique Fabricating NA, Inc. (the “US Buyer”), an existing subsidiary of the Company, purchased 100% of the outstanding capital stock of Intasco USA, Inc., a United States based tape manufacturer, for a purchase price of $890,726 paid by the issuance of 70,797 shares of the Company's common stock. These shares were issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended. A portion of the purchase price is being held in escrow to fund the obligations of Intasco Corporation and Intasco USA, Inc., (together “Intasco”) and a related party to indemnify the Canadian Buyer and US Buyer against certain claims, losses, and liabilities. The purchase agreement included a potential purchase price adjustment provision based on the actual working capital acquired on the day of closing as compared to what was originally estimated at closing. On the date of closing, the Company paid an estimated working capital adjustment of $126,047 to Intasco, which is included in the total cash consideration paid above. Subsequent to the end of the quarter, during August 2016, Intasco paid the Company $212,823 for the actual final working capital adjustment. This final actual working capital settlement is included in the table below. The cash purchase price was paid with borrowings under a new senior credit facility which replaced the Company's existing facility as further described in Note 6. The Company incurred transaction costs of $848,252 related to the acquisition of Intasco. The acquisition significantly broadens the Company's solution offering, production capabilities, and potentially expands its reach into new markets.

In connection with the business combination, Intasco terminated the leases it had with an affiliated entity for its operating facilities in the United States and Canada and the Company entered into new leases for the same facilities. The terms of the Company's lease in the United States provides for a term of two years with monthly rental payments of $4,000 beginning on May 1, 2016 and $4,080 beginning on May 1, 2017. The terms of the Company's lease in Canada provides for a term of five years with monthly rental payments of $16,750 CAD beginning on May 1, 2016, $17,085 CAD beginning on May 1, 2017, and $17,427 CAD beginning on May 1, 2019.

The following table summarizes the preliminary acquisition date fair values of the assets acquired and liabilities assumed.

Cash	$	18,250
Accounts receivable	2,146,082
Inventory	2,485,781
Other current assets	74,194
Property, plant, and equipment	861,491
Identifiable intangible assets	7,316,694
Accounts payable and accrued liabilities	(716,080		)
Deferred tax liability	(97,622		)
Total identifiable net assets	12,088,790
Goodwill	9,657,221
Total	21,746,011

The goodwill arising from the acquisition consists largely of Intasco's reputation, trained employees, and other unique features that cannot be associated with a specific identifiable asset. Of the total amount of goodwill recognized, $7,267,507 is expected to be deductible for tax purposes. The Company also recognized intangible assets as part of the acquisition which consisted of customer contracts, trade names, and unpatented technology. For further detail of the Company's intangibles please refer to Note 5.

The consolidated operating results for the 13 and 26 weeks ended July 3, 2016 included the operating results of Intasco from April 29, 2016. Intasco's revenue included in the accompanying statement of operations for both the 13 and 26 weeks ended July 3, 2016, totaled $3,684,008, from the date of the acquisition. Intasco's net income included in the accompanying statement of operations for both the 13 and 26 weeks ended July 3, 2016, totaled $(302,411), from the date of acquisition. The loss is primarily due to $521,071 of transaction costs incurred by the Company being recorded on Intasco's financial statements.

2015

On August 31, 2015, the Company, through a newly created subsidiary, Unique Molded Foam Technologies, Inc., acquired substantially all of the assets of Great Lakes Foam Technologies, Inc. (“Great Lakes”) for total cash consideration of $11,947,392, after all adjustments described below. The purchase agreement included a potential purchase price adjustment provision based on the actual working capital acquired on the day of closing as compared to what was originally estimated at closing. On the date of closing, the Company paid a total purchase price of $12,000,000 less the estimated working capital adjustment of $180,009 owed to the Company by Great Lakes. During November 2015, the Company paid Great Lakes $127,401 for the actual working capital adjustment true-up once the actual working capital was determined. This acquisition was financed through the Company's revolving line of credit without the need for further revisions to any debt or equity agreements. The Company incurred costs of $415,849 related to the acquisition of Great Lakes. The acquisition allows the Company to strengthen its existing product offerings and potentially enable it to access new customers and increase sales to certain of its existing customers.

In connection with the business combination, Great Lakes terminated the lease it had with an affiliated entity for its operating facility and the Company entered into a new lease for the same facility. The terms of the Company's lease provide for monthly rental payments of $7,500 for five years beginning on August 31, 2015.

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed.

Accounts receivable	$	1,001,005
Inventory	1,115,809
Deferred tax assets	1,468
Other current assets	2,500
Property, plant, and equipment	810,001
Identifiable intangible assets	5,915,000
Accounts payable and accrued liabilities	(928,933		)
Total identifiable net assets	7,916,850
Goodwill	4,030,542
Total	$	11,947,392

The goodwill arising from the acquisition consists largely of Great Lakes reputation, trained employees, and other unique features that cannot be associated with a specific identifiable asset. The Company also recognized intangible assets as part of the acquisition which consisted of customer contracts and non-compete agreements. For further detail of the Company's intangibles please refer to Note 5.

The consolidated operating results for the 13 and 25 weeks ended June 28, 2015 does not include any operating results for Great Lakes as the acquisition did not take place until August 31, 2015.

The following pro forma supplementary data for the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015 gives effect to the acquisition of Intasco as if it had occurred on January 5, 2015 (the first day of the Company's 2015 fiscal year) and Great Lakes as if it had occurred on December 30, 2013 (the first day of the Company’s 2014 fiscal year). The pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed and does not project the Company’s results of operations for any future date.

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Net sales	$	43,509,852	$	42,742,615	$	87,877,251	$	82,243,570
Net income	$	1,151,033	$	1,605,703	$	3,028,561	$	3,495,001
Net income per common share – basic	$	0.12	$	0.24	$	0.31	$	0.52
Net income per common share – diluted	$	0.12	$	0.23	$	0.31	$	0.50

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Inventory

6 Months Ended

Jul. 03, 2016

Inventory Disclosure [Abstract]

Inventory

Inventory

Inventory consists of the following:

	July 3, 2016		January 3, 2016
Raw materials	$	9,569,798	$	8,048,747
Work in progress	684,983		643,207
Finished goods	5,767,493		5,893,657
Total inventory	$	16,022,274	$	14,585,611

Included in inventory are assets located in Mexico with a carrying amount of $2,218,703 at July 3, 2016 and $1,788,902 at January 3, 2016, and assets located in Canada with a carrying amount of $1,578,314 at July 3, 2016 and $0 at January 3, 2016.

The inventory acquired in the 2016 acquisition of Intasco included a fair value adjustment of $318,518. At July 3, 2016$39,352 of this fair value adjustment remained in inventory while $279,166 was included in cost of goods sold during the 13 and 26 weeks ended July 3, 2016.

The inventory acquired in the 2015 acquisition of Great Lakes included a fair value adjustment of $146,191. At July 3, 2016 and January 3, 2016, $0 of this fair value adjustment remained in inventory while $0 was included in cost of goods sold during the 13 and 26 weeks ended July 3, 2016. Also, $0 was included in cost of goods sold during the 13 and 25 weeks ended June 28, 2015.

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Property, Plant, and Equipment

6 Months Ended

Jul. 03, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant, and Equipment

Property, plant, and equipment consists of the following:

	July 3, 2016		January 3, 2016		Depreciable Life – Years
Land	$	1,663,153	$	1,663,153
Buildings	7,541,976		7,541,976		23 – 40
Shop equipment	11,958,416		10,291,903		7 – 10
Leasehold improvements	876,949		824,869		3 – 10
Office equipment	1,010,194		682,884		3 – 7
Mobile equipment	192,521		135,501		3
Construction in progress	893,532		588,343
Total cost	24,136,741		21,728,629
Accumulated depreciation	3,836,197		2,967,451
Net property, plant, and equipment	$	20,300,544	$	18,761,178

Depreciation expense was $445,108 and $872,463 for the 13 and 26 weeks ended July 3, 2016, respectively, and $319,547 and $635,266 for the 13 and 25 weeks ended June 28, 2015.

Included in property, plant, and equipment are assets located in Mexico with a carrying amount of $1,152,718 and $637,435 at July 3, 2016 and January 3, 2016, respectively, and assets located in Canada with a carrying amount of $771,069 and $0 at July 3, 2016 and January 3, 2016, respectively.

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Intangible Assets

6 Months Ended

Jul. 03, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Intangible assets of the Company consist of the following at July 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	26,523,065	$	6,531,648	8.16
Trade names	4,673,044		723,012		16.43
Non-compete agreements	1,161,790		764,424		2.53
Unpatented technology	$	1,534,787	$	52,982	5.00
Total	$	33,892,686	$	8,072,066

Intangible assets of the Company consist of the following at January 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	20,948,881	$	5,195,109	8.73
Trade names	4,465,322		599,734		20.00
Non-compete agreements	1,161,790		641,937		2.53
Total	$	26,575,993	$	6,436,780

The weighted average amortization period for all intangible assets is 8.96 years. Amortization expense for intangible assets totaled $930,286 and $1,635,287 for the 13 and 26 weeks ended July 3, 2016, and $572,954 and $1,104,275 for the 13 and 25 weeks ended June 28, 2015.

Estimated amortization expense is as follows:

2016	$	2,060,828
2017	4,121,655
2018	4,070,321
2019	3,945,264
2020	3,913,627
Thereafter	7,708,925
Total	$	25,820,620

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Long-term Debt

6 Months Ended

Jul. 03, 2016

Debt Disclosure [Abstract]

Long-term Debt

Long-term Debt

Old Senior Credit Facility

The Company had a senior credit facility with a bank it entered into on March 18, 2013, in conjunction with the acquisition of Unique Fabricating, and subsequently amended. The facility initially provided for a $12.5 million revolving line of credit (“Revolver”) and an $11.0 million term loan facility (“Term Loan”). On December 18, 2013, in conjunction with the acquisition of Prescotech Holdings Inc. (“PTI”), the Company entered into an amendment with its bank under this senior credit facility. The amendment increased the Revolver to $15.0 million and the Term Loan to $20.0 million. In October 2014, an additional amendment increased the Revolver to $19.5 million, and the increased amount available was used to construct a second facility in LaFayette, Georgia. The total construction costs were $4.4 million which was all funded by the Revolver. The total amount was capitalized, including interest costs of $0.1 million, and depreciated over the useful lives of the various assets. In December 2015, an additional amendment increased the Revolver capacity to $25.0 million. On April 29, 2016, in conjunction with the acquisition of Intasco, this senior credit facility was repaid and terminated and replaced with a new senior credit facility which is described below. On the date of termination, $15.4 million outstanding under the Term Loan, and $17.3 million outstanding under the Revolver were repaid.

As of January 3, 2016, $14,787,191 was outstanding under the Revolver. This amount was gross of debt issuance costs which are further disclosed in Note 1. Borrowings under the Revolver were subject to a borrowing base, bore interest at the 30 day LIBOR plus a margin that ranged from 2.75 percent to 3.25 percent (an effective rate of 3.5000 percent at January 3, 2016 ), and were secured by substantially all of the Company’s assets. The half percent range per annum on the Term Loan, as noted in the table below, and Revolver was determined quarterly based on the senior leverage ratio. The Revolver was going to mature on December 18, 2017.

The Company also had a senior subordinated note payable with a private lender effective March 18, 2013, as amended. The holder of the senior subordinated note payable also held equity interests of the Company, and therefore, was a related party. As disclosed in Note 1, the Company used the net proceeds from the IPO to repay on July 7, 2015, the $13.1 million principal amount of the senior subordinated note, together with accrued interest through the date of payment.

New Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as syndication agent, and other lenders, entered into a credit agreement (the “New Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.0 million. The New Credit Agreement is a senior secured credit facility and consists of a revolving line of credit of up to$30.0 million (the “New Revolver”) to the US Borrower, a $17.0 million principal amount Term Loan (the “US Term Loan”) to the US Borrower, and a $15.0 million principal amount Term Loan (the “CA Term Loan”) to the CA Borrower. At Closing, the US Term Loan and the CA Term Loan were fully funded and the US Borrower borrowed approximately $22.9 million under the New Revolver. The borrowings were used to finance the acquisition of Intasco, including working capital adjustments and amounts paid into escrow, and to repay the Company’s existing senior credit facility, which was terminated as noted above.

The New Revolver, US Term Loan, and CA Term Loan all mature on April 29, 2021 and bear interest at the Company's election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or ii) the LIBOR rate, plus an applicable margin ranging from 1.75% to 2.50% in the case of the Base Rate and 2.75% to 3.50% in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds measured quarterly.

In addition, the New Credit Agreement allows for increases in the principal amount of the New Revolver and US and CA Term Loans not to exceed a $10.0 million principal amount, in the aggregate, provided that before and after giving effect to the proposed increase (and any transactions to be consummated using proceeds of the increase) the total leverage and debt service coverage ratio do not exceed specified amounts. The New Credit Agreement also provides for the issuance of letters of credit with, a face amount of up to a $2.0 million in the aggregate, provided that any letter of credit that is issued will reduce availability under the New Revolver.

As of July 3, 2016, $22,421,821 was outstanding under the New Revolver. This amount is gross of debt issuance costs which are further described in Note 1. The New Revolver had an effective interest rate of 3.9603% percent per annum at July 3, 2016, and is secured by substantially all of the Company’s assets. At July 3, 2016, the maximum additional available borrowings under the Revolver were $7,478,179, which includes a reduction for a $100,000 letter of credit issued for the benefit of the landlord of one of the Company’s leased facilities. The maximum amount available was further subject to borrowing base restrictions.

Long term debt consists of the following:

	July 3, 2016		January 3, 2016
US Term Loan, payable to lenders in quarterly installments of $318,750 through March 31, 2018, $425,000 through March 31, 2019, and $531,250 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $202,368 from costs paid to or on behalf of the lenders.	$	16,478,882	$	—
CA Term Loan, payable to lenders in quarterly installments of $281,250 through March 31, 2018, $375,000 through March 31, 2019, and $468,750 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $99,842 from costs paid to or on behalf of the lenders.	$	14,618,908	$	—
Term Loan, payable to a bank in quarterly installments of $500,000 through December 31, 2015, $625,000 through December 31, 2016, $750,000 through September 30, 2017, with a lump sum due at maturity. Interest is paid on a quarterly basis at an annual rate of LIBOR plus a margin of 3.00 percent to 3.50 percent (an effective rate of 3.567 percent per annum at January 3, 2016). The Term Loan was originally due on March 15, 2018, but was amended to be due December 18, 2017, and was secured by substantially all of the Company’s assets. At January 3, 2016, the balance of the Term Loan is presented net of a debt discount of $98,452 from costs paid to or on behalf of the lender.	$	—	$	15,901,548

Note payable to the seller of Chardan which is unsecured and subordinated to the New Credit Agreement. Interest accrues monthly at an annual rate of 6 percent. The note payable is due in full on February 6, 2019.	500,000		500,000
Other debt	15,100		24,514
Total debt excluding Revolver	31,612,890		16,426,062
Less current maturities	2,415,100		2,519,069
Long-term debt – Less current maturities	$	29,197,790	$	13,906,993

The New Credit Agreement contains customary negative covenants and requires that the Company comply with various financial covenants including a total leverage ratio and debt service coverage ratio, as defined. As of July 3, 2016, the Company was in compliance with these financial covenants. As of January 3, 2016, the Company was in compliance with all financial covenants under the old senior credit facility. Additionally, the US Term Loan and CA Term Loan contains a clause, effective January 1, 2017, that requires an excess cash flow payment to be made if the Company’s cash flow exceeds certain thresholds as defined by the New Credit Agreement and certain performance thresholds are not met.

Maturities on the Company’s New Revolver and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows:

2016	$	1,209,655
2017	2,405,445
2018	3,000,000
2019	4,300,000
2020	4,000,000
Thereafter	39,421,821
Total	54,336,921
Discounts	(302,210		)
Debt issuance costs	(336,408		)
Total debt – Net	$	53,698,303

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Derivative Financial Instruments

6 Months Ended

Jul. 03, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Swap

The Company holds a derivative financial instrument, in the form of an interest rate swap, as required by its New Credit Agreement, for the purpose of hedging certain identifiable transactions in order to mitigate risks relating to the variability of future earnings and cash flows caused by interest rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The interest rate swap is recognized in the accompanying consolidated balance sheets at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized currently in net income as interest expense in the consolidated statements of operations.

Effective January 17, 2014, in connection with the refinancing of the old senior credit facility during December 2013, the Company entered into an interest rate swap which required the Company to pay a fixed rate of 1.27 percent while receiving a variable rate based on the one month LIBOR for a net monthly settlement based on the notional amount which began immediately. The notional amount began at $10,000,000 and decreased by $250,000 each quarter until March 31, 2016, when it began decreasing by $312,500 per quarter until the stated expiration date on January 31, 2017. At January 3, 2016, the fair value of this old interest rate swap was ($46,874), and was included in other long-term liabilities in the consolidated balance sheets. The Company paid $16,113 and $33,094 in net monthly settlements in the 13 and 26 weeks ended July 3, 2016, respectively, and $30,760 and $46,712 for the 13 and 25 weeks ended June 28, 2015, respectively. Both the change in fair value and the monthly settlements were included in interest expense in the consolidated statements of operations.

Effective June 30, 2016, as required under the new credit facility entered into during April 2016 as discussed in Note 6, the Company entered into a new interest rate swap which requires the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount beginning immediately. This terminated the old swap entered into on January 17, 2014. The notional amount at the effective date was $16,681,250 and decreases by $318,750 each quarter until June 30, 2017, and begins decreasing by $425,000 per quarter until June 29, 2018, when it begins decreasing by $531,250 per quarter until it expires on June 28, 2019. At July 3, 2016, the fair value of this new interest rate swap was $(181,179), and was included in in other long-term liabilities in the consolidated balance sheets. There were no payments by the Company with respect to the interest rate swap for both the 13 and 26 weeks ended July 3, 2016. Both the change in fair value and the monthly settlements were included in interest expense in the consolidated statements of operations.

Foreign Currency Forward Contract

Effective June 29, 2016, the Company entered into a foreign currency forward contract to hedge the Mexican Peso. The forward contract has an equivalent USD notional amount of $3,300,000 and expires on June 30, 2017. The Company is exposed to market risk, including fluctuations in foreign currency exchange rates which may result in cash flow risks, and as a result from time to time will enter into forward contracts to mitigate risks relating to the variability of future earnings and cash flows caused by foreign currency rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The foreign currency forward contract is recognized in the accompanying consolidated balance sheets at its fair value and monthly settlement payments due on the foreign currency forward contract and changes in its fair value are recognized currently in net income as gain/losses on foreign currency exchange (which is part of other income (expense), net) in the consolidated statements of operations. At July 3, 2016, the fair value of this new foreign currency forward contract was $(10,848), which at July 3, 2016 was included in other short-term liabilities in the consolidated balance sheets. There were no payments by the Company with respect to the foreign currency forward contract for both the 13 and 26 weeks ended July 3, 2016 .

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Restructuring

6 Months Ended

Jul. 03, 2016

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

Unique's restructuring activities are undertaken as necessary to implement management's strategy, streamline operations, take advantage of available capacity and resources, and achieve net cost reductions. The restructuring activities generally relate to realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, either in the normal course of business or pursuant to specific restructuring programs.

On October 27, 2015, the Company announced the planned closure of its manufacturing facility located in Murfreesboro, Tennessee that resulted in a workforce reduction of approximately 30 employees. The planned closure of the Murfreesboro facility was effective in the fourth quarter of 2015 and completed in January 2016. The action was necessary due to the tight labor market in Murfreesboro and the struggle to staff production levels to meet the ongoing growth strategy for Murfreesboro's respective products manufactured at the plant. In order to ensure the Company's ability to service its customers at the increasing volumes projected for the future, the Company decided to move existing Murfreesboro production including equipment to the Company's other manufacturing facilities in Evansville, Indiana and LaFayette, Georgia. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as the closing does not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The Company reversed severance related costs which had been previously recorded as a result of this plant closure in the amount of $0 in the 13 weeks ended July 3, 2016 and $(51,951) in the 26 weeks ended July 3, 2016. The amount of other costs incurred associated with this plant closure, which primarily consisted of moving existing production equipment at Murfreesboro to other facilities was $0 in the 13 weeks ended July 3, 2016 and $87,005 in the 26 weeks ended July 3, 2016. Further expected charges as of July 3, 2016, are $0.0 million related to severance costs and other costs. All of these costs were recorded to the restructuring expense line in continuing operations in the Company's consolidated statement of operations. The Company also intends to sell the building in Murfreesboro, which the Company owns, which has a current net book value of $2,033,327 and a current estimated selling price of approximately $2,750,000. The building qualifies as held for sale, is expected to be sold in the next year, and is presented properly as such in the consolidated balance sheets as a current asset.

The table below summarizes the activity in the restructuring liability for the 26 weeks ended July 3, 2016.

	Employee Termination Benefits Liability			Other Exit Costs Liability			Total
Accrual balance at January 3, 2016	$	190,864		$	63,327		$	254,191
Provision for estimated expenses incurred during the year	(51,951		)	87,005			35,054
Payments made during the year	(138,913		)	(150,332		)	(289,245		)
Accrual balance at July 3, 2016	$	—		$	—		$	—

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Redeemable Common Stock

6 Months Ended

Jul. 03, 2016

Temporary Equity [Abstract]

Redeemable Common Stock

Redeemable Common Stock

On March 18, 2013, in conjunction with the acquisition of Unique Fabricating, and on December 18, 2013, in conjunction with the acquisition of PTI, the Company issued shares of common stock to its subordinated lender. The 1,415,400 shares issued to the subordinated lender included features for the shares to be redeemed at their fair value on the sixth or seventh anniversary of the purchase or when the founders group no longer owned 75 percent of the shares originally purchased. These shares were accounted for as redeemable common stock due to the redemption feature being outside of the Company’s control. These shares were recorded initially using their net proceeds and were adjusted to their redemption value each period using a ratable allocation based on the Company’s estimate of the redemption date and fair value of the shares. The Company accreted the redemption value of these shares over the estimated redemption period to the earliest known redemption date with any changes in estimates accounted for prospectively. However, reductions in the redemption value were only recorded to the extent of previously recorded increases.

On January 14, 2013, the Company sold 999,999 shares of common stock for $0.167 per share to a group of founding shareholders. An agreement that existed before the closing of the Company's IPO required the Company to redeem these shares if the Company were sold, liquidated or completed an initial public offering for less than $4 per share. These shares were accounted for as redeemable common stock due to the redemption feature being outside of the Company’s control. These shares were recorded initially using their proceeds of $0.167 per share and there was not any accretion of these shares from this initial value because they were already recorded at their redemption value. The redemption value of the shares was $166,667.

Effective upon the closing of the IPO in July of 2015, the Company’s 999,999 shares issued to the founder group at $0.167 per share were no longer redeemable as the IPO was completed at a price of more than $4 per share and the Company was no longer required to purchase these shares. Furthermore, the 1,415,400 shares issued to the subordinated lender were also no longer redeemable, effective upon the closing of the IPO, as the subordinated lender agreed to terminate its right to require the Company to repurchase its shares in exchange for the Company granting it certain registration rights. As a result, all of the shares included in redeemable common stock were reclassified to common stock and amounts attributable to redeemable common stock were allocated to common stock at par value and additional paid-in-capital.

As of June 28, 2015 the redemption value of the redeemable shares was estimated to be $13,446,300 which was more than the initial proceeds. As a result, $1,364,031 of accretion was recorded in the period ended June 28, 2015. The redemption value was calculated based on an internal methodology, which was based on calculating Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) multiples based on enterprise values of selected public companies that are comparable to the Company. An estimated EBITDA multiple was then determined for the Company and used to calculate the enterprise value and thereby the per share value used in the redemption value.

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Stock Incentive Plans

6 Months Ended

Jul. 03, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Incentive Plans

Stock Incentive Plans

2013 Stock Incentive Plan

The Company’s board of directors approved a stock incentive plan (the “Plan”) in 2013. The Plan permits the Company to grant 495,000 non statutory or incentive stock options to the employees, directors and consultants of the Company. 495,000 shares of unissued common stock are required to be reserved for the Plan. The board of directors has the authority to determine the participants to whom stock options shall be awarded as well as any restrictions to be placed upon the awards. The exercise price cannot be less than the fair value of the underlying shares at the time the stock options are issued and the maximum length of an award is ten years.

On July 17, 2013 and January 1, 2014, the board of directors approved the issuance of 375,000 and 120,000 non statutory stock option awards, respectively to employees of the Company with an exercise price of $3.33 with a weighted average grant date fair value of $86,450 and $42,000 respectively. On April 29, 2016 the Company issued 7,200 non statutory stock option awards to employees of the Company with an exercise price of $12.58 with a weighted average grant date fair value of $20,160. All 3 tranches of grants of the awards vest 20 percent on the grant date and an additional 20 percent on each of the first, second, third and fourth anniversaries thereafter. Vested awards can only be exercised while the participants are employed by the Company. Upon termination, the Company may repurchase the vested awards at their fair value (or their exercise price if terminated for cause) prior to their exercise.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		January 1, 2014		July 17, 2013
Expected volatility	40.00	%	34.00	%	34.00	%
Dividend yield	5.00	%	—	%	—	%
Expected term (in years)	5		4		4
Risk-free rate	1.28	%	1.27	%	0.96	%

2014 Omnibus Performance Award Plan

In 2014 the board of directors and stockholders adopted the Unique Fabricating, Inc. 2014 Omnibus Performance Award Plan, or the 2014 Plan. The 2014 Plan provides for the grant of cash awards, stock options, stock appreciation rights, or SARs, shares of restricted stock and restricted stock units, or RSUs, performance shares and performance units. The 2014 Plan authorizes the grant of awards relating to 250,000 shares of our common stock. In the event of any transaction that causes a change in capitalization, the Compensation Committee, such other committee administering the 2014 Plan or the board of directors will make such adjustments to the number of shares of common stock delivered, and the number and/or price of shares of common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights. An amendment approved in March of 2016 by our board of directors which was included as a proposal and approved by our stockholders in our June 2016 proxy statement, increased the authorized grant of awards to a total of 450,000 shares of our common stock.

On August 17, 2015, the board of directors approved the issuance of a total of 230,000 stock option awards of which 45,000 non statutory awards were granted to the board of directors, and 185,000 incentive stock options were granted to employees of the Company. All of the awards had an exercise price of $12.50 with a weighted average grant date fair value of $625,600. These awards vest 20 percent on the grant date and an additional 20 percent on each of the first, second, third and fourth anniversaries thereafter. Vested awards can only be exercised while the participants are employed by the Company.

On November 20, 2015, the board of directors approved the issuance of stock option awards for 15,000 shares to employees of the Company. All of the awards had an exercise price of $11.50 with a weighted average grant date fair value of $33,500. The vesting schedule, vesting percentage, and capability of the employees to exercise these options have the exact same conditions as the August 17, 2015 grants discussed above.

On April 29, 2016, the board of directors approved the issuance of stock option awards for 5,000 shares to employees of the Company. All of the awards had an exercise price of $12.58 with a weighted average grant date fair value of $14,000. The vesting schedule, vesting percentage, and capability of the employees to exercise these options have the exact same conditions as the November 20 and August 17, 2015 grants discussed above.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		November 20, 2015		August 17, 2015
Expected volatility	40.00	%	35.00	%	38.00	%
Dividend yield	5.00	%	5.00	%	4.80	%
Expected term (in years)	5		5		5
Risk-free rate	1.28	%	1.70	%	1.58	%

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
Outstanding at January 3, 2016	695,000	$	6.54	8.35
Granted	12,200	$	12.58	10.00
Exercised	17,520	$	3.33	0
Forfeited or expired	7,200	$	3.33	0
Outstanding at July 3, 2016	682,480	$	6.77	7.90	$	4,388,346
Vested and exercisable at July 3, 2016	278,720	$	5.02	7.48	$	2,279,930

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares as of July 3, 2016 and multiplying this result by the related number of options outstanding and exercisable at July 3, 2016. The estimated fair value of the shares is based on the closing price of the stock of $13.20 as of July 3, 2016.

The Company recorded compensation expense of $46,900 and $85,998 for the 13 and 26 weeks ended July 3, 2016, respectively, and $6,401 and $12,309 for the 13 and 25 weeks ended June 28, 2015, respectively, in its consolidated statements of operations, as a component of sales, general and administrative expenses. The income tax benefit related to share based compensation expense was $17,195 and $29,434 for the 13 and 26 weeks ended July 3, 2016, respectively, and $2,038 and $4,092 for the 13 and 25 weeks ended June 28, 2015, respectively.

As of July 3, 2016, there was $468,585 of total unrecognized compensation cost related to nonvested stock option awards under the plans. That cost is expected to be recognized over a weighted average period of 2.19 years.

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Income Taxes

6 Months Ended

Jul. 03, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date income before income taxes. The tax effects of unusual or infrequently occurring items, including changes in judgement about valuation allowances and effect of changes in tax laws or rates, are reported in the interim period in which they occur, if applicable.

Income tax expense for the 13 and 26 weeks ended July 3, 2016 was $430,385 and $1,265,952, respectively, compared to $801,090 and $1,436,718 for the 13 and 25 weeks ended June 28, 2015, respectively. The income tax rate varies from the US statutory income tax rate primarily due to state income taxes, and the effect of foreign income taxes (Canada and Mexico), offset by a benefit related to the domestic production activities deduction, or DPAD. The difference between the actual effective rate of 41.8% and the statutory rate of 34.0% for the 13 weeks ended July 3, 2016 was mainly a result of $49,923 of non-deductible transactions costs related to the Intasco acquisition, which increased our effective tax rate by 4.9%. During the 26 weeks ended July 3, 2016 the effective tax rate and statutory rate were in alignment with each other. During the 13 weeks ended June 28, 2015, the difference between the actual effective tax rate of 32.1% and the statutory rate of 34.0% was mainly a result of DPAD, which provided a $68,827 income tax benefit and therefore reduced our effective tax rate by 2.7%. During the 25 weeks ended June 28, 2015, the effective tax rate and statutory rate were in alignment with each other for the period.

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Operating Leases

6 Months Ended

Jul. 03, 2016

Leases, Operating [Abstract]

Operating Leases

Operating Leases

The Company leases office space, production facilities and equipment under operating leases with various expiration dates through the year 2021. The leases for office space and production facilities require the Company to pay taxes, insurance, utilities and maintenance costs. Three of the leases for office space and production facilities provides for escalating rents over the life of the respective lease and rent expense is recognized over the term of the lease on a straight line basis, with the difference between lease payments and rent expense recorded as deferred rent in other accrued liabilities in the consolidated balance sheets. Total rent expense charged to operations was approximately $477,100 and $927,305 for the 13 and 26 weeks ended July 3, 2016, and $334,926 and $662,438 for the 13 and 25 weeks ended June 28, 2015.

Future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows at July 3, 2016:

2016	$	995,203
2017	1,934,819
2018	1,782,160
2019	1,380,108
2020	850,998
Thereafter	85,456
Total	$	7,028,744

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Retirement Plans

6 Months Ended

Jul. 03, 2016

Compensation and Retirement Disclosure [Abstract]

Retirement Plans

Retirement Plans

The Company maintains a defined contribution plan covering certain full time salaried employees. Employees can make elective contributions to the plan. The Company contributes 100 percent of an employee’s contribution in an amount up to the first 3 percent of each employee’s total compensation and 50 percent of the contribution for the next 2 percent of each employee’s total compensation. In addition, the Company, at the discretion of the board of directors, may make additional contributions to the plan on behalf of the plan participants. The Company contributed $100,356 and $215,981 for the 13 and 26 weeks ended July 3, 2016, respectively, and $94,603 and $183,966 for the 13 and 25 weeks ended June 28, 2015, respectively.

The Intasco operations acquired in April 2016 have separate retirement plans. The United States facility sponsors a SIMPLE IRA account for qualifying employees. The plan makes a contribution equal to 3 percent of a participant's gross wages to the participating employees' SIMPLE IRA accounts. Contributions in the United States totaled $1,671 for both the 13 and 26 weeks ended July 3, 2016.

The Canadian facility sponsors a retirement plan where Intasco makes a matching contribution of participant contributions up to a maximum amount based on the participants' number of years of service. Contributions in Canada totaled $15,248 for both the 13 and 26 weeks ended July 3, 2016.

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Related Party Transactions

6 Months Ended

Jul. 03, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

A shareholder provided subordinated debt financing which is discussed further in Note 6. Effective upon the closing of the IPO as disclosed in Note 1, this subordinated debt amount was paid off in full with the proceeds received from the IPO. Interest charges were recognized in the amounts of $0 for the 13 and 26 weeks ended July 3, 2016, and $523,876 and $1,041,995 for the 13 and 25 weeks ended June 28, 2015, respectively, related to the subordinated debt financing.

Effective March 18, 2013, the Company is under a five year management agreement with a firm related to several shareholders. The agreement required annual management fees of $300,000 and additional fees for assistance provided with acquisitions. The Company incurred management fees of $56,250 and $112,500 for the 13 and 26 weeks ended July 3, 2016, and $75,000 and $150,000 for the 13 and 25 weeks ended June 28, 2015. During the 13 and 26 weeks ended July 3, 2016, the Company paid acquisition related fees under the management agreement of $259,900 as a result of the Intasco acquisition on April 29, 2016. There were no acquisition related party fees for the 13 and 25 weeks ended June 28, 2015. The Company allocates these fees, if any, to the services provided based on their relative fair values. Effective upon completion of the IPO, the agreement was amended to reduce the annual management fee by an amount equal to the amount, if any, of annual cash retainers and equity awards received as compensation for service on the board of directors by any person who is a related person of Taglich Private Equity, LLC or Taglich Brothers, Inc.

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Fair Value Measurements

6 Months Ended

Jul. 03, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates.

Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item.

In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item.

The Company measures its interest rate swap at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variance and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market.

The Company measures its foreign currency forward contract on a recurring basis based primarily on Level 2 inputs using the present value of future cash flows to be incurred on the contracts. In accordance with market standards and conventions for valuing such contracts, the transactions reflect the current direction and amounts expected in each currency, spot exchange rates at period-end, discount factors and forward interest rate curves for each relevant currency pair and future maturity date.

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Contingencies

6 Months Ended

Jul. 03, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While uncertainties are inherent in the final outcome of such matters, the Company believes that there are no pending proceedings in which the Company is currently involved that will have a material effect on its financial position, results of operations or cash flow.

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Earnings Per Share

6 Months Ended

Jul. 03, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed giving effect to all potentially weighted average dilutive shares including options and warrants. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share.

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Basic earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Net income attributable to common stockholders	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Net income per share-basic	$	0.06	$	0.25	$	0.25	$	0.43

Diluted earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Effect of dilutive securities:
Stock options(1)(2)	211,765		197,845		211,644		194,901
Warrants(1)(2)	13,702		85,100		11,536		79,868
Diluted weighted average shares outstanding	9,905,841		7,022,943		9,869,446		7,014,767
Net income per share-diluted	$	0.06	$	0.24	$	0.25	$	0.41

(1)Options to purchase 425,280 shares of common stock remaining to be exercised under the 2013 plan, warrants to purchase 2,286 shares of common stock remaining to be exercised and warrants to purchase 141,000 shares issued to the underwriters of the Company's IPO granted in July 2015 as discussed in Note 10, were considered in the computation of diluted earnings per share using the treasury stock method in the 2016 calculation. Options to purchase 245,000 shares of common stock that were granted in August 2015 and November 2015, as noted in Note 10, under the 2014 plan and options to purchase 7,200 shares of common stock and 5,000 shares of common stock that were granted under the 2013 and 2014 plan, respectively, in April 2016 were not included in the computation of diluted earnings per share in the 2016 period because the effect would have been anti-dilutive.

(2)Options to purchase 495,000 shares of common stock remaining to be exercised and warrants to purchase 139,200 shares of common stock remaining to be exercised were considered in the computation of diluted earnings per share using the treasury stock method in the 2015 calculation.

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Subsequent Event

6 Months Ended

Jul. 03, 2016

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

Declaration of Cash Dividend

On August 16, 2016, our board of directors declared a quarterly cash dividend of $0.15 per common share. The dividend will be payable on September 7, 2016 to stockholders of record at the close of business on August 31, 2016. The aggregate amount of the dividend is approximately $1.4 million.

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Nature of Business and Significant Accounting Policies (Policies)

6 Months Ended

Jul. 03, 2016

Accounting Policies [Abstract]

Basis of Presentation

 The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying Consolidated Financial Statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of such financial statements. The interim results for the periods presented may not be indicative of the Company's actual annual results.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and all subsidiaries over which the Company exercises control. All intercompany transactions and balances have been eliminated upon consolidation.

Fiscal Years

The Company’s quarterly periods end on the Sunday closest to the end of the quarterly period. The quarterly and year to date period, which was 13 and 26 weeks, respectively, during 2016, ended on July 3, 2016, and the quarterly and year to date period, which was 13 and 25 weeks, respectively, during 2015, ended on June 28, 2015. Fiscal year 2015 ended on Sunday, January 3, 2016.

Cash and Cash Equivalents and Accounts Payable

Under the Company’s cash management system, checks issued but not yet presented to the Company’s bank frequently result in overdraft balances for accounting purposes and are classified as accounts payable on the consolidated balance sheets.

The Company considers all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

Accounts Receivable

Accounts receivable are stated at the invoiced amount and do not bear interest. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in the existing accounts receivable. Management determines the allowance based on historical write-off experience and an understanding of individual customer payment history and financial condition. Management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered.

Inventory

Inventory is stated at the lower of cost or market, with cost determined on the first in, first out method (FIFO). Inventory acquired as part of a business combination is recorded at its estimated fair value at the time of the business combination. The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments.

Valuation of Long-Lived Assets

The carrying value of long-lived assets held for use is periodically evaluated when events or circumstances warrant such a review. The carrying value of a long-lived asset held for use is considered impaired when the anticipated separately identifiable undiscounted cash flows from the asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

Property, Plant, and Equipment

Property, plant, and equipment purchases are recorded at cost. Property, plant, and equipment acquired as part of a business combination are recorded at estimated fair value at the time of the business combination. Depreciation is calculated using the straight line method over the estimated useful life of each asset. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the period of the related leases. Upon retirement or disposal, the initial cost or valuation and accumulated depreciation are removed from the accounts, and any gain or loss is included in net income. Repair and maintenance costs are expensed as incurred.

Intangible Assets

The Company does not hold any intangible assets with indefinite lives. Identifiable intangible assets recognized as part of a business combination are recorded at their estimated fair value at the time of the business combination. Acquired intangible assets subject to amortization are amortized on a straight line basis, which approximates the pattern in which the economic benefit of the respective intangible is realized, over their respective estimated useful lives. Amortizable intangible assets are reviewed for impairment whenever events or circumstances indicate that the related carrying amount may be impaired. The remaining useful lives of intangible assets are reviewed to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Goodwill

Goodwill represents the excess of the acquisition cost of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed from business combinations at the date of acquisition. Goodwill is not amortized, but rather is assessed at least on an annual basis for impairment. If it is determined that it is more likely than not that the fair value is greater than the carrying value of a reporting unit then a qualitative assessment may be used for the annual impairment test. Otherwise, a two-step process is used. The first step requires estimating the fair value of each reporting unit compared to its carrying value. If the carrying value exceeds the estimated fair value, a second step is performed in order to determine the implied fair value of the goodwill. If the carrying value of the goodwill exceeds its implied fair value then goodwill is deemed impaired and is written down to its implied fair value.

Debt Issuance Costs

Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as debt discount, as a reduction of the noted debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt.

Investments

Investments in entities in which the Company has less than a 20 percent interest or is not able to exercise significant influence are carried at cost. Dividends received are included in income, except for those dividends received in excess of the Company’s proportionate share of accumulated earnings, which are applied as a reduction of the cost of the investment. Impairment losses due to a decline in the value of the investment that is other than temporary are recognized when incurred.

Stock Based Compensation

The Company accounts for its stock based compensation using the fair value of the award estimated at the grant date of the award. The Company estimates the fair value of awards, consisting of stock options, using the Black Scholes option pricing model. Compensation expense is recognized in earnings using the straight line method over the vesting period, which represents the requisite service period.

Revenue Recognition

Revenue is recognized by the Company upon shipment to customers when the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sale price is fixed and determinable. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Shipping and Handling

Shipping and handling costs are included in costs of sales as they are incurred.

Income Taxes

A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the period. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between financial reporting and tax accounting measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized.

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement with the relevant tax authority.

Foreign Currency Adjustments

The Company’s functional currency for all operations worldwide is the United States dollar. Nonmonetary assets and liabilities of foreign operations are remeasured at historical rates and monetary assets and liabilities are remeasured at exchange rates in effect at the end of each reporting period. Income statement accounts are remeasured at average exchange rates for the year. Gains and losses from remeasurement of foreign currency financial statements into United States dollars are classified in operating income in the consolidated statements of operations.

Derivative Financial Instruments

All derivative instruments are required to be reported on the consolidated balance sheets at fair value unless the transactions qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (the “ASU”). Previously, such costs were required to be presented as a non-current asset in an entity's balance sheet and amortized into interest expense over the term of the related debt instrument. The changes implemented by the ASU require that debt issuance costs be presented in the entity's balance sheet as a direct deduction from the carrying value of the related debt liability. The amortization of debt issuance costs remains unchanged per the ASU. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied this change to the current and prior periods in the financial statements for comparable purposes. Debt issuance costs are no longer disclosed separately by the Company in the balance sheet and are now shown as a direct deduction from the carrying value of the related debt liability.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes most of the existing guidance on revenue recognition in ASC Topic 605, Revenue Recognition, and establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606): Deferral of the Effective Date, to defer implementation of ASU 2014-09 by one year. The guidance is now currently effective for fiscal years beginning after December 15, 2018 and is to be applied retrospectively at the entity's election either to each prior reporting period presented or with the cumulative effect of application recognized at the date of initial application. The ASU allows for early adoption for fiscal years beginning after December 15, 2016, and the Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The ASU requires an entity to measure inventory at the lower of cost and net realizable value, simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2016, and is to be applied prospectively with early adoption permitted.The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Currently, deferred income tax liabilities and assets are required to be separated into current and non-current amounts in an entity's balance sheet. The changes implemented by the ASU require that all deferred income tax liabilities and assets are to be classified as non-current on the balance sheet. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods only in the consolidated financial statements. Deferred taxes are now shown as non-current by the Company in the balance sheet.

In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in Topic 850. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with current guidance. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09), to simplify the accounting for share-based payment transactions. The ASU is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2017. The Company early adopted this ASU during the 13 and 26 weeks ended July 3, 2016 and applied the change to these periods in the consolidated financial statements. Excess tax benefits are no longer disclosed in the consolidated statements of cash flows as a result of this early adoption.

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Business Combinations (Tables)

6 Months Ended

Jul. 03, 2016

Business Acquisition [Line Items]

Schedule of Pro Forma Information

The following pro forma supplementary data for the 13 and 26 weeks ended July 3, 2016 and 13 and 25 weeks ended June 28, 2015 gives effect to the acquisition of Intasco as if it had occurred on January 5, 2015 (the first day of the Company's 2015 fiscal year) and Great Lakes as if it had occurred on December 30, 2013 (the first day of the Company’s 2014 fiscal year). The pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed and does not project the Company’s results of operations for any future date.

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Net sales	$	43,509,852	$	42,742,615	$	87,877,251	$	82,243,570
Net income	$	1,151,033	$	1,605,703	$	3,028,561	$	3,495,001
Net income per common share – basic	$	0.12	$	0.24	$	0.31	$	0.52
Net income per common share – diluted	$	0.12	$	0.23	$	0.31	$	0.50

Intasco USA, Inc.

Business Acquisition [Line Items]

Schedule of Business Acquisitions by Acquisition

The following table summarizes the preliminary acquisition date fair values of the assets acquired and liabilities assumed.

Cash	$	18,250
Accounts receivable	2,146,082
Inventory	2,485,781
Other current assets	74,194
Property, plant, and equipment	861,491
Identifiable intangible assets	7,316,694
Accounts payable and accrued liabilities	(716,080		)
Deferred tax liability	(97,622		)
Total identifiable net assets	12,088,790
Goodwill	9,657,221
Total	21,746,011

Great Lakes Foam Technologies, Inc.

Business Acquisition [Line Items]

Schedule of Business Acquisitions by Acquisition

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed.

Accounts receivable	$	1,001,005
Inventory	1,115,809
Deferred tax assets	1,468
Other current assets	2,500
Property, plant, and equipment	810,001
Identifiable intangible assets	5,915,000
Accounts payable and accrued liabilities	(928,933		)
Total identifiable net assets	7,916,850
Goodwill	4,030,542
Total	$	11,947,392

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Inventory (Tables)

6 Months Ended

Jul. 03, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following:

	July 3, 2016		January 3, 2016
Raw materials	$	9,569,798	$	8,048,747
Work in progress	684,983		643,207
Finished goods	5,767,493		5,893,657
Total inventory	$	16,022,274	$	14,585,611

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Property, Plant, and Equipment (Tables)

6 Months Ended

Jul. 03, 2016

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment

Property, plant, and equipment consists of the following:

	July 3, 2016		January 3, 2016		Depreciable Life – Years
Land	$	1,663,153	$	1,663,153
Buildings	7,541,976		7,541,976		23 – 40
Shop equipment	11,958,416		10,291,903		7 – 10
Leasehold improvements	876,949		824,869		3 – 10
Office equipment	1,010,194		682,884		3 – 7
Mobile equipment	192,521		135,501		3
Construction in progress	893,532		588,343
Total cost	24,136,741		21,728,629
Accumulated depreciation	3,836,197		2,967,451
Net property, plant, and equipment	$	20,300,544	$	18,761,178

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Intangible Assets (Tables)

6 Months Ended

Jul. 03, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of finite-lived intangible assets

Intangible assets of the Company consist of the following at July 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	26,523,065	$	6,531,648	8.16
Trade names	4,673,044		723,012		16.43
Non-compete agreements	1,161,790		764,424		2.53
Unpatented technology	$	1,534,787	$	52,982	5.00
Total	$	33,892,686	$	8,072,066

Intangible assets of the Company consist of the following at January 3, 2016:

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life – Years
Customer contracts	$	20,948,881	$	5,195,109	8.73
Trade names	4,465,322		599,734		20.00
Non-compete agreements	1,161,790		641,937		2.53
Total	$	26,575,993	$	6,436,780

Schedule of finite-lived Intangible assets, future amortization expense

Estimated amortization expense is as follows:

2016	$	2,060,828
2017	4,121,655
2018	4,070,321
2019	3,945,264
2020	3,913,627
Thereafter	7,708,925
Total	$	25,820,620

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Long-term Debt (Tables)

6 Months Ended

Jul. 03, 2016

Debt Disclosure [Abstract]

Schedule of long-term debt

Long term debt consists of the following:

	July 3, 2016		January 3, 2016
US Term Loan, payable to lenders in quarterly installments of $318,750 through March 31, 2018, $425,000 through March 31, 2019, and $531,250 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $202,368 from costs paid to or on behalf of the lenders.	$	16,478,882	$	—
CA Term Loan, payable to lenders in quarterly installments of $281,250 through March 31, 2018, $375,000 through March 31, 2019, and $468,750 through March 31, 2021, with a lump sum due at maturity. The effective interest rate was 3.9603 per annum at July 3, 2016. At July 3, 2016, the balance of the US Term Loan is presented net of a debt discount of $99,842 from costs paid to or on behalf of the lenders.	$	14,618,908	$	—
Term Loan, payable to a bank in quarterly installments of $500,000 through December 31, 2015, $625,000 through December 31, 2016, $750,000 through September 30, 2017, with a lump sum due at maturity. Interest is paid on a quarterly basis at an annual rate of LIBOR plus a margin of 3.00 percent to 3.50 percent (an effective rate of 3.567 percent per annum at January 3, 2016). The Term Loan was originally due on March 15, 2018, but was amended to be due December 18, 2017, and was secured by substantially all of the Company’s assets. At January 3, 2016, the balance of the Term Loan is presented net of a debt discount of $98,452 from costs paid to or on behalf of the lender.	$	—	$	15,901,548

Note payable to the seller of Chardan which is unsecured and subordinated to the New Credit Agreement. Interest accrues monthly at an annual rate of 6 percent. The note payable is due in full on February 6, 2019.	500,000		500,000
Other debt	15,100		24,514
Total debt excluding Revolver	31,612,890		16,426,062
Less current maturities	2,415,100		2,519,069
Long-term debt – Less current maturities	$	29,197,790	$	13,906,993

Schedule of maturities of long-term debt

Maturities on the Company’s New Revolver and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows:

2016	$	1,209,655
2017	2,405,445
2018	3,000,000
2019	4,300,000
2020	4,000,000
Thereafter	39,421,821
Total	54,336,921
Discounts	(302,210		)
Debt issuance costs	(336,408		)
Total debt – Net	$	53,698,303

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Restructuring (Tables)

6 Months Ended

Jul. 03, 2016

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost

The table below summarizes the activity in the restructuring liability for the 26 weeks ended July 3, 2016.

	Employee Termination Benefits Liability			Other Exit Costs Liability			Total
Accrual balance at January 3, 2016	$	190,864		$	63,327		$	254,191
Provision for estimated expenses incurred during the year	(51,951		)	87,005			35,054
Payments made during the year	(138,913		)	(150,332		)	(289,245		)
Accrual balance at July 3, 2016	$	—		$	—		$	—

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Stock Incentive Plans (Tables)

6 Months Ended

Jul. 03, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		November 20, 2015		August 17, 2015
Expected volatility	40.00	%	35.00	%	38.00	%
Dividend yield	5.00	%	5.00	%	4.80	%
Expected term (in years)	5		5		5
Risk-free rate	1.28	%	1.70	%	1.58	%

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of comparable companies. The Company estimated zero employee terminations based on the options granted being limited to a small pool of senior employees of which the Company has no historical turnover experience. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	April 29, 2016		January 1, 2014		July 17, 2013
Expected volatility	40.00	%	34.00	%	34.00	%
Dividend yield	5.00	%	—	%	—	%
Expected term (in years)	5		4		4
Risk-free rate	1.28	%	1.27	%	0.96	%

Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
Outstanding at January 3, 2016	695,000	$	6.54	8.35
Granted	12,200	$	12.58	10.00
Exercised	17,520	$	3.33	0
Forfeited or expired	7,200	$	3.33	0
Outstanding at July 3, 2016	682,480	$	6.77	7.90	$	4,388,346
Vested and exercisable at July 3, 2016	278,720	$	5.02	7.48	$	2,279,930

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares as of July 3, 2016 and multiplying this result by the related number of options outstanding and exercisable at July 3, 2016. The estimated fair value of the shares is based on the closing price of the stock of $13.20 as of July 3, 2016.

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Operating Leases (Tables)

6 Months Ended

Jul. 03, 2016

Leases, Operating [Abstract]

Schedule of future minimum lease payments

Future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows at July 3, 2016:

2016	$	995,203
2017	1,934,819
2018	1,782,160
2019	1,380,108
2020	850,998
Thereafter	85,456
Total	$	7,028,744

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Earnings Per Share (Tables)

6 Months Ended

Jul. 03, 2016

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

The following table sets forth the computation of basic and diluted earnings per share.

	Thirteen Weeks Ended July 3, 2016		Thirteen Weeks Ended June 28, 2015		Twenty-Six Weeks Ended July 3, 2016		Twenty-Five Weeks Ended June 28, 2015
Basic earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Net income attributable to common stockholders	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Net income per share-basic	$	0.06	$	0.25	$	0.25	$	0.43

Diluted earnings per share calculation:
Net income	$	599,172	$	1,691,900	$	2,432,823	$	2,884,637
Weighted average shares outstanding	9,680,374		6,739,998		9,646,266		6,739,998
Effect of dilutive securities:
Stock options(1)(2)	211,765		197,845		211,644		194,901
Warrants(1)(2)	13,702		85,100		11,536		79,868
Diluted weighted average shares outstanding	9,905,841		7,022,943		9,869,446		7,014,767
Net income per share-diluted	$	0.06	$	0.24	$	0.25	$	0.41

(1)Options to purchase 425,280 shares of common stock remaining to be exercised under the 2013 plan, warrants to purchase 2,286 shares of common stock remaining to be exercised and warrants to purchase 141,000 shares issued to the underwriters of the Company's IPO granted in July 2015 as discussed in Note 10, were considered in the computation of diluted earnings per share using the treasury stock method in the 2016 calculation. Options to purchase 245,000 shares of common stock that were granted in August 2015 and November 2015, as noted in Note 10, under the 2014 plan and options to purchase 7,200 shares of common stock and 5,000 shares of common stock that were granted under the 2013 and 2014 plan, respectively, in April 2016 were not included in the computation of diluted earnings per share in the 2016 period because the effect would have been anti-dilutive.

(2)Options to purchase 495,000 shares of common stock remaining to be exercised and warrants to purchase 139,200 shares of common stock remaining to be exercised were considered in the computation of diluted earnings per share using the treasury stock method in the 2015 calculation.

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Nature of Business and Significant Accounting Policies (Details)			3 Months Ended		6 Months Ended
	Apr. 29, 2016 USD ($)	Jul. 07, 2015 USD ($) $ / shares shares	Jul. 03, 2016 USD ($)	Jun. 28, 2015 USD ($)	Jul. 03, 2016 USD ($) segment	Jun. 28, 2015 USD ($)	Apr. 30, 2016 USD ($)	Jan. 03, 2016 USD ($)	Jul. 31, 2015 USD ($)
Accounting Policies [Abstract]
Number of operating segments | segment					1
Number of reportable segments | segment					1
Class of Stock [Line Items]
Allowance for doubtful accounts receivable			$ 716,502		$ 716,502			$ 734,230
Impairment charge			0	$ 0	0	$ 0
Debt issuance cost	$ 160,111		336,408		336,408		$ 99,909	192,098
Unamortized discount	92,508		302,210		302,210			98,452
Loss on extinguishment of debt	$ (60,202)				(60,202)	0
Amortization of debt issuance costs			36,737	80,956	61,517	155,226
Concentration Risk [Line Items]
Dividend income			0	0	0	0
Unrecognized tax benefits			0		0			0
Income tax penalties and interest			$ 0	$ 0	$ 0	$ 0
Subordinated debt
Class of Stock [Line Items]
Extinguishment of debt		$ 13,100,000
Stated interest rate									16.00%
Unamortized discount									$ 386,552
Geographic concentration risk | Mexico | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			12.00%	13.00%	12.00%	13.00%
Geographic concentration risk | Mexico | Production risk
Concentration Risk [Line Items]
Concentration risk (percentage)			11.00%	12.00%	11.00%	12.00%
Geographic concentration risk | Canada | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			8.00%	4.00%	6.00%	4.00%
Geographic concentration risk | Canada | Production risk
Concentration Risk [Line Items]
Concentration risk (percentage)			8.00%	0.00%	4.00%	0.00%
Geographic concentration risk | Other foreign countries | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			2.00%	2.00%	1.00%	1.00%
IPO
Class of Stock [Line Items]
Proceeds from issuance of common stock		$ 22,200,000
IPO | Common Stock
Class of Stock [Line Items]
Shares issued during the period (in shares) | shares		2,702,500
Share price (in USD per share) | $ / shares		$ 9.50
Over-Allotment Option | Common Stock
Class of Stock [Line Items]
Shares issued during the period (in shares) | shares		352,500
Collective Bargaining Arrangements Expiring August 2016 | Labor force concentration risk | Workforce Subject to Collective Bargaining Arrangements
Concentration Risk [Line Items]
Concentration risk (percentage)					29.00%
Collective Bargaining Arrangements Expiring January 2017 | Labor force concentration risk | Workforce Subject to Collective Bargaining Arrangements
Concentration Risk [Line Items]
Concentration risk (percentage)					5.00%
General Motors Company | Customer concentration risk | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			12.00%	15.00%	12.00%	15.00%
Chrysler Group, LLC | Customer concentration risk | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			11.00%	15.00%	12.00%	16.00%
Ford Motor Company | Customer concentration risk | Sales revenue, net
Concentration Risk [Line Items]
Concentration risk (percentage)			13.00%	15.00%	13.00%	15.00%
Warrants for Underwriters
Class of Stock [Line Items]
Number of warrants purchased (in shares) | shares		141,000
Percentage of offering price per share		125.00%
Grant date fair value		$ 336,300
Warrants for Underwriters | Minimum
Class of Stock [Line Items]
Warrant term		1 year
Warrants for Underwriters | Maximum
Class of Stock [Line Items]
Warrant term		5 years
Accounts payable
Concentration Risk [Line Items]
Checks issued in excess of available cash			$ 2,050,139		$ 2,050,139			$ 2,403,498

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Business Combinations - Narrative (Details)			1 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended			24 Months Ended
	Apr. 29, 2016 USD ($) shares	Aug. 31, 2015 USD ($)	Aug. 16, 2016 USD ($)	Nov. 30, 2015 USD ($)	Jul. 03, 2016 USD ($)	Jul. 03, 2016 USD ($)	May 01, 2018 USD ($)	Apr. 30, 2017 CAD	Apr. 30, 2017 USD ($)	May 01, 2021 CAD	Apr. 30, 2019 CAD
Intasco USA, Inc.
Business Acquisition [Line Items]
Intasco revenues					$ 3,684,008
Payments to acquire business	$ 21,049,045
Percentage of voting interests acquired	100.00%
Total consideration	$ 890,726
Equity interest issued (in shares) | shares	70,797
Working capital adjustment	$ 126,047
Acquisition transaction costs	848,252
Tax deductible portion of goodwill	$ 7,267,507
Intasco earnings					(302,411)	$ (302,411)
Transaction costs of acquiree					$ 521,071	$ 521,071
Great Lakes Foam Technologies, Inc.
Business Acquisition [Line Items]
Payments to acquire business		$ 11,947,392
Total consideration		12,000,000
Working capital adjustment		180,009		$ 127,401
Acquisition transaction costs		415,849
Operating lease, rent expense		$ 7,500
Operating lease, rent expense, term of lease		5 years
Subsequent Event | Intasco USA, Inc.
Business Acquisition [Line Items]
Amount owed at closing			$ 212,823
United States | Intasco USA, Inc.
Business Acquisition [Line Items]
Operating lease, rent expense, term of lease						2 years
United States | Forecast | Intasco USA, Inc.
Business Acquisition [Line Items]
Operating lease, rent expense							$ 4,080		$ 4,000
Canada | Intasco USA, Inc.
Business Acquisition [Line Items]
Operating lease, rent expense, term of lease						5 years
Canada | Forecast | Intasco USA, Inc.
Business Acquisition [Line Items]
Operating lease, rent expense | CAD								CAD 16,750		CAD 17,427	CAD 17,085

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Business Combinations - Schedule of Business Acquisitions by Acquisition (Details) - USD ($)	Jul. 03, 2016	Apr. 29, 2016	Jan. 03, 2016	Aug. 31, 2015
Business Acquisition [Line Items]
Goodwill	$ 28,871,179		$ 19,213,958
Intasco USA, Inc.
Business Acquisition [Line Items]
Cash		$ 18,250
Accounts receivable		2,146,082
Inventory		2,485,781
Other current assets		74,194
Property, plant, and equipment		861,491
Identifiable intangible assets		7,316,694
Accounts payable and accrued liabilities		(716,080)
Deferred tax liability		(97,622)
Total identifiable net assets		12,088,790
Goodwill		9,657,221
Total		$ 21,746,011
Great Lakes Foam Technologies, Inc.
Business Acquisition [Line Items]
Accounts receivable				$ 1,001,005
Inventory				1,115,809
Deferred tax assets				1,468
Other current assets				2,500
Property, plant, and equipment				810,001
Identifiable intangible assets				5,915,000
Accounts payable and accrued liabilities				(928,933)
Total identifiable net assets				7,916,850
Goodwill				4,030,542
Total				$ 11,947,392

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Business Combinations - Schedule of Pro Forma Information (Details) - Intasco and Great Lakes Foam Technologies, Inc. [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Business Acquisition [Line Items]
Net sales	$ 43,509,852	$ 42,742,615	$ 87,877,251	$ 82,243,570
Net income	$ 1,151,033	$ 1,605,703	$ 3,028,561	$ 3,495,001
Net income per common share – basic (in USD per share)	$ 0.12	$ 0.24	$ 0.31	$ 0.52
Net income per common share – diluted (in USD per share)	$ 0.12	$ 0.23	$ 0.31	$ 0.50

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Inventory - Schedule of Inventory (Details) - USD ($)	Jul. 03, 2016	Jan. 03, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 9,569,798	$ 8,048,747
Work in progress	684,983	643,207
Finished goods	5,767,493	5,893,657
Total inventory	$ 16,022,274	$ 14,585,611

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Inventory - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015	Jan. 03, 2016
Inventory [Line Items]
Inventory – net	$ 16,022,274		$ 16,022,274		$ 14,585,611
Fair value adjustment to inventory | Cost of Sales
Inventory [Line Items]
Provisional information, adjustment, inventory			0
Fair value adjustment to inventory | Inventory
Inventory [Line Items]
Provisional information, adjustment, inventory					0
Intasco USA, Inc. | Fair value adjustment to inventory
Inventory [Line Items]
Provisional information, adjustment, inventory			318,518
Intasco USA, Inc. | Fair value adjustment to inventory | Cost of Sales
Inventory [Line Items]
Provisional information, adjustment, inventory	279,166		279,166
Intasco USA, Inc. | Fair value adjustment to inventory | Inventory
Inventory [Line Items]
Provisional information, adjustment, inventory			39,352
Great Lakes Foam Technologies, Inc. | Fair value adjustment to inventory
Inventory [Line Items]
Provisional information, adjustment, inventory				$ 146,191
Great Lakes Foam Technologies, Inc. | Fair value adjustment to inventory | Cost of Sales
Inventory [Line Items]
Provisional information, adjustment, inventory	0	$ 0		$ 0
Great Lakes Foam Technologies, Inc. | Fair value adjustment to inventory | Inventory
Inventory [Line Items]
Provisional information, adjustment, inventory			0
Mexico
Inventory [Line Items]
Inventory – net	2,218,703		2,218,703		1,788,902
Canada
Inventory [Line Items]
Inventory – net	$ 1,578,314		$ 1,578,314		$ 0

XML

Property, Plant, and Equipment - Schedule of Property, Plant, and Equipment (Details) - USD ($)	6 Months Ended
	Jul. 03, 2016	Jan. 03, 2016
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 24,136,741	$ 21,728,629
Accumulated depreciation	3,836,197	2,967,451
Net property, plant, and equipment	20,300,544	18,761,178
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment	1,663,153	1,663,153
Buildings
Property, Plant and Equipment [Line Items]
Property, plant and equipment	7,541,976	7,541,976
Shop equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	11,958,416	10,291,903
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment	876,949	824,869
Office equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	1,010,194	682,884
Mobile equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 192,521	135,501
Depreciable life, years	3 years
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 893,532	$ 588,343
Minimum | Buildings
Property, Plant and Equipment [Line Items]
Depreciable life, years	23 years
Minimum | Shop equipment
Property, Plant and Equipment [Line Items]
Depreciable life, years	7 years
Minimum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Depreciable life, years	3 years
Minimum | Office equipment
Property, Plant and Equipment [Line Items]
Depreciable life, years	3 years
Maximum | Buildings
Property, Plant and Equipment [Line Items]
Depreciable life, years	40 years
Maximum | Shop equipment
Property, Plant and Equipment [Line Items]
Depreciable life, years	10 years
Maximum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Depreciable life, years	10 years
Maximum | Office equipment
Property, Plant and Equipment [Line Items]
Depreciable life, years	7 years

XML

Property, Plant, and Equipment - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015	Jan. 03, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 445,108	$ 319,547	$ 872,463	$ 635,266
Property, plant, and equipment – net	20,300,544		20,300,544		$ 18,761,178
Mexico
Property, Plant and Equipment [Line Items]
Property, plant, and equipment – net	1,152,718		1,152,718		637,435
Canada
Property, Plant and Equipment [Line Items]
Property, plant, and equipment – net	$ 771,069		$ 771,069		$ 0

XML

Intangible Assets - Schedule of Intangible Assets By Major Class (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jul. 03, 2016	Jan. 03, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 33,892,686	$ 26,575,993
Accumulated Amortization	8,072,066	6,436,780
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	26,523,065	20,948,881
Accumulated Amortization	6,531,648	5,195,109
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,673,044	4,465,322
Accumulated Amortization	723,012	599,734
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,161,790	1,161,790
Accumulated Amortization	764,424	$ 641,937
Unpatented technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,534,787
Accumulated Amortization	$ 52,982
Weighted Average
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life – Years	8 years 11 months 16 days
Weighted Average | Customer contracts
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life – Years	8 years 1 month 29 days	8 years 8 months 23 days
Weighted Average | Trade names
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life – Years	16 years 5 months 6 days	20 years
Weighted Average | Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life – Years	2 years 6 months 10 days	2 years 6 months 10 days
Weighted Average | Unpatented technology
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life – Years	5 years

XML

Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 930,286	$ 572,954	$ 1,635,287	$ 1,104,275
Weighted Average
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period			8 years 11 months 16 days

XML

Intangible Assets - Finite-Lived Intangible Assets, Future Amortization Expense Schedule (Details) - USD ($)	Jul. 03, 2016	Jan. 03, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2016	$ 2,060,828
2017	4,121,655
2018	4,070,321
2019	3,945,264
2020	3,913,627
Thereafter	7,708,925
Total	$ 25,820,620	$ 20,139,213

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Long-term Debt - Narrative (Details) - USD ($)			6 Months Ended	12 Months Ended
	Apr. 29, 2016	Jul. 07, 2015	Jul. 03, 2016	Jan. 03, 2016	Dec. 31, 2015	Oct. 31, 2014	Dec. 18, 2013	Mar. 18, 2013
Debt Instrument [Line Items]
Construction costs			$ 4,400,000
Interest costs incurred			$ 100,000
Subordinated debt
Debt Instrument [Line Items]
Extinguishment of debt		$ 13,100,000
Line of credit | Secured debt | Maximum
Debt Instrument [Line Items]
Effective interest rate				3.567%
Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			3.00%
Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			3.50%
Senior credit facility | Revolver term loan | Revolving credit facility
Debt Instrument [Line Items]
Debt instrument, face amount								$ 11,000,000.0
Repayments of long-term debt	$ 15.4
Senior credit facility | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity								$ 12,500,000.0
Repayments of long-term debt	17.3
Senior credit facility, first amendment | Revolver term loan | Revolving credit facility
Debt Instrument [Line Items]
Debt instrument, face amount							$ 20,000,000.0
Senior credit facility, first amendment | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 15,000,000.0
Senior credit facility, second amendment | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity						$ 19,500,000.0
Line of credit				$ 14,787,191
Effective interest rate				3.50%
Letters of credit outstanding, amount			$ 100,000
Senior credit facility, second amendment | Line of credit | Revolving credit facility | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate				2.75%
Senior credit facility, second amendment | Line of credit | Revolving credit facility | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate				3.25%
Senior credit facility, third amendment | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 25,000,000.0
New credit agreement | Letter of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity	2,000,000.0
New credit agreement | Line of credit | Secured debt
Debt Instrument [Line Items]
Maximum borrowing capacity	62,000,000.0
Maximum increase to principal amount	10,000,000.0
New credit agreement | Line of credit | Secured debt | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			1.75%
New credit agreement | Line of credit | Secured debt | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			2.50%
New credit agreement | Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			2.75%
New credit agreement | Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			3.50%
New revolver | Revolving credit facility
Debt Instrument [Line Items]
Line of credit			$ 22,421,821
New revolver | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity	30,000,000.0		$ 7,478,179
Effective interest rate			3.9603%
Senior notes	22,900,000
US term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount	17,000,000.0
Effective interest rate			3.9603%
CA term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount	$ 15,000,000.0
Effective interest rate			3.9603%

XML

Long-term Debt - Schedule of long-term debt (Details) - USD ($)	6 Months Ended
	Jul. 03, 2016	Apr. 29, 2016	Jan. 03, 2016
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 31,612,890		$ 16,426,062
Less current maturities	2,415,100		2,519,069
Long-term debt – Less current maturities	29,197,790		13,906,993
Unamortized discount	302,210	$ 92,508	98,452
Unsecured debt
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 500,000		$ 500,000
Stated interest rate	6.00%		6.00%
Other debt
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 15,100		$ 24,514
Line of credit | Secured debt
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 0		15,901,548
Unamortized discount			$ 98,452
Line of credit | Secured debt | Maximum
Debt Instrument [Line Items]
Effective interest rate			3.567%
Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	3.00%
Line of credit | Secured debt | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%
Line of credit | Secured debt | Installments Through December 31, 2015
Debt Instrument [Line Items]
Periodic principal amount	$ 500,000
Line of credit | Secured debt | Installments Through December 31, 2016
Debt Instrument [Line Items]
Periodic principal amount	625,000
Line of credit | Secured debt | Installments Through September 30, 2017
Debt Instrument [Line Items]
Periodic principal amount	750,000
Line of credit | US term loan | Secured debt
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 16,478,882		$ 0
Effective interest rate	3.9603%
Unamortized discount	$ 202,368
Line of credit | US term loan | Secured debt | Installments Through March 31, 2018
Debt Instrument [Line Items]
Periodic principal amount	318,750
Line of credit | US term loan | Secured debt | Installments Through March 31, 2019
Debt Instrument [Line Items]
Periodic principal amount	425,000
Line of credit | US term loan | Secured debt | Installments Through March 31, 2021
Debt Instrument [Line Items]
Periodic principal amount	531,250
Line of credit | CA term loan | Secured debt
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 14,618,908		$ 0
Effective interest rate	3.9603%
Unamortized discount	$ 99,842
Line of credit | CA term loan | Secured debt | Installments Through March 31, 2018
Debt Instrument [Line Items]
Periodic principal amount	281,250
Line of credit | CA term loan | Secured debt | Installments Through March 31, 2019
Debt Instrument [Line Items]
Periodic principal amount	375,000
Line of credit | CA term loan | Secured debt | Installments Through March 31, 2021
Debt Instrument [Line Items]
Periodic principal amount	$ 468,750

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Long-term Debt - Schedule of repayment of maturities (Details) - USD ($)	Jul. 03, 2016	Apr. 29, 2016	Jan. 03, 2016
Debt Disclosure [Abstract]
2016	$ 1,209,655
2017	2,405,445
2018	3,000,000
2019	4,300,000
2020	4,000,000
Thereafter	39,421,821
Total	54,336,921
Discounts	(302,210)	$ (92,508)	$ (98,452)
Debt issuance costs	(336,408)
Total debt – Net	$ 53,698,303

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Derivative Financial Instruments (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015	Jun. 29, 2018	Jun. 30, 2017	Jun. 30, 2016	Jun. 29, 2016	Mar. 31, 2016	Jan. 03, 2016	Jan. 17, 2014
Interest rate swap one | Not designated as hedging instrument
Derivatives, Fair Value [Line Items]
Fixed interest rate											1.27%
Notional amount											$ 10,000,000
Quarterly decrease in notional amount									$ 312,500		$ 250,000
Interest rate swap one | Not designated as hedging instrument | Interest expense
Derivatives, Fair Value [Line Items]
Monthly settlements	$ 16,113	$ 30,760	$ 33,094	$ 46,712
Interest rate swap one | Not designated as hedging instrument | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative fair value liability										$ (46,874)
Interest rate swap two | Not designated as hedging instrument
Derivatives, Fair Value [Line Items]
Fixed interest rate							1.055%
Notional amount							$ 16,681,250
Quarterly decrease in notional amount							$ 318,750
Derivative fair value assets (liabilities)	(181,179)		(181,179)
Interest rate swap two | Not designated as hedging instrument | Forecast
Derivatives, Fair Value [Line Items]
Quarterly decrease in notional amount					$ 531,250	$ 425,000
Interest rate swap two | Not designated as hedging instrument | Interest expense
Derivatives, Fair Value [Line Items]
Monthly settlements	0		0
Foreign exchange forward | Designated as hedging instrument
Derivatives, Fair Value [Line Items]
Notional amount								$ 3,300,000
Derivative fair value assets (liabilities)	(10,848)		(10,848)
Monthly settlements	$ 0		$ 0

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Restructuring - Narrative (Details)		3 Months Ended	6 Months Ended
	Oct. 27, 2015 employee	Jul. 03, 2016 USD ($)	Jul. 03, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Workforce reduction due to plant closure (in employees) | employee	30
Buildings
Restructuring Cost and Reserve [Line Items]
Net book value of building		$ 2,033,327	$ 2,033,327
Estimated selling price of building		2,750,000	2,750,000
One-time Termination Benefits | Restructuring Charges
Restructuring Cost and Reserve [Line Items]
Amount of restructuring costs incurred		0	(51,951)
Other Exit Costs Liability | Restructuring Charges
Restructuring Cost and Reserve [Line Items]
Amount of restructuring costs incurred		0	87,005
Employee Termination Benefits Liability | Restructuring Charges
Restructuring Cost and Reserve [Line Items]
Amount of expected restructuring cost remaining		$ 0	$ 0

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Restructuring - Liability (Details) - USD ($)	6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015
Restructuring Reserve [Roll Forward]
Accrual balance at January 3, 2016	$ 254,191
Provision for estimated expenses incurred during the year	35,054	$ 0
Payments made during the year	(289,245)
Accrual balance at July 3, 2016	0
Employee Termination Benefits Liability
Restructuring Reserve [Roll Forward]
Accrual balance at January 3, 2016	190,864
Provision for estimated expenses incurred during the year	(51,951)
Payments made during the year	(138,913)
Accrual balance at July 3, 2016	0
Other Exit Costs Liability
Restructuring Reserve [Roll Forward]
Accrual balance at January 3, 2016	63,327
Provision for estimated expenses incurred during the year	87,005
Payments made during the year	(150,332)
Accrual balance at July 3, 2016	$ 0

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Redeemable Common Stock (Details) - USD ($)			6 Months Ended
	Mar. 18, 2013	Jan. 14, 2013	Jul. 03, 2016	Jun. 28, 2015
Temporary Equity [Line Items]
Accretion on redeemable common stock			$ 0	$ 1,364,031
Private Placement
Temporary Equity [Line Items]
Redemption price per share (in USD per share)		$ 0.167
Minimum public offering (in USD per share)		4
Shares issue price per share (in USD per share)		$ 0.167
Redeemable common stock redemption value		$ 166,667
Common Stock | Private Placement
Temporary Equity [Line Items]
Redeemable common stock issued (in shares)		999,999
Investor
Temporary Equity [Line Items]
Redeemable common stock issued (in shares)	1,415,400
Threshold for redemption (percent)	75.00%
Redeemable common stock redemption value				13,446,300
Accretion on redeemable common stock				$ 1,364,031
Minimum | Investor
Temporary Equity [Line Items]
Equity redemption period	6 years
Maximum | Investor
Temporary Equity [Line Items]
Equity redemption period	7 years

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Stock Incentive Plans - Narrative (Details)						3 Months Ended		6 Months Ended
	Apr. 29, 2016 USD ($) $ / shares shares	Nov. 20, 2015 USD ($) $ / shares shares	Aug. 17, 2015 USD ($) $ / shares shares	Jan. 01, 2014 USD ($) $ / shares shares	Jul. 17, 2013 USD ($) $ / shares shares	Jul. 03, 2016 USD ($)	Jun. 28, 2015 USD ($)	Jul. 03, 2016 USD ($) employee	Jun. 28, 2015 USD ($)	Mar. 31, 2016 shares	Jan. 04, 2015 shares	Dec. 29, 2013 shares
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Tax benefit from share based compensation expense | $						$ 17,195	$ 2,038	$ 29,434	$ 4,092
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Unrecognized compensation cost | $						468,585		$ 468,585
Compensation cost, weighted average period (in years)								2 years 2 months 10 days
Selling, General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated share-based compensation expense | $						$ 46,900	$ 6,401	$ 85,998	$ 12,309
The 2013 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Number of shares reserved for future issuance												495,000
Shares granted	7,200			120,000	375,000
Granted (in USD per share) | $ / shares	$ 12.58			$ 3.33	$ 3.33
Weighted average grant date fair value | $	$ 20,160			$ 42,000	$ 86,450
The 2013 Stock Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Number of shares available for grant												495,000
Expiration period								10 years
Employee terminations | employee								0
The 2013 Stock Incentive Plan | Award vesting on grant date | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage				20.00%	20.00%
The 2013 Stock Incentive Plan | Award vesting, first anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage				20.00%	20.00%
The 2013 Stock Incentive Plan | Award vesting, second anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage				20.00%	20.00%
The 2013 Stock Incentive Plan | Award vesting, third anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage				20.00%	20.00%
The 2013 Stock Incentive Plan | Award vesting, fourth anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage				20.00%	20.00%
2014 Omnibus Performance Award Plan
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Shares granted	5,000	15,000	230,000
Granted (in USD per share) | $ / shares	$ 12.58	$ 11.50	$ 12.50
Weighted average grant date fair value | $	$ 14,000	$ 33,500	$ 625,600
Number of shares authorized										450,000	250,000
2014 Omnibus Performance Award Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Employee terminations | employee								0
2014 Omnibus Performance Award Plan | Award vesting on grant date | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage			20.00%
2014 Omnibus Performance Award Plan | Award vesting, first anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage			20.00%
2014 Omnibus Performance Award Plan | Award vesting, second anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage			20.00%
2014 Omnibus Performance Award Plan | Award vesting, third anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage			20.00%
2014 Omnibus Performance Award Plan | Award vesting, fourth anniversary | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award vesting rights, percentage			20.00%
2014 Omnibus Performance Award Plan | Director
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Shares granted			45,000
2014 Omnibus Performance Award Plan | Employee
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Shares granted			185,000

XML

Stock Incentive Plans - Valuation Assumptions (Details) - Employee Stock Option	Apr. 29, 2016	Nov. 20, 2015	Aug. 17, 2015	Jan. 01, 2014	Jul. 17, 2013
The 2013 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	40.00%			34.00%	34.00%
Dividend yield	5.00%			0.00%	0.00%
Expected term (in years)	5 years			4 years	4 years
Risk-free rate	1.28%			1.27%	0.96%
2014 Omnibus Performance Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	40.00%	35.00%	38.00%
Dividend yield	5.00%	5.00%	4.80%
Expected term (in years)	5 years	5 years	5 years
Risk-free rate	1.28%	1.70%	1.58%

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Stock Incentive Plans - Schedule of stock options and stock awards (Details) - USD ($)				6 Months Ended	12 Months Ended
	Apr. 29, 2016	Jan. 01, 2014	Jul. 17, 2013	Jul. 03, 2016	Jan. 03, 2016
Aggregate Intrinsic Value
Share price (in USD per share)				$ 13.20
The 2013 Stock Incentive Plan
Number of Shares
Granted	7,200	120,000	375,000
Weighted Average Exercise Price
Granted (in USD per share)	$ 12.58	$ 3.33	$ 3.33
The Plan and the 2014 Plan
Number of Shares
Outstanding at January 3, 2016				695,000
Granted				12,200
Exercised				17,520
Forfeited or expired				7,200
Outstanding at July 3, 2016				682,480	695,000
Vested and exercisable (in shares)				278,720
Weighted Average Exercise Price
Outstanding at January 3, 2016 (in USD per share)				$ 6.54
Granted (in USD per share)				12.58
Exercised (in USD per share)				3.33
Forfeited (in USD per share)				3.33
Outstanding at April 3, 2016 (in USD per share)				6.77	$ 6.54
Vested and exercisable (in USD per share)				$ 5.02
Weighted Average Remaining Contractual Term (in years)
Outstanding weighted average remaining contractual term				7 years 10 months 25 days	8 years 4 months 5 days
Granted				10 years
Exercised				0 years
Forfeited or expired				0 years
Vested and exercisable				7 years 5 months 23 days
Aggregate Intrinsic Value
Outstanding at April 3, 2016				$ 4,388,346
Vested and exercisable				$ 2,279,930

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Income Tax Disclosure [Abstract]
Income tax expense	$ 430,385	$ 801,090	$ 1,265,952	$ 1,436,718
Actual effective rate	41.80%	32.10%
Statutory rate	34.00%	34.00%
Increase to effective tax rate	$ 49,923
Change in enacted tax rate (percent)	4.90%	(2.70%)
Reduction in enacted tax rate		$ (68,827)

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Operating Leases - Narrative (Details)	3 Months Ended		6 Months Ended
	Jul. 03, 2016 USD ($)	Jun. 28, 2015 USD ($)	Jul. 03, 2016 USD ($) lease	Jun. 28, 2015 USD ($)
Leases, Operating [Abstract]
Number of leases providing for escalating rents | lease			3
Operating lease, total rent expense | $	$ 477,100	$ 334,926	$ 927,305	$ 662,438

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Operating Leases - Schedule of future minimum lease payments (Details)	Jul. 03, 2016 USD ($)
Leases, Operating [Abstract]
2016	$ 995,203
2017	1,934,819
2018	1,782,160
2019	1,380,108
2020	850,998
Thereafter	85,456
Total	$ 7,028,744

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Retirement Plans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of employees gross pay			3.00%
Employer contribution amount	$ 100,356	$ 94,603	$ 215,981	$ 183,966
United States
Defined Benefit Plan Disclosure [Line Items]
Employer contribution amount	1,671		1,671
Canada
Defined Benefit Plan Disclosure [Line Items]
Employer contribution amount	$ 15,248		$ 15,248
Defined contribution plan, initial contribution
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent			100.00%
Employer matching contribution, percent of employees gross pay			3.00%
Defined contribution plan, additional contribution
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent			50.00%
Employer matching contribution, percent of employees gross pay			2.00%

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Related Party Transactions (Details) - USD ($)			3 Months Ended		6 Months Ended
	Apr. 29, 2016	Mar. 18, 2013	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Investor | Subordinated debt | Accrued Interest
Related Party Transaction [Line Items]
Interest expense, related party			$ 0	$ 523,876	$ 0	$ 1,041,995
Affiliated Entity | Management Agreement
Related Party Transaction [Line Items]
Management agreement, term		5 years
Annual management fees		$ 300,000
Expenses from management contract			$ 56,250	$ 75,000	$ 112,500	$ 150,000
Affiliated Entity | Expenses from Intasco Acquisition
Related Party Transaction [Line Items]
Expenses from management contract	$ 259,900

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Earnings Per Share - Schedule of earnings per share, basic and diluted (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015	Jan. 03, 2016
Basic earnings per share calculation:
Net income	$ 599,172	$ 1,691,900	$ 2,432,823	$ 2,884,637
Net income attributable to common stockholders	$ 599,172	$ 1,691,900	$ 2,432,823	$ 2,884,637
Weighted average shares outstanding (in shares)	9,680,374	6,739,998	9,646,266	6,739,998
Net income per share-basic (in USD per share)	$ 0.06	$ 0.25	$ 0.25	$ 0.43
Diluted earnings per share calculation:
Weighted average shares outstanding (in shares)	9,680,374	6,739,998	9,646,266	6,739,998
Effect of dilutive securities:
Stock options (in shares)	211,765	197,845	211,644	194,901
Warrants (in shares)	13,702	85,100	11,536	79,868
Diluted weighted average shares outstanding (in shares)	9,905,841	7,022,943	9,869,446	7,014,767
Net income (loss) per share-diluted (in USD per share)	$ 0.06	$ 0.24	$ 0.25	$ 0.41
Warrants for Underwriters
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities considered in the computation of earnings per share (in shares)			141,000
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities considered in the computation of earnings per share (in shares)			2,286		139,200
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities considered in the computation of earnings per share (in shares)			425,280		495,000
Antidilutive securities excluded from computation of EPS (in shares)			245,000
The 2013 Stock Incentive Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			7,200
2014 Omnibus Performance Award Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			5,000

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Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended		6 Months Ended
	Sep. 07, 2016	Aug. 16, 2016	Jul. 03, 2016	Jun. 28, 2015	Jul. 03, 2016	Jun. 28, 2015
Subsequent Event [Line Items]
Dividends declared (in USD per share)			$ 0.15	$ 0	$ 0.30	$ 0
Subsequent Event
Subsequent Event [Line Items]
Dividends declared (in USD per share)		$ 0.15
Subsequent Event | Forecast
Subsequent Event [Line Items]
Dividends	$ 1.4