ASSET PURCHASE AGREEMENT

      This ASSET PURCHASE AGREEMENT (“Agreement”) is entered into as of
August  31, 2015 by Air Industries Group, a Nevada corporation (“Buyer”), on the
one hand, and Compac Development Corp., a New York corporation (the “Company”),
and Peter C. Rao and Vito Valenti, the shareholders (“Shareholders”)  of the
Company, on the other hand.

RECITALS:

The Company is engaged in the business of providing specialized RFI/EMI shielded
enclosures to the aerospace and other industries (the “Business”);

The Shareholders own all of the outstanding shares of the common stock of the
Company; and

    The Company desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from Seller, certain assets, rights and obligations related
to the Business on the terms and conditions set forth in this Agreement.
 

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1
DEFINITIONS

      As used herein the following terms shall have the following meanings and
shall include in the singular number the plural and in the plural number the
singular unless the context otherwise requires (capitalized terms not defined in
this Article 1 shall have the meanings ascribed to such terms elsewhere in this
Agreement):

      "Affiliate" means, as to a Person, any other Person that, directly or
indirectly, through one or more intermediaries controls, is controlled by or is
under common control with the first-mentioned Person.

“Agreement” means this Asset Purchase Agreement, together with all Exhibits and
Schedules annexed hereto, as the same may be amended, supplemented or modified
from time to time.
      "Assets" means all of assets, properties, rights and claims of every kind
and description used in the ordinary course operation of the Business
immediately prior to the date hereof (other than the Excluded Assets), whether
real or personal, tangible or intangible, vested or unvested, contingent or
otherwise, wherever located, and all goodwill associated therewith.

      “Assignment and Assumption Agreements” means the Assignment and Assumption
Agreements to be executed by Buyer and the Company.
 
 
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“Bill of Sale” means the Bill of Sale to be executed by the Company and the
Intellectual Property Bill of Sale to be executed by the Company.
 
“Business Proprietary Information” means confidential or proprietary information
of the Business which is either marked as such or given the nature of the
information or circumstances surrounding its disclosure, ought reasonably to be
understood to be confidential or proprietary information and shall include: (a)
any Intellectual Property, or any information concerning any Intellectual
Property employed by the Company but not generally known to its customers,
vendors or competitors, or under development by or being tested by the Company
but not at the time offered generally to customers or vendors; (b) any
information relating to Software or computer systems used by the Company or the
Company’s pricing or marketing methods, margins, capital structure, operating
results, or borrowing arrangements; (c) any business plans, budgets, advertising
or marketing plans relating to the Business;  (d) any information belonging to
customers or vendors of the Business or any other Person which the Company has
agreed to hold in confidence in connection with the Business; and (e) all
written, graphic and other material relating to any of the foregoing.

      "Code" means the Internal Revenue Code of 1986, as amended.

      “Contract" shall mean any agreement, contract, obligation, promise,
undertaking, indenture, mortgage, policy, arrangement, or instrument, including
any amendment thereto, fixed or contingent, written or oral, expressed or
implied, which cannot be terminated by the Company without cause on no more than
30 days notice and without liability to the Company in excess of $10,000.

“Copyrights” means all domestic and foreign copyright interests in any original
work of authorship, whether registered or unregistered, including all copyright
registrations or foreign equivalent, all applications for registration or
foreign equivalent, all moral rights, all common-law rights, and all rights to
register and obtain renewals and extensions of copyright registrations, together
with all other copyright interests accruing by reason of international copyright
convention.

“Domain Names” means all domain name registrations used in the Business.

“Effective Time” means the close of business on August 31, 2015, and “Effective
Date” means August 31, 2015.

      "Environmental Damages" means all claims, judgments, damages (other than
special or consequential damages), losses, penalties, fines, liabilities,
encumbrances, liens, costs and expenses of defense of a claim, and costs and
expenses of reporting, investigating, removing and/or remediating Hazardous
Materials, of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable, including reasonable attorneys' fees
and disbursements and consultants' fees, any of which are incurred at any time
arising out of, based on or resulting from: (i) the presence or release of
Hazardous Materials in or into the environment, on or prior to the Closing Date,
in violation of applicable Environmental Laws upon, beneath or from any real
property or other location (whether or not owned by the Company) where the
Company conducted operations or generated, stored, sent, transported or disposed
of Hazardous Materials; or (ii) any violation of Environmental Laws by the
Company on or prior to the Closing Date. Environmental Damages attributable to
any individual shall include only that portion of any punitive damages assessed
against the Company as direct result of actions taken by or omissions of that
individual.
 
 
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      "Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, codes, regulations, ordinances, rules, judgments,
injunctions, orders, decrees, permits, franchises or licenses relating
to  pollution, hazardous substances, hazardous wastes, petroleum or otherwise
relating to protection of the environment, natural resources or human health,
including but not limited to: the Clean Air Act; Clean Water Act; Resource
Conservation and Recovery Act ("RCRA"); Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"); Emergency Planning and Community
Right-to-Know Act; Federal Insecticide, Fungicide and Rodenticide Act; Safe
Drinking Water Act; Toxic Substances Control Act; Hazardous Materials
Transportation Act; Occupational Safety and Health Act; and Endangered Species
Act of 1973, each as amended.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

“Escrow Agent” means Eaton & Van Winkle LLP.

      "Governmental Body" means any federal, state, local, municipal, foreign,
or other government, or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).

      "Hazardous Materials" means any substance in amounts and concentrations
that: (i) require reporting, investigation, removal or remediation under any
Environmental Law; (ii) are regulated as a "hazardous waste," "hazardous
substance" or "pollutant" or "contaminant" under any Environmental Law; (iii)
causes a nuisance, trespass or other tortuous condition or poses a hazard to the
health or safety of persons; or (iv) contains gasoline, diesel fuel or other
petroleum fuels, PCBs, asbestos or urea formaldehyde foam insulation.

“Intellectual Property” means: (a) all works of authorship, methodologies,
models, business processes, Software, Marks, Domain Names, Inventions, Know How,
Trade Secrets and other intellectual property (i) that is owned (wholly, jointly
or in part) or licensed (as licensor or licensee) by the Company, including, in
each case, in connection with any alliance, joint venture, partnership or
similar agreement, (ii) that is or has been used in any product, service,
technology or process currently or formerly offered by the Company, (iii) that
is or has been used in the Business, or (iv) that is under development by or on
behalf of the Company; and (b) all rights in the foregoing, including
Copyrights, Patents, moral rights and associated goodwill.

“Inventions” means novel devices, processes, compositions of matter, methods,
techniques, observations, discoveries, apparatuses, machines, designs,
expressions, theories and ideas, whether or not patentable.
 
 
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“Know how” means all scientific, engineering, mechanical, electrical, financial,
marketing or practical knowledge or experience used by the Company in operating
the Business.

      "IRS" means the Internal Revenue Service.

      "Knowledge" means a Person will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such person is actually aware of such
fact or other matter or (b) a prudent individual in the position of the Chief
Executive Officer or Chief Financial Officer of the Company could reasonably be
expected to become aware of such fact or other matter in the course of
performing his duties on behalf of the Company. "Knowledge" with respect to the
Company shall mean the Knowledge of the Shareholders.

“Law” means, with respect to any Person, any U.S. federal, state or local, and
any foreign national, state or local, law, statute, common law, ordinance, code,
treaty, rule, regulation, order, ordinance, Permit, license, writ, injunction,
directive, determination, judgment or decree or other requirement of any
Governmental Entity or arbitrator, in each case, applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject.

“Lease” means, the lease between the Company and _Westbury Park Associates LLC
dated March 17, 2008 with respect to the premises occupied by the Company at
1460 Clinton Avenue, Bay Shore, New York 11706.

"Legal Requirement" means any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.

"Liability" means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
(without limitation) any liability for Taxes.

“Marks” means all domestic and foreign trademarks, trade dress, service marks,
trade names, business names, icons, logos, slogans, and any other indicia of
source or sponsorship of goods and services, designs and logotypes related to
the above, in any and all forms, all trademark registrations and applications
for registration related to such trademarks (including intent to use
applications), and all goodwill related to the foregoing.

"Ordinary Course of Business" means the ordinary course of business of the
Company consistent with past practice.

“Patents” means all domestic and foreign patents (including certificates of
invention and other patent equivalents), provisional applications, patent
applications and patents issuing therefrom as well as any division, continuation
or continuation in part, reissue, extension, reexamination, certification,
revival or renewal of any patent, all Inventions and subject matter related to
such patents, in any and all forms.
 
 
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"Permits" shall mean any and all licenses, permits, orders or approvals of any
federal, state, local or foreign governmental or regulatory body necessary for
the operation of the Business by the Company as presently conducted.

“Permitted Lien” means (a) any Lien for Taxes which are not yet due or (b) any
carrier’s, warehouseman’s, mechanic’s, materialman’s, repairman’s, landlord’s or
similar statutory or inchoate Lien incidental to the ordinary conduct of
business which involves an obligation that is not yet due.

"Person" means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization or other legal entity.

"Regulatory Approvals" shall mean all regulatory approvals, exemptions, lapses
of waiting periods, written opinions or other actions by the federal, state and
local governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement.

"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment of any Hazardous Material (including the abandonment or
discarding of barrels, containers, and other closed receptacles containing any
Hazardous Material).

"Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic's, materialmen's and similar
liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, (d) in the case of real property, rights of way, building use
restrictions, variances and easements, provided the same will not in any
material respect interfere with the Buyer’s operation of the Business and (e)
other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.

“Software” means (a) any and all computer or software programs (including all
software implementations of models, algorithms and methodologies, and all source
code, object code, firmware, programming development and design tools, applets,
compilers and assemblers), (b) machine readable databases and compilations,
including any and all data and collections of data, (c) descriptions, flow
charts, models, diagrams or other work product used to design, plan, organize or
develop any of the foregoing, (d) the technology supporting, and all content,
including audio/video displays, contained on, Internet site(s) and (e) all
documentation, other works of authorship and media, including user manuals and
materials relating to or embodying any of the foregoing or on which any of the
foregoing is recorded.

"Tax" or "Taxes" means any federal, state, local and foreign income or gross
receipts tax, alternative or add-on minimum tax, sales and use tax, customs duty
and any other tax, charge, fee, levy or other assessment including property,
transfer, occupation, service, license, payroll, franchise, excise, withholding,
ad valorem, severance, stamp, premium, windfall profit, employment, rent or
other tax, governmental fee or like assessment or charge of any kind, together
with any interest, fine or penalty thereon, addition to tax, additional amount,
deficiency, assessment or governmental charge imposed by any federal, state,
local or foreign taxing authority.
 
 
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      "Tax Return" includes any material report, statement, form, return or
other document or information required to be supplied by a federal, state, local
or foreign taxing authority in connection with Taxes.

“Trade Secrets” means any formula, design, device or compilation, or other
information which is used or held for use by a business, which gives the holder
thereof an advantage or opportunity for advantage over competitors which do not
have or use the same, and which is not generally known by the public, including
formulas, algorithms, models, market surveys, market research studies, client
lists, information contained on drawings, diagrams and other documents,
methodologies, and information relating to research, development or testing.
 
      "Transaction Documents" means this Agreement and the Escrow Agreement.
 
ARTICLE 2
SALE AND PURCHASE OF ASSETS

Section 2.1. Purchase and Sale of Acquired Assets.  In exchange for the
consideration specified herein, and upon and subject to the terms and conditions
of this Agreement, Buyer hereby agrees to purchase from the Company, and the
Company hereby agrees to sell, assign, transfer and deliver to Buyer, at the
Closing referred to in Section 3.1 below, all of the Company’s right, title and
interest in and to the Assets other than the Excluded Assets, in each case, as
of the Effective Time, whether real or personal, tangible or intangible, vested
or unvested, contingent or otherwise, wherever located, and all goodwill
associated therewith (collectively, the “Acquired Assets”),  free and clear of
all Security Interests except for those in respect of Assumed Liabilities,
including:

(a)           Purchased Contracts.  All of the Company’s right, title and
interest in, to, and under the Contracts to which the Company is a party other
than those set forth on Schedule 2.1(a) (the “Purchased Contracts”) together
with all amounts prepaid thereunder;
 
(b)           Intellectual Property.  (i) All Intellectual Property, including
Know how owned by the Company and used in the operation of the Business and (ii)
all documentation and media constituting, describing or relating to such
Intellectual Property, including memoranda, models, diagrams, manuals, technical
specifications and other records wherever and whenever created;
 
(c)           Accounts Receivable and Work in Process.  All accounts receivable
and work in process as of the Effective Time.
 
(d)           Goodwill.  All goodwill and general intangibles (the “Goodwill”)
associated with the name, assets, properties and rights of the Company or the
Business and all of the Company’s rights (both legal and equitable) to protect
its rights and interests;
 
 
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(e)           Lease.  All of the Company’s rights under the Lease, and its
security deposit under the Lease;
 
(f)           Equipment and Personal Property.  All equipment, furniture,
fixtures, servers, data storage devices, systems, networks and other computer
assets, hardware and equipment and other tangible personal property owned by the
Company, including laptop computers and all technology underlying or enabling
Internet sites, systems or networks, and all leasehold improvements made to the
Leased Premises;
 
(g)           Permits.  All Permits and applications therefor held by the
Company that may legally be transferred to Buyer;
 
(h)           E-mail Addresses; Telephone and Fax Numbers.  All e-mail
addresses, telephone numbers and fax numbers used in connection with the
Business and/or assigned to the Leased Premises;
 
(i)           Records and Documentation.  All books, records (including
financial and accounting records, except that the Company shall be permitted to
retain its Tax records and such financial records as are necessary to prepare
the Company’s Tax Returns; provided that the Company shall provide Buyer with
copies of such Tax records and financial records), lists of customers and
prospective customers of the Business, files, working papers, analytical models,
work product, correspondence, memoranda and other documentation related to the
Business or the Acquired Assets or the Assumed Liabilities, including any
confidential records and any item stored in electronic format, in computer or
any other means or media.
 
(j)           Raw Materials.    All materials held by the Company not committed
to a particular customer.
 
 
2.2
Excluded Assets.  The purchase of the Acquired Assets by Buyer and sale of the
Acquired Assets by the Company contemplated by this Agreement shall not include
any of the following assets of the Company as of the Effective Time, which
assets shall be referred to as the “Excluded Assets”:

 
 
2.2.1
Cash and Cash Equivalents.  Any cash or cash equivalents of the Company;

 
 
2.2.2
Marketable Securities.  Any marketable securities of the Company;

 
 
2.2.3
Certain Contracts.  Any Contracts not expressly assumed hereunder, which, among
others, includes without limitation the Contracts set forth on Schedule 2.1(a);

 
 
2.2.4
Certain Equipment and Personal Property.  Any equipment, furniture, supplies,
fixtures, or other tangible personal property enumerated on Schedule 2.2;

 

  2.2.5 Tax Refunds.  Any claims for federal, state or local Tax refunds and any
right to utilize any net operating loss carry forwards for Pre-Closing Tax
Periods; and

                           
 
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2.2.6
Certain Claims.  Any claims, causes of action and choses in action.

 
 
2.3
Liabilities.  Assumed Liabilities.  Upon the terms and subject to the conditions
of this Agreement, Buyer hereby agrees to assume all liabilities and obligations
of the Company reflected in its books and records as of the Effective
Time,  together with its obligations under the Purchased Contracts and the
Lease, in each case to the extent that any such liabilities and obligations
accrue and first arise after the Effective Time for reasons other than any
breach, violation or default by the Company (the “Assumed Liabilities”).
Excluded Liabilities.  Notwithstanding any provision in this Agreement or any
other writing to the contrary, Buyer is assuming only the Assumed Liabilities
and is not assuming any other liability or obligation of the Company as of the
Effective Time of whatever nature, whether presently in existence or arising
hereafter, including any other liabilities of any the Company (or any
predecessor of the Company) (all such liabilities and obligations not being
assumed being herein referred to as the “Excluded Liabilities”).  Without
limiting the generality of the foregoing, the term “Excluded Liabilities”
includes:

 
 

 
2.3.1
all liabilities or obligations of the Company owing to any Affiliates,
directors, officers, employees, former employees, independent contractors,
agents, representatives or other personnel;

 

 
2.3.2
all liabilities or obligations relating to any compensation or benefits of any
current or former director, officer, partner, principal, manager, employee,
independent contractor, consultant, agent, representative or other personnel
(hereinafter “personnel”) of the Company or under any Employee Benefit Plans,
including in respect of worker’s compensation, wage and hour, independent
contractor misclassification, civil rights, discrimination or other claims,
charges or complaints brought by any Person (including any Governmental Entity)
in connection with labor and employment Laws or otherwise relating to employment
by, or provision of services to, the Company, and including all retirement,
severance, deferred compensation, incentive, equity option, vacation, bonus,
commission, unemployment, partnership or other payments, distributions or
benefits payable to or accrued in favor of such Persons on or prior to the
Effective Time, whether or not pursuant to any Employee Benefit Plans and
whether or not such Persons become engaged by the Buyer or an Affiliate of
Buyer);

 

  2.3.3
all liabilities or obligations relating to any Excluded Asset;

 

 
2.3.4
all liabilities or obligations relating to the Company’s issuance or endorsement
of any check, note, draft or instrument;

 
 
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2.3.5
all liabilities or obligations relating to any claim of any third party,
including any Governmental Entity, arising out of the ownership or operation of
the Business or the Acquired Assets prior to the Effective Time;

 

 
2.3.6
all liabilities or obligations relating to any lease of real property, other
than those arising on or after the Effective Time under the Lease;

 

 
2.3.7
all liabilities or obligations of the Company or any stockholder or other
equityholder of the Company for Taxes, including all liabilities or obligations
for Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any similar
provision of Law), as a transferee or successor by contract, or otherwise;

 

 
2.3.8
all liabilities or obligations relating to any payables of the Company other
than those expressly assumed hereunder;

 

 
2.3.9
all liabilities or obligations arising from or relating to the rights of the
holders of any shares of capital stock or any other equity interest of the
Company or any phantom equity or any options, warrants, subscriptions or other
rights, calls or commitments to issue, or any obligations or commitments to
purchase, any capital stock or any other equity interest of the Company or any
securities convertible into or exchangeable for any of the capital stock or any
other equity interest of the Company; and

 

 
2.3.10
all liabilities or obligations relating to any broker or finder retained by any
the Company or its Affiliates.

 

2.4           Purchase Price. As consideration for the purchase of the Acquired
Assets, in addition to assuming the Assumed Liabilities, Buyer shall pay to the
Company, One Million Two Hundred Thousand Dollars ($1,200,000) plus (or minus)
an amount equal to the Company’s ”Net Working Capital(deficit)” as of the
Effective Time (the “Purchase Price”).
 
2.5           Adjustments to Purchase Price.   (a) For purposes of this
Agreement, the Company’s Net Working Capital shall be equal to the sum of the
Company’s accounts receivable plus finished stock plus work in progress plus Raw
Materials less the Company’s Accounts Payable all as reflected on the books and
records of the Company as of the Effective Time.
 
              For purposes of closing, Buyer and the Company have agreed upon a
reasonable good faith estimate of the Company’s Net Working Capital as of the
Effective Time (the “Estimated Net Working Capital”) as indicated on the
“Closing Statement” prepared by the Company and reviewed by Buyer which shows a
net working capital surplus (deficit) of $ 267,410.91.  The Company has provided
Buyer such additional back-up or supporting data relating to the preparation of
the Closing Statement and the calculation of the Estimated Net Working Capital
as Buyer requested.
 
 
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           (b) Buyer shall have up to forty-five (45) days after the Effective
Time to review the books and records of the Company to determine whether the
Estimated Net Working Capital accurately reflects the books and records of the
Company.  If Buyer concludes that the Estimated Net Working Capital is
incorrect, no later than forty-five (45) days after the Effective Time, Buyer
shall prepare and deliver to the Company a statement of Buyer’s determination of
the net working capital amount as of the Effective Time (the “Buyer’s Net
Working Capital”), setting forth in reasonable detail the basis for such
determination (the “Post-Closing Statement”).  The Buyer’s Net Working Capital
shall be prepared on a basis consistent with the accounting policies of the
Company prior to the Effective Time and the manner in which the Company computed
the Estimated Net Working Capital as of the Effective Time and shall otherwise
be consistent with the books and records of the Company.  Buyer shall provide to
the Company such additional back-up or supporting data relating to the
preparation of the Post-Closing Statement as the Company may reasonably request
and shall allow the Company’s accountants access to the work papers developed in
the preparation of the Post-Closing Statement.
 
(c)  If the Company agrees with the Buyer’s Net Working Capital, within ten (10)
days of its receipt of Buyer’s Post Closing Statement the Company shall pay to
Buyer the excess of the Estimated Net Working Capital over the Buyer’s Net
Working Capital or the Buyer shall pay to the Company the excess of Buyer’s Net
Working Capital over the Estimated Net Working Capital.  If the Company
disagrees with the Buyer’s Net Working Capital it shall so advise the Buyer and
if the parties cannot resolve the disagreement within ten (10) days of Buyer’s
receipt of a notice of disagreement from Buyer, either party may submit the
matter for resolution by a single arbitrator appointed by the American
Arbitration Association.  The arbitration shall be held in Suffolk County at a
location designated by the arbitrator and shall be conducted in accordance with
the Rules of the American Arbitration Association.  The parties shall not be
entitled to any discovery in aid of arbitration.
 
2.6  Allocation.  The Purchase Price (and all other capitalizable costs) will be
allocated for Tax purposes (the “Allocation”) among the Acquired Assets in
accordance with Schedule 2.6
 
ARTICLE 3
CLOSING

Section 3.1.  (a)  The closing for the purchase and sale of the Acquired Assets
shall take place at a time and place mutually agreed to by the Buyer and the
Company, but in no event later than on September 4, 2015 (the “Closing”).   At
the Closing, Buyer will  pay by wire transfer in immediately available funds to
the account of the Company as provided by the Company, $1,150,000 plus the
Estimated Net Working Capital and (y) to the Escrow Agent, $50,000 (the “Escrow
Amount”). The Escrow Amount shall be held subject to the terms of the Escrow
Agreement among Buyer, the Company and the Escrow Agent  to be executed at the
Closing. Further, at the Closing, Buyer will deliver to the Company:

3.1.1           a certificate signed by the Secretary of the Buyer, dated as of
the Effective Date (the “Secretary’s Certificate”): (1) certifying as to: (A)
the continuing accuracy of the representations and warranties of the Buyer set
forth in Article 5 of this Agreement, (B) the resolutions (or written consent)
of the Buyer’s  board of directors, authorizing and approving this Agreement and
the Transaction Documents; and (C) the signatures and incumbency of the
individual(s) signing this Agreement and the Transaction Documents on behalf of
the Buyer;
 
 
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3.1.2           the Assignment and Assumption Agreement, executed by the Buyer;
 
3.1.3           the assignment of the Lease (the “Lease Assignments”), including
the consent to such assignment and assumption by the landlord, executed by the
Buyer
 
3.1.4           the Escrow Agreement executed by the Buyer and the Escrow Agent;
 
3.1.5           all other Transaction Documents to which the Buyer is a party
duly executed by the Buyer.
 
(b)           At the Closing, the Company shall deliver to Buyer:
 
3.2.1 a certificate signed by the Secretary of the Company (the “Secretary’s
Certificate”): (1) certifying as to the following: (A) the continuing accuracy
of the representations and warranties of the Company set forth in Article 4 of
this Agreement and the covenant set forth in Section 6.1 of this Agreement, (B)
the resolutions (or written consent) of the Company’s board of directors and
stockholders, authorizing and approving this Agreement and the Transaction
Documents and the transactions contemplated hereby and the changing of the
Company’s name to a name which is not similar to or confusing with Compac
Development Corp., together with such documentation as is required to be filed
with the Secretary of State of the State of New York to effectuate such change
of name; (C) the charter or organizational document of the Company as in effect
on the Effective Date; (D) the bylaws of the Company as in effect on the
Effective; and (E) the signatures and incumbency of the individual(s) signing
this Agreement and the Transaction Documents on behalf of the Company;
 
3.2.2           the Bill of Sale, executed by the Company;
 
3.2.3           the Assignment and Assumption Agreements, executed by the
Company;
 
3.2.4           the assignment of the Lease (the “Lease Assignments”) executed
by the Company and the landlord;
 
3.2.5           to the extent necessary to effect transfer of the Domain Names
of the Company, a domain name assignment agreement (the “Domain Name Assignment
Agreement”), together with all other necessary documents, in form and substance
reasonably satisfactory to Buyer, transferring the Domain Names of the Company
to Buyer, executed by such Seller;
 
 
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3.2.6           a trademark assignment agreement (the “Trademark Assignment
Agreement”), transferring the Company’s Marks to Buyer, executed by the Company;
 
3.2.7           the Escrow Agreement, executed by the Company; and
 
3.2.8           all other Transaction Documents to which the Company is a party,
executed by the Company.
 
For the avoidance of doubt, the parties intend that the risk of loss and benefit
of any profit associated with the Acquired Assets from and after the Effective
Time is for the account of Buyer notwithstanding that the Closing and transfer
of the Acquired Assets will occur at a later date.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE COMPANY

      As an inducement to Buyer to enter into this Agreement and perform its
obligations hereunder, the Company and the Shareholders represent and warrant to
Buyer as of the date hereof:

Section 4.1. Organization, Good Standing, Power.  The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. The Company has the corporate power and authority to own,
lease and operate its assets and to carry on the Business as now being
conducted. The minute books, stock ledgers and stock transfer records of the
Company were furnished to Buyer for review.

Section 4.2. Certificate of Incorporation and By-Laws.  Correct and complete
copies of the Certificate of Incorporation (the "Certificate of Incorporation")
and By-laws (the "By-laws") of the Company, in each case as amended to date have
been made available to Buyer.

Section 4.3. Capital Stock. (a) All of the outstanding shares of the capital
stock of the Company are owned beneficially and of record by Peter C. Rao and
Vito Valenti.  Mr. Rao owns 95% of the outstanding shares of the Company and Mr.
Valenti owns the balance.

      (b) There are no outstanding offers, options, warrants, rights, calls,
commitments, obligations (verbal or written), conversion rights, plans or other
agreements (conditional or unconditional) of any character providing for or
requiring the sale, purchase or issuance of any other shares of capital stock or
securities of the Company.

Section 4.4. Subsidiaries, Divisions and Affiliates.  The Company does not own
or have any rights to any equity interest, directly or indirectly, in any
corporation, partnership, joint venture, firm or other entity.

Section 4.5. Authorization.  The Company possesses the legal right and capacity
to execute, deliver and perform this Agreement, without obtaining any approval,
authorization, consent or waiver or giving any notice other than as required
from its board of directors and shareholders.   The Company, its directors and
its shareholders have taken all action, if any, required by applicable law, the
Company's Certificate of Incorporation, By-laws or otherwise, required to be
taken to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement and all
other Transaction Documents to which the Company is a party have been, or will
be, duly executed and delivered by the Company, and constitute the legal, valid
and binding obligations of the Company, as the case may be, enforceable against
the Company in accordance with their respective terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, fraudulent conveyance or similar laws affecting or
relating to the enforcement of creditors' rights generally, and by equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law).
 
 
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Section 4.6. Effect of Agreement.  The execution, delivery and performance of
this Agreement by the Company, will not, with or without the giving of notice
and the lapse of time, or both, (a) violate any provision of law, statute, rule,
regulation or executive order to which the Company or the Business is subject;
(b) violate any judgment, order, writ or decree of any court applicable to the
Company, its assets or the Business;  (c) result in the lapse, with or without
the giving of notice or the passage of time, in any customer approval,
qualification or license which is used or useful in the operation of the
Business or (d) result in the breach of or conflict with any term, covenant,
condition or provision of, or, constitute a default under, or result in the
creation or imposition of any Security Interest upon any of the Acquired Assets
pursuant to the Certificate of Incorporation or the By-laws, or any commitment,
contract or other agreement or instrument, including any of the Contracts, to
which the Company is a party or by which any of the Acquired Assets are bound.

Section 4.7. Governmental and Other Consents.    No notice to, consent,
authorization or approval of, or exemption by, any governmental or public body
or authority is required in connection with the execution, delivery and
performance by the Company of this Agreement or any other Transaction Documents
to which the Company is a party, or the taking of any action herein
contemplated; and (ii) no notice to, consent, authorization or approval of, any
Person, including any customer or vendor, under any agreement, arrangement or
commitment of any nature to which the Company is a party or by which the
Acquired Assets are bound by or subject to, or from which the Company receives
or is entitled to receive a benefit, is required in connection with the
execution, delivery and performance by the Company of this Agreement or any
other Transaction Documents to which the Company is a party, or the taking of
any action herein contemplated.  The sale of the Acquired Assets as contemplated
hereby will not result in the lapse, termination or forfeiture of any license,
customer certification or approval required to be maintained for the Buyer to
operate the Business as operated immediately prior to the date hereof.

Section 4.8. Financial Information.   The tax returns and other financial
information which the Company has provided to Buyer have been accurate in all
material respects.
 
      Section  4.9 – Intentionally Omitted
 
 
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  Section 4.10 – Intentionally Omitted

  Section 4.11. Title to Assets; Absence of Liens and Encumbrances.     The
Company has good and marketable title to, and owns outright, the Assets, free
and clear of all Security Interests. The leases and other agreements or
instruments under which the Company holds, leases or is entitled to the use of
any real or personal property are in full force and effect. The Company enjoys
peaceable and undisturbed possession under all such leases. All Assets are in
material conformance with applicable zoning and other laws, ordinances, rules
and regulations; and no notice of violation of any law, ordinance, rule or
regulation thereunder has been received by the Company or Shareholders.

      The Company owns no real property.   The address of the premises occupied
by the Company is 1460 Clinton Avenue, Bay Shore, New York 11706.
 (the “Premises”). The Company has made available to Buyer a true and complete
copy of the lease pursuant to which it occupies the Premises.  All buildings,
structures, appurtenances and material items of machinery, equipment and other
material tangible assets used by the Company in the conduct of the Business are
in reasonably good operating condition and repair, ordinary wear and tear
excepted, are usable in the Ordinary Course of Business and are adequate and
suitable for the uses to which they are being put.
 
  Section 4.12. Equipment.  All items of equipment used in the Business are
reflected in the books and records of the Company (collectively, the
"Equipment").
 
  Section 4.13. Insurance.  There are no outstanding or unsatisfied written
requirements imposed or made by any of the Company's current insurance companies
with respect to current policies covering any of the Assets, or by any
governmental authority requiring or recommending, with respect to any of the
Assets, that any repairs or other work be done on or with respect to, or
requiring or recommending any equipment or facilities be installed on or in
connection with, any of the Assets.

  Section 4.14. Agreements, Arrangements.  (a) Except for open purchase orders
in the ordinary course of business, the Lease and contracts which may be
terminated on no more than thirty (30) days notice at a cost to the Company of
no more than $10,000, and as set forth on Schedule 4.14, the Company is not a
party to, nor are the Assets subject to or bound by any other agreement,
including, without limitation:

(i) equipment lease agreement (whether as lessor or lessee) where the annual
obligation of the Company exceeds $15,000;

   (ii) license agreement, assignment or contract (whether as licensor  or
licensee, assignor or assignee) relating to trademarks, trade names,  patents,
or copyrights (or applications therefore), unpatented designs or processes,
formulae, know-how or technical assistance, or other  proprietary rights, other
than agreements relating to off-the-shelf software used in the conduct of the
Business;
 
 
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   (iii) agreement with any banks or other persons, for the borrowing or lending
of money other than its line of credit with Chase  which is not secured by a
lien on any assets of the Company;

   (iv) agreement granting any person a Security Interest on any of the Assets;

(v) agreement, contract or order with any buying agent, supplier or other Person
involved in the acquisition of supplies with an annual cost to the Company in
excess of $15,000;

   (vi) non-competition, secrecy or confidentiality agreements, or another
agreement restricting the Company from doing business anywhere in the world;

   (vii) agreement or other arrangement for the sale of goods or services to any
third party (including the government or any other governmental authority) in
annual amounts in excess of $15,000;

 (viii) agreement with any distributor, dealer, leasing company, sales  agent or
representative;

 (ix) agreement, contract or order with any manufacturer, leasing company,
broker, supplier or customer (including those agreements which allow discounts
or allowances or extended payment terms), where the annual obligation of the
Company is more than $15,000;

 (x) agreement guaranteeing, indemnifying or otherwise becoming  liable for the
obligations or liabilities of another Person;

 (xi) advertising, publication or printing agreement other than those referred
to on Schedule 4.14; and

 (xv)  agreement giving any party the right to renegotiate or require a
reduction in prices to be paid or the repayment of any amount previously paid,
to the Company.

     The Lease and all contracts as are required to be set forth on Schedule
4.14 are referred to as the “Principal Contracts.” Correct and complete copies
of all Material Contracts have been delivered to Buyer prior to the date hereof.

      (b) Each of the Principal Contracts is valid, in full force and effect and
enforceable in accordance with its terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, fraudulent conveyance or similar laws affecting or
relating to the enforcement of creditors' rights generally, and by equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law).

      (c) Except for open purchase orders and as set forth on Schedule 4.14, the
Company has fulfilled, or has taken all action reasonably necessary to enable it
to fulfill when due, all of its respective obligations under the Principal
Contracts. Furthermore, there has not occurred any default or any event which
with the lapse of time or the election of any person other than the Company or
Shareholder, will become a default under any of the Principal Contracts, except
for such defaults, if any, which have been indicated on Schedule 4.14.
 
 
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  Section 4.15. Patents, Trademarks, Copyrights.  The Company has no registered
patent, trademark or copyright used in the Business.

The Company has not sold, assigned, transferred, licensed, sub-licensed or
conveyed any common law rights it may have in any copyrights, trademarks or
Know-how used in the Business To Shareholder’s Knowledge, none of the Company’s
common law rights in any trademark, copyright or Know-how is the subject of any
pending or threatened opposition, interference, cancellation, nullification,
conflict, concurrent use, litigation or other proceeding. To Shareholder’s
Knowledge, the conduct of the Business as currently operated, and the use of the
Assets does not conflict with, or infringe upon, any legally enforceable rights
of third parties.

(a)           None of the Intellectual Property used by the Company in the
Business is the subject of any pending or threatened litigation or other
proceeding. To Shareholder’s Knowledge, the conduct of the Business as currently
operated, and the use of any Intellectual Property employed in the Business does
not conflict with, or infringe upon, any legally enforceable rights of third
parties.
 
(b)           There are no licenses, sublicenses or agreements or instruments
involving the Intellectual Property of the Company, except with respect to
generally available “off-the-shelf” software and software incorporated in
certain machinery and equipment (each a “License”).    With respect to each
License, (x) there is no default (or event that with the giving of notice or
passage of time could constitute a default) by the Company or, to Shareholder’s
knowledge, the other party thereto, and (y) there are no pending claims and, to
Shareholder’s knowledge, no such claims have been threatened.
 
(c)           To Shareholders’ Knowledge, there is no Intellectual Property,
other than know-how or business methods, that is material to the conduct of the
Business as currently conducted by the Company.
 
(d)           No Person other than the Company has any right or interest of any
kind or nature in or with respect to any know-how or business methods material
to the operation of the Business
 
(e)           Neither the Company nor the conduct of the Business by the
Company,  has been alleged to have, and to Shareholder’s knowledge, neither the
Company nor the conduct of the Business by the Company,  has infringed upon,
misappropriated or otherwise violated any Intellectual Property or other
proprietary information or rights of another Person.
 
(f)           The Company has taken reasonable steps to protect the proprietary
nature of the Intellectual Property and to maintain in confidence all Trade
Secrets and other confidential Intellectual Property and information owned or
used by the Company.  To Shareholder’s knowledge, no Trade Secret or other
confidential Intellectual Property or information of the Company has been
disclosed or authorized to be disclosed to any Person, other than pursuant to a
non-disclosure agreement or other conditional obligation that protects the
Company’s proprietary interests in and to such Trade Secrets or confidential
Intellectual Property or information.
 
 
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(g)      There is no Software, including databases and collections of data,
material to the conduct of the Business other than Software to be delivered to
Buyer on the Closing Date (“Seller Software”).  The Companys owns full and
unencumbered right and good, valid and marketable title to or has valid licenses
to the Seller Software.  The Company has not incorporated any third party
intellectual property into any Seller Software.

  Section 4.16. Permits.  Set forth on Schedule 4.16 is a complete list of all
Permits issued to the Company (the "Company Permits"). The Permits set forth in
Schedule 4.16 are all Permits required to permit the Company to carry on the
Business as currently conducted.

  Section 4.17. Compliance with Applicable Laws.  The conduct by the Company of
the Business does not violate or infringe, and to Shareholders' Knowledge there
is no reasonable basis for any claims of violation or infringement of, any law,
statute, ordinance, regulation or
executive order currently in effect and applicable to the Company, except in
each case for violations or infringements which could not be reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the Business, taken as a whole. The Company is not in default under any Company
Permit, under any governmental or administrative order or demand directed to it,
or with respect to any order, writ, injunction or decree of any court applicable
to it.

  Section 4.18. Litigation.  There is no claim, action, suit, proceeding,
arbitration, reparation, investigation or hearing, pending against the Company
or which could prevent the consummation of the transaction contemplated hereby,
before any court or governmental, administrative or other competent authority or
private arbitration tribunal, nor (i) to the Knowledge of Shareholder, is any
such claim threatened and (ii) are there any facts known to Shareholders which
could reasonably be expected to give rise to claim, action, suit, proceeding,
arbitration, investigation or hearing, which could result in a Material Adverse
Change, or prevent the consummation of the transactions contemplated by this
Agreement. The Company has not waived any statute of limitations or other
affirmative defense with respect to any obligation. There is no continuing
order, injunction or decree of any court, arbitrator or governmental,
administrative or other competent authority to which the Company is a party, or
to which the Assets or Business is subject. Neither the Company nor any current
officer, director, or employee of the Company has been permanently or
temporarily enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or other body from engaging in or continuing any
conduct or practice in connection with the Business.

  Section 4.19. Customers, Suppliers, Distributors and Agents.  Shareholder has
no Knowledge of (i) any contemplated material and adverse modification or change
in the business relationship of the Company with, or (ii) any existing condition
or state of facts which will materially adversely affect, or has a reasonable
likelihood of materially adversely affecting the business relationship of the
Company with, the five largest (in dollar value ) purchasers of goods from the
Company in the year ended December 31, 2014,r which has prevented or will
prevent the Business from being carried on under its new ownership after the
Closing in substantially the same manner as it is currently carried on.
 
 
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  Section 4.20. Employee Benefit Plans.  (a) No other corporation or other
entity would now or in the past constitute a single employer within the meaning
of Section 414 of the Code with the Company.

      (b)Except for an IRA to which the Company is not obligated to make
contributions  and the medical plan made available to all employees (of which
the Buyer has been apprised), the Company does not have and during the past five
years has not had:

                  (i) Any employee benefit plan as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),; or

                  (ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, split dollar or other employee benefit plan, program,
policy, or arrangement, whether written or unwritten, formal or  informal.
 
  Section 4.21. Powers of Attorney.   No person has any power of attorney to act
on behalf of the Company or either Shareholder in connection with any of the
Company's properties or business affairs other than such powers to so act as
normally pertain to the officers of the Company.
 
  Section 4.22. Labor Matters.  (a) The Company is not a party to any contract
or collective bargaining agreement with any labor organization. No organizing
effort or question concerning union representation is pending regarding the
employees of the Company, and no such question has been raised within the
preceding three years.

      (b) All reasonably anticipated material obligations of the Company,
whether arising by operation of law, contract, past custom or otherwise, for
unemployment compensation benefits, pension benefits, salaries, wages, bonuses
and other forms of compensation payable to the officers, directors and other
employees and independent contractors of the Company have been paid.

      (c) There is no basis for any material claim, grievance, arbitration,
negotiation, suit, action or charge of or by the employees of the Company, and
no such material charge or complaint is pending against the Company before the
National Labor Relations Board, the Equal Employment Opportunity Commission or
any other federal, state or local agency with jurisdiction over employment
matters which, if adversely determined for the Company would result in a
Material Adverse Change.

      (d) The Company has withheld and paid to the appropriate governmental
authorities or is withholding for payment not yet due to such authorities all
amounts required to be withheld from the employees of the Company. The Company
is not liable for any arrears of such amounts or penalties thereon for failure
to comply with any of the foregoing. The Company is in compliance in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those relating to wages, hours, collective
bargaining and the payment and withholding of taxes and other amounts as
required by appropriate governmental authorities.
 
 
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  Section 4.23. Personnel.   (a) The Company has provided Buyer with a list (the
“Employee List”), as of the date hereof, of the following information for each
full-time, part-time or temporary employee, officer, director or consultant of
the Company, including each employee on leave of absence or layoff status: name;
job title; current employment status; current compensation; severance or other
compensation to be paid as a result of termination of employment or upon a
change of control; and the basis for determining any bonuses, commissions or
similar payments. There are no Contracts or letters evidencing employment to
which the Company is a party, except for contracts which can be terminated
without liability in excess of $10,000 upon not more than thirty (30) days’
notice. No officer, director or employee of the Company will have any claim for
severance or any other compensation as the result of the transaction
contemplated hereby.

      (b) No employee or director of the Company is a party to, or is otherwise
bound by, any Contract or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other Person that in any way adversely affects or will affect
(i) the performance of his duties as an employee or director, or (ii) the
ability to conduct the Business. Except for Peter C. Rao, to the Shareholders’
Knowledge, no director, officer, or other key employee of the Company intends to
terminate his employment.

      (c) All employees of the Company are retained or employed on an at-will
basis, and the Company does not have any written or oral agreement with any such
personnel that would interfere with (i) the Company’s ability to discharge such
personnel without payment of any severance or any other cost or expense or
adverse consequences other than such amounts as are to be paid by the Company,
or (ii) Buyer’s ability to hire such personnel.  The Company has not promised or
represented to any of its personnel that any of such personnel will be employed
or engaged by or receive any particular benefits from Buyer.
 
(d) There is no collective bargaining agreement, works council agreement, union
contract or agreement with any other staff representatives binding on the
Company which covers any of its personnel (and the Company does not recognize
any works council, union or staff representatives for negotiation
purposes).  The Company is under no obligation to negotiate any such agreement
with respect to any such individuals, no labor organization or group of
personnel of the Company has made a pending demand for recognition or
certification and, to Shareholder’s knowledge, there are and have been no
representation or certification proceedings or petitions seeking a
representation proceeding, with the National Labor Relations Board or any other
labor relations tribunal or authority, and no such demands, proceedings or
petitions been brought or filed or threatened to be brought or filed within the
past three (3) years.
 
(e)  The Company has complied with all Laws relating to the employment of labor
to the extent relating to the Business, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining, workers’ compensation
and the payment of social security and other Taxes and unlawful discrimination
and harassment.  Except for a complaint brought by Terri DiMaggio which was
dismissed on August 19, 2014, by the New York Division of Human Rights, there
are, and during the past three (3) years there have been, no unfair labor
practice charges or complaints, minimum wage or overtime or equal pay charges or
complaints, occupational safety and health charges or complaints, wrongful
discharge or unfair dismissal charges or complaints, employee grievances,
discrimination claims, claims arising out of any alleged failure to properly
inform or consult employees or their representatives, workers’ compensation
claims or claims relating to unpaid wages or other compensation due to any
personnel pending against the Company, and, to Shareholder’s knowledge, none
have been threatened in writing or are likely.  No notice has been received by
the Company within the past three (3) years of the intent of any federal, state,
local or foreign agency responsible for the enforcement of labor or employment
laws to conduct an investigation of the Company, and, to Shareholder’s
knowledge, no such investigation is in progress.  The Company has not incurred
any liability, and no facts exist that would be likely to give rise to any
liability, in connection with the classification by the Company of any
individual as an independent contractor.
 
 
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(f)  There are no outstanding orders or charges against the Company under any
occupational health or safety legislation and, to Shareholder’s knowledge, none
have been threatened.  All material levies, assessments and penalties made
against the Company related to the Business pursuant to all applicable workers
compensation legislation as of the date hereof have been paid by such
Seller.(g)  Each individual employed by the Company has presented legal proof of
his or her identity and authorization to work in the relevant jurisdiction for
the Company and is either (i) a citizen of the relevant jurisdiction or lawful
permanent resident entitled to work or (ii) a nonimmigrant possessing a current,
valid authorization issued by U.S. Citizenship and Immigration Services (or
equivalent foreign border control agency) permitting employment by Seller.
 
(c) There are no retired employees or directors of the Company receiving
benefits or scheduled to receive benefits in the future from the Company.
 
  Section 4.24. Environmental Matters.    The Company is in compliance with all
applicable Environmental Laws; (ii) the Company has not transported, stored and
disposed of any Hazardous Materials upon real property owned or leased by it in
contravention of applicable Environmental Laws; (iii) there has not occurred,
nor is there presently occurring, a Release of any Hazardous Materials by the
Company on, into or beneath the surface of any parcel of real property in which
the Company has (or will have after giving effect to the transactions
contemplated hereby) an ownership interest or any leasehold interest except in
compliance with applicable Environmental Laws; (iv) the Company has not
transported or disposed of, or allowed or arranged for any third parties to
transport or dispose of, any Hazardous Material to or at a site which, pursuant
to CERCLA, has been placed on the National Priorities List; (v) the Company has
not received written notice that the Company is a potentially responsible party
for a federal or state environmental cleanup site or for corrective action under
RCRA; and (vi) the Company has not undertaken (or been requested to undertake)
any response or remedial actions at the request of any federal, state or local
governmental entity in each of the foregoing cases of causes (i) through (vi),
except as to circumstances which could not reasonably be expected to have a
material adverse effect on the Business of the Company, taken as a whole.

  Section 4.25. Tax Matters.    (a) The Company has filed all Tax Returns that
it was required to file or has obtained valid extensions of time to file such
Tax Returns. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by the Company and by the Shareholders in respect of
the income of the Company have been paid or adequately reserved for. The Company
is not currently the beneficiary of any extension of time within which to file
any Tax Return that has not already been timely filed (with due regard to such
extension). No written claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security Interests on any
of the Assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax (except for Taxes not yet due and owing).
 
 
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      (b) The Company has withheld and paid all Taxes (other than taxes of a de
minimus amount) required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.

      (c) There is no pending or threatened claim by any authority for
additional Taxes for any period for which Tax Returns have been filed. There
have been delivered to Buyer correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company since December 31, 2012.

      (d) The Company has maintained its status as a "small business
corporation" within the meaning of ss. 1361(b) of the Code and any comparable
provisions of state or local law at all times since January 1, 2008. The
validity of the election of "S Corporation" status has not been challenged by
the Internal Revenue Service nor is there any basis for such a challenge. Since
January 1, 2008, , the Company has not been taxed other than as a "small
business corporation".

      (e) The Company has not agreed to, and is not required to include in its
income, any adjustment pursuant to ss. 481(c) of the Code (or comparable
provisions of any state or local law) by reason of a change in accounting method
or otherwise.

  Section 4.26.  Intentionally Omitted.

  Section 4.27. Inventory.  The inventory of the Company as of the date hereof
is adequate and appropriate for the conduct of the business of the Company as it
is currently being conducted. Current inventory levels are not in excess of the
normal operating requirements of the Company in the Ordinary Course of Business
consistent with past practice. Any Inventory not of a quality maintained in the
Ordinary Course of Business or usable in the Ordinary Course of Business has
been written down to scrap value.

  Section 4.28. Purchase and Sale Obligations.  All open purchases, sales and
orders have been made in the usual and Ordinary Course of the Company’s Business
in accordance with normal practices., The Company has delivered to Buyer a
schedule of all such uncompleted purchase and sale orders and other commitments
with respect to any of the Company's obligations as of a date not earlier than
five (5) days prior to the date hereof.

  Section 4.29. Accounts Receivable and Accounts Payable.  A true and correct
aged (30-60-90 days) list of all accounts receivable and accounts payable of the
Company as of July 31, 2015 has been furnished to Buyer. All of the accounts
receivable of the Company are actual and bona fide accounts receivable
representing obligations for the total dollar amount thereof showing on the
books of the Company, and to Shareholder's Knowledge, the accounts receivable
are not and the accounts receivable as of the Closing Date will not be subject
to any recoupments, set-offs or counter-claims, other than set-offs from the
purchase of inventory by the Company and returns, in each case in the ordinary
course of business consistent with past practice. Except as otherwise reflected
or reserved for in the Financial Statement to the Seller's Knowledge, such
accounts receivable are collectible in the ordinary course of business.
 
 
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Section 4.30. Brokers and Finders.  Neither Shareholders nor the Company, nor
any of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement other than
Bentley Associates, LLP, whose fee will be paid by the Company. The Shareholders
agree to indemnify, defend and hold Buyer harmless from any liability, loss,
cost, claim and/or demand that any broker or finder may have in connection with
this transaction as a result of actions taken by the Company, its employees or
affiliates.

  Section 4.31. Insider Interests.  No shareholder, officer or director of the
Company, or member of his family, is a party to any transaction with the Company
including, without limitation, by being a party to any contract, agreement or
arrangement (i) providing for the furnishing of services, (ii) providing for
rental of real or personal property, or (iii) otherwise requiring payments to
any such shareholders, officer or director or to any trust, corporation or
entity to which such person has any interest.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER

      Buyer hereby represents and warrants to Shareholders as of the date hereof
and as of the Closing Date:

Section 5.1. Organization and Good Standing; Power and Authority.  Buyer is a
corporation duly organized and validly existing under the laws of the State of
Nevada. Buyer has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.

Section 5.2. Corporate Authorization.  Buyer has full corporate power and
authority and has taken all actions necessary to enter into this Agreement and
to carry out the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and all other Transaction Documents to which Buyer
is a party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of Buyer. This Agreement and the other Transaction Documents to
which Buyer is a party have been, or will be, duly executed and delivered by
Buyer and constitute (or when executed will constitute) the valid, legal and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except to the extent such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent
conveyance or similar laws affecting or relating to the enforcement of
creditors' rights generally, and by equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).
 
 
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Section 5.3. Conflicts; Defaults.  The execution and delivery of this Agreement
and the other agreements and instruments executed or to be executed in
connection herewith by Buyer do not, and the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby or thereby, will not: (i) violate, conflict
with, or constitute a breach or default under any of the terms of its
certificate of incorporation or bylaws; (ii) require any authorization,
approval, consent, registration, declaration or filing with, from or to any
governmental authority; (iii) violate any law, statute, judgment, decree,
injunction, order, writ, rule or regulation applicable to Buyer; or (iv)
conflict with or result in a breach of, create an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute an
event of default) under, or give any third party the right to terminate, cancel
or accelerate any obligation under, any contract, agreement, note, bond,
guarantee, deed of trust, loan agreement, mortgage, license, lease, indenture,
instrument, order, arbitration award, judgment or decree to which Buyer is a
party or by which such party is bound and which would affect the consummation of
the transactions contemplated hereby. There is no pending or, to the Knowledge
of Buyer, threatened action, suit, claim, proceeding, inquiry or investigation
before or by any governmental authorities, involving or that could reasonably be
expected to restrain or prevent the consummation of the transactions
contemplated by this Agreement.

Section 5.4. Brokers, Finders and Agents.  Neither Buyer nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement and Buyer agrees to
indemnify, defend and hold the Shareholders harmless from any liability, loss,
cost, claim and/or demand that any broker or finder may have in connection with
this transaction as a result of actions taken by Buyer or any of its officers,
directors or employees.

Section 5.5 No Consents Required.  No notice to, consent, authorization or
approval of, or exemption by, any governmental or public body or authority is
required in connection with the execution, delivery and performance by Buyer of
this Agreement or any other Transaction Documents to which Buyer is a party, or
the taking of any action herein contemplated. No notice to, consent,
authorization or approval of, any Person under any agreement, arrangement or
commitment of any nature which Buyer is party to or which the assets of Buyer
are bound by or subject to, or from which Buyer receives or is entitled to
receive a benefit, is required in connection with the execution, delivery and
performance by Buyer of this Agreement or any other Transaction Documents to
which Buyer is a party, or the taking of any action by Buyer herein
contemplated.
 
ARTICLE 6
COVENANTS

Section 6.1 Operation of Business Until Closing. The Company agrees that between
the date of this Agreement and the Closing Date it will operate the business of
the Company in the ordinary course of its business, consistent with past
practice and the Shareholders shall endeavor to consult with the Buyer in
connection with all significant business decisions between the date hereof and
the Closing date.
 
 
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               Section 6.2 Post-Closing Covenants.  (a) Other than in the
service of the Buyer, for a period of five (5) years following the Closing Date
(a) neither of the Shareholders shall engage, directly or indirectly through any
other person, whether as a director, manager, member, stockholder, partner,
owner, employee, consultant or agent of any business, or in any other capacity
in any business, enterprise or employment which competes with the business of
the Company as conducted as of the date hereof and as of the date of the
termination of the engagement of such individual by the Buyer, (b) neither of
the Shareholders shall, directly or indirectly, for himself, or on behalf of or
in conjunction with any other person, solicit or attempt to solicit the business
or patronage of, or interfere with the business relationship of the Company,
Buyer and any of their respective subsidiaries with any customer of the Company
or Buyer, and (c) neither of the Shareholders shall directly or indirectly cause
any other person to employ, solicit, disturb, entice away, or in any other
manner persuade any employee of the Company, Buyer and any of their respective
subsidiaries to discontinue or alter his or her relationship with the Company,
Buyer and any of their respective subsidiaries.

Each of the Shareholders acknowledges and agrees that the business of the
Company is of a national nature and that any geographic limitation on the
foregoing covenant would be ineffective to adequately protect the interests of
the Company. Further each of the Shareholders acknowledges and agrees that the
foregoing covenant is an integral part of this Agreement, is fair and reasonable
in light of all of the facts and circumstances of the relationship between the
Shareholders, the Company and Buyer. In the event any court of competent
jurisdiction determines that, notwithstanding the foregoing acknowledgments, the
scope of the restricted activities of the foregoing covenant is excessive or not
enforceable, or that the foregoing covenant is not enforceable unless it is
subject to a geographic limitation, this Agreement shall be deemed amended to
reflect the maximum restrictions on activities and geographic scope allowable
pursuant to such court's determination.

(b)        Further Assurances.  Each of the Shareholders and Buyer covenant and
agree to deliver and acknowledge (or cause to be executed, delivered and
acknowledged), from time to time, at the request of any other party and without
further consideration, all such further instruments and take all such further
actions as may be reasonably necessary or appropriate to carry out the
provisions and intent of this Agreement.

ARTICLE 7
AGREEMENTS REGARDING TAXES

Section 7.1.  Cooperation on Tax Matters.  Buyer, the Company and Shareholders
shall cooperate fully, as and to the extent reasonably requested, in connection
with the filing of Tax Returns with respect to the Business and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon another party's request) the provision of
records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Buyer, the Company and Shareholder shall retain all
books and records with respect to Tax matters pertinent to the Business relating
to any taxable period beginning before the Effective Time until the expiration
of the statute of limitations of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing authority.
 
 
 
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ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
 
Section 8.1. Survival.  The representations and warranties, set forth in this
Agreement, in any Exhibit or Schedule hereto and in any certificate or
instrument delivered in connection herewith shall survive for a period of twelve
(12) months after the Effective Time (the "Warranty Period") and shall thereupon
terminate and expire and shall be of no force or effect thereafter, except (i)
with respect to any claim, written notice of which shall have been delivered to
Buyer or the Shareholder, as the case may be, in accordance herewith and prior
to the end of the Warranty Period, such claim shall survive the termination of
such Warranty Period for as long as such claim is unsettled, and (ii) with
respect to any litigation which shall have been commenced to resolve such claim
on or prior to such date. Notwithstanding the foregoing, solely with respect to
the representations and warranties regarding Taxes, ERISA matters, and
environmental matters, the applicable Warranty Period shall be the applicable
statute of limitations.

Section 8.2.  Indemnification by Shareholder.  Subject to the provisions of
Section 8.5 below, Shareholder hereby covenants and agrees with Buyer that
Shareholder shall indemnify the Buyer, and its directors, officers, employees
and affiliates, and each of their successors and assigns (individually, a "Buyer
Indemnified Party"), and hold them harmless from, against and in respect of any
and all costs, losses, claims, liabilities (including for Taxes), fines,
penalties, damages and expenses (including interest, if any, imposed in
connection therewith, court costs and reasonable fees and disbursements of
counsel) (collectively, "Damages") incurred by any of them resulting from (i)
the operation of the Business on or prior to the date hereof and (ii) any breach
of any representation or warranty in this Agreement or the non-fulfillment in
any material respect of any agreement, covenant or obligation by the Company or
Shareholder made in this Agreement (including without limitation any Exhibit or
Schedule hereto and any certificate or instrument delivered in connection
herewith).

Section 8.3. Indemnification by Buyer.  Buyer hereby covenants and agrees with
Shareholder that Buyer shall indemnify the Company and Shareholder, the
Company’s directors, officers, employees and affiliates, and each of their
successors and assigns (individually, a "Shareholder Indemnified Party") and
hold them harmless from, against and in respect of any and all Damages incurred
by any Shareholder Indemnified Party resulting from (i) the operation of the
Business after the date hereof and (ii) any misrepresentation, breach of any
representation or warranty in this Agreement or the non-fulfillment in any
material respect of any agreement, covenant or obligation by Buyer made in this
Agreement (including without limitation any Exhibit or Schedule hereto and any
certificate or instrument delivered in connection herewith).
 
 
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Section 8.4. Right to Defend.  If the facts giving rise to any claim for
indemnification shall involve any actual claim or demand by any third party
against a Buyer Indemnified Party or Shareholder Indemnified Party (referred to
herein as an "Indemnified Party"), then the Indemnified Party will give prompt
written notice of any such claim to the indemnifying party, which notice shall
set forth in reasonable detail the nature, basis and amount of such claim (the
"Notice of Third Party Claim"); provided that the failure to provide such Notice
of Third Party Claim shall only relieve the indemnifying party of its or his
obligation to indemnify for such claim only to the extent that such indemnifying
party has been prejudiced by such Indemnified Party's failure to give the Notice
of Third Party Claim as required. The indemnifying party receiving such Notice
of Third Party Claim may (without prejudice to the right of any Indemnified
Party to participate at its own expense through counsel of its own choosing)
undertake the defense of such claims or actions at its expense with counsel
chosen and paid by its giving written notice (the "Election to Defend") to the
Indemnified Party within thirty (30) days after the date the Notice of Third
Party Claim is deemed received; provided, however, that the indemnifying party
receiving the Notice of Third Party Claim may not settle such claims or actions
without the consent of the Indemnified Party, which consent will not be
unreasonably withheld or delayed, except if the sole relief provided is monetary
damages to be borne solely by the indemnifying party; and, provided further, if
the defendants in any action include both the indemnifying party and the
Indemnified Party, and the Indemnified Party shall have reasonably concluded
that counsel selected by the indemnifying party has a conflict of interest
because of the availability of different or additional defenses to the parties,
the Indemnified Party shall cooperate in the defense of such claim and shall
make available to the indemnifying party pertinent information under its control
relating thereto, but the Indemnified Party shall have the right to retain its
own counsel and to control its defense and shall be entitled to be reimbursed
for all reasonable costs and expenses incurred in such separate defense. In no
event will the provisions of this Article reduce or lessen the obligations of
the parties under this Article, if prior to the expiration of the foregoing
thirty (30) day notice period, the Indemnified Party furnishing the Notice of
Third Party Claim responds to a third party claim if such action is reasonably
required to minimize damages or avoid a forfeiture or penalty or because of any
requirements imposed by law. If the indemnifying party receiving the Notice of
Third Party Claim does not duly give the Election to Defend as provided above,
then it will be deemed to have irrevocably waived its right to defend or settle
such claims, but it will have the right, at its expense, to attend, but not
otherwise to participate in, proceedings with such third parties; and if the
indemnifying party does duly give the Election to Defend, then the Indemnified
Party giving the Notice of Third Party Claim will have the right at its expense,
to attend, but not otherwise to participate in, such proceedings. The parties to
this Agreement will not be entitled to dispute the amount of any Damages
(including reasonable attorney's fees and expenses) related to such third party
claim resolved as provided above.

Section 8.5 Limitation on Rights of Indemnification.   (a) No Buyer Indemnified
Party shall have the right to indemnification under this Agreement unless and
until the aggregate amount of any and all such indemnification claims made by
Buyer Indemnified Party under this Agreement exceeds $100,000 (the
"Basket").  If Buyer Indemnified Party claims exceed the Basket, Buyer
Indemnified Parties shall be entitled to receive one and one-half ($1.50)
dollars in respect of each one dollar of indemnified claims in excess of the
Basket until Buyer Indemnified Parties shall have received an amount equal to
the sum of the reimbursed indemnified claims plus the Basket in respect of
indemnified claims.  If Buyer Indemnified Parties are entitled to any further
payments in respect of indemnifications claims, they shall be made on a dollar
for dollar basis subject to any limitations contained herein. The Basket shall
not apply to claims regarding Ownership of Shares (4.3), Insider Interests
(4.31), Taxes (4.25), and ERISA (4.20).
 
 
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            (b) The aggregate liability of Shareholders pursuant to this Article
8 shall not exceed the Purchase Price; provided, however, that the provisions of
this Section 8.5(b) shall not apply to: (i) breaches of Shareholder's
representations and warranties relating to tax matters.

Section 8.6. Subrogation.   If the Indemnified Party receives payment or other
indemnification from the indemnifying party hereunder, the indemnifying party
shall be subrogated to the extent of such payment or indemnification to all
rights in respect of the subject matter of such claim to which the Indemnified
Party may be entitled, to institute appropriate action against third parties for
the recovery thereof, including under any insurance policies, and the
Indemnified Party agrees to assist and cooperate in good faith with the
indemnifying party and to take any action reasonably required by such
indemnifying party, at the expense of such indemnifying party, in enforcing such
rights.

      If a Shareholders shall have paid a Buyer Indemnified Party for an
indemnified claim or otherwise, and Buyer Indemnified Party subsequently
receives payment under insurance policies  covering such claim, Buyer
Indemnified Party shall repay to the Shareholder the amount of such prior
payment made by the Shareholder; provided, however, such repayment shall not
exceed the actual amount received by Buyer Indemnified Party under such policy,
less all reasonable fees (including attorneys' fees) incurred by Buyer
Indemnified Party in pursuing and collecting under such policy.

ARTICLE 10
MISCELLANEOUS

Section 10.1. Waivers.  No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or in any other documents. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. Any party
hereto may, at or before the Closing, waive any conditions to its obligations
hereunder which are not fulfilled.

Section 10.2. Binding Effect; Benefits.   This Agreement shall inure to the
benefit of the parties hereto and shall be binding upon the parties hereto and
their respective successors and assigns. Except as otherwise set forth herein,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto, Buyer Indemnified Party, the Shareholders
Indemnified Party or their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
 
 
Section 10.3. Assignment; Delegation.   No party to this Agreement may assign
its rights or delegate its obligations hereunder without the prior written
consent of all of the other parties; provided, however, that at Closing Buyer
may assign this Agreement or direct the Company to assign the Acquired Assets to
an entity in which Buyer holds and continues to hold a greater than ninety
percent (90%) equity interest, without the prior written consent of the Company
and Shareholders, provided, however, Buyer shall remain liable for the
performance of its obligations under this Agreement. Any assignment or
delegation in violation of this Section 12.4 shall be null and void.
 
 
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Section 10.4. Notices.   All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
after dispatch by recognized overnight courier to the party to whom the same is
so given or made:
 
If to Buyer, to:
 

  Air Industries Group   360 Motor Parkway, Suite 100   Hauppauge, NY 11788  
Attn:   Daniel R. Godin

 

  With a copy to:   Eaton & Van Winkle LLP   3 Park Avenue, 16th floor   New
York, NY  10016   Attn:  Vincent J. McGill, Esq.   Phone: (212) 561-3604
(Direct)

                                         
or at such other address as Buyer may have advised the other parties hereto in
writing; and
 

  If to the Company, to:   Peter Rao   President   Compac Development Corp.   4
Nixon Court   Lake Grove, New York 11755

 

  With a copy to:   David P. Fallon   Law Offices of David P. Fallon PLLC   53
Main Street, Suite 1   Sayville, New York 11782

 
or at such other address as the Shareholder may have advised Buyer in writing;
and
 
 
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      All such notices, requests and other communication shall be deemed to have
been received on the date of delivery thereof (if delivered by hand) and on the
next business day after the sending thereof (if by recognized overnight
courier).

Section 10.5. Entire Agreement.    This Agreement (including the Schedules and
Exhibits hereto) and the other Transaction Documents constitute the entire
agreement and supersede all prior agreements, statements, representations or
promises, oral and written, among the parties hereto with respect to the subject
matter hereof. No party hereto shall be bound by or charged with any written or
oral arguments, representations, warranties, statements, promises or
understandings not specifically set forth in this Agreement or in any Schedule
or Exhibits hereto or any other Transaction Documents, or in certificates and
instruments to be delivered pursuant hereto on or before the Closing.

Section 10.6.  Governing Law.      This Agreement, and the rights and
obligations of the parties hereto under this Agreement, shall be governed by,
construed and enforced in accordance with the laws of the State of New York,
without giving effect to the choice of law principles thereof. Any action
arising out of the breach or threatened breach of this Agreement shall be
commenced in a proper New York State court and each of the parties hereby
submits to the jurisdiction of such courts for the purpose of enforcing this
Agreement.

Section 10.7. Severability.      If any term or provision of this Agreement
shall to any extent be finally determined by a court of competent jurisdiction
to be invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby, and each term and provision of the agreement shall be valid
and enforced to the fullest extent permitted by law, provided that as so
enforced, each of the parties receives substantially all of the benefits
contemplated hereby.

Section 10.9. Transaction Taxes.   The Buyer shall pay any sales or transfer
taxes arising out of the transfer of the Acquired Assets.

Section 10.10. Exhibits and Schedules.   The Exhibits and Schedules attached
hereto or referred to herein are incorporated herein and made a part hereof. As
used herein, the expression "this Agreement" includes such Exhibits and
Schedules.

Section 10.11. Press Releases and Public Announcements.    Buyer shall be
permitted to issue a press release and make any public announcement disclosing
the execution and delivery of this Agreement; provided that Buyer shall provide
Shareholder an opportunity to review the same prior to its release.
 
[the signature page is on the following page]
 
 
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 IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the first date
written above.
 

  AIR INDUSTRIES GROUP            
By:
/s/ Daniel R. Godin       Daniel R. Godin       President and CEO          

 
COMPAC DEVELOPMENT CORP.
         
 
By:
/s/ Peter C. Rao       Peter C. Rao, President             By: /s/ Peter C. Rao
     
Peter C. Rao, Individually
 

             
 
By:
/s/ Vito Valenti      
Vito Valenti, Individually
 

 
 
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Schedule 2.1 (a) Excluded Contracts

No disclosure is required on this schedule
 
 
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Schedule .2.2(a) Excluded Equipment

No disclosure is required on this schedule
 
 
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Schedule 2.6
Allocation of Purchase Price
 

Goodwill    $ 558,940   Customer Lists     300,000   Trade Name     200,000  
Covenant Not to Compete   100,000   Machinery & Equipment   40,560   Furniture  
500  

 
 
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Schedule 4.14   - Contracts
 
Advertising Agreement with Global Spec, $916.25/month expiring 8/31/15
Advertising Agreement with IOS $1,625/r month expiring 11/26/15
 
 
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Schedule 4.16

Permits
 
 
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