Material Agreement (Form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

On April 20, 2026, Electro-Sensors, Inc. ("Electro-Sensors", the "Company", "we", "us" or "our") entered into an Agreement and Plan of Merger (the "Merger Agreement") with steute Industrial Controls, Inc., a Connecticut corporation ("steute" or "Parent"), and Steute Burwell, Inc., a Minnesota corporation and wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to the Merger Agreement, Steute Burwell, Inc. will merge with and into the Company with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), by virtue of the Merger and without any further action on the part of the Company, Merger Sub, Parent, or any holder of shares of common stock of the Company or Merger Sub, each share of common stock of the Company issued and outstanding immediately prior to the Effective Time (other than dissenting shares and the shares held by the Company, Parent, or Merger Sub) will be converted into the right to receive US $7.75 in cash (before giving effect to any required Tax withholdings), without interest (the "Merger Consideration") (collectively, the "Merger"). The Merger Agreement contains customary representations, warranties, and covenants.

Our board of directors has approved and declared the Merger Agreement advisable and resolved to recommend that our shareholders approve the Merger Agreement and related matters. We expect the Merger to be consummated after obtaining the required approval by our stockholders and the satisfaction of certain other customary closing conditions.

Conditions to Closing

The consummation of the Merger is subject to the satisfaction or waiver of customary closing conditions, include:

 approval of the Merger and related agreement by the shareholders of the Company;

 no legal injunctions or constraints against the Merger;

 accuracy of the representations and warranties of each party;

 each party having performed in all material respects, all obligations and complied in all material respects with all covenants required by the Merger Agreement;

 no material adverse effect having occurred after the date of the Merger Agreement;

 each Support Agreement remaining in full force and effect and binding obligations of each Support Shareholder;

 holders of no more than ten percent (10%) of the outstanding shares of Company Common Stock entitled to vote having properly exercise statutory dissenters' rights;

 the ESOP trustee having provided evidence of the legally valid completion of the ESOP vote and the ESOP determination; and

 unless otherwise agreed by Parent by a particular case, holders of all Company Options and the Company having duly executed and delivered an Option Cancellation Receipt and Release to Parent.

Termination

The Company will be required to pay steute a termination fee of $1,000,000, plus reimbursement of steute's expense up to $300,000, under certain circumstances, including if the Merger Agreement is terminated due to a Recommendation Change by the Company Board or if the Company enters into or consummates an alternative acquisition transaction following termination under certain circumstances.

Support Agreements

In connection with the execution of the Merger Agreement, certain members of the Company's board of directors and certain beneficial owners of the Company (the "Support Shareholders") entered into voting and support agreements (each, a "Support Agreement"), agreeing to vote all of their shares of the Company's stock in favor of the various proposals related to the Merger Agreement and any other matters necessary for consummation of the Merger and against any action reasonably expected to impede, delay or materially and adversely affect the Merger.

The foregoing descriptions of the Merger Agreement and the Support Agreements do not purport to be complete and are qualified in their entirety by the actual agreements. The Merger Agreement and Support Agreement will be filed as exhibits with the Securities and Exchange Commission (the "SEC").