Exhibit 10.1

 

 

 

STOCK PURCHASE AGREEMENT

By and Among

ASTRONICS CORPORATION,

and

PLANESITE HOLDINGS, INC.,

and

THE ROBERT ABBINANTE TRUST DATED OCTOBER 14, 2009,

THE ABBINANTE 2013 IRREVOCABLE TRUST # 1,

THE ABBINANTE 2013 IRREVOCABLE TRUST #2

and

ROBERT ABBINANTE

Dated as of December 23, 2014

 

 

 

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SCHEDULES

 

Schedule

  

Description

1.1(a)

   Accounts Payable

1.1(b)

   Accounts Receivable

1.1(c)

   Accrued Liabilities

1.1(d)

   Sale Event Compensation Plans

1.1(e)

   Inventory

3.1

   Ownership of Shares

3.2

   Foreign Qualifications

3.4(a)

   Violations and/or Breaches

3.4(b)

   Required Consents and Approvals

3.5(a)

   Capitalization

3.6

   Subsidiaries and Investments

3.7

   Financial Statements

3.7(b)

   Deviations from GAAP

3.8

   Liabilities

3.9(a)

   Tangible Personal Property

3.9(b)

   Liens on Tangible Personal Property

3.12(a)

   Contracts

3.12(b)

   Loss Contracts

3.12(c)

   Government Contracts

3.13

   Litigation

3.14

   Tax Matters

3.15

   Insurance

3.16(c)

   Intellectual Property; Grants of Licenses

3.16(d)

   Third Party Intellectual Property

3.17

   Compliance with Laws, Orders and Permits

3.18(b)

   Disputed Obligations

3.19

   Inventory

3.20

   Suppliers and Customers

3.21(a)

   Personnel Matters

3.21(d)

   Immigration Matters

3.22(a)

   Employee Plans

3.23

   Environmental Matters

3.24

   Affiliate Transactions

3.25

   Bank Accounts; Powers of Attorney

3.26

   Permits

3.27

   Absence of Certain Changes

3.28

   Brokers’ or Finders’ Fees

3.29(a)

   Product Warranties

3.29(c)

   Extended Warranties

3.31(a)

   Import and Export Licenses

3.31(b)

   Import and Export Disclosures

3.31(d)

   Import and Export Disclosures

 

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of December 23, 2014
(the “Signing Date”) by and among ASTRONICS CORPORATION, a New York corporation
(“Purchaser”), PLANESITE HOLDINGS, INC., an Illinois corporation (“Planesite”),
the stockholders of Planesite signatory hereto (such stockholders are sometimes
hereinafter referred to individually as a “Stockholder” and, collectively as the
“Stockholders”) and Robert Abbinante (“Abbinante”).

W I T N E S S E T H:

WHEREAS, the Stockholders own all of the issued and outstanding shares of stock
in Planesite (the “Shares”); and

WHEREAS, Planesite holds all of the issued and outstanding shares of stock in
Armstrong Aerospace, Inc., an Illinois corporation (“Armstrong”); and

WHEREAS, Armstrong holds all of the issued and outstanding shares of stock in
Armstrong Aerospace DISC, Inc., an Illinois corporation (“Armstrong DISC” and
together with Planesite and Armstrong, the “Companies” and each a “Company”);
and

WHEREAS, the Companies are engaged in the business of aviation engineering,
certification, design, and manufacture of technologies for aircrafts (the
“Business”); and

WHEREAS, the Stockholders desire to sell, and the Purchaser desires to purchase,
all of the Shares pursuant to the terms of this Agreement; and

WHEREAS, it is the intention of the parties hereto that, upon consummation of
the transactions contemplated by this Agreement, the Purchaser will own directly
all of the issued and outstanding Shares and all equity and voting interest in
Planesite.

NOW, THEREFORE, IT IS AGREED:

ARTICLE I

DEFINITIONS

Section 1.1 Defined Terms. When used in this Agreement, the following terms will
have the respective meanings specified below.

“Accounts Payable” means (i) all bona fide accounts payable of a Company
(exclusive of Accrued Liabilities, unpaid Transaction Costs, Indebtedness and
accounts payable of such Company to Affiliates of such Company) and (ii) all
checks written on bank accounts of any Company prior to the Closing Date which
have not cleared as of the Signing Date. Schedule 1.1(a) sets forth a list of
the Accounts Payable as of the Signing Date, which Schedule shall be updated by
the Companies in accordance with Section 5.12 as of a date within two
(2) Business Days prior to the Closing Date.

“Accounts Receivable” means all bona fide accounts receivable of a Company,
whether billed or unbilled (exclusive of any accounts receivable of such Company
from Affiliates of such Company). Schedule 1.1(b) sets forth a list of the
Accounts Receivable as of the Signing Date, which Schedule shall be updated by
the Companies in accordance with Section 5.12 as of a date within two
(2) Business Days prior to the Closing Date.

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“Accrued Liabilities” means all accrued expenses of a Company (exclusive of
Accounts Payable, unpaid Transaction Costs and Indebtedness). Schedule 1.1(c)
sets forth a list of the Accrued Liabilities as of November 30, 2014, which
Schedule shall be updated by the Companies in accordance with Section 5.12 as of
a date within two (2) days prior to the Closing Date.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided, however, that, for the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means 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 and provided, further, that an Affiliate of
any Person will also include (i) any Person that directly or indirectly owns
more than five percent (5%) of any class of capital stock or other equity
interest of such Person, (ii) any officer, director, trustee or beneficiary of
such Person, (iii) any spouse, parent, sibling or descendant of any Person
described in clauses (i) or (ii) above, and (iv) any trust for the benefit of
any Person described in clauses (i) through (iii) above or for any spouse, issue
or lineal descendant of any Person described in clauses (i) through (iii) above.
Notwithstanding anything herein to the contrary, Armstrong AeroMod, LLC, an
Illinois limited liability company, shall not be deemed an Affiliate of any
Company.

“Books and Records” means originals or true copies of all operating data and
records of the Companies including, without limitation, financial, accounting
and bookkeeping books and records, purchase and sale orders and invoices, sales
and sales promotional data, advertising materials, marketing analyses, past and
present price lists, past and present customer service files, credit files,
warranty files, batch and product serial number records and files, written
operating methods and procedures, specifications, operating records and other
information related to the Companies’ assets, properties and rights, reference
catalogues, insurance files, personnel records, records relating to potential
acquisitions and other records, on whatever media, pertaining to the Companies
or its business or operations, or to customers or suppliers of, or any other
parties having contracts or other business relationships with, the Companies.

“Business Day” means any day, other than a Saturday, Sunday or a day on which
banks are permitted or required by law to be closed in the State of Illinois.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder. Section references to the
Code are to the Code as in effect at the date of this Agreement.

“Confidential Information” means any information concerning the organization,
business or finances of a Company or of any third party which any Company is
currently under an obligation to keep confidential or that is currently
maintained by a Company as confidential, including, without limitation,
confidential or secret processes, products, technology, know-how, merchandising
and advertising programs and plans, suppliers, services, techniques, customers
and plans with respect to a Company; provided, however, that notwithstanding
anything in the foregoing, the term “Confidential Information” shall not include
information that (i) is or becomes generally available to the public, other than
as a result of disclosure by the Stockholders, Abbinante, or their
Representatives in violation of this Agreement, or (ii) becomes available to the
Stockholders, Abbinante, or their Representatives from a Person other than the
Purchaser or a Company on a non-confidential basis, provided that such Person
was not known by the Stockholders, Abbinante, or their Representatives to be
bound by an obligation of confidentiality to the Purchaser or a Company or its
Representatives with respect to such information, or (iii) is required to be
disclosed pursuant to a subpoena or court order.

 

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“Contract(s)” means the contracts, agreements, purchase orders, proposals and
commitments, whether written or oral, which are currently in effect and to which
a Company is a party or by which it or its assets or properties are bound,
including, without limitation, contracts, agreements, purchase orders, proposals
and commitments:

(i) which contain restrictions with respect to payment of dividends or any other
distribution in respect of the capital stock or other equity interests of a
Company;

(ii) relating to capital expenditures or other purchases of material, supplies,
equipment or other assets or properties (other than purchase orders for
Inventory or supplies in the Ordinary Course of Business) with respect to a
Company in excess of $5,000 individually, or $10,000 in the aggregate;

(iii) involving a loan (other than Accounts Receivable from trade debtors in the
Ordinary Course of Business) or advance to (other than travel and entertainment
allowances to the employees of a Company extended in the Ordinary Course of
Business), or investment in, any Person or relating to the making of any such
loan, advance or investment;

(iv) involving Indebtedness;

(v) under which any Person (other than a Company) has directly or indirectly
guaranteed Indebtedness;

(vi) granting or evidencing a Lien on any properties or assets of a Company;

(vii) regarding the employment of any individual;

(viii) providing for any management, consulting, financial advisory or any other
similar service;

(ix) limiting the ability of a Company to engage in any line of business or to
compete with any Person;

(x) (including letters of intent) involving the future disposition or
acquisition of assets or properties, or any merger, consolidation or similar
business combination transaction, whether or not enforceable;

(xi) involving any joint venture, partnership, strategic alliance, stockholders’
agreement, co-marketing, co-promotion, co-packaging, joint development or
similar arrangements;

(xii) involving any resolution or settlement of any actual or threatened
litigation, arbitration, claim or other dispute;

(xiii) involving a confidentiality, standstill or similar arrangement;

 

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(xiv) involving leases or subleases of personal property to which a Company is a
party (as lessee or lessor) and involving an annual base rental payment in
excess of $25,000;

(xv) involving the payment or receipt by a Company of $25,000 or more which are
not cancelable by such Company without penalty on thirty (30) days’ or less
notice;

(xvi) containing a “most favored nation” clause or similar provision;

(xvii) granting a power of attorney or other similar grant of agency; and

(xviii) all other Contracts that are material to the Business.

“Current Real Property” means the land and buildings at 1437 Harmony Court,
Itasca, Illinois and 1377 Industrial Drive, Itasca, Illinois (other than the
buildings and improvements owned by Armstrong), each leased by Armstrong
pursuant to the applicable Lease.

“Damages” means any and all losses, liabilities, claims, damages, demands, lost
profits, amounts due from judgments or Proceedings, assessments, costs and
expenses, including interest, penalties, reasonable attorney’s fees and any and
all reasonable out-of-pocket expenses incurred by an Indemnified Party in
investigating, preparing or defending against any Proceeding, commenced or
threatened or any claim. Damages will not be deemed to include any punitive
damages, incidental damages, consequential damages, special damages, indirect
damages, or diminution in value damages, except to the extent a Person is
required to pay such damages to a third party in connection with a matter for
which such Person is otherwise entitled to indemnification under this Agreement.

“Environmental Claim” means any notice of violation, notice of potential or
actual responsibility or liability, claim, suit, action, judgment, demand, fine,
penalty, directive or order (including those for contribution and/or indemnity)
by any Governmental or Regulatory Authority or other Person for any damage
(including, but not limited to, personal injury, tangible or intangible property
damage, natural resource damage, indirect or consequential damages, governmental
costs, investigative costs, removal, mitigation, response or remediation costs,
nuisance, pollution, contamination or other adverse effects on the environment),
fines, penalties or restrictions or conditions on any Permit resulting from or
relating to (i) any alleged injury or threat of injury to health, safety or the
environment, (ii) the presence of, a Release or threatened Release of, or
exposure to, any Hazardous Substances, (iii) the generation, manufacture,
processing, distribution, use, handling, transportation, storage, treatment or
disposal of any Hazardous Substances, or (iv) non-compliance with any
Environmental Laws or any term or condition of any Environmental Permit.

“Environmental Law” means any existing Law, Order or other requirement of law,
including any principle of common law, or binding agreement with any
Governmental or Regulatory Authority, relating to the protection of human
health, natural resources or the environment, or to the manufacture, use,
transport, treatment, storage, disposal, release or threatened release of any
Hazardous Substances.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder. Section
references to ERISA are to ERISA as in effect at the date of this Agreement.

 

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“Estimated Tax Gross Up” means the Tax Gross Up paid by the Purchaser to the
Stockholders on the Closing Date as estimated in good faith and mutually agreed
by the Purchaser and the Stockholders at least two (2) Business Days prior to
the Closing Date.

“Final Tax Gross Up” means the Tax Gross Up as reflected in the Final Gross Up
Schedule as finally determined in accordance with Section 2.4.

“Government Contract” means a Contract between a Company and a Governmental or
Regulatory Authority, or a prime contractor or subcontractor thereof.

“Governmental or Regulatory Authority” means any instrumentality, subdivision,
court, administrative agency, commission, official or other authority of the
United States or any other country or any state, province, prefect,
municipality, locality or other government or political subdivision thereof, or
any quasi-governmental or private body exercising any regulatory, taxing,
legislative, judicial, quasi-judicial, importing or other governmental or
quasi-governmental authority.

“Hazardous Substances” means: (i) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws, including, but not limited to, the definition of
“contaminant,” “pollutant,” “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous wastes,” “restricted hazardous
wastes,” “toxic substances,” or “toxic pollutants”; and (ii) any petroleum or
petroleum-derived products, radon, radioactive materials or wastes, asbestos in
any form, lead or lead-containing materials, urea formaldehyde foam insulation,
and polychlorinated biphenyls.

“Indebtedness” means, without duplication, (i) any obligations of a Company for
borrowed money (including all obligations for principal, interest, premiums,
penalties, fees, expenses and breakage costs) or indebtedness of a Company
issued or incurred in substitution or exchange for obligations for borrowed
money, (ii) all Accounts Payable or other debts due and owing from a Company to
its Affiliates, (iii) the amount of customer advances, less $850,000,
(iv) amounts owing by a Company as deferred purchase price for property or
services (other than trade payables incurred in the Ordinary Course of
Business), (v) any obligations of a Company evidenced by any note, bond,
debenture or other debt security, (vi) any obligations of a Person other than a
Company secured by a Lien against (A) the Shares or (B) any right, title and
interest in and to the Business, properties, assets and rights of any kind,
whether tangible or intangible, real or personal, and owned by a Company or in
which a Company has any interest, (vii) any obligations or commitments of a
Company to repay deposits or other amounts advanced by and owing to third
parties (other than customer advances), (viii) any obligations of a Company
under capital leases, (ix) other than bonuses payable pursuant to the terms of
the Sale Event Compensation Plans set forth on Schedule 1.1(d), any obligations
of a Company which would become due and owing under any employment, severance,
bonus, commission, non-competition or similar agreement upon the execution of
this Agreement or the consummation of the transactions contemplated hereby,
(x) accrued royalties, (xi) funded letters of credit and (xii) all obligations
of the types described in clauses (i) through (xi) above of any Person other
than a Company, the payment of which is guaranteed, directly or indirectly, by a
Company. Indebtedness will not, however, include (i) Accounts Payable,
(ii) Accrued Liabilities, and (iii) the endorsement of negotiable instruments
for collection in the Ordinary Course of Business.

 

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“Indemnifiable Claim” or “Indemnifiable Claims” means (i) Purchaser
Indemnifiable Claim(s) when used in the context of a Purchaser Indemnified Party
as the Indemnified Party, and/or (ii) Stockholder Indemnifiable Claim(s) when
used in the context of a Stockholder Indemnified Party as the Indemnified Party.

“Indemnified Party” means (i) a Purchaser Indemnified Party when used in the
context of an Indemnifiable Claim under Section 8.2(a) and/or (ii) a Stockholder
Indemnified Party when used in the context of an Indemnifiable Claim under
Section 8.2(b).

“Indemnifying Party” means (i) the Stockholders, jointly and severally, in
connection with a Purchaser Indemnifiable Claim and (ii) the Purchaser in
connection with a Stockholder Indemnifiable Claim.

“Intellectual Property” means all intellectual property owned, leased or used by
a Company to conduct the Business including, without limitation, (i) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and re-examinations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations and
renewals in connection therewith, (iv) all mask works and all applications,
registrations, and renewals in connection therewith, (v) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (vi) all computer software (including data and related
documentation and including software installed on hard disk drives) other than
generally available commercial off-the-shelf computer software subject to
shrinkwrap or clickwrap licenses and (vii) all copies and tangible embodiments
of any of the foregoing (in whatever form or medium).

“Inventory” means all raw material, work-in-process and finished goods inventory
of a Company. Schedule 1.1(e) sets forth the Inventory as of November 30, 2014,
which Schedule shall be updated by the Companies in accordance with Section 5.12
as of December 31, 2014. Purchaser acknowledges that the Inventory provided as
of November 30, 2014 is an estimate only and not subject to any physical
inventory examination conducted by the Companies as of such date.

“Law” means any existing statute, law, ordinance, rule or regulation of any
Governmental or Regulatory Authority.

“Lease” means that certain (i) Lease Agreement, dated as of January 1, 2013, by
and between Harmony Court Properties, LLC and Armstrong, related to the Current
Real Property located at 1437 Harmony Court, Itasca, Illinois; and (ii) Lease
Agreement, dated as of January 1, 2013, by and between Harmony Court Properties
III, LLC and Armstrong, related to the Current Real Property located at 1377
Industrial Drive, Itasca, Illinois.

“Liens” means liens, security interests, options, rights of first refusal,
claims, easements, mortgages, charges, indentures, deeds of trust, rights of way
or similar encumbrances.

 

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“Material Adverse Change” or “Material Adverse Effect” means, (i) when used with
respect to a Company or the Business, any change or effect that individually or
in the aggregate is material and adverse to such Company, taken as a whole, or
(ii) when used with respect to the Purchaser, any materially adverse change in
or effect on (including any material delay) the ability of the Purchaser to
perform its obligations hereunder; provided that none of the following shall be
deemed to constitute, and shall not be taken into account in determining whether
there has been, a Material Adverse Change or Material Adverse Effect: (A) the
execution, delivery, announcement or pendency of this Agreement or the
transactions contemplated by this Agreement; (B) conditions generally affecting
the industry in which the Business participates or the United States economy as
a whole so long as such conditions do not affect the Business in a
disproportionate manner as compared with businesses in the same industry
(C) compliance with the terms of, or the taking of any action required by this
Agreement; (D) any change in accounting requirements or principles, any change
in foreign currency exchange rates, or any change in applicable Laws or the
interpretation thereof by a Governmental or Regulatory Authority; (E) changes
that are the result of acts of war, armed hostilities, acts of terrorism, or
natural disasters, whether or not pursuant to the declaration of a national
emergency or war; (F) changes resulting from the disruption of financial,
banking, or securities markets (including any decline in the price of any
security or any market index); (G) changes in laws, rules, regulations, orders,
or other binding directives issued by any Governmental or Regulatory Authority;
and (H) changes resulting from any existing event, occurrence, or circumstance
with respect to which the Companies have disclosed on the Schedules.

“Order” means any judgment, order, injunction, decree, writ, permit or license
of any Governmental or Regulatory Authority or any arbitrator.

“Ordinary Course of Business” means an action taken by a Person if such action
is consistent with the past practices of such Person and/or taken in the
ordinary course of such Person’s business.

“Permits” means all permits, licenses, consents, franchises, approvals and other
authorizations (and any pending applications for issuance or renewal thereof)
required from any Governmental or Regulatory Authority or other Person with
respect to a Company or the operation of the Business and necessary to conduct
the Business as presently conducted.

“Permitted Liens” means (i) Liens for Taxes and other similar governmental
charges and assessments which are not yet due and payable or that are being
contested in good faith and, in each case, for which adequate reserves have been
established in accordance with GAAP, (ii) Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen and other like liens arising
in the Ordinary Course of Business for sums not yet due and payable; and
(iii) Liens on the underlying interest of the landlord or lessor of any property
leased by a Company (to the extent such Company is not in default under such
lease).

“Person” means and includes an individual, a partnership, a joint venture, a
corporation, a limited liability company, a limited liability partnership, a
trust, an incorporated organization and a Governmental or Regulatory Authority.

“Proceeding” means any claim, demand, action, suit, litigation, dispute, audit,
Order, writ, injunction, judgment, assessment, decree, grievance, arbitration,
mediation or other proceeding, whether civil, criminal, administrative or
investigative.

 

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“Release” means any actual release, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
abandonment, disposing or allowing to escape or migrate into or through the
environment (including, without limitation, ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any
building, structure, facility or fixture).

“Representative” means any officer, director, manager, principal, attorney,
accountant, agent, employee or other representative of any Person.

“Rights” means (i) warrants, options, restricted stock, performance units,
convertible securities and other similar arrangements or commitments which
obligate a Company to issue or dispose of any of its capital stock and
(ii) stock appreciation rights, performance units and other similar stock-based
rights, whether they obligate a Company to issue equity securities or other
securities or to pay cash.

“Subsidiary” means, with respect to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation will have or might have voting power by reason of the happening
of any contingency) is owned by such Person directly or indirectly through one
or more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person,
directly or indirectly, through one or more Subsidiaries of such Person, has
more than a 50% equity interest or more than 50% of the voting control.

“Tangible Personal Property” means all of the tangible personal property (other
than Inventory) owned or leased by a Company or in which a Company has any
interest, including, without limitation, production and processing equipment,
warehouse equipment, computer hardware, furniture and fixtures, tooling,
transportation equipment, leasehold improvements, supplies and other tangible
assets, together with any transferable manufacturer or vendor warranties related
thereto.

“Tax Return” means any return, report, information return or other document
(including any related or supporting information and, where applicable, profit
and loss accounts and balance sheets) with respect to Taxes required to be filed
with any Governmental or Regulatory Authority.

“Taxes” means all taxes, assessments, charges, duties, fees, levies or other
governmental charges, including all U.S. and non-U.S. federal, state, local and
other income, franchise, profits, capital gains, capital stock, transfer, sales,
use, occupation, property, excise, severance, windfall profits, stamp, license,
payroll, withholding and other taxes, assessments, charges, duties, fees, levies
or other similar governmental charges (whether payable directly or by
withholding and whether or not requiring the filing of a Tax Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest and will include any liability for such amounts as a result either of
being a Stockholder of a combined, consolidated, unitary or affiliated group or
of a contractual obligation to indemnify any Person or other entity for such
amounts.

“Transaction Costs” means all fees, costs and expenses paid or accrued by the
Stockholders and/or a Company in connection with the transactions contemplated
by this Agreement, including, without limitation, the fees and expenses of
attorneys, accountants, consultants and financial advisers.

 

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“Transaction Documents” means this Agreement (including the Schedules and
Schedule Updates), the Escrow Agreement and all other instruments and agreements
to be executed and delivered hereunder and thereunder.

Section 1.2 Additional Defined Terms. In addition to the terms defined in
Section 1.1, the following terms will have the respective meanings assigned
thereto in the sections indicated below.

 

DEFINED TERMS

  

SECTION

“Aggregate Cap”    8.3(a) “Agreed Claims”    8.4 “Agreement”    Preamble
“Armstrong”    Recitals “Armstrong DISC”    Recitals “Balance Sheet”    3.7(a)
“Balance Sheet Date”    3.7(a) “Business”    Recitals “Claim Notice”    8.4(a)
“Closing”    2.3 “Closing Date”    2.3 “Closing Payment”    2.2(a) “Company” or
“Companies”    Recitals “Employee”    3.21(a) “Employee Plans”    3.22(a)
“Escrow Account”    2.2(b) “Escrow Account 1”    2.2(b) “Escrow Account 2”   
2.2(b) “Escrow Agent”    2.2(b) “Escrow Agreement”    2.2(b) “Escrow Amount”   
2.2(b) “Estimated Tax Gross Up”    5.13(b) “FAR”    3.12(c)(i) “Final Gross Up
Schedule”    2.4(b) “Financial Statements”    3.7(a) “General Cap”    8.3(a)
“GoGo Receivable”    2.2 “Gross Up Arbitrator”    2.4(b) “Initial Allocation
Schedule”    2.4(a) “Initial Gross Up Schedule”    2.4(a) “Objecting
Stockholder(s)”    2.4(b) “Planesite”    Recitals “Pre-Closing Taxes    5.9(e)
“Pre-Closing Tax Periods”    5.3(a) “Purchaser Indemnifiable Claim”    8.2(a)
“Purchaser Indemnified Party”    8.2(a) “Purchase Price”    2.2 “Purchaser”   
Preamble “Schedule Update”    5.12 “Section 338(h)(10) Election(s)”    5.13(a)

 

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“Shares”    Recitals “Stockholder(s)”    Preamble “Stockholder Indemnifiable
Claim”    8.2(b) “Stockholder Indemnified Party”    8.2(b) “Straddle Tax
Periods”    5.9(b) “Tax Gross Up”    5.13(b) “Threshold”    8.3(a)

Section 1.3 Construction. In this Agreement, unless the context otherwise
requires:

(a) any reference in this Agreement to “writing” or comparable expressions
includes a reference to facsimile or e-mail transmission or comparable means of
communication;

(b) words expressed in the singular number will include the plural and vice
versa, words expressed in the masculine will include the feminine and neuter
gender and vice versa;

(c) references to Articles, Sections, Schedules and Recitals are references to
articles, sections, schedules and recitals of this Agreement;

(d) reference to “day” or “days” are to calendar days;

(e) this Agreement or any other agreement or document will be construed as a
reference to this Agreement or, as the case may be, such other agreement or
document as the same may have been, or may from time to time be, amended,
varied, novated or supplemented; and

(f) “include,” “includes,” and “including” are deemed to be followed by “without
limitation” whether or not they are in fact followed by such words or words of
similar import.

Section 1.4 Schedules and Exhibits. The Schedules to this Agreement are
incorporated into and form an integral part of this Agreement.

Section 1.5 Knowledge. Where any representation or warranty contained in this
Agreement is expressly qualified by reference to the “knowledge of the Company”
or “knowledge of the Companies,” such knowledge means (i) the actual knowledge
of Robert Abbinante and M. Chryss Crockett, in each case after due inquiry with
Shawn Raybell, Natalie Blachowicz, Steve Keysor, Dominick Zaccaro, and Anthony
Colletti.

ARTICLE II

SALE OF SHARES

Section 2.1 Sale of Shares. On the terms, and subject to the conditions, set
forth in this Agreement, the Stockholders agree to sell, assign, transfer and
deliver to the Purchaser on the Closing Date, and the Purchaser agrees to
purchase from the Stockholders on the Closing Date, the Shares. The certificates
or other documentation representing the Shares held by each Stockholder will be
delivered to the Purchaser at the Closing by such Stockholder, duly endorsed in
blank, or accompanied by such other instruments of transfer as are reasonably
acceptable to the Purchaser, in each case, with all necessary transfer tax and
other revenue stamps, acquired at such Stockholder’s expense, affixed and
canceled.

 

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Section 2.2 Consideration. The aggregate consideration for the Shares shall be
(a) FIFTY MILLION DOLLARS ($50,000,000.00) minus the aggregate amount of the
gross purchase price agreed upon by the parties following the Signing Date for
the purchase of the Current Real Property and the property located at 1431
Harmony Court, Itasca, Illinois from the owners thereof to the Purchaser, plus
the sum of (i) the Final Tax Gross Up and (ii) any amount remaining unpaid as of
the Closing Date from GoGo, LLC with respect to the Company’s invoice numbers
9057-57 and 9539-35 to GoGo, LLC dated November 17, 2014 and November 18, 2014,
respectively (such unpaid amount being the “GoGo Receivable”), minus (b) the sum
of (i) the aggregate amount of the Indebtedness, if any, and (ii) the aggregate
amount of the unpaid Transaction Costs (together, the “Purchase Price”). At
Closing the Purchaser will:

(a) pay an amount equal to (i) FIFTY MILLION DOLLARS ($50,000,000.00) minus the
aggregate amount of the gross purchase price agreed upon by the parties
following the Signing Date for the purchase of the Current Real Property and the
property located at 1431 Harmony Court, Itasca, Illinois from the owners thereof
to the Purchaser, plus the Estimated Tax Gross Up, minus (ii) the sum of (x) the
aggregate amount of the Indebtedness, if any, and (y) the aggregate amount of
the unpaid Transaction Costs (the “Closing Payment”), payable by wire transfer
of immediately available funds to an account identified to the Purchaser by the
Stockholders;

(b) deliver to an escrow agent mutually agreed upon by the parties (the “Escrow
Agent”) an amount equal to THREE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS
($3,750,000)(the “Escrow Amount”), for deposit into an escrow account (the
“Escrow Account”), in accordance with the terms of an escrow agreement to be
mutually agreed upon by the Purchaser, the Stockholders and the Escrow Agent
(the “Escrow Agreement”); provided that if the GoGo Receivable has not been
received by the Company in full prior to the Closing Date, the Escrow Amount
shall be increased by the amount of the GoGo Receivable remaining unpaid and the
Escrow Agreement shall provide that the Escrow Amount related to the GoGo
Receivable shall be held in a separate account from the other funds comprising
the Escrow Amount, with the GoGo Receivable being “Escrow Account 1” and the
remaining Escrow Amount being “Escrow Account 2” for the purposes of this
Agreement. The Escrow Amount so deposited will be applied by the Escrow Agent in
accordance with the terms and conditions of this Agreement and the Escrow
Agreement. Subject to and in accordance with the terms and conditions of this
Agreement and the Escrow Agreement, the Purchaser and the Stockholders will
jointly direct the Escrow Agent to release to the Stockholders as follows:

(i) if the Escrow Amount includes the GoGo Receivable, the funds in Escrow
Account 1 at such time as GoGo, LLC has paid the Company any portion of the GoGo
Receivable (provided that the parties agree that any part of the GoGo Receivable
remaining unpaid as of February 16, 2015 shall be released back to Purchaser);

(ii) the portion of the then-available Escrow Amount in Escrow Account 2 in
excess of $1,875,000 on the date that is twelve (12) months from the Closing
Date; provided, however, if pending claims with respect thereto exceed
$1,875,000 on such date, the Escrow Agent shall be directed to release only the
portion of Escrow Amount 2 in excess of the aggregate of such claims; and

(iii) the then-available Escrow Amount in Escrow Account 2, less any pending
claims or unpaid claims with respect thereto, on the date that is eighteen
(18) months from the Closing Date.

 

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Any portion of the Escrow Amount not paid to the Stockholders but released to
the Purchaser will be deemed to be a reduction in the Purchase Price; and

Section 2.3 Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place via the electronic exchange of
documents (by facsimile or electronic mail transmission) (i) three Business Days
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the Closing set forth in Article VI and VII (other than
conditions in connection with actions to be taken at the Closing itself), or
(ii) at such other time and place as the parties may agree in writing (the date
that the Closing actually takes place, the “Closing Date”). Notwithstanding the
foregoing, the effective time of the Closing will be deemed to have occurred at
12:01 a.m., Chicago, Illinois time, on the Closing Date, it being the intent of
the parties that the business of the Company on the Closing Date will be for the
account of the Purchaser.

Section 2.4 Adjustment of Tax Gross Up.

(a) Not later than one hundred eighty (180) days after the Closing Date, the
Purchaser shall deliver to the Stockholders an initial appraisal of the
consolidated assets of the Companies, prepared by an appraisal firm of national
repute approved by the Stockholders (which approval shall not be unreasonably
withheld), together with a preliminary computation of the allocation of Purchase
Price and all other items properly included in “aggregate deemed sale price” and
“adjusted grossed-up basis” within the meaning of Treasury Regulation
Section 1.338-4 and Treasury Regulation Section 1.338-5 (the “Initial Allocation
Schedule”). At that time, the Purchaser shall also deliver to Stockholders its
computation of the Final Tax Gross-Up amount based on the Initial Allocation
Schedule (the “Initial Gross Up Schedule”) and shall provide Stockholders with
such information as the Stockholders may request relating to Purchaser’s
determination of the Initial Allocation Schedule and Initial Gross Up Schedule.

(b) The Stockholders shall have a thirty (30) day review period following the
receipt of the Initial Allocation Schedule and the Initial Gross-Up Schedule. In
the absence of any written objection to such schedules by the Stockholders to
the Purchaser, the computations set forth in the Initial Allocation Schedule
shall become final (those final computations, the “Final Allocation”), the
Initial Gross Up Schedule shall become the “Final Gross Up Schedule,” and the
Purchaser shall pay to the Stockholders the Final Tax Gross Up payment as
provided below. If any Stockholder (an “Objecting Stockholder”) objects to the
content of the Initial Allocation Schedule or Initial Gross Up Schedule and the
preliminary computation of the Final Tax Gross Up payment therein, the Purchaser
and the Objecting Stockholder(s) shall promptly endeavor to reach agreement as
to the Final Allocation, the Final Gross Up Schedule and the resulting Final Tax
Gross Up payment. In the event that all Objecting Stockholders and the Purchaser
are unable to reach agreement within thirty (30) days, the Purchaser and the
Objecting Stockholders shall submit the matter to a nationally recognized U.S.
independent public accounting firm mutually agreed upon by the Purchaser and the
Objecting Stockholders (the “Gross Up Arbitrator”) for determination of the
Final Allocation and Final Gross-Up Schedule. The Gross Up Arbitrator’s
determination must be made within sixty (60) days after the expiration of the
aforesaid 30-day period. The Gross Up Arbitrator’s determination of the Final
Allocation and Final Gross Up Schedule will be restricted as

 

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to scope to address only those matters as to which Purchaser and the Objecting
Stockholder(s) have not reached agreement. The Gross Up Arbitrator’s
determination of the Final Allocation and the Final Gross Up Schedule shall be
final and binding on the Purchaser and the Objecting Stockholders, and all
expenses of the Gross Up Arbitrator shall be borne 50% by the Purchaser and 50%
by the Objecting Stockholders.

(c) Upon the final determination of the Final Allocation and Final Gross Up
Schedule pursuant to the provisions of Section 2.4(b), (i) if the Estimated Tax
Gross Up exceeds the Final Tax Gross Up, the Stockholders shall, jointly and
severally, pay the excess to the Purchaser by wire transfer of immediately
available funds within five (5) Business Days of the date the Final Tax Gross Up
is finally determined and (ii) if the Final Tax Gross Up exceeds the Estimated
Tax Gross Up, the Purchaser shall pay the excess to the Stockholders, allocated
among the Stockholders as set forth in the Final Gross up Schedule, by wire
transfer or delivery of other immediately available funds within five
(5) Business Days of the date the Final Tax Gross Up is finally determined. The
Final Tax Gross Up will not be subject to further adjustment after the amount
thereof has been finally determined pursuant to this Section 2.4.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

Except as set forth in the correspondingly numbered Schedules or Schedule
Updates (even if a representation or warranty in this Article III does not
contain a reference to such Schedules or Schedule Updates), the Companies and
the Stockholders (i) severally and not jointly, as to itself with respect to
representations and warranties concerning itself only, and (ii) jointly and
severally with respect to representations and warranties concerning the
Companies, represent and warrant to the Purchaser that the representations and
warranties contained in this Article III, together with the information set
forth in Schedules and Schedule Updates, are correct and complete as of the
Signing Date and the Closing Date.

Section 3.1 Ownership of Shares. Each Stockholder is the lawful owner,
beneficially and of record of the Shares set forth opposite his, her or its name
on Schedule 3.1, free and clear of all Liens. The delivery to the Purchaser of
the Shares pursuant to this Agreement will transfer to the Purchaser good and
valid title to all of the issued and outstanding equity securities and voting
interests of Planesite, free and clear of all Liens.

Section 3.2 Existence and Good Standing. Each Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois, (ii) has all requisite power and authority to own its property and to
carry on its business as now conducted, and (iii) to the knowledge of such
Company, is duly qualified to do business and is in good standing in each
jurisdiction in which the character or location of the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary. A list of the jurisdictions in which the Company is
qualified to do business as a foreign entity is set forth in Schedule 3.2.

Section 3.3 Authority and Enforceability. Each Stockholder has the legal
capacity and all necessary power and authority and has taken all action
necessary to authorize, execute and deliver the Transaction Documents, to
consummate the transactions contemplated thereby, and to perform its obligations
under the Transaction Documents. No other action on the part of any Stockholder
is required to authorize the execution and delivery of the Transaction Documents
and to consummate

 

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the transactions contemplated thereby other than any consents or resolutions
required to be delivered in connection with this Agreement. The Transaction
Documents, when delivered in accordance with the terms hereof and thereof,
assuming the due execution and delivery of this Agreement and each such other
document by the other parties hereto and thereto, will have been duly executed
and delivered by the Stockholders and will be valid and binding obligations of
each Stockholder, enforceable against it in accordance with their respective
terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and to general
equitable principles.

Section 3.4 Consents and Approvals; No Violations.

(a) Except as set forth in Schedule 3.4(a), the execution and delivery by each
Stockholder of the Transaction Documents will not, and the consummation by the
Stockholders of the transactions contemplated thereby will not result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment, or acceleration) under, or result in the creation of any
Lien on any of the properties or assets of any Company under: (i) any provision
of the organizational documents of the Company; (ii) subject to obtaining and
making any of the approvals, consents, notices and filings referred to in
paragraph (b) below, any Law or Order applicable to the Company or by which any
of his, her or its properties or assets may be bound; or (iii) any of the terms,
conditions or provisions of any Contract.

(b) Except as set forth in Schedule 3.4(b) and except for the fact that the
Shares to be sold to the Purchaser hereunder have not been registered under the
Securities Act of 1933, as amended or under any state securities law and may not
be resold or transferred by the Purchaser except in compliance therewith, no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other Person is necessary or required (i) under any of
the terms, conditions or provisions of any Law or Order applicable to any
Stockholder or any Company or by which any Stockholder or any Company or any of
their respective assets or properties may be bound, (ii) under any of the terms,
conditions or provisions of any Contract or (iii) for the execution and delivery
of the Transaction Documents by the Stockholders or the performance by the
Stockholders of their respective obligations thereunder or the consummation of
the transactions contemplated thereby.

Section 3.5 Capitalization.

(a) The Shares (i) constitute all of the issued and outstanding Shares of
Planesite, (ii) are owned beneficially and of record by the Stockholders,
(iii) have been duly authorized and validly issued, (iv) are fully paid and
non-assessable and (v) are not subject to, nor were they issued in violation of,
any preemptive rights. No other equity securities of Planesite are issued,
outstanding or reserved for issuance. Except as set forth in Schedule 3.5(a),
there are no outstanding or authorized Rights or other equity or voting interest
in Planesite pursuant to which Planesite is or may become obligated to issue,
deliver or sell, or cause to be issued, delivered or sold, Shares or other
equity or voting interest in Planesite or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
Shares or other equity or voting interest in Planesite.

 

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(b) There are no agreements or commitments to which the Stockholders or
Planesite is a party or by which any of them are bound to (i) repurchase, redeem
or otherwise acquire any outstanding equity securities or voting interest in
Planesite or any other Person or (ii) vote or dispose of any Shares or other
equity or voting interest in Planesite. There are no irrevocable proxies or
voting agreements with respect to any Shares or other equity or voting interest
in Planesite.

Section 3.6 Subsidiaries and Investments. Except as set forth on Schedule 3.6,
none of the Companies owns, directly or indirectly, any capital stock of, or
other equity, ownership, proprietary or voting interest in, any Person. Except
as set forth on Schedule 3.6, the shares of each Subsidiary held by the
applicable Company (i) constitute all of the issued and outstanding shares of
such Subsidiary, (ii) are owned beneficially and of record by such Company, free
and clear of all Liens, (iii) have been duly authorized and validly issued,
(iv) are fully paid and non-assessable and (v) are not subject to, nor were they
issued in violation of, any preemptive rights. No other equity securities of
such Subsidiary are issued, outstanding or reserved for issuance. Except as set
forth in Schedule 3.6, there are no outstanding or authorized Rights or other
equity or voting interest in such Subsidiary pursuant to which any Company is or
may become obligated to issue, deliver or sell, or cause to be issued, delivered
or sold, shares or other equity or voting interest in such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any shares or other equity or voting interest in such
Subsidiary.

Section 3.7 Financial Statements.

(a) The Companies have furnished the Purchaser with (i) the unaudited balance
sheets of the Companies as of December 31, 2012, and the related unaudited
statements of income for the year ended December 31, 2012, (ii) the audited
balance sheets of the Companies as of December 31, 2013, and the related audited
statements of income, changes in stockholders’ equity and cash flows for the
year ended December 31, 2013, and (iii) the unaudited balance sheet of the
Companies as of November 30, 2014 and the related unaudited statement of income
for the eleven months then ended. The unaudited balance sheet of the Companies
as at November 30, 2014, is hereinafter referred to as the “Balance Sheet” and
November 30, 2014 is hereinafter referred to as the “Balance Sheet Date.” The
financial statements referred to in clauses (i), (ii), and (iii) above,
including any footnotes thereto, are collectively referred to as the “Financial
Statements.”

(b) The Financial Statements are complete in all material respects, are based on
and consistent with the Books and Records of the Companies in all material
respects, are true and correct in all material respects, and fairly present
(i) the financial condition of the Company at the dates thereof and (ii) the
results of the Companies’ operations and cash flows and the changes in its
financial condition for the periods presented. The audited balance sheets of the
Companies as of December 31, 2013, and the related audited statements of income,
changes in stockholders’ equity and cash flows for the year ended December 31,
2013, and the Balance Sheet, were prepared in all material respects in
accordance United States generally accepted accounting principles as in effect
from time to time, consistently applied.

Section 3.8 Liabilities. The Companies have no material claims, obligations,
liabilities or Indebtedness, whether absolute, accrued, contingent or otherwise,
except for (i) claims, obligations, liabilities or Indebtedness set forth in the
Financial Statements, or specifically disclosed in the footnotes thereto
(ii) the Accrued Liabilities, (iii) the Accounts Payable, (iv) future
obligations under the Contracts, and (v) liabilities and obligations incurred
between the Balance Sheet Date and the Closing Date in the Ordinary Course of
Business of the Company (none of which results from, arises out of or relates to
any breach of contract, breach of contractual warranty, tort, infringement or
violation of law).

 

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Section 3.9 Tangible Personal Property.

(a) Schedule 3.9(a) sets forth, as of the date hereof, (i) the Companies’
depreciation schedule setting forth each item of Tangible Personal Property
owned by any Company, and (ii) a list of each item of Tangible Personal Property
leased by any Company having an annual rental in excess of $10,000. Except as
set forth in Schedule 3.9(a), there is no Tangible Personal Property used in the
operation of the Business other than the Tangible Personal Property reflected in
the Balance Sheet or thereafter acquired, except for Tangible Personal Property
disposed of in the Ordinary Course of Business since the Balance Sheet Date.
Except as set forth in Schedule 3.9(a), all of the Tangible Personal Property is
located at the Current Real Property and there is no Tangible Personal Property
used by any Company in the operation of the Business located at the Current Real
Property which is not owned or leased by a Company.

(b) Except as set forth in Schedule 3.9(b), the Companies have good title to or,
in the case of leased assets, a valid leasehold interest in, free and clear of
all Liens except Permitted Liens, all of the Tangible Personal Property.

(c) The Companies own or have the exclusive right to use the Tangible Personal
Property necessary for the conduct of the Business as currently conducted.

Section 3.10 Books and Records. The Books and Records contain accurate records
of all meetings of, and material action taken by (including action taken by
written consent), the stockholders and directors of each Company. All of the
records, systems, controls, data or information of the Companies, recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or held
by any means (including all means of access thereto and therefrom) are under the
exclusive ownership and direct control of the Companies.

Section 3.11 Current Real Property. The Companies do not own, nor have they ever
owned any real property. The Leases are the only leases, subleases or other
agreements relating to the use or occupancy of real property to which any the
Company is a party or bound. The Company has a valid leasehold interest in the
real property described in each Lease, free and clear of any and all Liens
except Permitted Liens. Each Lease (a) is in full force and effect; (b) all
rents and additional rents due to date on the Lease have been paid;
(c) Armstrong has been in peaceable possession since the commencement of the
original term of the Lease and is not in material default thereunder; (d) no
waiver, indulgence or postponement of Armstrong’s obligations thereunder has
been granted by the lessor, and (e) to the knowledge of the Company, there
exists no material default or event, occurrence, condition or act (including the
transfer of the Shares) which, with the giving of notice, the lapse of time or
the happening of any further event or condition, would give rise to a right of
termination or any liability on the part of Armstrong.

Section 3.12 Contracts.

(a) Schedule 3.12(a) sets forth a true and complete list of the Contracts. Each
Contract is in full force and effect and there exists no (i) default or event of
default by any Company or, to the knowledge of the Company, any other party to
any such Contract with respect to any material term or provision of any such
Contract or (ii) event, occurrence, condition or act (including

 

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the consummation of the transactions contemplated by this Agreement) which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default by any Company party
thereto or, to the knowledge of the Company, any other party thereto, with
respect to any material term or provision of any such Contract.

(b) Except as set forth on Schedule 3.12(b), no Company is a party to any
Contract where the cost of completion of such Contract would be reasonably
expected to exceed the balance of monies to be paid by a customer or other
Person to such Company under such Contract.

(c) Each Government Contract that a Company is a party to is listed on Schedule
3.12(c). Except as set forth on Schedule 3.12(c):

(i) With respect to each Government Contract (A) the Company party thereto has
complied in all material respects with all terms and conditions and all
applicable Law, (B) neither the United States government nor any prime
contractor or subcontractor thereof or other Person has notified the Company
party thereto in writing that such Company has breached or violated any Law,
certification, representation, clause, provision or requirement pertaining to
any such Government Contract, (C) such Company has not received any written
notice of termination for convenience, notice of termination for default, cure
notice or show cause notice pertaining to any such Government Contract, (D) all
Cost or Pricing Data (as defined in Federal Acquisition Regulation (“FAR”)
Section 15.401) and other information submitted by such Company or such
Company’s subcontractors, if any, in support of such Government Contract, or
modification thereto, was, as of the date of price agreement or payment
submission, current, accurate and complete, (E) as of the Signing Date, other
than in the Ordinary Course of Business, no cost incurred by such Company
pertaining to any such Government Contract has been questioned or challenged, is
the subject of any audit or investigation or has been disallowed by any
Governmental or Regulatory Authority, and (F) as of the date of this Agreement,
other than in the Ordinary Course of Business, no payments due to such Company
pertaining to any such Government Contract has been withheld or set off, nor has
any written claim been made to withhold or set off money, and such Company is
entitled to all payments received to date with respect thereto.

(ii) (A) No Company nor, to the knowledge of the Company, any officer, director
or employee of a Company is, or since January 1, 2008 has been, under
administrative, civil or criminal investigation, indictment or information by
Governmental or Regulatory Authority or under any audit or investigation by a
Company with respect to any alleged act or omission arising under or relating to
any Government Contract, offer or bid, and (B) no Company has made a voluntary
disclosure with respect to any alleged irregularity, mischarging, misstatement,
or omission arising under or related to any Government Contract, offer or bid
that has led or would be reasonably likely to lead, either before or after the
Closing Date, to any of the consequences set forth in clauses (A) or (B) above
or any other damage, penalty assessment, recoupment or payment or disallowance
of cost.

(iii) No Company, nor to the knowledge of the Company, any officer, director or
employee of any Company, has been suspended, proposed for disbarment or debarred
from participation in the award of any Government Contract, offer or bid with
the United States government or any other Governmental or Regulatory Authority
(excluding for this purpose ineligibility to bid on certain Government Contracts
due to generally applicable bidding requirements). To the knowledge of the
Company, there exist no facts or circumstances that would be reasonably likely
to result in the institution of suspension or debarment Proceedings or the
finding of non-responsibility or ineligibility on the part of the Company or any
of its officers, consultants or stockholders.

 

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Section 3.13 Litigation. Except as set forth in Schedule 3.13, there is no
Proceeding pending or, to the knowledge of the Company, threatened by any
Governmental or Regulatory Authority or any other Person, against or affecting
any Company, or any of its assets or rights. No Company is subject to any Order.

Section 3.14 Taxes. Except as set forth on Schedule 3.14:

(a) each Company has properly and timely filed all federal and all other
material Tax Returns that are required to be filed by it, all of which were
accurately prepared and completed in full compliance with all applicable Laws;

(b) all Taxes owing by the Companies have been fully paid (or properly accrued
in accordance with GAAP). The provision for Taxes on the Financial Statements is
sufficient for all accrued and unpaid Taxes as of the date of such Financial
Statements;

(c) each Company has complied with all Laws relating to the payment and
withholding of Taxes and has, within the time and manner prescribed by Law,
withheld and paid over to the proper tax authorities all amounts required to be
withheld and paid over by it;

(d) no pending or, to the knowledge of the Company, threatened audit,
Proceeding, examination or litigation or similar claim has been commenced or is
presently pending with respect to any Taxes or Tax Return of any Company;

(e) since January 1, 2008, no written claim has been made by any tax authority
in a jurisdiction where a Company does not file a Tax Return that such Company
is or may be subject to taxation in that jurisdiction;

(f) no outstanding written agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against a Company, and no power of attorney granted by a Company
with respect to any Taxes is currently in force; there is no Tax Lien against
any Company or any assets of the Company, except for Permitted Liens;

(g) the Stockholders have previously delivered or made available to the
Purchaser (A) complete and accurate copies of all Tax Returns of the Companies
for the prior three (3) tax years; (B) all audit reports, letter rulings,
technical advice memoranda and similar documents issued by any tax authority
relating to the United States Federal, state, local or foreign Taxes due from or
with respect to the Companies and (C) any closing agreements entered into by any
Company with any tax authority in each case existing on the date hereof;

(h) no Company is presently, and has never previously been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;

(i) no Company has been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in accounting method
initiated by such Company, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method;

 

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(j) no Company is a party to any agreement that would require it to make any
payment that would constitute an “excess parachute payment” for purposes of
Sections 280G and 4999 of the Code;

(k) no Company is a party to any Tax allocation or sharing agreement;

(l) Planesite has made a valid S-election under Section 1362 of the Code and all
such elections required under analogous provisions of state and local Law;
Armstrong has made a valid QSSS-election under Section 1361 of the Code and all
such elections required under analogous provisions of state and local Law. All
such elections were effective for the first tax year of the applicable Company
since its incorporation and remain in full force and effect through the date
hereof. No Company has had any ineligible stockholders that would disqualify or
adversely affect any of such elections;

(m) Armstrong DISC has made a valid IC-DISC election under Section 992 of the
Code and has made all such elections required under analogous provisions of
state and local Law; all such elections were effective for the first tax year of
Armstrong DISC since its incorporation and remain in full force and effect
through the date hereof; and

(n) no Company is subject to Section 1374 Tax.

Section 3.15 Insurance. Set forth in Schedule 3.15 is a list and general
description of each insurance policy that covers a Company (including
self-insurance), specifying as to each policy (i) the carrier, (ii) policy
number, (iii) coverage limits and deductibles, (iv) expiration date, (v) the
current annual premiums, (vi) type of coverage provided and (vii) whether such
policy is claims or occurrence based. To the knowledge of the Company, such
policies are in full force and effect, all premiums heretofore due and payable
thereon have been paid, and each Company is otherwise in compliance in all
material respects with the terms and provisions of such policies. No Company is
in default under any of the insurance policies set forth in Schedule 3.15 (or
required to be set forth in Schedule 3.15) and, to the knowledge of the Company,
there exists no event, occurrence, condition or act (including the transfer of
the Shares pursuant to the terms of this Agreement) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would reasonably be expected to become a default thereunder. No Company has
received any written notice of cancellation or non-renewal of any such policy or
arrangement nor, to the knowledge of the Company, has the termination of any
such policies or arrangements been threatened. To the knowledge of the Company,
there exists no event, occurrence, condition or act which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would reasonably be expected to entitle any insurer to terminate or cancel any
such policies. Schedule 3.15 also sets forth a list of all pending claims and
the claims history for each Company during the past five (5) years (including
with respect to insurance obtained during such period but not currently
maintained).

Section 3.16 Intellectual Property.

(a) The Companies own, or have the right to use, all Intellectual Property
necessary for the conduct of the Business as currently conducted. To the
knowledge of the Company, no claim has been asserted or is pending by any Person
against any Company challenging or questioning such Company’s use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor, to the knowledge of the Company, does any valid basis for any
such claim exist.

 

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(b) To the knowledge of the Company, no Company has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of third parties, and in the last five (5) years, no Company has
received any charge, complaint, claim, demand or other notice in writing
alleging any such interference, infringement, misappropriation or violation
(including any claim that it must license or refrain from using any intangible
property rights of any third party) which has not been resolved. To the
knowledge of the Company, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any of the Intellectual
Property.

(c) Schedule 3.16(c) identifies (i) all issuances and registrations of
Intellectual Property owned by the Company, (ii) each application thereof owned
by or issued to a Company and (iii) each license, sublicense or other agreement
which the Company has granted to any third party with respect to any of its
Intellectual Property. Each such issuance, registration and application has been
duly and validly registered in, filed in or issued by, the official governmental
registrars and/or issuers (or officially recognized issuers) of patents,
trademarks, copyrights or Internet domain names, in the appropriate
jurisdictions. Except as set forth on Schedule 3.16(c), (i) each such
registration, filing and/or issuance (A) has not been abandoned, canceled or
otherwise compromised, (B) has been maintained effective by all requisite
filings, renewals and payments and (C) remains in full force and effect as of
the date hereof and (ii) with respect to each item of Intellectual Property
required to be identified in Schedule 3.16(c): (A) a Company possesses all
right, title and interest in and to the item, free and clear of any Liens except
Permitted Liens, (B) the item is not subject to any outstanding Order, (C) no
Proceeding is pending or, to the knowledge of the Company, threatened which
challenges the legality, validity, enforceability, use or ownership of the item
and (D) other than routine indemnities given to distributors, sales
representatives, dealers and customers, no Company has any current obligations
to indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.

(d) Schedule 3.16(d) identifies each item of Intellectual Property that any
third party owns and that a Company uses pursuant to a license, sublicense or
other agreement (other than commercially available off-the shelf licenses).
Except as set forth on Schedule 3.16(d), with respect to each item of
Intellectual Property required to be identified in Schedule 3.16(d): (i) each
license, sublicense or other agreement covering the item is enforceable and,
following the Closing, will continue to be enforceable on substantially similar
terms and conditions, except to the extent that their enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and to
general equitable principles, (ii) no Company nor, to the knowledge of the
Company, any other party to a license, sublicense or other agreement is in
breach or default, and, to the knowledge of the Company, no event has occurred
which, with notice or lapse of time, would reasonably be expected to constitute
a breach or default or permit early termination, modification or acceleration
thereunder, (iii) no Company nor, to the knowledge of the Company, any other
party to a license, sublicense or other agreement has repudiated any provision
thereof, (iv) to the knowledge of the Company, the underlying item of
Intellectual Property is not subject to any outstanding Order, (v) no Proceeding
is pending or, to the knowledge of the Company, threatened against any Company
which challenges the legality, validity, enforceability or use of the underlying
item of Intellectual Property and (vi) no Company has granted any sublicense or
similar right with respect to any license, sublicense or other agreement.

 

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Section 3.17 Compliance with Laws. Except as set forth on Schedule 3.17, since
January 1, 2008, each Company (and its assets and properties) has complied and
is in compliance with all applicable Laws, Orders and Permits, except for such
non-compliance which, individually or in the aggregate, would not have a
Material Adverse Effect on such Company. No Company has received any written
notice to the effect that, or otherwise been advised that, it or any of its
assets and/or properties are not in compliance with any applicable Law, Order or
Permit and there are no presently existing facts, circumstances or events which,
with notice or lapse of time, would result in violations of any applicable Law,
Order or Permit which, individually or in the aggregate, would have a Material
Adverse Effect on such Company.

Section 3.18 Accounts Receivable; Accounts Payable; Accrued Liabilities.

(a) All of the Accounts Receivable have arisen from bona fide transactions and,
to the knowledge of the Company, each is the valid and enforceable obligation of
the obligor thereto, except to the extent that their enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and to
general equitable principles. To the knowledge of the Company, none of such
Accounts Receivable is subject to any valid counterclaim or right of set-off.

(b) The Accounts Payable and Accrued Liabilities have arisen in bona fide arm’s
length transactions in the Ordinary Course of Business. Except as set forth in
Schedule 3.18(b), since January 1, 2013, there are no unpaid invoices or bills
representing amounts alleged to be owed by any Company, or other alleged payment
obligations of any Company, that a Company has disputed or determined to dispute
or refuse to pay.

Section 3.19 Inventory. Except as set forth in Schedule 3.19, (i) the Inventory
is in the physical possession of the Companies and (ii) none of the Inventory
has been pledged as collateral or otherwise is subject to any Lien (other than
any Lien imposed as a matter of law) or is held on consignment from others. The
Inventory was acquired or produced by the Companies in the Ordinary Course of
Business. Except as reflected in a reserve for obsolete Inventory reflected in
the Financial Statements, the finished goods included in Inventory are generally
good and merchantable and are of a quality and quantity presently generally
useable and salable by the Companies in the Ordinary Course of Business.

Section 3.20 Suppliers and Customers. Schedule 3.20 sets forth the top ten
(10) customers and suppliers of the Companies, based on aggregate dollar sales
volume, for the period beginning on January 1, 2014 and ending on the Signing
Date. To the knowledge of the Company, the relationship of the Companies with
each such supplier and customer is a good commercial working relationship, and
no such supplier or customer has canceled or otherwise terminated, or threatened
to cancel or otherwise terminate, its relationship with the applicable Company.
No Company has received any written notice that any such supplier or customer
may cancel or otherwise materially and adversely modify its relationship with
such Company or limit its services, supplies or materials to such Company, or
its usage or purchase of the services and products of the Companies either as a
result of the transactions contemplated hereby or otherwise. Except as set forth
in Schedule 3.20, to the knowledge of the Company, no customer of any Company
has any re-stocking rights or similar right to return any non-defective products
to such Company for reimbursement or credit.

 

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Section 3.21 Personnel.

(a) Schedule 3.21(a) identifies for each current employee of the Companies (an
“Employee”), his or her name, position or job title, base salary or wages, bonus
or other compensation earned in the year ended December 31, 2013 and his or base
salary or wages for 2014 on an annualized basis.

(b) (i) The Companies do not have any obligations under any written or oral
labor agreement, collective bargaining agreement or other agreement with any
labor organization or employee group, (ii) to the knowledge of the Company, no
Company is currently engaged in any unfair labor practice and there is no unfair
labor practice charge or other employee-related or employment-related complaint
pending or, to the knowledge of the Company, threatened against any Company
before any Governmental or Regulatory Authority, (iii) there is currently no
labor strike, labor disturbance, slowdown, work stoppage or other material labor
dispute or arbitration pending or, to the knowledge of the Company, threatened
against any Company and no material grievance currently being asserted, (iv) no
Company has experienced a labor strike, labor disturbance, slowdown, work
stoppage or other material labor dispute at any time during the three (3) years
immediately preceding the date of this Agreement and (v) to the knowledge of the
Company, there are no claims against any Company by any Person for unpaid wages,
wrongful termination, accidental injury or death, sexual harassment or
discrimination or violation of any Law and, to the knowledge of the Company, no
valid basis for any such claim exists.

(c) Each Company has classified each individual who currently performs services
for or on behalf of such Company as a contractor or employee in accordance with
all applicable Laws.

(d) Except as set forth on Schedule 3.21(d), each Company has on file a valid
Form I-9 for each Employee employed by it and for each Employee hired by it on
or after November 7, 1986. All Employees are (i) United States citizens or
lawful permanent residents of the United States, (ii) aliens whose right to work
in the United States is unrestricted, (iii) aliens who have valid, unexpired
work authorization issued by the U. S. Department of Homeland Security or
(iv) aliens who have been continually employed by the Company since November 6,
1986. Except as set forth on Schedule 3.21(d), with respect to its Employees, no
Company has been the subject of an immigration compliance or employment visit
from, nor has it been assessed any fine or penalty by, or been the subject of
any Order of, the United States Department of Labor or the U. S. Department of
Homeland Security.

Section 3.22 Employee Benefit Plans.

(a) Schedule 3.22(a) sets forth a list of all “employee benefit plans” (as
defined in Section 3(3) of ERISA), whether or not subject to ERISA and all other
employment, compensation, consulting, bonus, stock option, restricted stock
grant, stock purchase, other cash or stock-based incentive, profit sharing,
savings, retirement, disability, insurance, severance, retention, change in
control, deferred compensation and other compensatory plans, policies, programs,
agreements or arrangements sponsored, maintained, contributed to or required to
be contributed to, or entered into or made by any Company with or for the
benefit of, or relating to, any current or former Employee, director or other
independent contractor of, or consultant to, any Company and with respect to
which any Company has or may have any direct or indirect liability (together,
the “Employee Plans”).

 

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(b) To the knowledge of the Company, the Companies have provided the Purchaser
true and complete copies of (i) all Employee Plans, together with all amendments
thereto, (ii) the latest Internal Revenue Service determination letters obtained
with respect to any Employee Plan intended to be qualified under Section 401(a)
or 501(a) of the Code, (iii) the two most recent annual actuarial valuation
reports, if any, (iv) the two most recently filed Forms 5500 together with all
related schedules, if any, (v) the “summary plan description” (as defined in
ERISA), if any, and all modifications thereto communicated to Employees,
(vi) any trust or other funding governing documents for vehicles maintained as
part of any Employee Plan, and (vii) the two most recent annual and periodic
accountings of related plan assets.

(c) Since January 1, 2008, no Company, nor any of its directors, officers,
Employees or agents, has, with respect to any Employee Plan, engaged in or been
a party to any “prohibited transaction” (as defined in Section 4975 of the Code
or Section 406 of ERISA), which could result in the imposition of either a
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, in each case applicable directly or indirectly
(through an indemnification obligation or otherwise) to any Company or any
Employee Plan.

(d) Since January 1, 2008, all Employee Plans have been administered in all
material respects in accordance with their terms and in compliance with Law. No
compensation paid or required to be paid under any Employee Plan is or will be
subject to additional tax under Section 409A(1)(B) of the Code.

(e) There are no pending or, to the knowledge of the Company, threatened claims,
arbitrations, regulatory or other Proceedings (other than routine claims for
benefits), relating to any of the Employee Plans, or the assets of any trust for
any Employee Plan.

(f) Each Employee Plan intended to qualify under Section 401(a) of the Code, and
the trusts created thereunder intended to be exempt from tax under the
provisions of Section 501(a) of the Code has received a favorable determination
or opinion letter from the Internal Revenue Service which is currently in
effect. To the knowledge of the Company, nothing has occurred since the date of
the determination letter that would adversely affect the qualification or tax
exempt status of such Employee Plan and its related trust.

(g) All contributions or payments required to be made prior to the Closing Date
under the terms of any Employee Plan will have been made prior to the Closing
Date. Contributions that are not yet due on or before the Closing Date have been
accrued on the Financial Statements.

(h) The Companies do not contribute to, nor within the six-year period ending on
the date hereof has it contributed or been obligated to contribute to, any plan,
program or agreement which is a “multiemployer plan” (as defined in
Section 3(37) of ERISA) or which is subject to Section 412 of the Code or
Section 302 or Title IV of ERISA.

(i) No Employee Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for current or former Employees,
directors, consultants or other personnel of the Companies for periods extending
beyond their retirement or other termination of service (other than group health
plan continuation coverage mandated by Law).

 

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(j) No condition exists that would prevent the Companies from amending or
terminating any Employee Plan providing health or medical benefits in respect of
any active Employee other than an amendment or termination required by Law.

Section 3.23 Environmental Matters. Except as set forth in Schedule 3.23,
(i) the Companies are now, and at all times prior to the Closing Date have been,
in compliance in all material respects with all applicable Environmental Laws,
and have obtained, and are in compliance with, all Permits required under all
applicable Environmental Laws; (ii) there are no claims, Proceedings,
investigations or actions by any Governmental or Regulatory Authority or other
Person or entity pending, or to the knowledge of the Companies, threatened,
against any Company under any Environmental Law or Permit; (iii) to the
knowledge of the Companies, there are no facts, circumstances or conditions
relating to the past or present business or operations of any Company, or any
real property or improvements now or formerly owned, leased, used, operated or
occupied by any Company, that could reasonably be expected to give rise to an
Environmental Claim; (iv) there has been no Release of Hazardous Substances at,
on, under, in, to or from any real property or assets currently or formerly
owned, leased, operated or used by the Companies; (v) the Company has not
retained or assumed, by contract or operation of law, any liability or
obligation of any other Person under or relating to any Environmental Law; and,
(vi) the Companies have provided or otherwise made available all environmental
reports, studies, records, and other similar documents with respect to the
Business or to any real property or improvements now or formerly owned, leased,
used, operated or occupied, which are in its control and possession.

Section 3.24 Affiliate Transactions. Except as set forth in Schedule 3.24, there
are no Contracts, liabilities or obligations between any Company, on the one
hand, and any of its Affiliates on the other hand and (ii) neither any Company
nor any of the Stockholders, nor Abbinante, possesses, directly or indirectly,
any financial interest in, or is a shareholder, director, officer, member,
manager or employee of, any Person which is a client, supplier, customer,
lessor, lessee, or competitor or potential competitor of any Company. Ownership
of securities of a company whose securities are registered under the Securities
and Exchange Act of 1934, as amended, of 1% or less of any class of such
securities will not be deemed to be a financial interest for purposes of this
Section 3.24.

Section 3.25 Bank Accounts; Powers of Attorney. Set forth in Schedule 3.25 is an
accurate and complete list showing (i) the name and address of each bank in
which each Company has an account or safe deposit box, and the names of all
Persons authorized to draw thereon or to have access thereto and (ii) the names
of all Persons, if any, holding powers of attorney from any Company and a
summary statement of the terms thereof.

Section 3.26 Permits. Schedule 3.26 contains a complete and accurate list of all
material Permits obtained or possessed by the Companies that are currently in
effect, the date each Permit was last granted to the relevant Company and the
current term of each Permit. The Companies have obtained and possess all Permits
and has made all registrations or filings with or notices to any Governmental or
Regulatory Authority necessary for the lawful conduct of its business as
presently conducted, or necessary for the lawful ownership of the its assets and
properties or the operation of its business as presently conducted, except where
the failure to obtain any such Permit or make such registration, filing or
notice would not result in a Material Adverse Effect. All such Permits are in
full force and effect. The Companies are in compliance with all such Permits
except for such non-compliances that would not, individually or in the
aggregate, have a Material Adverse Effect on the Companies. Any applications for
the renewal of any such Permit which are due prior to the Closing

 

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Date will be timely made or filed by the Companies prior to the Closing Date. No
Proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit
any such Permit is pending or, to the knowledge of the Company, threatened, and
to the knowledge of the Company, no valid basis for any such Proceeding,
including the transactions contemplated hereby, exists. No administrative or
governmental action or Proceeding has been taken or, to the knowledge of the
Company, threatened in connection with the expiration, continuance or renewal of
any such Permit and, to the knowledge of the Company, no valid basis for any
such Proceeding exists.

Section 3.27 Absence of Changes. Except as set forth in Schedule 3.27, since the
Balance Sheet Date there has not been a Material Adverse Change with respect to
any Company and, to the knowledge of the Company, no fact, circumstance or event
exists or has occurred which would, individually or in the aggregate, result in
a Material Adverse Change with respect to any Company, and the Companies have
not:

(a) increased the compensation payable (including, but not limited to, wages,
salaries, bonuses or any other remuneration) or to become payable to any
Employee, officer or agent;

(b) made any bonus, profit sharing, pension, retirement or insurance payment,
distribution or arrangement to or with any Employee, officer, personnel,
consultant or agent, except for payments that were already accrued or
contemplated prior to the Balance Sheet Date or cash dividends paid to the
Stockholders prior to Closing;

(c) loaned any money to any Person or guaranteed any loan to, or liability or
obligation of, any Person, except for advances of expenses to Employees in the
Ordinary Course of Business;

(d) entered into, materially amended or become subject to any Contract or any
contract or agreement outside the Ordinary Course of Business;

(e) permitted any of its properties or assets to be subject to any Lien (other
than Permitted Liens);

(f) sold, transferred, leased, licensed or otherwise disposed of any assets or
properties except for (i) sales of Inventory in the Ordinary Course of Business
and (ii) leases or licenses entered into in the Ordinary Course of Business;

(g) permitted any Permit or Company-owned Intellectual Property to lapse, other
than in the Ordinary Course of Business;

(h) acquired any business or Person, by merger or consolidation, purchase of
substantial assets or equity interests, or by any other manner, in a single
transaction or a series of related transactions, or entered into any Contract,
letter of intent or similar arrangement (whether or not enforceable) with
respect to the foregoing;

(i) made any capital expenditure or commitment therefor in excess of $25,000
individually or $50,000 in the aggregate or otherwise acquired any assets or
properties (other than Inventory in the Ordinary Course of Business) or entered
into any Contract, letter of intent or similar arrangement (whether or not
enforceable) with respect to the foregoing;

 

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(j) entered into, materially amended or become subject to any joint venture,
partnership, strategic alliance, stockholders’ agreement that would apply to or
be binding on Purchaser after Closing, co-marketing, co-promotion, co-packaging,
joint development or similar arrangement;

(k) written-off as uncollectible any notes or Accounts Receivable, except
write-offs in the Ordinary Course of Business charged to applicable reserves;

(l) granted any special conditions with respect to any Accounts Receivable other
than in the Ordinary Course of Business;

(m) failed to pay any Account Payable on a timely basis in the Ordinary Course
of Business;

(n) canceled or waived any claims or rights in excess of $50,000;

(o) made any change in any method of accounting or auditing practice;

(p) paid, discharged, settled or satisfied any claims, liabilities or
obligations (absolute, accrued, asserted), other than payments, discharges or
satisfactions in the Ordinary Course of Business;

(q) conducted its cash management customs and practices (including the
collection of receivables and payment of payables) other than in the Ordinary
Course of Business;

(r) received notice from any customer, supplier, Governmental or Regulatory
Authority or any other Person which could reasonably be expected to give rise
to, or result in, a Material Adverse Effect on any Company;

(s) made any change to its articles or certificate of incorporation, by-laws or
other governing instruments or

(t) entered into any contract or letter of intent with respect to (whether or
not binding), or otherwise committed or agreed, whether or not in writing, to do
any of the foregoing (other than with the Purchaser).

Section 3.28 Brokers’ or Finders’ Fees. Except as set forth on Schedule 3.28, no
agent, broker, Person or firm acting on behalf of the Stockholders, the
Companies or any of its Affiliates is, or will be, entitled to any commission or
brokers’ or finders’ fees from any Company or the Purchaser or any of their
respective Affiliates, in connection with any of the transactions contemplated
by this Agreement.

Section 3.29 Product Warranties.

(a) Schedule 3.29(a) contains a form of each standard product warranty relating
to products produced or sold by any Company or services performed by any Company
which will be in effect on the Closing Date.

(b) To the knowledge of the Company, no material defect exists in any design,
materials, manufacture or otherwise in any products designed, manufactured,
marketed or sold by any Company during the past seven (7) years and no defect
in, or replacement of, any such products which could give rise to any material
claim.

 

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(c) Except as provided in any of the standard product warranties described in
Section 3.29(a) and as otherwise set forth in Schedule 3.29(c), no Company has
sold any products or services which are subject to an extended warranty of any
Company beyond twelve (12) months and which warranty has not yet expired.

Section 3.30 Absence of Questionable Payments. No Company has, nor to the
knowledge of the Company, has any of its stockholders, directors, officers,
agents, Employees or any other Persons acting on its behalf, (i) used any funds
for unlawful contributions, unlawful gifts, unlawful entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns, (iii) accepted or received any unlawful
contributions, payments, expenditures or gifts or (iv) otherwise taken any
action that would cause any Company to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any applicable Law of similar effect.

Section 3.31 Export Control Regulations.

(a) Schedule 3.31(a) contains a true and complete list of (i) all current and
active import and export licenses issued by the United States government for the
products imported or exported by the Companies and for the procurement by any
Company of materials related to the manufacture of its products; (ii) a complete
and current accounting of licensing exemptions used by the Companies for
products being imported or exported; and (iii) all export related agreements,
including, but not limited to, technical assistance agreements, manufacturing
license agreements, distribution and warehousing agreements with any non-U.S.
entity for the manufacture of export-controlled designs or for the transfer of
technical information between any Company and a non-U.S. Person.

(b) Schedule 3.31(b) contains a true and complete list of all voluntary
disclosures made, currently in process or proposed for submission to the U.S.
Government by any Company with respect to import and export matters.

(c) No current or past violation of the regulations of the United States or of
any foreign government as related to the import or export of the products of any
Company has occurred.

(d) The Companies have an Export Compliance Program that has been administered
in such a manner so as to reasonably assure that the Companies have been
conducted in compliance with the U.S. Government regulations regarding the
export of commercial and defense related products and technology.

Section 3.32 Full Disclosure. This Agreement (including the Schedules and any
Schedule Updates) does not (i) contain any representation or warranty of or
relating to the Companies or the Stockholders that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact necessary
in order to make such representations, warranties and information contained and
to be contained herein and therein (in the light of the circumstances under
which such representations, warranties and information were or will be made or
provided) not false or misleading.

 

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Section 3.33 No Outside Reliance. Notwithstanding anything contained in this
Agreement, neither the Companies nor the Stockholders are making any
representation or warranty, express or implied, beyond those expressly given in
this Agreement, including, without limitation, any implied warranty or
representation as to condition, merchantability, suitability or fitness for a
particular purpose or trade as to any of the assets of any Company. Without
limiting the generality of the foregoing, it is understood that any cost
estimates, financial or other projections or other predictions that may be
contained or referred to in the Schedules, Schedule Updates, as well as any
information, documents or other materials (including any such materials
contained in the “data room” or otherwise reviewed by the Purchaser) or
management presentations that have been or shall hereafter be provided to the
Purchaser or any of the Purchaser’s Representatives are not and shall not be
deemed to be representations or warranties of the Companies or the Stockholders,
and no representation or warranty is made as to the accuracy or completeness of
any of the foregoing except as may be expressly set forth in this Agreement.
Except as otherwise expressly set forth in this Agreement, any equipment and
vehicles of the Companies are furnished “as is”, “where is” without any other
representation or warranty of any nature whatsoever.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Stockholders that the
representations and warranties contained in this Article IV are correct and
complete as of the Signing Date and the Closing Date.

Section 4.1 Existence and Good Standing. The Purchaser (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, (ii) has all requisite corporate power and authority to own its
property and to carry on its business as now conducted, (iii) is duly qualified
to do business and is in good standing in each jurisdiction in which the
character or location of the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except for such jurisdictions where the failure to be so qualified or licensed
and in good standing would not have a Material Adverse Effect on the Purchaser.

Section 4.2 Authority and Enforceability. The Purchaser has all necessary power
and authority and has taken all action necessary to authorize, execute and
deliver the Transaction Documents, to consummate the transactions contemplated
thereby, and to perform its obligations under the Transaction Documents. No
other action on the part of the Purchaser is required to authorize the execution
and delivery of the Transaction Documents and to consummate the transactions
contemplated thereby. The Transaction Documents, when delivered in accordance
with the terms hereof, assuming the due execution and delivery of this Agreement
and each such other document by the other parties hereto and thereto, will have
been duly executed and delivered by the Purchaser and will be valid and binding
obligations of the Purchaser, enforceable against it in accordance with their
respective terms, except to the extent that their enforceability may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and to general
equitable principles.

 

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Section 4.3 Consents and Approvals; No Violations.

(a) The execution and delivery of this Agreement by the Purchaser do not, the
execution and delivery by the Purchaser of the other instruments and agreements
to be executed and delivered by the Purchaser as contemplated hereby will not
and the consummation by the Purchaser of the transactions contemplated hereby
and thereby will not result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, payment or acceleration)
under, or result in the creation of any Lien upon any of the properties or
assets of the Purchaser under: (i) any provision of the certificate of
incorporation or by-laws of the Purchaser; (ii) subject to obtaining and making
any of the approvals, consents, notices and filings referred to in paragraph
(b) below, any Law or Order applicable to the Purchaser or by which any of its
properties or assets may be bound (iii) any written or oral contract, agreement,
commitment or other obligation to which the Purchaser is a party, or by which
any of its properties or assets is bound.

(b) No consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority or other Person is necessary or required under any of
the terms, conditions or provisions of any Law or Order, any written or oral
contract, agreement, commitment or other obligation to which the Purchaser is a
party or by which any of its properties or assets is bound, for the execution
and delivery of the Transaction Documents by the Purchaser, the performance by
the Purchaser of its obligations thereunder or the consummation of the
transactions contemplated thereby.

Section 4.4 Brokers’ or Finders’ Fees. No agent, broker, person or firm acting
on behalf of Purchaser is, or will be, entitled to any commission or brokers’ or
finders’ fees from the Company, the Stockholders, or their Affiliates, in
connection with any of the transactions contemplated by this Agreement.

Section 4.5 Full Disclosure. This Agreement (including the Schedules) does not
(i) contain any representation, warranty or information of or relating to the
Purchaser that is false or misleading with respect to any material fact, or
(ii) omit to state any material fact necessary in order to make such
representations, warranties and information contained and to be contained herein
and therein (in the light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading.

Section 4.6 Certain Proceedings. There is no pending Proceeding that has been
commenced against the Purchaser that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement and, to the knowledge of the
Purchaser, no such Proceeding has been threatened.

Section 4.7 Availability of Funds. The Purchaser has cash available or has
existing borrowing facilities that together are sufficient to enable it to
consummate and perform all of the transactions contemplated by this Agreement.

Section 4.8 Securities Representation. The Purchaser is acquiring the Shares for
its own account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof (as such term is defined in
Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities
Act”)). The Purchaser understands that the Shares have not been registered under
the Securities Act or any applicable state securities laws and cannot be sold
unless subsequently registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available. The
Purchaser is an “accredited investor” as such term is defined in Rule 501(a)
under the Securities Act.

 

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ARTICLE V

COVENANTS

Section 5.1 Public Announcements. Neither the Companies, the Stockholders nor
the Purchaser shall, nor shall any of their respective Affiliates, without the
approval of the other parties, issue any press releases or otherwise make any
public statements with respect to the transactions contemplated by this
Agreement, except as may be required by applicable Law or regulation or by
obligations pursuant to any listing agreement with any national securities
exchange.

Section 5.2 Investigation by the Purchaser. During the period beginning on the
date of this Agreement and ending on the Closing Date, the Purchaser and each of
its Representatives will continue to conduct a review of the Companies and the
Business. In connection with such review, Abbinante and the Stockholders shall
grant, and shall cause the Companies to grant, to the Purchaser and each of
Purchaser’s Representatives full access to the Books and Records, property,
assets and personnel (with a Representative of the Companies present) of the
Companies upon reasonable prior notice and during normal business hours. In
connection with such review, Abbinante and the Stockholders agree, upon
reasonable prior notice, to (i) cooperate with the Purchaser and each of the
Purchaser’s Representatives, (ii) provide all information, and all documents and
other data relating to such information, reasonably requested by the Purchaser
or any Representative of the Purchaser and (iii) permit the Purchaser and each
of the Purchaser’s Representatives to inspect any assets of the Companies or the
Business.

Section 5.3 Notifications, Consents and Approvals. As soon as practicable, the
Purchaser and the Stockholders shall commence all reasonable actions to obtain
the consents and approvals (including, but not limited to, those approvals,
consents, orders, registrations, declarations and filings marked with an
asterisk in Schedule 3.4(b)) and to make the filings required to consummate the
transactions contemplated by this Agreement.

Section 5.4 Conduct Pending Closing. From the date of this Agreement to the
Closing Date, and except as otherwise specifically consented to or approved by
the Purchaser in advance in writing, such consent or approval not to be
unreasonably withheld or delayed, the Stockholders agree as follows:

(a) Abbinante and the Stockholders shall cause the Companies to carry on their
businesses substantially in the same manner as heretofore conducted and shall
not engage in any transaction or activity, enter into or amend any agreement or
make any commitment except in the Ordinary Course of Business;

(b) Abbinante and the Stockholders shall use reasonable commercial efforts to
preserve the Companies’ existence and business organization intact and to
preserve the Companies’ businesses, properties, assets and relationships with
their personnel, suppliers, customers and others with whom they have business
relations;

(c) Abbinante and the Stockholders shall cause the Companies to not (A) grant
any special conditions with respect to any Account Receivable other than in the
ordinary course of business consistent with past practice, (B) fail to pay any
Account Payable on a timely basis in the Ordinary Course of Business consistent
with past practice, (C) make or commit to make any capital expenditures in
excess of $10,000 in the aggregate without the prior written consent of the
Purchaser or (D) start up or acquire any new business or product line which is
not similar to or directly complementary to any existing business or product
line;

 

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(d) Abbinante and the Stockholders shall cause the Companies to not (A) increase
the compensation payable (including, but not limited to, wages, salaries,
bonuses or any other remuneration) or to become payable to any officer, employee
or agent, other than in accordance with its usual practices; (B) make, or make
any commitment to make, any bonus to any officer, employee or agent, or
(C) enter into or amend any employment agreements; provided that the foregoing
shall not restrict the Companies from paying bonus compensation in accordance
with its usual practices (and not related to the transactions contemplated
herein) and which has been accrued;

(e) Abbinante and the Stockholders shall cause the Companies to (A) settle any
and all related party liabilities, (B) terminate any related party transactions
or agreements, and (C) pay all declared or accrued dividends;

(f) Abbinante and the Stockholders shall cause the Companies to distribute all
cash and cash equivalents to the Stockholders, except for cash necessary to
cover outstanding checks as of the Closing Date;

(g) Abbinante and the Stockholders shall cause the Companies to not enter into
any settlement with respect to any Proceeding against or relating to the
Company;

(h) Abbinante and the Stockholders shall cause the Companies to not make any
changes to their organizational documents;

(i) Abbinante and the Stockholders shall cause the Companies to not issue, sell,
or buy any Rights or securities of any Company;

(j) Abbinante and the Stockholders shall cause the Companies to not become a
party to any agreement, and not become subject to any Law or Governmental Order,
that requires or may require the Company to issue, sell, or buy any Rights or
securities of the Company;

(k) Abbinante and the Stockholders shall cause the Companies to not enter into
any agreement limiting the ability of the Companies to engage in any line of
business or to compete with any Person;

(l) Abbinante and the Stockholders shall not voluntarily take any action or
cause the Companies to take any action, or voluntarily fail to take any action
or cause the Company to voluntarily fail to take any action the failure of which
would cause any representation or warranty of the Stockholders contained in this
Agreement to be breached or untrue in any material respect, other than as
required by Law; and

(m) Abbinante and the Stockholders shall cause the Companies to liquidate and
dissolve Armstrong DISC pursuant to Section 332 of the Code and pay all
dividends accrued prior to Closing.

 

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Section 5.5 Notification of Certain Matters.

(a) The Stockholders shall give prompt written notice to the Purchaser of
(i) any fact or circumstance, or any occurrence or failure to occur of any event
of which the Stockholders have knowledge, which fact, circumstance, occurrence
or failure causes or, with notice of the lapse of time, would cause any
representation or warranty of the Stockholders contained in this Agreement to be
breached or untrue or inaccurate in any respect any time from the date of this
Agreement to the Closing Date and (ii) any failure of the Stockholders or the
Companies to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by the Stockholders under this Agreement.

(b) The Purchaser shall give prompt written notice to the Stockholders of
(i) any fact or circumstance, or any occurrence or failure to occur of any event
of which the Purchaser has knowledge, which fact, circumstance, occurrence or
failure causes or, with notice of the lapse of time, would cause any
representation or warranty of the Stockholders contained in this Agreement to be
breached or untrue or inaccurate in any respect any time from the date of this
Agreement to the Closing Date and (ii) any failure of the Purchaser to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by the Purchaser under this Agreement.

Section 5.6 No Negotiation. Until such time as this Agreement may be terminated
pursuant to Section 9.1, Abbinante and the Stockholders shall not, and shall
cause the Companies not to, directly or indirectly, solicit, initiate, encourage
or entertain any inquiries or proposals from, or discuss or negotiate with any
Person other than the Purchaser or its Representatives relating to an
acquisition or other disposition of the Shares or the assets, properties and
rights of the Companies.

Section 5.7 Access to Records and Personnel. For a period of six (6) years after
the Closing Date, the Stockholders and their Representatives will have
reasonable access to (including the right to make copies of) all Books and
Records of the Companies to the extent that such access may reasonably be
required in connection with matters relating to (i) all matters as to which the
Stockholders are required to provide or entitled to receive indemnification
under this Agreement, (ii) the preparation of any Tax Returns required to be
filed by the Stockholders with respect to any period, whether ending prior to,
on or after the Closing; or (iii) otherwise in connection with any audit or
investigation by any Governmental or Regulatory Authority or other reasonable
need of a Stockholder. Such access will be afforded by the Purchaser upon
receipt of reasonable advance notice and during normal business hours, provided
such access does not unduly disrupt the Purchaser’s normal business operations.
The Stockholders will be solely responsible for any costs or expenses incurred
by them pursuant to this Section 5.7. If the Purchaser wishes to dispose of any
Books and Records prior to the expiration of the six-year period, the Purchaser
will, prior to such disposition, give the Stockholders a reasonable opportunity,
at the Stockholders’ expense, to segregate and remove such Books and Records as
the Stockholders may select.

Section 5.8 Further Assurances. Subject to the terms and conditions set forth in
this Agreement, each of the parties hereto shall use its commercially reasonable
efforts (subject to, and in accordance with, applicable Law) to take promptly,
or cause to be taken, all actions, and to do promptly, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable under applicable Laws to consummate and make effective the
sale of the Shares hereunder and the other transactions contemplated by this
Agreement including (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental or Regulatory Authorities and
the making of all necessary registrations and filings and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid a
Proceeding by, any Governmental or Regulatory Authority, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by this Agreement.

 

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Section 5.9 Tax Matters. The following provisions will govern the allocation of
responsibility for certain Tax matters following the Closing Date:

(a) Pre-Closing Returns. The Stockholders shall, at the Stockholders’ expense,
(i) prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Companies for periods ending prior to or including the Closing
Date which have not yet been filed as of the Closing Date, including the S short
year (as described in Section 5.9(d); (ii) pay or cause to be paid all Tax
reported, or required to be reported, on such Tax Returns for the pre-Closing
Tax Returns; (iii) include any income or gain recognized as a result of
Section 5.13 in the Companies’ and the Stockholders’ pre-Closing Tax Returns;
and (iv) cause to be prepared all such Tax Returns consistent with the past
practice of the Companies, except as otherwise required by applicable Law;
provided, however, that for the avoidance of doubt and to the extent permitted
by applicable Law, all deductions related to or arising out of the transactions
contemplated by this Agreement shall be treated as arising on or before the
Closing Date. At least thirty (30) days prior to the date on which each such Tax
Return is filed (including any applicable extensions), the Stockholders shall
submit such Tax Return to the Purchaser for the Purchaser’s review and approval,
which approval shall not be unreasonably withheld or delayed. Notwithstanding
the above, all expense, including fines, late fees and additional Taxes,
resulting from or arising out of amendments to the Companies’ Tax Returns filed
by or on behalf of the Stockholders for periods prior to the Closing Date shall
be the obligation of, and be paid by, the Stockholders.

(b) Post-Closing Returns. The Purchaser shall, at Purchaser’s expense, prepare
or cause to be prepared and file or cause to be filed all Tax Returns for the
Companies for all periods beginning after the Closing Date.

(c) Tax Periods Beginning Before and Ending After the Closing Date. The
Purchaser will prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Companies for Tax periods which begin before the Closing Date
and end after the Closing Date (“Straddle Tax Periods”). Except as otherwise
required by applicable Law, such Tax Returns will be prepared in a manner
consistent with Tax Returns prepared and filed by the Company prior to the
Closing Date. At least thirty (30) days prior to the date on which each such Tax
Return is filed (including any applicable extensions), the Purchaser shall
submit such Tax Return to the Stockholders for the Stockholders’ review and
approval, which approval shall not be unreasonably withheld or delayed. For
purposes of this Section 5.9, in the case of any Taxes that are imposed on a
periodic basis and are payable for a taxable period that includes (but does not
end on) the Closing Date, the portion of such Taxes which relates to the portion
of such taxable period ending on the day immediately preceding the Closing Date
will (i) in the case of any Taxes other than Taxes based upon or related to
income, be deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on the day immediately preceding the Closing Date and the
denominator of which is the number of days in the entire taxable period and
(ii) in the case of any Tax based upon or related to income or receipts be
deemed equal to the amount which would be payable if the relevant taxable period
ended on the day immediately preceding the Closing Date. All determinations
necessary to give effect to the foregoing allocations will be made in a manner
consistent with prior practices of the Companies.

 

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(d) S Termination Year. Items of income, gain, loss, deduction and credit shall
be allocated between the S short year (as defined in Section 1362(e)(1)(A) of
the Code) and the C short year (as defined in Section 1362(e)(1)(B) of the Code)
pursuant to Section 1.1362-3(b)(2) of the Code.

(e) Payment of Taxes. To the extent such Taxes are not accrued on the Companies’
books and records and balance sheet as of the Closing, the Stockholders will be
liable for the timely payment of all Taxes for Pre-Closing Tax Periods and the
portion of Taxes for Straddle Tax Periods which relate to the period ending on
the day immediately preceding the Closing Date (collectively, “Pre-Closing
Taxes”).

(f) Conduct and Notice of Audits. After the Closing, the Stockholders and the
Purchaser shall (i) provide to the other party such information relating to the
Companies as the Stockholders or the Purchaser may reasonably request with
respect to Tax matters and (ii) cooperate with each other in the conduct of any
audit or other proceeding with respect to any Tax involving the Companies and
shall retain or cause to be retained all Books and Records pertinent to the
Companies for each taxable period or portion thereof ending on or prior to the
Closing Date until the expiration of the applicable statute of limitations
(giving effect to any and all extensions and waivers). If any party to this
Agreement receives any written notice from any taxing authority proposing an
adjustment to any Tax for which any other party hereto may be obligated to
indemnify under this Agreement, such party shall give prompt written notice
thereof to the other that describes such proposed adjustment in reasonable
detail; the failure to give such notice, however, shall not reduce the
obligations of a party hereunder unless, and to the extent that, such failure
prejudices the rights of the other party to contest such Tax.

(g) Amendment of Tax Returns. Without the prior written consent of the
Stockholders, the Purchaser will not amend or permit the Companies to amend any
Tax Return relating to a taxable period (or portion of such taxable period)
ending on or prior to the Closing Date. The Stockholders shall have the right to
amend a pre-Closing Tax Return; provided that at least thirty (30) days prior to
the date on which each such amended Tax Return is filed, the Stockholders shall
submit such amended Tax Return to the Purchaser for the Purchaser’s review and
approval, which approval shall not be unreasonably withheld or delayed.

Section 5.10 Confidentiality.

(a) Commencing on the date hereof and continuing for a period of five (5) years
thereafter, (i) Abbinante and the Stockholders will not divulge, transmit or
otherwise disclose (except as legally compelled by court order, and then only to
the extent required, after prompt notice to the Purchaser of any such order),
directly or indirectly, any Confidential Information with respect to the
Companies and/or the Business and (ii) Abbinante and the Stockholders will not
use, directly or indirectly, any Confidential Information for the benefit of
anyone other than the Purchaser or the Business.

(b) Commencing on the date hereof and thereafter, Abbinante and the Stockholders
will not take any action intended to disparage or damage the reputation of the
Companies, the Purchaser or their respective Affiliates, directors, officers or
personnel, or to engage in any other action that is intended to injure or hinder
the business relationships of the Business.

 

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(c) It is the desire and intent of the parties to this Agreement that the
provisions of this Section 5.10 will be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If any particular provisions or portion of this
Section 5.10 will be adjudicated to be invalid or unenforceable, this
Section 5.10 will be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable, such amendment to apply only
with respect to the operation of such Section in the particular jurisdiction in
which such adjudication is made.

(d) The parties recognize that the performance of the obligations under this
Section 5.10 by Abbinante and the Stockholders is special, unique and
extraordinary in character, and that in the event of the breach by Abbinante or
any Stockholder of the terms and conditions of this Section 5.10, the Purchaser
and the Companies will be entitled, if they so elect, to seek Damages for any
breach of this Section 5.10 from Abbinante or the breaching Stockholder and/or
to enforce the specific performance thereof by such breaching Stockholder.

(e) The parties acknowledge and agree that Damages in the event of a breach of
any of the provisions of this Section 5.10 would be difficult, if not
impossible, to ascertain and it is therefore agreed that the Purchaser, in
addition to and without limiting any other remedy or right it may have, will
have the right to seek an injunction or other equitable relief in any court of
competent jurisdiction enjoining any such breach. Abbinante and the Stockholders
further agree that the Purchaser will not be required to post a bond or other
security in connection with the issuance of any such injunction.

Section 5.11 Non-Competition and Non-Solicitation.

(a) In consideration of the Purchase Price payable hereunder, Abbinante agrees
for a period of five (5) years after his separation from employment with the
Purchaser or the Company, and each Stockholder agrees that for a period of five
(5) years after the Closing Date, he or it will not, on behalf of himself,
herself, or any other Person:

(i) within any jurisdiction or marketing area in which the business of the
Purchaser or its Subsidiaries is conducted (x) with respect to Abbinante, at the
time of his separation from employment with the Purchaser, and (y) with respect
to the Stockholders, on the Closing Date, directly or indirectly own, manage,
operate or control, be employed by (whether as an employee, consultant or
advisor) or otherwise engage in any business of the type and character engaged
in and competitive with the business of the Purchaser or its Subsidiaries. For
these purposes, ownership of securities of less than five percent (5%) of any
class of securities of a public company will not be considered to be competition
with the Purchaser’s or any of its Subsidiaries’ business; or

(ii) induce or attempt to induce any potential customer, supplier, licensee or
other business relation of the Purchaser or its Subsidiaries not to transact
business with the Purchaser or a Subsidiary of the Purchaser in connection with
the business of the Purchaser or its subsidiaries or to transact business with
another company in lieu of doing business with the Purchaser or any of its
Subsidiaries in connection with the business of the Purchaser and its
Subsidiaries;

(iii) solicit for himself, herself, itself or any Person (other than the
Purchaser or any of its Subsidiaries) the business of any Person, in lieu of
doing business with the Purchaser or any of its Subsidiaries, that is or was a
customer, supplier, licensee or other business relation of the Purchaser or any
of its Subsidiaries (x) with respect to Abbinante, within two (2) years

 

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prior to the date of his separation from employment with the Purchaser, and
(y) with respect to the Stockholders, within two (2) years prior to the date of
this Agreement or in any way intentionally interfere with the relationship
between the Purchaser or any of its Subsidiaries and any such Person; or

(iv) knowingly induce, attempt to induce, or in any way knowingly interfere with
the relationship between the Purchaser or any of its Subsidiaries and any
Employee; or solicit, employ or otherwise contract for services of any Employee
of the Purchaser or any of its Subsidiaries.

(b) For purposes of this Section 5.11, the business of the Purchaser and its
Subsidiaries shall be the business of the Purchaser and its Subsidiaries as
conducted (x) with respect to Abbinante, on the date of his separation of
employment with the Purchaser, and (y) with respect to the Stockholders, on the
date of this Agreement.

(c) It is the desire and intent of the parties that the provisions of this
Section 5.11 will be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If any particular provisions or portion of this Section 5.11 is adjudicated to
be invalid or unenforceable, this Section 5.11 will be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
such amendment to apply only with respect to the operation of such Section in
the particular jurisdiction in which such adjudication is made.

(d) The parties recognize that the performance of the obligations under this
Section 5.11 by Abbinante and the Stockholders is special, unique and
extraordinary in character, and that in the event of the breach by Abbinante or
a Stockholder of the terms and conditions of this Section 5.11, the Purchaser
will be entitled, if it so elects, to obtain Damages for any breach of this
Section 5.11, or to enforce the specific performance thereof by Abbinante or a
breaching Stockholder or to enjoin Abbinante or a breaching Stockholder from
performing services for any Person.

(e) The parties acknowledge and agree that Damages in the event of a breach of
any of the provisions of this Section 5.11 would be difficult, if not
impossible, to ascertain and it is therefore agreed that the Purchaser, in
addition to and without limiting any other remedy or right it may have, will
have the right to seek an injunction and/or other equitable relief in any court
of competent jurisdiction enjoining any such breach. Abbinante and the
Stockholders further agree that the Purchaser will not be required to post a
bond or other security in connection with the issuance of any such injunction.

Section 5.12 Update of Schedules. From time to time prior to the Closing Date,
the Stockholders may provide updates (“Schedule Updates”) of all Schedules
attached hereto to reflect changes thereto, including changes to any
representations and warranties in Article III as to which no Schedules have been
created as of the date hereof but as to which a Schedule would have been
required to have been created on or before the date hereof if such changes had
existed on the date hereof; provided, however, that the Stockholders shall
deliver such Schedule Updates not less than two (2) Business Days prior to the
Closing Date in accordance with the provisions of Section 10.5 and shall provide
any additional information with respect to such Schedule Updates that the
Purchaser may reasonably request within one (1) Business Day after such request.
If any Schedule Update represents a material change from the Schedule provided
on the Signing Date, the Purchaser may terminate this Agreement in reliance on
Section 9.1. Any Schedule Updates delivered to

 

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Purchaser shall not be deemed to modify the representations and warranties
herein for purposes of determining whether or not the conditions to Closing set
forth in Section 6.1 has been satisfied, but shall be deemed to modify the
representations and warranties herein for purposes of determining any claims for
indemnification pursuant to Section 8.2(a)(i).

Section 5.13 Section 338(h)(10) Election.

(a) With respect to the acquisition of the Shares hereunder, the Purchaser and
each Stockholder will make a timely election under Section 338 of Code (and any
corresponding elections under State or local tax law) (collectively, the
“Section 338(h)(10) Elections”). The Stockholders and the Purchaser shall
(i) take, and cooperate with each other to take, all actions necessary and
appropriate (including filing such forms (Form 8883), returns, elections
(including Form 8023), schedules and other documents as may be required) to
effect and preserve timely Section 338(h)(10) Elections in accordance with
Section 338 of the Code and Treasury Regulations Section 1.338(h)(10)-1 or any
successor provisions and any comparable provisions arising out of State or local
tax law, and (ii) the Stockholders and the Purchaser shall report the sale of
the Shares pursuant to this agreement consistent with the Section 338(h)(10)
Election and shall take no position contrary thereto or inconsistent therewith
in any Tax Return, any discussion with or Proceeding before any taxing
authority, or otherwise. No party shall revoke, withdraw, or modify the
Section 338(h)(10) Election. The Purchaser and the Stockholders agree that the
Purchase Price and liabilities of the Companies will be allocated among the
assets of the Companies for all purposes on IRS Form 8883. The Purchaser, the
Companies and the Stockholder will all file Tax Returns (including amended
returns and claims for refund) and information reports in a manner consistent
with such election.

(b) The Purchaser shall increase the Purchase Price in the amount (such amount,
the “Tax Gross Up”) necessary to compensate the Stockholders on an after-tax
basis for any Taxes payable by the Stockholders in excess of the Taxes payable
as if the Section 338(h)(10) Elections had not been made. The Tax Gross Up shall
be calculated using the highest federal and state income Tax rates then in
effect for ordinary income, recapture income and capital gain income. The
after-tax effect of the allocation of the Purchase Price among the assets,
including the amount allocated to the covenant not to compete, shall be taken
into account in calculating the Tax Gross Up. Any Tax Gross Up paid will be
treated as additional Purchase Price for all provisions of this Agreement. The
final Tax Gross Up amount (the Final Tax Gross Up) shall be determined pursuant
to Section 2.4 herein.

(c) The Form 8883 shall be agreed to by the Purchaser and the Stockholders as
soon as practicable after final determination of the Final Gross Up pursuant to
Section 2.4(b). In the event of an adjustment to the Purchase Price in
accordance with this Agreement, such adjustment shall be made to the Purchase
Price paid for the assets of the Companies. The Parties will file all Tax
Returns (including amended Tax Returns and claims for refund) and information
reports in a manner consistent with such allocation.

(d) The Purchaser shall pay the Tax Gross Up to the Stockholders pursuant to
Section 2.2, subject to adjustment pursuant to Section 2.4.

(e) Any income Tax refunds that are received by the Purchaser or the Companies,
and any amounts credited against income Tax to which the Purchaser or the
Companies become entitled in a Tax period ending after the Closing Date, that
relate to Tax periods or portions of such periods ending on or before the
Closing Date shall be for the account of the Stockholders. The Purchaser shall
pay over to the Stockholders any such refund or the amount of any such credit
within five (5) days after actual receipt of such refund or application of such
credit against Taxes.

 

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Section 5.14 Armstrong AeroMod, LLC. Abbinante shall dispose of any direct or
indirect interest in Armstrong AeroMod, LLC, an Illinois limited liability
company, within one year after the Closing Date, in a manner and on terms and
conditions reasonably acceptable to the Purchaser.

ARTICLE VI

CONDITIONS TO THE PURCHASER’S OBLIGATIONS

The purchase of the Shares by the Purchaser on the Closing Date is conditioned
on satisfaction by the Stockholders, or waiver by the Purchaser, at or prior to
the Closing, of the following conditions:

Section 6.1 Representations and Warranties. Each of the representations and
warranties of the Companies and the Stockholders contained in this Agreement,
after giving effect to the Schedules but not the Schedule Updates, shall be true
and correct in all material respects on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
that are made as of a specific date, which shall be true and correct in all
material respects as of that date), and the Stockholders shall have delivered to
the Purchaser a certificate of the Stockholders, dated the Closing Date, to such
effect.

Section 6.2 Agreements and Covenants. The Companies and the Stockholders shall
have performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date, and the Stockholders shall have delivered to the Purchaser a certificate
of the Stockholders, dated the Closing Date, to such effect.

Section 6.3 Good Standing Certificate. The Stockholders shall have delivered to
Purchaser certificates of existence and/or good standing for each Company from
the Secretary of State of the State of Illinois dated within thirty (30) days of
the Closing Date.

Section 6.4 No Material Adverse Change. Since the Signing Date, there shall have
been no Material Adverse Change with respect to the Business, and no events,
facts or circumstances shall have occurred which would reasonably be expected to
result, individually or in the aggregate, in a Material Adverse Change, and the
Stockholders shall have delivered to the Purchaser a certificate of the
Stockholders, dated the Closing Date, to such effect.

Section 6.5 No Litigation. No Proceedings shall have been instituted or, to the
knowledge of the Companies, threatened before a court or other Governmental or
Regulatory Authority to restrain or prohibit or materially delay any of the
transactions contemplated hereby, and the Stockholders shall have delivered to
the Purchaser a certificate of the Stockholders, dated the Closing Date, to such
effect.

Section 6.6 Delivery of Shares. Each Stockholder shall have delivered to the
Purchaser, and the Purchaser shall have received, one or more certificates or
assignments representing, in the aggregate, the number of Shares owned by him,
her or it, or, if such certificates or assignments are not available, an
affidavit attesting to the loss of such documents accompanied by an indemnity
acceptable to Purchaser in its sole discretion.

 

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Section 6.7 No Claim Regarding Share Ownership or Proceeds. There will not have
been made or threatened by any Person any claim asserting that such Person
(i) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any Shares, or any other voting, equity or
ownership interest in, the Company or (ii) is entitled to all or any portion of
the Purchase Price payable to the Stockholders for the Shares.

Section 6.8 Consents and Approvals. All governmental and third-party consents,
waivers and approvals, if any, disclosed in Schedule 3.4(b) or otherwise
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received or waived by Purchaser.

Section 6.9 Statutes; Orders. No Law or Order of any kind shall have been
enacted, entered, promulgated or enforced by any court or Governmental or
Regulatory Authority since the Signing Date that would prohibit or materially
delay the consummation of the transactions contemplated by this Agreement or has
the effect of making them illegal.

Section 6.10 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Purchaser and its
counsel, and Purchaser shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.

Section 6.11 Minute Book and Stock Records. The Stockholders will have delivered
to the Purchaser the original minute book and stock records of the Companies.

Section 6.12 Pay-Off Letters; Lien Releases. All Indebtedness of the Company as
of the Closing Date shall have been repaid (as evidenced by customary pay-off
letters from the holders of such Indebtedness delivered to the Purchaser by the
Stockholders) and all arrangements reasonably satisfactory to the Purchaser
providing for lien releases, canceled notes and other documents reasonably
requested by the Purchaser prior to Closing shall have been made. The
Stockholders shall have delivered to the Purchaser duly executed releases of
liens releasing all of the assets of the Companies from all Liens except
Permitted Liens.

Section 6.13 Satisfactory Due Diligence. The Purchaser and its Representatives
shall be satisfied in their reasonable discretion with their due diligence
review of the Companies with respect to (i) the Companies’ compliance in all
material respects with state and local Tax reporting in jurisdictions other than
Illinois, (ii) confirming that the internal, unaudited income statement of the
Companies for the period ended December 31, 2014 and the internal, unaudited
balance sheet of the Companies as of December 31, 2014 are materially consistent
with the results of operations as of the Balance Sheet Date, and (iii) the
historical depositing of materials within the designated Salt Creek
floodplain/water shed along the northern property border of 1437 Harmony Court,
including, but not limited to, any specific removal, remediation, or mitigation
actions taken to address such materials, as well as any associated issues
pertaining to the Company’s stormwater permitting status at such site,
including, but not limited to, any ongoing obligations due to such status, such
as monitoring and maintenance obligations.

 

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Section 6.14 Resignations. The Companies shall have delivered to the Purchaser
the resignation of each officer and director of the Companies, in their
capacities as officers and directors, and not as employees, as the Purchaser
shall have specified.

Section 6.15 Delivery of Section 338(h)(10) Election Forms. The Stockholders
shall have delivered to the Purchaser all required forms, returns, elections,
schedules and other documents necessary for the Section 338(h)(10) Election no
later than two (2) days prior to the Closing Date.

Section 6.16 Escrow Agreement. The Stockholders shall have delivered to the
Purchaser a duly executed counterpart of the Escrow Agreement.

Section 6.17 Real Property Matters. The Stockholders shall have delivered to the
Purchaser: (i) evidence of the consummation of the sale of the Current Real
Property and the real property located at 1431 Harmony Court, Itasca, Illinois,
from the owners thereof to Purchaser; and (ii) termination of the Leases.

Section 6.18 Termination of Employment Agreements. The Stockholders shall have
delivered to the Purchaser evidence of (i) the termination of the Employment
Agreement, dated as of January 21, 2013, by and between Armstrong and Chryss
Crockett, such termination to include an acknowledgment by Chryss Crockett that
all options referenced in such Employment Agreement are terminated and that no
shares of stock in any Company were issued to her; and (ii) the termination of
the Employment Agreement dated as of January 1, 2014, by and between Armstrong
and Dominick Zaccaro.

Section 6.19 Bank Account Numbers. The Stockholders shall have delivered to the
Purchaser a list of all of the Companies’ bank account numbers and safe deposit
box numbers.

Section 6.20 Frustration of Closing Conditions. The Purchaser may not rely on
the failure of any condition set forth in this Article VI to be satisfied if
such failure was caused by the Purchaser’s failure to act in good faith or the
Purchaser’s failure to use its commercially reasonable efforts to cause the
Closing to occur.

ARTICLE VII

CONDITIONS TO StockHOLDERS’ OBLIGATIONS

The sale of the Shares by the Stockholders on the Closing Date is conditioned
upon satisfaction by the Purchaser, or waiver by the Stockholders in writing, at
or prior to the Closing, of the following conditions:

Section 7.1 Representations and Warranties. Each of the representations and
warranties of the Purchaser contained in this Agreement shall have been true and
correct in all material respects on and as of the Closing Date as though made on
and as of the Closing Date (except for representations and warranties that are
made as of a specific date, which shall be true and correct in all material
respects as of that date), and the Purchaser shall have delivered to the
Stockholders a certificate of the Purchaser, dated the Closing Date, to such
effect.

Section 7.2 Agreements and Covenants. The Purchaser shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date, and the
Purchaser shall have delivered to the Stockholders a certificate of the
Purchaser, dated the Closing Date, to such effect.

 

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Section 7.3 No Litigation. No Proceedings shall have been instituted or
threatened before a court or other Governmental or Regulatory Authority to
restrain or prohibit any of the transactions contemplated hereby, and the
Purchaser shall have delivered to Stockholders a certificate of the Purchaser,
dated the Closing Date, to such effect.

Section 7.4 Consents and Approvals. All governmental and third-party consents,
waivers and approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been received.

Section 7.5 Statutes; Orders. No Law or Order of any kind shall have been
enacted, entered, promulgated or enforced by any court or Governmental or
Regulatory Authority which prohibits the consummation of the transactions
contemplated by this Agreement or has the effect of making them illegal.

Section 7.6 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Stockholders and
their counsel, and the Stockholders shall have received copies of all such
documents and other evidences as they or their counsel may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.

Section 7.7 Escrow Agreement. The Purchaser shall have delivered to the
Stockholders a duly executed counterpart of the Escrow Agreement.

Section 7.8 Real Property Matters. The Purchaser shall have delivered to the
Stockholders evidence of the consummation of the sale of the Current Real
Property and the real property located at 1431 Harmony Court, Itasca, Illinois,
from the owners thereof to Purchaser.

Section 7.9 Frustration of Closing Conditions. The Stockholders and the
Companies may not rely on the failure of any condition set forth in this Article
VII to be satisfied if such failure was caused by the Stockholders’ or the
Companies’ failure to act in good faith or the Stockholders’ or the Companies’
failure to use its commercially reasonable efforts to cause the Closing to
occur.

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

Section 8.1 Survival of Representations; Survival of Covenants.

(a) Except as set forth in subparagraph (b) below, the respective
representations and warranties of the parties contained in this Agreement will
survive the Closing for a period of eighteen (18) months after the Closing Date.

(b) The representations and warranties contained in:

(i) Section 3.1 (Ownership of Shares), Section 3.2 (Existence and Good
Standing), Section 3.3 (Authority and Enforceability), Section 3.5
(Capitalization), Section 3.6 (Subsidiaries and Investments) and Section 3.28
(Brokers’ or Finders’ Fees) will survive the Closing indefinitely;

 

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(ii) Section 3.14 (Taxes) and Section 3.23 (Environmental Matters) will survive
the Closing until sixty (60) days after the expiration of the applicable statute
of limitations period (after giving effect to any waivers and extensions
thereof); and

(iii) Section 4.1 (Existence and Good Standing, Section 4.2 (Authority and
Enforceability) and Section 4.4 (Brokers’ or Finders’ Fees) will survive the
Closing indefinitely.

(c) Except as otherwise specifically provided in this Agreement, all covenants,
agreements and obligations in this Agreement will survive the Closing
indefinitely.

Section 8.2 Indemnification.

(a) Subject to the limitations set forth in this Article VIII, the Stockholders
will jointly and severally, indemnify and hold harmless the Purchaser and its
Affiliates, officers, directors, agents, employees, successors, representatives
and assigns (each, a “Purchaser Indemnified Party”) from and against any and all
Damages asserted against, resulting to, imposed upon, or incurred or suffered by
any Purchaser Indemnified Party, directly or indirectly resulting from or
arising out of any of the following (each, a “Purchaser Indemnifiable Claim”):

(i) any inaccuracy in or breach of any of the representations or warranties,
taking into account the Schedules and the Schedule Updates, made by the
Stockholders in this Agreement or any other Transaction Document;

(ii) any breach or non-performance of any covenant, agreement or obligation to
be performed by the Stockholders pursuant to this Agreement or any other
Transaction Document;

(iii) any Indebtedness;

(iv) any Transaction Costs;

(v) any Environmental Claim based on or arising from materials having been
deposited within the designated Salt Creek floodplain water shed along the
northern property border in contravention of Environmental Laws or any Permit;
(b) failing to address, mitigate, or remediate any historic deposit of materials
deposited within the designated Salt Creek floodplain water shed along the
northern property border, to the extent required by any Governmental or
Regulatory Authority, Environmental Law, or Permit; and (c) any instance of
non-compliance with regard to any obligations regarding the Company’s existing
stormwater permitting status, including any attendant obligations associated
with addressing, monitoring, or mitigating any wetland area installed due to the
prior deposit of materials within the designated Salt Creek floodplain water
shed along the northern property border; and

(vi) any Pre-Closing Taxes but only to the extent not otherwise reflected in the
Balance Sheet subject to Section 3.14 of this Agreement.

 

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(b) Subject to the limitations set forth in this Article VIII, the Purchaser
will indemnify and hold harmless the Stockholders and their respective
Affiliates, successors, representatives and assigns (each, a “Stockholder
Indemnified Party”) from and against any and all Damages asserted against,
resulting to, imposed upon, or incurred or suffered by any Stockholder
Indemnified Party directly or indirectly resulting from or arising out of any of
the following (each, a “Stockholder Indemnifiable Claim”):

(i) any inaccuracy in or breach of any of the representations or warranties made
by the Purchaser in this Agreement or any other Transaction Document;

(ii) any breach or non-performance of any covenant, agreement or obligation to
be performed by the Purchaser pursuant to this Agreement or any other
Transaction Document;

(iii) the operations of the Companies from and after the Closing; and

(iv) any Taxes other than Pre-Closing Taxes not otherwise reflected in the
Balance Sheet.

(c) The obligations to indemnify and hold harmless pursuant to Sections 8.2(a)
and 8.2(b) will survive the consummation of the transactions contemplated by
this Agreement for the time periods set forth in Section 8.1, except for claims
for indemnification asserted prior to the end of such periods, which claims will
survive until final resolution thereof.

Section 8.3 Limitation on Indemnification.

(a) Except as set forth in this Section 8.3(a) or in Section 8.3(b) below, the
maximum personal liability of all of the Stockholders to the Purchaser with
respect to Purchaser Indemnifiable Claims will be an aggregate amount equal to
$7,500,000 (the “General Cap”); provided, however, that the General Cap shall
not apply with respect to Purchaser Indemnifiable Claims arising from any breach
or inaccuracy of any representation and warranty in Section 3.21 (Personnel),
Section 3.22 (Employee Benefit Plans) and Section 3.23 (Environmental Matters).
The maximum personal liability of all of the Stockholders to the Purchaser with
respect to Purchaser Indemnifiable Claims inclusive of Purchaser Indemnifiable
Claims arising from any breach or inaccuracy of any representation and warranty
in Section 3.21 (Personnel), Section 3.22 (Employee Benefit Plans) and
Section 3.23 (Environmental Matters) will be an amount equal to $12,500,000 (the
“Aggregate Cap”). In addition, the Stockholders will have no liability (for
indemnification or otherwise) (i) with respect to any individual claim the
Damages of which are less than $10,000 and (ii) unless and until the aggregate
of all Damages with respect to all aggregate claims exceeds $500,000 (the
“Threshold”); provided, however, that once the aggregate amount of such Damages
exceeds the Threshold, the Stockholders will be liable only for the entire
amount of Damages in excess of the Threshold.

(b) Notwithstanding the provisions of Section 8.3(a) above, any Damages with
respect to a Purchaser Indemnifiable Claim arising from any breach or inaccuracy
of any representation and warranty in Section 3.1 (Ownership of Shares),
Section 3.2 (Existence and Good Standing), Section 3.3 (Authority and
Enforceability), and Section 3.5 (Capitalization), Section 3.14 (Taxes) and
Section 3.28 (Brokers’ or Finders’ Fees), as well as Damages with respect to a
Purchaser Indemnifiable Claim under Sections 8.2(a)(ii) through
Section 8.2(a)(vi) or which arises from Fraud, will not be subject to or applied
toward the Threshold, the General Cap or the Aggregate Cap, and the Purchaser
Indemnified Parties will be entitled to indemnification for the entire amount of
Damages

 

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with respect thereto without regard to the General Cap or the Aggregate Cap. The
term “Fraud” shall mean a final determination of a court of competent
jurisdiction that an applicable party has committed fraud under applicable Law
against another party in connection with any representations, warranties or
covenants made herein or in any schedule, exhibit or certificate delivered
pursuant hereto.

(c) The maximum personal liability of the Purchaser to the Stockholders with
respect to Stockholder Indemnifiable Claims will be the General Cap. In
addition, the Purchaser will have no liability (for indemnification or
otherwise) with respect to claims until the total of all Damages with respect to
all aggregate claims exceeds the Threshold; provided, however, that once the
aggregate amount of such Damages exceeds the Threshold, the Purchaser will be
liable only for the entire amount of Damages in excess of the Threshold.

(d) Notwithstanding the provisions of Section 8.3(c) above, any Damages with
respect to a Stockholder Indemnifiable Claim arising from any breach or
inaccuracy of any representation and warranty in Section 4.1 (Existence and Good
Standing), Section 4.2 (Authority and Enforceability) and Section 4.4 (Brokers’
or Finders’ Fees), as well as Damages with respect to a Stockholder
Indemnifiable Claim under Sections 8.2(b)(ii) through Section 8.2(b)(iv), will
not be subject to or applied toward the Threshold or the Cap, and the
Stockholder Indemnified Parties will be entitled to indemnification for the
entire amount of Damages with respect thereto without regard to the Threshold or
General Cap.

(e) The Stockholders will not have any rights, hereunder or otherwise, to
indemnification or contribution from the Company with respect to any matter, and
the Stockholders hereby release the Company from any liability arising out of or
in connection with any such claim; provided, however, that, subject to the
limitations set forth in this Section 8.3, the foregoing release is not intended
to affect in any way the Stockholders’ right to be indemnified by the Purchaser
pursuant to Sections 8.2(b).

(f) Notwithstanding anything herein to the contrary, no party hereto shall be
entitled to indemnification or reimbursement under any provision of this
Agreement for any amount to the extent such party has been indemnified or
reimbursed for such amount under any other provision of this Agreement or by any
third Person.

(g) The amount of any claims for Damages which indemnification is provided under
this Article VIII shall be (i) net of any amounts recovered by an Indemnified
Party under insurance policies with respect to such claims, and (ii) reduced to
take account of any net Tax benefit realized by the Indemnified Party (including
as a result of any basis adjustment) arising from the incurrence or payment of
any such claims. If, after the Indemnifying Party has indemnified the
Indemnified Party for any part of such claims, the Indemnified Party recovers
any such claims under insurance policies, then the Indemnified Party shall
reimburse the Indemnifying Party the amount previously paid by the Indemnifying
Party to the Indemnified Party for such claims, up to the amount recovered by
the Indemnified Party for such claims.

(h) The Indemnified Party shall act in a commercially reasonable manner in
mitigating any claims for Damages that may provide the basis for an
indemnifiable claim (that is, the Indemnified Party shall respond to such claims
in the same manner that it would respond to such claims in the absence of the
indemnification provided for in this Agreement). Any request for indemnification
of specific costs shall include invoices and supporting documents containing
reasonably detailed information about the claims for which indemnification is
being sought.

 

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Section 8.4 Indemnification Procedure.

(a) Within a reasonable period of time after the incurrence of any Damages by an
Indemnified Party seeking indemnification under Section 8.2(a) or Section 8.2(b)
hereof, such Indemnified Party will deliver to the Indemnifying Party a written
notice of claim (a “Claim Notice”), which Claim Notice will:

(i) state that the Indemnified Party has paid or properly accrued Damages or
anticipates that it will incur liability for Damages for which such Indemnified
Party is entitled to indemnification pursuant to this Agreement; and

(ii) specify in reasonable detail each individual item of Damages included in
the amount so stated, the date such item was paid or properly accrued, the basis
for any anticipated liability and the nature of the misrepresentation, breach of
warranty, breach of covenant or claim to which each such item is related and the
computation of the amount to which such Indemnified Party claims to be entitled
hereunder.

(b) In the event that the Indemnifying Party objects to the indemnification of
an Indemnified Party in respect of any claim or claims specified in any
Certificate, the Indemnifying Party will, within ten (10) days after receipt by
the Indemnifying Party of such Claim Notice, deliver to the Indemnified Party a
notice to such effect and the Indemnifying Party and the Indemnified Party will,
within the twenty (20) day period beginning on the date of receipt by the
Indemnified Party of such objection, attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims to which
the Indemnifying Party will have so objected. If the Indemnified Party and the
Indemnifying Party succeed in reaching agreement on their respective rights with
respect to any of such claims, the Indemnified Party and the Indemnifying Party
will promptly prepare and sign a memorandum setting forth such agreement. Should
the Indemnified Party and the Indemnifying Party be unable to agree as to any
particular item or items or amount or amounts during such twenty (20) day
period, then the Indemnified Party and the Indemnifying Party will submit such
dispute to a court of competent jurisdiction for determination. The party which
receives a final judgment in such dispute will be indemnified and held harmless
for all reasonable attorney and consultant’s fees or expenses by the other
party.

(c) Claims for Damages specified in any Claim Notice to which an Indemnifying
Party does not object in writing within ten (10) days of receipt of such Claim
Notice, claims for Damages covered by a memorandum of agreement of the nature
described in Section 8.4(b), claims for Damages the validity and amount of which
have been the subject of judicial determination as described in Section 8.4(b)
and claims for Damages the validity and amount of which have been the subject of
a final judicial determination, or have been settled with the consent of the
Indemnifying Party, as described in Section 8.5, are hereinafter referred to,
collectively, as “Agreed Claims.” Within thirty (30) days of the determination
of the amount of any Agreed Claims, to the extent not paid from the Escrow
Account in the event of a Purchaser Indemnifiable Claim, the Indemnifying Party
will pay to the Indemnified Party an amount equal to the Agreed Claim by wire
transfer in immediately available funds to the bank account or accounts
designated by the Indemnified Party in a written notice to the Indemnifying
Party not less than three (3) Business Days prior to such payment.

 

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Section 8.5 Third Party Claims. If a claim by a third party is made against any
Indemnified Party, and if such Indemnified Party intends to seek indemnity with
respect thereto under this Article VIII, such Indemnified Party will promptly
notify in writing the Indemnifying Party of such claims pursuant to Section 8.4;
provided, that the failure to so notify will not relieve the Indemnifying Party
of its obligations hereunder, except to the extent that the Indemnifying Party
is actually and materially prejudiced thereby. The Indemnifying Party will have
thirty (30) days after receipt of such notice to assume the conduct and control,
through counsel reasonably acceptable to the Indemnified Party at the expense of
the Indemnifying Party, of the settlement or defense thereof; provided, however,
that (i) the Indemnifying Party will permit the Indemnified Party to participate
in such settlement or defense through counsel chosen by such Indemnified Party,
provided that the fees and expenses of such counsel will be borne by such
Indemnified Party and (ii) the Indemnifying Party will promptly be entitled to
assume the defense of such action only to the extent the Indemnifying Party
acknowledges its indemnity obligation and assumes and holds such Indemnified
Party harmless from and against the full amount of any Damages resulting
therefrom subject to the limitations set forth in this Agreement; provided,
further, that the Indemnifying Party will not be entitled to assume control of
such defense and will pay the reasonable fees and expenses of counsel retained
by the Indemnified Party if (i) the Indemnified Party and the Indemnifying Party
agree, reasonably and in good faith, that such third-party claim would give rise
to Damages which are more than 150% of the amount then remaining indemnifiable
by such Indemnifying Party pursuant to this Article VIII; (ii) the claim for
indemnification relates to or arises in connection with any criminal Proceeding,
(iii) the claim seeks an injunction or equitable relief against the Indemnified
Party; (iv) the Indemnified Party has been advised in writing by counsel that a
reasonable likelihood exists of a conflict of interest between the Indemnifying
Party and the Indemnified Party; or (v) upon petition by the Indemnified Party,
the appropriate court rules that the Indemnifying Party failed or is failing to
vigorously prosecute or defend such claim. Any Indemnified Party will have the
right to employ separate counsel in any such action or claim and to participate
in the defense thereof, but the fees and expenses of such counsel will not be at
the expense of the Indemnifying Party unless (i) the Indemnifying Party has
failed, within a reasonable time after having been notified by the Indemnified
Party of the existence of such claim as provided in the preceding sentence, to
assume the defense of such claim, (ii) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Party, or (iii) the named
parties to any such action (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such Indemnified Party has been
advised in writing by its counsel that there may be one or more legal defenses
available to the Indemnified Party which either are not available to the
Indemnifying Party, or are available to the Indemnifying Party but the assertion
of which would be adverse to the interests of the Indemnified Party. So long as
the Indemnifying Party is reasonably contesting any such claim in good faith,
the Indemnified Party will not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party will have the right to pay or settle any such
claim, provided, however, that in such event it waives any right to indemnity
therefor by the Indemnifying Party for such claim unless the Indemnifying Party
has consented to such payment or settlement. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days after the receipt of the
Indemnified Party’s notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party will have the right to
contest, settle or compromise the claim but will not thereby waive any right to
indemnity therefor pursuant to this Agreement. The Indemnifying Party will not,
except with the consent of the Indemnified Party, enter into any settlement that
is not entirely indemnifiable by the Indemnifying Party pursuant to this Article
VIII and does not include as an unconditional term thereof the giving by the
Person or Persons asserting such claim to all Indemnified Parties of an
unconditional release from all liability with respect to such claim or consent
to entry of any judgment.

 

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The Indemnifying Party and the Indemnified Party will cooperate with each other
in all reasonable respects in connection with the defense of any claim,
including making available records relating to such claim and furnishing,
without expense to the Indemnifying Party and/or its counsel, such employees of
the Indemnified Party as may be reasonably necessary for the preparation of the
defense of any such claim or for testimony as witnesses in any Proceeding
relating to such claim.

Section 8.6 Exclusive Remedies. In the absence of Fraud, the indemnification
provisions set forth in this Article VIII shall provide the exclusive remedy for
breach of any covenant, agreement, representation or warranty set forth in this
Agreement or any other Transaction Document. The parties shall not be entitled
to a rescission of this Agreement, or to any further indemnification rights or
other claims of any nature whatsoever in respect thereof (whether by contract,
common law, statute, law, regulation or otherwise, including, without
limitation, under the Racketeer Influence and Corrupt Organizations Act of 1970,
as amended), all of which the parties hereby waive.

ARTICLE IX

TERMINATION

Section 9.1 Termination Events. This Agreement may, by written notice given
prior to or at the Closing, be terminated:

(a) by either the Purchaser, on the one hand, or the Stockholders, on the other
hand, if a material breach of any provision of this Agreement has been committed
by the other party and such breach has not been waived in writing;

(b) by the Purchaser if any of the conditions in Article VI have not been
satisfied as of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of the Purchaser to comply
with its obligations under this Agreement) and the Purchaser has not waived such
condition in writing on or before Closing;

(c) by the Stockholders if any of the conditions in Article VII have not been
satisfied as of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of the Stockholders to comply
with its obligations under this Agreement) and the Stockholders have not waived
such condition in writing on or before Closing;

(d) by the mutual written consent of the Purchaser and the Stockholders; or

(e) by either the Purchaser or the Stockholders if the Closing has not occurred
(excluding a delay resulting from failure of the party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before January 31, 2015, or such later date as the parties may agree upon in
writing.

Section 9.2 Effect of Termination. Each party’s right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. Except for the obligations contained in Section 5.10(b) and the
next sentence, if this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate.
Notwithstanding the termination of this Agreement, the Purchaser will not take
any action intended to disparage or damage the reputation of the Companies, the
Stockholders, or Abbinante, their respective Affiliates, directors, officers or

 

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personnel, or to engage in any other action that is intended to injure or hinder
the business relationships of the Business. Notwithstanding the foregoing, if
the Agreement is terminated pursuant to Section 9.1(e), termination shall be the
sole and exclusive remedy and no party shall have any additional rights or
remedies available to it.

ARTICLE X

MISCELLANEOUS

Section 10.1 Expenses. The Purchaser shall pay all documentary, stamp, sales,
transfer, excise or other similar Taxes incurred in connection with this
Agreement, the Transaction Documents, and the transactions contemplated hereby
(but not any income Taxes imposed on Stockholders), and the filing of any Tax
return with respect to such Taxes. Other than as described in the first sentence
of this Section 10.1, whether or not the transactions contemplated by this
Agreement are consummated, the parties hereto will pay all of their own expenses
relating to the transactions contemplated by this Agreement, including the fees
and expenses of their respective counsel and financial advisers. The fees and
expenses of the Escrow Agent will be paid one-half by the Purchaser and one-half
by the Stockholders.

Section 10.2 Governing Law; Venue. The interpretation and construction of this
Agreement, and all matters relating hereto, will be governed by the laws of the
State of Illinois applicable to agreements executed and to be performed solely
within such State, without regard to principles of conflicts of law of any
jurisdiction. Any proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement shall be brought against any of the
parties in the circuit courts located in Chicago, Illinois, or, if it has or can
acquire jurisdiction, in the United States District Court for the Northern
District of Illinois, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such proceeding and
waives any objection to venue laid therein. Process in any proceeding referred
to in the preceding sentence may be served on any party anywhere in the world.

Section 10.3 Waiver of Jury Trial. Purchaser, Planesite, Abbinante and the
Stockholders hereby waive, to the fullest extent permitted by applicable Law,
any right it may have to a trial by jury in respect of any litigation as between
the parties directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby or disputes relating
hereto. Purchaser, Planesite, Abbinante and the Stockholders each (i) certify
that no representative, agent or attorney of the other party has represented,
expressly or otherwise that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledge that it
and the other parties have been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this Section 10.3.

Section 10.4 Table of Contents; Captions. The table of contents and the Article
and Section captions used herein are for reference purposes only, and will not
in any way affect the meaning or interpretation of this Agreement.

Section 10.5 Notices. Any notice or other communication required or permitted
under this Agreement will be deemed to have been duly given (i) three
(3) Business Days following deposit in the mails if sent by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile
transmission if receipt thereof is confirmed by telephone, (iii) when delivered,
if delivered personally to the intended recipient and (iv) two (2) Business Days
following deposit with a nationally recognized overnight courier service, in
each case addressed as follows:

 

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if to the Stockholders or Planesite, a single notice, to:

Robert Abbinante

542 N. Ellsworth Avenue

Addison, Illinois 60101

with a copy (which shall not constitute notice or service of process) to:

Huck Bouma PC

1755 S. Naperville Road

Suite 200

Wheaton, Illinois 60189

Attn: David D. O’Sullivan, Esq.

Facsimile: 630-221-1756

and if to the Purchaser, to

Astronics Corporation

130 Commerce Way

East Aurora, NY 14052

Attn: Chief Financial Officer

Facsimile: 716-655-0309

or such other address or number as is furnished in writing by any such party.

Section 10.6 Assignment; Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto without the
express written consent of the other party hereto, other than by operation of
law; provided, however, that the Purchaser may assign its rights, interests and
obligations hereunder to any direct or indirect wholly owned Subsidiary or to
any Affiliate and provided, further, that if the Purchaser makes any assignment
referred to above, the Purchaser will remain liable under this Agreement. This
Agreement is binding upon and will inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns.

Section 10.7 Counterparts; Facsimile Signatures. This Agreement may be executed
in two (2) or more counterparts, all of which taken together will constitute one
(1) instrument. The parties agree that this Agreement may be executed by
facsimile transmission and that the reproduction of signatures by facsimile or
similar device will be treated as binding as if originals, and each party agrees
and undertakes to provide the other party with a copy of the Agreement bearing
original signatures forthwith upon demand by the other party.

Section 10.8 Entire Agreement; Amendments. This Agreement, including the
Schedules and the Exhibits hereto, and the other documents referred to herein
which form a part hereof, contains the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter. This Agreement may not be changed, and any
of the terms, covenants, representations, warranties and conditions cannot be
waived, except pursuant to an instrument in writing signed by the Purchaser and
the Stockholders or, in the case of a waiver, by the party waiving compliance.

 

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Section 10.9 Severability. If any term, provision, agreement, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, agreements, covenants and restrictions of this Agreement will
remain in full force and effect and will in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such a determination, the parties will negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a reasonably acceptable manner in order that
the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.

Section 10.10 Independence of Covenants and Representations and Warranties. All
covenants hereunder will be given independent effect so that if a certain action
or condition constitutes a default under a certain covenant, the fact that such
action or condition is permitted by another covenant will not affect the
occurrence of such default, unless expressly permitted under an exception to
such initial covenant. In addition, all representations and warranties hereunder
will be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness or a breach of such
initial representation or warranty.

Section 10.11 Third-Party Beneficiaries. Each party hereto intends that this
Agreement will not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto and the Indemnified Parties.

Section 10.12 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event any
ambiguity or question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by all parties hereto, and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.

[ signature page follows ]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the day and year first above written.

 

            PURCHASER:     ASTRONICS CORPORATION     By:   /s/ David C. Burney  
  Name: David C. Burney     Title: Executive Vice President
            PLANESITE:     PLANESITE HOLDINGS, INC.     By:   /s/ Robert
Abbinante     Name: Robert Abbinante     Title: CEO             STOCKHOLDERS:  
 

THE ROBERT ABBINANTE TRUST DATED

OCTOBER 14, 2009

    By:    /s/ Robert Abbinante       Robert Abbinante, Trustee           THE
ABBINANTE 2013 IRREVOCABLE TRUST # 1,     By:   /s/ Robert Abbinante      
Robert Abbinante, Trustee           THE ABBINANTE 2013 IRREVOCABLE TRUST #2    
By:   /s/ MaryPaula I. Abbinante       MaryPaula I. Abbinante, Trustee          
ABBINANTE:    

/s/ Robert Abbinante

    Robert Abbinante

 

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