# EDGAR Filing Document

**Accession Number:** 0000766792
**File Stem:** 0001493152-26-023044
**Filing Date:** 2026-5
**Character Count:** 392127
**Document Hash:** 5c56197b90e005ac3cd7b270d1e1ab39
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-023044.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001493152-26-023044

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 60

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CVD EQUIPMENT CORP
- **CENTRAL INDEX KEY:** 0000766792
- **STANDARD INDUSTRIAL CLASSIFICATION:** SPECIAL INDUSTRY MACHINERY, NEC [3559]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 112621692
- **STATE OF INCORPORATION:** NY
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-16525
- **FILM NUMBER:** 26978521

**BUSINESS ADDRESS:**
- **STREET 1:** 355 S. TECHNOLOGY DRIVE
- **CITY:** CENTRAL ISLIP
- **STATE:** NY
- **ZIP:** 11722
- **BUSINESS PHONE:** 6319817081

**MAIL ADDRESS:**
- **STREET 1:** 355 S. TECHNOLOGY DRIVE
- **CITY:** CENTRAL ISLIP
- **STATE:** NY
- **ZIP:** 11722

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**________________**

**Form 10-Q**

---

| | |
|:---|:---|
| **(Mark One)** |  |
| ☒ | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.** |
|  | **For the quarterly period ended March 31, 2026** |
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.** |
|  | For the transition period from ____ to _____ |

---

Commission file number: 1-16525

**CVD EQUIPMENT CORPORATION**

*(Name of Registrant in Its Charter)*

 

---

| | |
|:---|:---|
| **New York** | **11-2621692** |
| ***State or Other Jurisdiction of<br> Incorporation or Organization)*** | ***(I.R.S. Employer***<br> ***Identification No.)*** |

---

**355 South Technology Drive**

**Central Islip, New York 11722**

***(Address of principal executive offices)***

(631) 981-7081

 **(Registrant's Telephone Number, Including Area Code)**

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | CVV | NASDAQ Capital Market |

---

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act).

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange.☐

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 6,940,509 shares of Common Stock, $0.01 par value at May 13, 2026.

**CVD EQUIPMENT CORPORATION AND SUBSIDIARIES**

Index

---

| | | | |
|:---|:---|:---|:---|
| [Part I - Financial Information](#a_001) | [Part I - Financial Information](#a_001) | [Part I - Financial Information](#a_001) |  |
|  | [Item 1 – Condensed Consolidated Financial Statements (Unaudited)](#a_002) | [Item 1 – Condensed Consolidated Financial Statements (Unaudited)](#a_002) |  |
|  |  | [Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025](#a_003) | 3 |
|  |  | [Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025](#a_004) | 4 |
|  |  | [Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2026 and 2025](#a_005) | 5 |
|  |  | [Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025](#a_006) | 6 |
|  |  | [Notes to Condensed Consolidated Financial Statements](#a_007) | 7 |
|  | [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](#m_001) | [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](#m_001) | 18 |
|  | [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](#m_002) | [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](#m_002) | 25 |
|  | [Item 4 – Controls and Procedures](#m_003) | [Item 4 – Controls and Procedures](#m_003) | 25 |
| [Part II - Other Information](#m_004) | [Part II - Other Information](#m_004) | [Part II - Other Information](#m_004) |  |
|  | [Item 1 – Legal Proceedings](#m_005) | [Item 1 – Legal Proceedings](#m_005) | 26 |
|  | [Item 1A-Risk Factors](#m_006) | [Item 1A-Risk Factors](#m_006) | 26 |
|  | [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](#m_007) | [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](#m_007) | 26 |
|  | [Item 3 – Defaults Upon Senior Securities](#m_008) | [Item 3 – Defaults Upon Senior Securities](#m_008) | 26 |
|  | [Item 4 – Mine Safety Disclosures](#m_009) | [Item 4 – Mine Safety Disclosures](#m_009) | 26 |
|  | [Item 5 – Other Information](#m_010) | [Item 5 – Other Information](#m_010) | 26 |
|  | [Item 6 – Exhibits](#m_011) | [Item 6 – Exhibits](#m_011) | 26 |
| [Signatures](#m_012) | [Signatures](#m_012) | [Signatures](#m_012) | 27 |

---

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)

---

| | | |
|:---|:---|:---|
|  | **March 31,** <br> **2026** | **December 31,<br> 2025** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $8196 | $8734 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit losses | 677 | 1293 |
| &nbsp;&nbsp;&nbsp;Contract assets | 3347 | 2853 |
| &nbsp;&nbsp;&nbsp;Inventories | 306 | 285 |
| &nbsp;&nbsp;&nbsp;Current assets of discontinued operations | 2780 | 2852 |
| &nbsp;&nbsp;&nbsp;Assets held for sale – equipment |  | 510 |
| &nbsp;&nbsp;&nbsp;Other current assets | 390 | 357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 15696 | 16884 |
| Property, plant and equipment, net | 10421 | 10529 |
| Noncurrent assets of discontinued operations |  | 46 |
| Other assets | 97 | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $26214 | $27509 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $213 | $250 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 1039 | 849 |
| &nbsp;&nbsp;&nbsp;Current maturities of long-term debt |  | 181 |
| &nbsp;&nbsp;&nbsp;Current liabilities of discontinued operations | 1154 | 944 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 526 | 560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 2932 | 2784 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 2932 | 2784 |
| Contingencies – Note 12 |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock - $0.01 par value – 20,000,000 shares authorized; 6,937,338 issued and outstanding at March 31, 2026 and December 31, 2025 | 69 | 69 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 30919 | 30699 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (7706) | (6043) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 23282 | 24725 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $26214 | $27509 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share and share amounts)

(Unaudited)

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**<br> **March 31,** | **Three Months Ended**<br> **March 31,** |
|  | **2026** | **2025** |
| Revenue | $1844 | $6332 |
| Cost of revenue | 1697 | 4598 |
| Gross profit | 147 | 1734 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 727 | 734 |
| &nbsp;&nbsp;&nbsp;Selling | 240 | 367 |
| &nbsp;&nbsp;&nbsp;General and administrative | 1022 | 953 |
| &nbsp;&nbsp;&nbsp;Gain on sale of equipment | (46) | - |
| Total operating expenses | 1943 | 2054 |
| Operating loss from continuing operations | (1796) | (320) |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 71 | 110 |
| &nbsp;&nbsp;&nbsp;Interest expense | (1) | (3) |
| Total other income, net | 70 | 107 |
| Loss from continuing operations before income taxes | (1726) | (213) |
| Income tax expense | - | 16 |
| Net loss from continuing operations | (1726) | (229) |
| Discontinued operations: |  |  |
| Income from discontinued operations | 499 | 589 |
| Transaction costs on disposal of discontinued operations | (436) | - |
| Income from discontinued operations, net of taxes | 63 | 589 |
| Net income (loss) | $(1663) | $360 |
| Net income (loss) per share of common stock – basic and diluted: |  |  |
| &nbsp;&nbsp;&nbsp;Loss from continuing operations per common share | $(0.25) | $(0.03) |
| &nbsp;&nbsp;&nbsp;Income from discontinued operations per common share | $0.01 | $0.09 |
| &nbsp;&nbsp;&nbsp;Net income (loss) per common share | $(0.24) | $0.05 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity

(in thousands, except share amounts)

(Unaudited)

**Three months ended March 31, 2026 and 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common stock** | **Common stock** | | | |
|  | **Shares** | **Par Value** | **Additional**<br>**Paid-in Capital** | **Accumulated**<br>**Deficit** |<br>**Total** |
| Balance at January 1, 2026 | 6937338 | $69 | $30699 | $(6043) | $24725 |
| Net loss |  |  |  | (1663) | (1663) |
| Stock-based compensation | - | - | 220 | - | 220 |
| Balance at March 31, 2026 | 6937338 | $69 | $30919 | $(7706) | $23282 |
| Balance at January 1, 2025 | 6881838 | $69 | $29757 | $(4458) | $25368 |
| Net income |  |  |  | 360 | 360 |
| Stock-based compensation | - | - | 264 | - | 264 |
| Balance at March 31, 2025 | 6881838 | $69 | $30021 | $(4098) | $25992 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **March 31,** | **March 31,** |
|  | **2026** | **2025** |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $(1663) | $360 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash used in <br> operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 220 | 264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 123 | 185 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of equipment | (46) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 222 | 743 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract assets | (298) | (2954) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 317 | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (55) | 271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 75 | 466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 321 | (372) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | (68) | (1303) |
| Net cash used in operating activities | (852) | (2262) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from assets held for sale and sale of equipment | 556 |  |
| &nbsp;&nbsp;&nbsp;Investment in captive insurance company | (48) | (51) |
| &nbsp;&nbsp;&nbsp;Purchases of property and equipment | (13) | (45) |
| Net cash provided by (used in) investing activities | 495 | (96) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Repayments of long-term debt | (181) | (21) |
| Net cash used in financing activities | (181) | (21) |
| Net decrease in cash and cash equivalents | (538) | (2379) |
| Cash and cash equivalents at beginning of period | 8734 | 12598 |
| Cash and cash equivalents at end of period | $8196 | $10219 |
| Supplemental disclosure of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;Income taxes paid | $1 | $6 |
| &nbsp;&nbsp;&nbsp;Interest paid | $1 | $3 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively "the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the interim financials not misleading have been included and all such adjustments are of a normal recurring nature. The operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that can be expected for the year ending December 31, 2026.

The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements at such date, as filed on Form 10-K with the SEC on March 30, 2026, but does not contain all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with that report.

All material intercompany balances and transactions have been eliminated in consolidation.

On March 23, 2026, the Company entered into an agreement to sell its SDC business division to a third party. The sale was completed on April 1, 2026. Accordingly, the financial results of the SDC business division are reflected in the consolidated condensed financial statements as discontinued operations for all periods presented.

Unless otherwise specified, disclosures in these condensed consolidated financial statements reflect continuing operations only. Prior period financial information related to discontinued operations has been reclassified and separately presented in the consolidated financial statements and accompanying notes to conform to the current period presentation. See Note 2 for further information regarding our discontinued operations.

Reclassifications

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on net loss.

Liquidity

At March 31, 2026, the Company had $8.2 million in cash and cash equivalents. The Company also received net proceeds of approximately $14.8 million in April 2026 upon the sale of the SDC business division. The Company anticipates that the existing cash and cash equivalents balance together with collections of existing accounts receivable and contract assets, and revenue from its existing backlog of systems as of this filing date, will be adequate to meet its working capital and capital equipment requirements, and its anticipated cash needs over the next 12 months from the date of issuance of these condensed consolidated financial statements.

NOTE 2: DISCONTINUED OPERATIONS

On March 23, 2026, the Company entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with a buyer to sell its SDC business division. On April 1, 2026, the Company completed the transaction whereby substantially all the assets related to SDC were sold.

The aggregate consideration paid to the Company in connection with the transaction was $16.9 million and is subject to customary post-closing adjustments. At the closing, $0.9 million of the purchase price was placed in escrow to secure post-closing adjustments and indemnification obligations in accordance with the Asset Purchase Agreement. The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. The net cash proceeds from the sale of SDC received by the Company in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million, increasing the Company's cash balance at the time to approximately $23 million.

The Company retained ownership of its Saugerties, New York facility and entered into a lease agreement with the buyer of SDC, pursuant to which the buyer will lease such facility for an initial term of two years following the closing for an initial annual rent of $0.2 million, subject to customary adjustments.

The transaction represents a single disposal plan that constitutes a strategic shift expected to have a material effect on our operations and financial results. Accordingly, the financial results of SDC are reflected in the condensed consolidated financial statements as discontinued operations for all periods presented and the SDC assets and liabilities are considered held for sale as of March 31, 2026.

The following table represents the amounts of assets and liabilities of the discontinued operations of SDC (in thousands):

---

| | | |
|:---|:---|:---|
|  | March 31, <br>2026 | December 31, <br> 2025 |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit losses | $1415 | $1021 |
| &nbsp;&nbsp;&nbsp;Contract assets | 342 | 538 |
| &nbsp;&nbsp;&nbsp;Inventories | 945 | 1284 |
| &nbsp;&nbsp;&nbsp;Other current assets | 33 | 9 |
| &nbsp;&nbsp;&nbsp;Equipment, net | 42 | 44 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | 3 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $2780 | $2898 |

---

---

| | | |
|:---|:---|:---|
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $503 | $392 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 471 | 339 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 180 | 213 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | $1154 | $944 |

---

NOTE 2: DISCONTINUED OPERATIONS (continued)

The following table represents statements of operations information for the discontinued operations of SDC (in thousands):

---

| | | |
|:---|:---|:---|
|  | Three months <br> ended March 31, | Three months <br> ended March 31, |
|  | 2026 | 2025 |
| Revenue | $2365 | $1984 |
| Cost of revenue | 1524 | 1093 |
| Gross profit | 841 | 891 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 54 | 47 |
| &nbsp;&nbsp;&nbsp;Selling | 62 | 53 |
| &nbsp;&nbsp;&nbsp;General and administrative | 226 | 202 |
| Total operating expenses | 342 | 302 |
| Income from discontinued operations | 499 | 589 |
| Transaction costs on disposal of discontinued operations | (436) |  |
| Income from discontinued operations, net of taxes | $63 | $589 |

---

The significant components included in the accompanying condensed consolidated statements of cash flow for the discontinued operations of SDC are as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | Three months <br> ended March 31, | Three months <br> ended March 31, |
|  | 2026 | 2025 |
| Net cash provided by operating activities | $413 | $654 |
| Net cash used in investing activities | (2) | (5) |
| Net cash provided by financing activities |  |  |

---

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606 - Revenue from Contracts with Customers ("ASC 606*"*), the Company records revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services promised to its customers. Under ASC 606*,* the Company follows a five-step model to: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price for the contract; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue using one of the following two methods:

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

*<u>Over time</u>*

 

The Company designs, manufactures and sells custom chemical vapor deposition, thermal process equipment and other equipment through contractual agreements. These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. For systems sales that meet the criteria to recognize revenue over time, the Company recognizes revenue over time by using an input method based on costs incurred as it depicts the Company's progress toward satisfaction of the performance obligation. For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions, the Company recognizes revenue based on point in time.

Under the over time method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Incurred costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work-in-process, and installed, as required by the project's engineering design. Cost based input methods of revenue recognition require the Company to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor and other system costs. If the estimated total costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. There were no material impairment losses recognized on contract assets during the three months ended March 31, 2026 and 2025.

The timing of revenue recognition, billings and collections results in accounts receivables, unbilled receivables or contract assets and contract liabilities on our consolidated balance sheet. Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones.

Under ASC 606, payments received from customers in excess of revenue recognized to date result in a contract liability. These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands, which can be higher in the earlier stages of a contract. Also, advanced payments and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract.

Contract assets include unbilled amounts typically resulting from system sales under contracts and represents revenue recognized that exceeds the amount billed to the customer.

Contract liabilities include advance payments and billings in excess of revenue recognized. The Company typically receives down payments upon receipt of order and progress payments as the system is manufactured.

Contract assets and contract liabilities are classified as current as these contracts in progress are expected to be substantially completed within the next twelve months.

*<u>Point in time</u>*

 

For non-system sales of products and services, revenue is recognized at the point in time when control of the promised products or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606, "Revenue from Contracts with Customers."

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For any system equipment sales where the equipment would have an alternative use or where the contract provisions of the contract preclude the use of over time revenue recognition, revenue is recognized at the point in time when control of the equipment is transferred to the customer. For the three months ended March 31, 2026 and 2025, all system equipment sales were recorded over time by using an input method except for one contract that was entered during 2024 and was not recognized as revenue using over time revenue recognition until July 2025 when a contract modification was entered into with the customer to change certain contract provisions.

Inventories

Inventories (raw materials, work-in-process and finished goods) are valued at the lower of cost (determined on the first-in, first-out method) or net realizable value. Work-in-process and finished goods inventory reflect all accumulated production costs, which are comprised of direct production costs and overhead, and is reduced by amounts recorded in cost of sales as the related revenue is recognized. Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are charged to expenses as incurred and are not included in our cost of sales or work-in-process and finished goods inventory.

Obsolete inventory or inventory in excess of management's estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for the Company's products may require a write down of inventory, which would be reflected in cost of sales in the period the revision is made.

Product Warranty

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance or fifteen months from the date of shipment by providing labor and parts necessary to repair the systems during the warranty period. The Company records the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in "Cost of revenue" in the condensed consolidated statements of operations. The estimated warranty cost is based on the Company's historical cost. The Company updates its warranty estimates based on actual costs incurred.

Assets Held for Sale and Discontinued Operations

Assets and related liabilities of a qualifying business are classified as held for sale when the following conditions are met: (i) management has committed to a plan to sell the net assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer, (iv) the sale and transfer of the net assets is probable within one year, (v) the net assets are being actively marketed for sale at a price that is reasonable in relation to the current fair value, and (vi) it is unlikely that significant changes will be made to the plan to sell the net assets. Assets and related liabilities which have been classified as held for sale are excluded from the net assets and liabilities of continuing operations in the period in which the held for sale criteria was met. A component of a business is classified as a discontinued operation when its disposal represents a strategic shift that has or will have a major effect on our operations and financial results. The results of discontinued operations are reported in income/loss from discontinued operations, net of tax on the consolidated statements of operations for all current and prior periods presented. The results of discontinued operations include direct costs attributable to the divested business and any gain or loss recognized in connection with the sale, or adjustment of the carrying amount to fair value less cost to sell while being held for sale, and excludes any indirect cost allocation associated with any shared-service or corporate functions not solely dedicated to the divested business. Adjustments to discontinued operations subsequent to the completion of a transaction or disposition are generally attributable to contingencies and indemnifications directly related to the disposal transaction, operations of the discontinued operations, or settlement of obligations directly related to the disposal.

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Assets and liabilities of discontinued operations, including those that meet the held-for-sale criteria are presented separately in the consolidated balance sheets. Upon classification as held for sale, assets are measured at the lower of carrying amount or fair value less cost to sell, and depreciation and amortization cease. Any impairment losses or subsequent measurement adjustments are recognized in the results of discontinued operations in the period in which they are identified. Cash flows attributable to discontinued operations are presented separately in the consolidated statements of cash flows, or otherwise disclosed, for all periods presented.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statements Expenses (Subtopic 220-40)," to improve income statement expenses disclosure. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement's expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for financial statements issued for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

The Company believes there is no additional new accounting guidance adopted, but not yet effective, which is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

 

NOTE 4: CONCENTRATION OF CREDIT RISK

Cash and cash equivalents

The Company had cash and cash equivalents of $8.2 million and $8.7 million at March 31, 2026 and December 31, 2025, respectively. The Company invests excess cash in U.S. treasury bills, certificates of deposit or deposit accounts, all with maturities of less than three months. Cash equivalents were $7.9 million and $8.2 million at March 31, 2026 and December 31, 2025, respectively.

The Company places most of its temporary cash investments with financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. There were no amounts at risk at March 31, 2026 and December 31, 2025.

Accounts receivable

The Company routinely assesses the financial strength of its customers*.* In accordance with the "expected credit loss" model, the carrying amount of accounts receivable is reduced by a valuation allowance that reflects the best estimate of the amounts the Company does not expect to collect. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating our reserve, including types of customers and their credit worthiness, experience and historical data adjusted for current conditions and reasonable supportable forecasts*.* The Company records an allowance for credit losses based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided based upon the collection history, current economic trends and reasonable supportable forecasts.

 

Accounts receivable is presented net of an allowance for credit losses of $15,000 as of both March 31, 2026 and December 31, 2025. The allowance is based on prior experience and management's evaluation of future economic conditions. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers. Future changes to the estimated allowance for credit losses could be material to our results of operations and financial condition.

 

NOTE 4: CONCENTRATION OF CREDIT RISK (continued)

At March 31, 2026, the accounts receivable balance included amounts from four customers that totaled 25.7%, 18.1%, 14.4% and 11.6% of total accounts receivable. As of December 31, 2025, the accounts receivable balance included amounts from two customers that totaled 57.0% and 28.2% of total accounts receivable.

Sales concentration

Revenue from a single customer in any one period can exceed 10% of our total revenues. During the three months ended March 31, 2026, three customers exceeded 10% of revenues, representing 27.2%, 21.7% and 17.3% of revenues, and during the three months ended March 31, 2025, three customers exceeded 10% of revenues, representing 54.0%, 18.4% and 11.7% of revenues

NOTE 5: REVENUE RECOGNITION

The following table represents a disaggregation of revenue for the three months ended March 31, 2026 and 2025 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | Three months ended March 31, 2026 | Three months ended March 31, 2026 | Three months ended March 31, 2026 |
|  | Over time | Point in time | Total |
| Energy | $- | $- | $- |
| Aerospace | 401 | 699 | 1100 |
| Industrial | 322 | 89 | 411 |
| Research | 251 | 82 | 333 |
| &nbsp;&nbsp;&nbsp;Total | $974 | $870 | $1844 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | Three months ended March 31, 2025 | Three months ended March 31, 2025 | Three months ended March 31, 2025 |
|  | Over time | Point in time | Total |
| Energy | $- | $7 | $7 |
| Aerospace | 1722 | 783 | 2505 |
| Industrial | 3419 | 281 | 3700 |
| Research | 26 | 94 | 120 |
| &nbsp;&nbsp;&nbsp;Total | $5167 | $1165 | $6332 |

---

The energy market includes customers involved in the manufacture of silicon carbide wafers and batteries. The aerospace market includes customers that manufacture aircraft engines. Industrial end market consists of various end customers in diverse industries. The research market principally represents customers that are universities and other research institutions.

The Company has unrecognized contract revenue of approximately $2.6 million at March 31, 2026, which it expects to substantially recognize as revenue over time within the next eighteen months.

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress toward contract completion and to calculate the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems may occur for a variety of reasons, including but not limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates may have a material effect on the Company's consolidated statements of operations.

The Company recorded a cumulative catch up adjustment of $0.3 million to increase revenue during the three months ended March 31, 2026 as a result of a contract modification.

NOTE 5: REVENUE RECOGNITION (continued)

Contract assets and liabilities

Contract assets and contract liabilities on input method type contracts in progress are summarized as follows as of March 31, 2026 (in thousands):

---

| | |
|:---|:---|
| Costs incurred on contracts in progress | $20898 |
| Estimated earnings | 9574 |
| Costs and estimated earnings on uncompleted contracts | $30472 |
| Billings to date | (27394) |
| Net cost in excess of billings | 3078 |
| Deferred revenue related to non-system contracts | (257) |
| Contract liability in excess of contract assets | $2821 |
| Included in accompanying condensed consolidated balance sheets <br>under the following captions (in thousands): |  |
| &nbsp;&nbsp;&nbsp;Contract assets | $3347 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | $526 |

---

Of the contract liability balances at December 31, 2025 and 2024, $0.2 million and $1.3 million was recognized as revenue during the three months ended March 31, 2026 and 2025, respectively. Contract assets and contract liabilities at December 31, 2024 were $2.1 million and $3.0 million, respectively.

NOTE 6: INVENTORIES

Inventories consist of:

---

| | | |
|:---|:---|:---|
|  | March 31, <br>2026 | December 31,<br> 2025 |
| Raw materials | $165 | $137 |
| Work-in-process | 141 | 148 |
| Finished goods | - | - |
| &nbsp;&nbsp;&nbsp;Total | $306 | $285 |

---

NOTE 7: LONG-TERM DEBT

In September 2022, the Company entered into a loan agreement to fund the acquisition of machinery. The loan amount of $432,000 was payable in 60 equal monthly installments of $8,352 and secured by equipment. The interest rate was 6%. This loan was fully repaid during the three months ended March 31, 2026.

NOTE 8: EARNINGS PER SHARE

The calculation of basic and diluted weighted average common shares outstanding for the three months ended March 31, 2026 and 2025 is as follows:

---

| | | |
|:---|:---|:---|
|  | Three months <br> ended March 31, | Three months <br> ended March 31, |
|  | 2026 | 2025 |
| Basic weighted average common shares <br> outstanding | 6937492 | 6867713 |
| Dilutive effect of stock options |  |  |
| Dilutive effect of unvested restricted stock | - | - |
| Diluted weighted average shares outstanding | 6937492 | 6867713 |

---

NOTE 8: EARNINGS PER SHARE (continued)

As the result of the losses from continuing operations for the three months ended March 31, 2026 and 2025, all stock options and unvested restricted stock were excluded from the computation diluted per share amounts for the loss from continuing operations, income from discontinued operations and net income (loss).

NOTE 9: STOCK-BASED COMPENSATION EXPENSE

The following table summarizes stock options awards for the three months ended March 31, 2026:

SCHEDULE OF STOCK OPTIONS AWARDS

---

| | | |
|:---|:---|:---|
|  |<br>Stock Option<br>Awards<br>(in shares) | Weighted<br>Average<br>Exercise<br>Price |
| Outstanding at January 1, 2026 | 803875 | $8.17 |
| Forfeited | (6250) | 8.80 |
| Outstanding at March 31, 2026 | 797625 | 8.17 |

---

The following table summarizes information about the outstanding and exercisable options at March 31, 2026 by ranges of exercise prices:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | | Options Outstanding | Options Outstanding | | | Options Exercisable | Options Exercisable |
| | | Weighted | | | | | |
| | | Average | | | | | |
| | | Remaining | Weighted | | | Weighted | |
| | | Contractual | Average | | | Average | |
| Exercise | Number | Life in | Exercise | Intrinsic | Number | Exercise | Intrinsic |
| Price Range | Outstanding | Years | Price | Value | Exercisable | Price | Value |
| $4.00-7.00 | 437125 | 5.7 | $4.54 | $18 | 392000 | $4.48 | $18 |
| $7.01-10.00 | 20000 | 2.1 | $8.07 | $- | 20000 | $8.07 | $- |
| $10.01-13.00 | 120000 | 1 | $10.52 | $- | 120000 | $10.52 | $- |
| $13.01-16.00 | 220500 | 7 | $14.11 | $- | 165375 | $14.11 | $- |

---

As of March 31, 2026, there was $0.6 million of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 0.9 years.

NOTE 9: STOCK-BASED COMPENSATION EXPENSE (continued)

The Company recorded stock-based compensation expense for the three months ended March 31, 2026 and 2025, respectively, that were included in the following line items in our condensed consolidated statements of operations (in thousands):

---

| | | |
|:---|:---|:---|
|  | Three months <br> ended March 31, | Three months <br> ended March 31, |
|  | 2026 | 2025 |
| Cost of revenue | $23 | $26 |
| Research and development | 39 | 47 |
| Selling | 13 | 26 |
| General and administrative | 133 | 150 |
| Total | $208 | $249 |

---

Stock-based related to discontinued operations were $12,000 and $15,000 for the three months ended March 31, 2026 and 2025, respectively. Stock-based compensation expense included $50,000 for both three months ended March 31, 2026 and 2025, related to restricted stock awards that directors elected to receive pursuant to the Director Compensation plan. Under this plan, each of the five independent directors is entitled to an Annual Equity Retainer in the amount of $40,000, to be granted on the date of the Company's annual meeting of shareholders.

NOTE 10: INCOME TAXES

As of March 31, 2026 and December 31, 2025, the Company has provided a full valuation allowance against its net deferred tax assets. This was based on management's assessment, including operating losses in recent years, that it is more likely than not that the net deferred tax assets may not be realized in the future. Management continues to evaluate for potential utilization of the Company's net deferred tax assets, which have been fully reserved for, on a quarterly basis, reviewing our economic models, including projections of future operating results.

NOTE 11: SEGMENT REPORTING

With the sale of the Company's SDC business in 2026 and the cessation of its MesoScribe business in 2024, the Company has one reportable segment consisting of its CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport, thermal process and related equipment.

The chief operating decision maker ("CODM") of the Company is the Company's chief executive officer. The CODM assesses performance and decides how to allocate resources, including employees, financial or capital resources, based on segment net income (loss). The CODM considers budget-to-actual variances on a quarterly basis when making decisions about allocating capital and other resources to the segments and to assess the performance for each segment.

The following table presents revenue by geographic area (in thousands):

SCHEDULE OF REVENUE BY GEOGRAPHIC AREA

---

| | | |
|:---|:---|:---|
|  | Three months ended <br> March 31, | Three months ended <br> March 31, |
|  | 2026 | 2025 |
| United States | $1682 | $6231 |
| North America, excluding US | 1 | 3 |
| Europe, Middle East and Africa | 161 | 48 |
| Asia-Pacific | - | 50 |
| &nbsp;&nbsp;&nbsp;Consolidated total revenue | $1844 | $6332 |

---

For geographical reporting, revenues are attributed to the location in which the customer facility is located. All the Company's long-lived assets are located in the United States.

NOTE 12: RISKS AND CONTINGENCIES

The Company operates in a challenging and uncertain global economic environment. Recent and potential actions by the U.S. federal administration, including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory or responsive actions by other governments, may adversely affect the Company's supply chain, costs, demand for its products, receipt of orders and results of operations. In addition, the Company faces ongoing risks related to geopolitical instability, including conflicts and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.

Other factors contributing to economic uncertainty include inflationary pressures, elevated interest rates, disruptions in global logistics, labor market challenges, and potential changes in fiscal, tax, or regulatory policies. These conditions may impact customer spending decisions, order rates, project timing, and the availability and cost of materials and components used in the Company's products.

While management continuously evaluates these conditions and has taken, and may take, actions intended to mitigate the potential adverse effects on the Company's business, there can be no assurance that such actions will be successful. The Company is unable to predict the ultimate impact of these risks and uncertainties on its future results of operations, financial position, or cash flows.

**Item 2.** **Management's Discussion and Analysis of Financial Condition and Results of Operations.**

*Except for historical information contained herein, this "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward*–*looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements involve known and unknown risks and uncertainties that may cause our actual results or outcomes to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on various factors and are derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Important assumptions and other factors that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to:*

● *uncertainty as to the receipt of and timing of future orders for our equipment;* 

● *uncertainty as to our future growth and return to consistent profitability;* 

● *uncertainty as to the general state of the silicon carbide wafer end market;* 

● *competition in our existing and potential future product lines of business, including our aerospace equipment and PVT150 / PVT200 systems;* 

● *uncertainty as to our ability to identify and develop new products for growth markets;* 

● *our ability to obtain financing on acceptable terms if and when needed;* 

● *our ability to attract and retain key personnel and employees;* 

● *uncertainty as to changes to international trade policies including the imposition of tariffs; and* 

● *uncertainty as to our ability to adequately obtain raw materials and on commercially reasonable terms.* 

 

*Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. We assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements. Past performance is no guarantee of future results.*

*You should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made. When used with this Report, the words* "*believes*"*,* "*anticipates*"*,* "*expects*"*,* "*estimates*"*,* "*plans*"*,* "*intends*"*,* "*will*" *and similar expressions are intended to identify forward-looking statements.*

**<u>Executive Summary</u>**

CVD Equipment Corporation ("CVD" or the "Company") has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York.

On November 6, 2025, our Board of Directors approved a comprehensive strategy to transform our Company in response to the continued fluctuations in our order rates and the recent decline in the bookings of our CVD Equipment division. As part of this strategy, we transitioned our operating model for our CVD Equipment business from vertically integrated fabrication to outsourced fabrication of certain components to reduce our fixed operating costs.

The transformation strategy also includes the exploration of strategic alternatives for businesses and product lines, including the potential sale or divestiture of assets or business lines.

On March 23, 2026, we entered into an asset purchase agreement with a third party to sell our SDC business division ("SDC"). The purchase price was approximately $16.9 million in cash, subject to customary purchase price adjustments. The transaction closed on April 1, 2026.

The net cash proceeds from the sale of SDC we received in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million. Following the sale of SDC, CVD Equipment has approximately $23 million in cash and no long-term debt. We expect to use the proceeds from the transaction to enhance financial flexibility and support initiatives aimed at creating shareholder value.

We retained ownership of our Saugerties, New York facility, which will be leased to the acquiring company for an initial term of two years.

With the sale of our SDC business and the cessation of our MesoScribe business in 2024, we have one reportable segment consisting of our CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport and thermal process equipment.

We design, develop, and manufacture a broad range of equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, battery energy storage markets as well as advanced industrial applications, and research.

Results from continuing operations during the quarter ended March 31, 2026 included:

● Revenue decreased by $4.5 million or 70.9% as compared to the prior period quarter due lower systems revenue due to reduced system bookings.

● Gross margin decreased by $1.6 million or 91.5% as compared to the prior period quarter due to the lower system revenues and lower absorption of fixed manufacturing costs.

● Decreases in revenue and gross margin for the quarter ended March 31, 2026 from lower system bookings were partially offset by a $0.3 million benefit from a contract modification.

● Total bookings for the first quarter of 2026 were approximately $1.8 million as compared to bookings of $0.8 million in the first quarter of 2025 due to higher non-system orders for spare parts.

● Backlog was $4.7 million at both December 31, 2025 and March 31, 2026.

● Cash and cash equivalents at March 31, 2026 were $8.2 million.

Income from discontinued operations before transaction costs of our SDC business division declined from $0.6 million in the prior year quarter to $0.5 million in the current year quarter due to lower gross margins on higher revenues. Transaction costs associated with the sale of SDC consisted of legal and investment banking fees of $0.4 million for the quarter ended March 31, 2026. The total income from discontinued operations was $63,000 for the quarter ended March 31, 2026 as compared to $0.6 million for the prior year quarter due principally to the transaction costs incurred in connection with the sale of SDC.

The Company filed a Form 8-K on April 7, 2026 that included pro forma financial information.

**<u>Business Update</u>**

As of December 31, 2025, we classified certain manufacturing equipment as held for sale with a fair value of $0.5 million based on an agreement we entered into in January 2026 with a third-party to sell the equipment for this amount. We received the proceeds from the sale in the first quarter of 2026 and also sold additional equipment for $46,000 that was no longer necessary for our business.

Our core strategy remains focused on serving key markets related to aerospace, microelectronics/power electronics and industrial applications.

With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials ("CMCs") that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and to produce specialty coatings for advanced high temperature environments.

In microelectronics/power electronics, our PVT reactor design and control system architecture allows for precise process and temperature control enabling run-to-run repeatability and system-to-system matching. The PVT system platform is also being considered to process other WBG materials such as aluminum nitride (AlN) to support the development of emerging, high performance semiconductor materials.

In October 2025, we sold two PVT150™ units to Stony Brook University (SBU) for their new semiconductor research center - onsemi Silicon Carbide Crystal Growth Center. The recently launched research center will enable SBU faculty, scientists, and students to conduct research on silicon carbide crystal growth and other wide band gap (WBG) materials and device-enabling technologies critical to improving energy efficiency in power semiconductors and foster the next generation of skilled professionals in this field.

Our PVT systems may provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission. In addition, silicon carbide ("SiC")semiconductors specifically help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers. We plan to evaluate the market conditions and opportunities to expand our product offerings in the power electronics market.

A potentially emerging market for our business is the nuclear energy industry. We are currently focused on two potential applications within this market. The first involves SiC chemical vapor infiltration systems used in the production of SiC tubing intended to replace traditional zirconium alloy fuel cladding. The second involves coating systems used to apply protective coatings to nuclear fuel pellets. We believe demand for both applications is being driven primarily by the development and deployment of small modular reactors. We intend to continue to focus on leading customers and strategic opportunities within this evolving market.

We have generally gained new customers through our industry reputation, as well as print advertising and trade show attendance. We have increased the number of trade shows and industry conferences we attend.

We operate in a challenging and uncertain global economic environment. Recent and potential actions by the U.S. federal administration, including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory or responsive actions by other governments, may adversely affect our supply chain, costs, demand for our products, receipt of orders and results of operations. In addition, we face ongoing risks related to geopolitical instability, including conflicts and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.

Other factors contributing to economic uncertainty include inflationary pressures, elevated interest rates, disruptions in global logistics, labor market challenges, and potential changes in fiscal, tax, or regulatory policies. These conditions may impact customer spending decisions, order rates, project timing, and the availability and cost of materials and components used in our products.

While our management continuously evaluates these conditions and has taken, and may take, actions intended to mitigate the potential adverse effects on our business, there can be no assurance that such actions will be successful. We are unable to predict the ultimate impact of these risks and uncertainties on our future results of our operations, financial position, or cash flows.

**Results of Operations**

**Quarters Ended March 31, 2026 and 2025**

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the quarters ended March 31, 2026 and 2025 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages). Unless otherwise specified, our discussion below reflects continuing operations only. Prior period financial information related to discontinued operations has been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **March 31** | **March 31** | | |
|  | **2026** | **2025** | **Change** | **Percent** |
| Revenue | $1844 | $6332 | $(4488) | (70.9)% |
| Cost of revenue | 1697 | 4598 | (2901) | (63.1)% |
| Gross profit | 147 | 1734 | (1587) | (91.5)% |
| Gross profit percentage | 8.0% | 27.4% |  |  |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 727 | 734 | (7) | (1.0)% |
| &nbsp;&nbsp;&nbsp;Selling | 240 | 367 | (127) | (34.6)% |
| &nbsp;&nbsp;&nbsp;General and administrative | 1022 | 953 | 69 | 7.2% |
| &nbsp;&nbsp;&nbsp;Gain on sale of equipment | (46) | - | (46) | 100.0% |
| Total operating expenses | 1943 | 2054 | (111) | (5.4)% |
| Operating loss from continuing operations | (1796) | (320) | (1476) | 461.3% |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 71 | 110 | (39) | (35.5)% |
| &nbsp;&nbsp;&nbsp;Interest expense | (1) | (3) | 2 | (66.7)% |
| Total other income, net | 70 | 107 | (37) | (34.6)% |
| Loss from continuing operations before income taxes | (1726) | (213) | (1513) | 710.3% |
| Income tax expense | - | 16 | 16 | \* |
| Net loss from continuing operations | (1726) | (229) | (1497) | 653.7% |
| Discontinued operations: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income from discontinued operations | 499 | 589 | (90) | (15.3)% |
| &nbsp;&nbsp;&nbsp;Transaction costs on disposal of discontinued operations | (436) | - | (436) | (100.0)% |
| Income from discontinued operations, net of taxes | 63 | 589 | (526) | (89.3)% |
| Net income (loss) | $(1663) | $360 | (2023) | \* |

---

\* Not meaningful

 

*Revenue*

Our revenue for the quarter ended March 31, 2026, was $1.8 million compared to $6.3 million for the quarter ended March 31, 2025, a decrease of 70.9%.

The decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings. The decrease was partially offset by $0.3 million benefit from a contract modification during the quarter. Revenue from three customers represented 227.2%, 21.7% and 17.3%, respectively, of our total revenues.

Our order backlog at March 31, 2026, was approximately $4.7 million as compared to December 31, 2025, of $4.7 million. Our order backlog at March 31, 2026, consists of approximately $2.6 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $2.0 million represents other orders received from customers. As of March 31, 2026, one industrial customer represented 14.7% of our backlog and one aerospace customer represented 32.8% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

*Gross Profit*

Gross profit for the quarter ended March 31, 2026, was $0.1 million, with a gross profit margin of 8.0%, compared to a gross profit of $1.7 million and a gross profit margin of 27.4% for the quarter ended March 31, 2025. The decrease in gross profit of $1.6 million was primarily the result of lower system revenue and lower absorption of fixed manufacturing costs. Gross profit during the quarter ended March 31, 2026, benefited by $0.3 million from a contract modification.

*Research and Development*

For the quarter ended March 31, 2026, research and development expenses were $0.7 million, or 39.4% of revenue as compared to $0.7 million, or 11.6% of revenue for the quarter ended March 31, 2025. During the current quarter there was less time charged to contracts in progress that was offset by lower personnel costs.

General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to cost of revenue when work is performed directly on a customer order.

*Selling*

Selling expenses were $0.2 million or 13.0% of revenue for the quarter ended March 31, 2026 as compared to $0.4 million or 5.8% of revenue for the quarter ended March 31, 2025. The decrease was primarily due to lower personnel costs.

 

*General and Administrative*

General and administrative expenses were $1.0 million or 55.4% of revenue for the quarter ended March 31, 2026 as compared to $1.0 million or 15.1% of revenue for the quarter ended March 31, 2025. The increase was due to higher personnel and building maintenance costs.

*Gain on Sales of Equipment*

During the quarter ended March 31, 2026, we recognized a gain of $46,000 on the sale of equipment that was no longer necessary for our business.

 

*Other Income, Net*

Other income, net was $70,000 for the quarter ended March 31, 2026, as compared to other income, net of $107,000 for the quarter ended March 31, 2025. Other income consists principally of interest earned on amounts invested in U.S. treasury securities and was lower than the prior period quarter due to less funds available for investment.

*Income Taxes*

We continue to evaluate the potential utilization of our net deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.

*Discontinued Operations – SDC* 

Income from discontinued operations before transaction costs of our SDC business division was $0.5 million in the current quarter as compared to $0.6 million for the quarter ended March 31, 2025. This decrease was primarily due to lower gross margins on higher revenues. Transaction costs associated with the sale of SDC consisted of legal and investment banking fees of $0.4 million for the quarter ended March 31, 2026. The total income from discontinued operations was $63,000 for the quarter ended March 31, 2026 as compared to $0.6 million for the quarter ended March 31, 2025 due principally to the transaction costs incurred in connection with the sale of SDC.

***<u>Liquidity and Capital Resources</u>***

As of March 31, 2026, aggregate working capital was $12.8 million. Cash and cash equivalents at March 31, 2026 were $8.2 million. The net cash proceeds from the sale of SDC received by us in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million, increasing our cash balance at the time to approximately $23 million.

Net cash used in operating activities for the quarter ended March 31, 2026 was $0.9 million. This decrease was principally due to net loss of $1.6 million and a $0.3 million increase in contract assets due to revenue recognized on contracts in progress. These decreases were partially offset by non-cash expense items of $0.3 million, decrease in inventory of $0.3 million, a decrease in accounts receivable of $0.2 million and an increase of $0.3 million in accrued expenses.

Net cash provided by investing activities for the quarter ended March 31, 2026 consisted of proceeds from the sale of assets held for sale and other equipment of $0.6 million partially offset by capital expenditures of $13,000 and an investment in a captive insurance company related to our health insurance program of $48,000.

Net cash used in financing activities for the quarter ended March 31, 2026 consisted of the full repayment of an equipment loan in the amount of $181,000. As of March 31, 2026, we have no outstanding debt.

We believe that our cash and cash equivalent positions and our projected cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months from the filing of these condensed consolidated financial statements included in this Form 10-Q. We will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs.

**Critical Accounting Estimates**

Use of Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.

In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We consider the following estimates within our significant accounting policies to be critical because of their complexity and the high degree of judgment involved in maintaining them. See Note 3 – "Summary of Significant Accounting Policies" of our Consolidated Financial Statements for additional information regarding our accounting policies.

Revenue Recognition

We design, manufacture, and sell custom chemical vapor deposition equipment through contractual agreements. These system sales require us to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. We recognize revenue over time by using an input method based on costs incurred as it depicts our progress toward satisfaction of the performance obligation. Under this method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.

Incurred costs include all direct material and labor costs, and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work-in-process as required by the project's engineering design. Cost based input methods of revenue recognition require us to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor, and other system costs. If the estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and can be reasonably estimated.

We have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years. Historically, we have demonstrated an ability to accurately estimate total revenues and total expenses relating to our long-term contracts. However, there exist many inherent risks and uncertainties in estimating revenues, expenses, and progress toward completion, particularly on larger or longer-term contracts. If we do not estimate the total sales, related costs, and progress toward completion on such contracts, the estimated gross margins may be significantly impacted, or losses may need to be recognized in future periods. Any such resulting changes in margins or contract losses could be material to our results of operations and financial condition.

Long-Lived Assets

Long-lived assets consist primarily of property, plant and equipment. Long-lived assets are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset's carrying value to determine if impairment exists pursuant to the requirements of ASC 360-10-35, "Impairment or Disposal of Long-Lived Assets." If the asset is determined to be impaired, the impairment loss is measured on the excess of it carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.

**Item 3.** **Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 4.** **Controls and Procedures**.

*Evaluation of Disclosure Controls and Procedure*s

We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 13d-15(e) under the Exchange Act of 1934, as amended, (the "Exchange Act")). As required by Rule 13a-15(b) under the Exchange Act, our management, under the direction of our Chief Executive Officer and Chief Financial Officer, reviewed and performed an evaluation of the effectiveness of design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Report").

Based on that review and evaluation, our Chief Executive Officer and Chief Financial Officer, along with others in our management, have determined that as of the end of the period covered by this Report on Form 10-Q the disclosure controls and procedures were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosures.

 

*Changes in Internal Controls*

There were no changes in our internal controls over financial reporting as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

 

*Limitations on the Effectiveness of Controls*

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

**CVD EQUIPMENT CORPORATION**

**PART II**

**OTHER INFORMATION**

**Item 1.** **Legal Proceedings.**

None.

**Item 1A.** **Risk Factors.**

There have been no other material changes to the risk factors disclosed in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2026.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

None.

**Item 3. Defaults Upon Senior Securities.**

None.

**Item 4.** **Mine Safety Disclosures.**

Not applicable.

**Item 5.** **Other Information.**

None.

---

| | |
|:---|:---|
| **Item 6.** | **Exhibits** |
| 3.1 | [Certificate of Incorporation, dated October 12, 1982 (Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024).](https://www.sec.gov/Archives/edgar/data/766792/000149315225010917/ex3-1.htm) |
| 3.2 | [Certificate of Amendment of Certificate of Incorporation, dated April 25, 1985 (Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024).](https://www.sec.gov/Archives/edgar/data/766792/000149315225010917/ex3-2.htm) |
| 3.3 | [Certificate of Amendment of Certificate of Incorporation, dated August 12, 1985 (Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024).](https://www.sec.gov/Archives/edgar/data/766792/000149315225010917/ex3-3.htm) |
| 3.4 | [Certificate of Amendment of Certificate of Incorporation, dated June 30, 1989 (Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024).](https://www.sec.gov/Archives/edgar/data/766792/000149315225010917/ex3-4.htm) |
| 3.5 | [Certificate of Amendment of the Certificate of Incorporation, dated December 9, 2016 (Incorporated herein by reference the Company's Current Report on Form 8-K filed on December 14, 2016).](https://www.sec.gov/Archives/edgar/data/766792/000100944816000080/exhibit31.htm) |
| 3.6 | [Amended and restated By-laws of CVD Equipment Corporation, dated as of October 5, 2016 (Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 11, 2016).](https://www.sec.gov/Archives/edgar/data/766792/000100944816000050/exhibit35.htm) |
| 10.1\*+ | [Asset Purchase Agreement, dated March 23, 2026.](ex10-1.htm) |
| 10.2\*+ | [Facility Lease, dated April 1, 2026.](ex10-2.htm) |
| 31.1\* | [Certification of Emmanuel Lakios, Chief Executive Officer, dated May 14, 2026.](ex31-1.htm) |
| 31.2\* | [Certification of Richard Catalano, Chief Financial Officer, dated May 14, 2026.](ex31-2.htm) |
| 32.1\* | [Certification of Emmanuel Lakios, Chief Executive Officer, dated May 14, 2026, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-1.htm) |
| 32.2\* | [Certification of Richard Catalano, Chief Financial Officer, dated May 14, 2026, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-2.htm) |
| 101.1 | Inline XBRL Instance. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition. |
| 101.LAB | Inline XBRL Taxonomy Extension Labels. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

\* Filed herewith.

+ Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 14<sup>th</sup> day of May 2026.

---

| | |
|:---|:---|
| **CVD EQUIPMENT CORPORATION** | **CVD EQUIPMENT CORPORATION** |
| By: | */s/ Emmanuel Lakios* |
|  | Emmanuel Lakios |
|  | President and Chief Executive Officer |
|  | (Principal Executive Officer) |
| By: | */s/ Richard Catalano* |
|  | Richard Catalano |
|  | Vice President and Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

## Exhibit 10.1

**Exhibit 10.1**

**CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. [\*\*\*] INDICATES THAT INFORMATION HAS BEEN REDACTED.**

**ASSET PURCHASE AGREEMENT**

This Asset Purchase Agreement (this <u>"Agreement"),</u> dated and effective as of March 23, 2026, is made by and among Edwards Semiconductor Solutions LLC, a Delaware limited liability company ("Buyer"), and CVD Equipment Corporation, a New York corporation ("Seller"). Seller and Buyer are collectively referred to as the <u>"Parties."</u>

**RECITALS**

Seller owns certain assets which it uses in its conduct of the Business (as defined below).

Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, such assets upon the terms and subject to the conditions set forth in this Agreement.

**AGREEMENT**

The Parties agree as follows:

**ARTICLE I - DEFINITIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Defined Terms.</u> As used herein, the following terms shall have the indicated

meanings. Certain other capitalized terms are defined elsewhere in this Agreement.

<u>"Actions"</u> as defined in **Section 4.9**.

<u>"Acquisition Proposal"</u> as defined in **Section 6.3.1**.

<u>"Affiliate"</u> means any Person, directly or indirectly, through one or more intermediaries, that controls, is controlled by or is under common control with any other Person, and, to the extent such Person is a natural person, any family member of such Person to the extent such family member shares the same household as such Person.

<u>"Ancillary Agreements"</u> means each agreement or document identified herein as an exhibit to this Agreement, or referred to in an exhibit to this Agreement, together with all other agreements, documents and certificates that are deliverable pursuant to this Agreement.

<u>"Annual Financial Statements"</u> as defined in **Section 4.3**.

<u>"Applicable Law"</u> means all applicable statutes, rules, regulations, ordinances, codes or agency guidelines of any Governmental Unit.

<u>"Assets"</u> means all of the assets owned, used or held for use by Seller solely in connection with the Business, including, without limitation, the Customer Deposits and those assets set forth on <u>Schedule A,</u> other than the Excluded Assets.

<u>"Assignment and Assumption Agreement"</u> as defined in **Section 3.2.1(a)**.

<u>"Assumed Contracts"</u> means the Contracts listed in <u>Schedule 4.5</u> and designated therein as "Assumed Contracts."

Classified as Secret

<u>"Assumed Liabilities"</u> means all (i) executory obligations of Seller under the Assumed Contracts, if any, specifically excluding any obligation which exists or which may arise as a result of a delinquency, default or breach of warranty by Seller, except for warranty performance obligations with respect to products manufactured, sold or serviced prior to the Closing Date; and (ii) the liabilities identified on <u>Schedule B</u> and included on the Final Net Asset Value Statement and taken into account in determining the Final Net Asset Value.

<u>"Balance Sheet"</u> means the most recent balance sheet included within the Annual Financial Statements.

<u>"Business"</u> means all of the business conducted by Seller solely as it relates to the ultra-high-purity gas and liquid storage and delivery systems, including bulk gas delivery, gas cylinder storage, gas rock systems, heated gas cabinets, liquid chemical delivery, ultra-high-purity gas blending, ultra-high-purity gas cabinets, ultra-high-purity gas panels, valve manifold boxes, and bubblers and evaporators, identified as Seller's "Stainless Design Concepts" business division and excluding any and all other operations of the Seller or its Affiliates, as the case may be, including, but not limited to, the sale of gas cabinets and components that are sold as constituent parts of a system encompassing Seller's other products that, as a whole, are not competitive to the products of the business.

<u>"Business Day"</u> means each day that is not a Saturday, Sunday or other day on which banking institutions located in New York, New York are authorized or obligated by Applicable Law or Order to close.

<u>"Buyer Closing Certificate"</u> as defined in **Section 7.3.6**.

<u>"Claim"</u> as defined in **Section 8.2.4**.

<u>"Claim Notice"</u> as defined in **Section 8.2.4**.

<u>"Closing"</u> means the consummation of the Transaction.

<u>"Closing Date"</u> as defined in **Section 3.1**.

<u>"Confidentiality Agreement"</u> means that certain confidentiality agreement by and between the Parties dated November 10, 2025.

<u>"Contract"</u> means any agreement, lease, contract, note, loan, evidence of indebtedness, purchase order, letter of credit, undertaking, covenant, guaranty, performance bond, power of attorney, Employee Plan, license, commitment, or understanding to which Seller or any of its Affiliates is a party that relates solely to the Business or the Assets, whether oral or written.

<u>"Customer Deposits"</u> means the aggregate value of all cash or cash equivalents deposited with Seller by the customers of the Business in respect of work to be performed and not yet completed as of the Closing Date, calculated in accordance with <u>Schedule D.</u>

<u>"Damages"</u> means any and all claims, damages, costs, losses (including, without limitation, diminution in value), Taxes, liabilities, judgments, penalties, fines, obligations, lawsuits, deficiencies, demands and expenses (whether or not arising out of third party claims), including, without limitation, interest, penalties, costs of mitigation, expenses of environmental investigation and remediation, lost profits and other losses, reasonable attorneys' fees, experts' fees and all amounts paid in investigation, defense or settlement of any of the foregoing.

2 <br>Classified as Secret

<u>"Drop Dead Date"</u> as defined in **Section 9.1.2**.

<u>"Employee Plans"</u> as defined in **Section 4.19**.

<u>"Employees"</u> means all employees of Seller who solely or predominantly perform services to the Business as of the Closing Date.

<u>"Encumbrance"</u> means any claim, lien (including, without limitation, for Taxes), pledge, option, warrant, purchase or subscription right, charge, easement, security interest, deed of trust, mortgage, right-of-way, encroachment, building or use restriction, conditional sales agreement, encumbrance, equitable interest, right of first refusal, or restriction of any kind or other claim or right of third parties and any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership or other right of third parties.

<u>"Environmental Laws"</u> as defined in **Section 4.13**.

<u>"Equipment and Machinery"</u> means all of the machinery and equipment (including office equipment, and plant and office furniture and fixtures), appliances, computer hardware, materials, vehicles, tools, dies, molds, accessories, spare parts and repair or replacement parts applicable thereto, necessary to, used or useful solely or predominantly in the operation of the Business and owned, leased or licensed by Seller, or used by Seller under any other arrangement or circumstance.

<u>"Escrow"</u> means the escrow of the Escrow Amount, plus any interest accrued thereon, with the Escrow Agent pursuant to the Escrow Agreement.

<u>"Escrow Agent"</u> means U.S. Bank, National Association, a national banking association.

<u>"Escrow Agreement"</u> means the agreement among the Parties and the Escrow Agent that sets forth the terms and conditions pursuant to which the Escrow Amount will be held in, and distributed from, the Escrow, the form of which is attached hereto as <u>Exhibit C.</u>

<u>"Escrow Amount"</u> means $900,000.00.

<u>"Estimated Deposit Amount"</u> means Seller's calculation of the Customer Deposits as of one (1) week prior to the Closing Date.

<u>"Excluded Assets"</u> means the assets set forth on <u>Schedule C.</u> 

<u>"Excluded Liabilities"</u> as defined in **Section 2.3**.

<u>"Facility"</u> means that certain parcel of Real Property having the address 1117 Kings Highway, Saugerties, New York 12477, together with all Improvements thereupon.

3 <br>Classified as Secret

<u>"Final Deposit Amount"</u> means the Customer Deposits, as of the Closing Date, calculated pursuant to **Section 3.5** in accordance with <u>Schedule D.</u>

<u>"Final Net Asset Value"</u> means the Net Asset Value derived from the Final Net Asset Value Statement.

<u>"Final Net Asset Value Statement"</u> means a Net Asset Value statement setting forth the Final Net Asset Value.

<u>"Financial Statements"</u> as defined in **Section 4.3**.

<u>"FIRPTA Certificate"</u> as defined in **Section 7.2.14**.

<u>"GAAP"</u> means United States generally accepted accounting principles.

<u>"Governmental Unit"</u> means any foreign, domestic, national, federal, territorial, provincial, state, county, city, village, municipal, district or other jurisdiction of any nature, governmental or quasi-governmental unit of any nature, instrumentality, court, government or self-regulatory or other organization, commission, tribunal or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing and/or any body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature (other than the United Nations).

<u>"Improvements"</u> as defined in **Section 4.25.2**.

<u>"Indemnifiable Event"</u> means any circumstance that leads to Damages incurred in connection with, arising out of, resulting from or relating to the contingencies identified in **Sections 8.2.1** or **8.2.2**.

<u>"Indemnity Period"</u> is the twelve (12) months following the Closing Date.

<u>"Interim Financial Statements"</u> as defined in **Section 4.3**.

<u>"Inventory"</u> means all of Seller's inventory consisting of raw materials, work in progress, finished goods, samples, spare parts and all other materials and supplies to be used for the production of finished goods and all of Seller's new repair or replacement parts, supplies and packaging items and similar items, in each case, solely with respect to the Business, in each case wherever they may be located; including, without limitation, Inventory held for sale or rental.

<u>"Key Employees"</u> means those Employees set forth on Schedule E.

<u>"Leased Real Property"</u> means all Real Property or Improvements used, occupied or held for use by Seller in connection with the conduct of the Business pursuant to a lease.

<u>"Lookback Date"</u> means December 10, 2025.

4 <br>Classified as Secret

<u>"Material Adverse Effect"</u> or <u>"Material Adverse Change"</u> means any significant or substantial adverse effect or change in the condition (financial or otherwise), business, results of operations, prospects, assets, liabilities or operations of the Business or the Assets or on the ability of Seller to consummate the Transaction, or any event or condition which would, with the giving of notice, the passage of time, or both, constitute any of the foregoing. Notwithstanding anything to the contrary in this Agreement, none of the following changes, events, developments or effects arising therefrom shall be taken into account in determining whether there has been a Material Adverse Effect or Material Adverse Change: (i) general business or economic conditions in any of the markets or geographical areas in which Seller operates, (ii) any conditions generally affecting any industry in which Seller operates, (iii) national or international economic, political or social conditions, including the engagement by the United States or any other county in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any other county, or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other county, (iv) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (v) changes in law, (vi) acts of God, (vii) any failure to meet projections, forecasts, or revenue or earnings predictions for any period, or (viii) any effect on the Business or the Assets resulting from the public disclosure of the transactions contemplated hereunder; provided, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (viii) above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur, to the extent such event, occurrence, fact, condition or change has a disproportionate effect on the Business compared to other participants in the industry in which the Business operates. For purposes of this definition, without limitation, any event, occurrence, or development that does, or would be reasonably likely to reduce the dollar value of consolidated earnings of the Business before interest, taxes, depreciation and amortization by more than twenty percent (20%) in the year in which such event, occurrence, or development occurs, or the subsequent year, in each case on a year-over-year basis, shall be considered a Material Adverse Effect or a Material Adverse Change; *provided that*, for the avoidance of doubt, such determination shall disregard the effects of the Transaction following Closing, including Buyer's acts and omissions in directing the affairs and operation of the Business following such Closing.

<u>"Net Asset Value"</u> as of any date, means the net value of the Assets minus the Assumed Liabilities calculated using the methodologies, principles and procedures set forth on <u>Schedule D.</u>

<u>"Order"</u> means any order, writ, injunction, judgment, ruling, decree, award, or other directive of any court or other Governmental Unit.

<u>"Ordinary Course"</u> means the ordinary course of business consistent with past practice, as adjusted to account for increased inventory purchase at Buyer's request.

<u>"Organizational Documents"</u> with respect to a Person, means the articles or certificate of incorporation, bylaws, partnership agreement, certificate of partnership, certificate of formation, operating agreement, and/or any similar document(s) adopted or filed in connection with the creation, formation or organization of such Person; and any amendment to any of the foregoing.

<u>"Permits"</u> means all licenses, permits, franchises, approvals, authorizations, consents or Orders of, or filings with, any Governmental Unit or any other Person, necessary or useful for the past, present or anticipated conduct of the Business, including the Real Property Permits.

5 <br>Classified as Secret

<u>"Person"</u> means any natural person, company, corporation, subsidiary, partnership, limited liability company, association, trust, organization, Governmental Unit or other entity.

<u>"Personally Identifiable Information"</u> means any information that specifically identifies, or is capable of identifying, any individual Person, whether living or dead, including any information that could be associated with such individual, such as an address, e-mail address, telephone number, health information, financial information, drivers' license number, location information, or government issued identification number.

<u>"Purchase Price"</u> as defined in **Section 3.3**.

<u>"Purchase Price Adjustment"</u> means the net adjustments to the Purchase Price required by **Section 3.5**.

<u>"Real Property"</u> means any real property, including the Leased Real Property.

<u>"Real Property Laws"</u> as defined in **Section 4.25.3**.

<u>"Real Property Permits"</u> as defined in **Section 4.25.4**.

<u>"Receivables"</u> means all trade account receivables arising out of the Business and operations of Seller arising from the provision of services or the sale of Inventory.

<u>"Representative"</u> means any officer, director, principal, owner, attorney, agent, employee, engineer, consultant or other representative of a Person.

<u>"Seller"</u> as defined in the recitals above.

<u>"Seller's knowledge"</u> means: (i) the actual knowledge of the officers and directors of Seller, including, without limitation, Emmanuel Lakios, Richard A. Catalano, Kevin R. Collins, Carlos A. Berenguel and Linda C. Elkin, after due inquiry, and (ii) any fact or circumstance set forth in a writing (electronic or otherwise) addressed or delivered to or written by any such individuals prior to the Closing Date.

<u>"Seller Closing Certificate"</u> as defined in **Section 7.2.11**.

<u>"Target Net Asset Value"</u> means $1,905,082.

"Tax" means any federal, state, local, foreign or other tax, levy, impost, fee, assessment, unclaimed property and escheat obligations or other charge imposed by a Governmental Unit, Order or Applicable Law, including, without limitation, income, estimated income, business, occupation, franchise, property, payroll, personal property, sales, transfer, use, employment, commercial rent, occupancy, franchise or withholding taxes, and any premium, including, without limitation, interest, penalties and additions in connection therewith.

<u>"Transaction"</u> means the execution, delivery or performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby. <u>"Transaction Documents"</u> means this Agreement and each of the Ancillary Agreements. <u>"USG Briefing"</u> as defined in **Section 6.15**.

6 <br>Classified as Secret

**ARTICLE II- PURCHASE AND SALE OF ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Transfer of Assets.</u> Upon the terms and subject to the conditions contained herein, Seller hereby sells, conveys, transfers, assigns and delivers the Assets to Buyer free and clear of any and all Encumbrances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Assumption of Liabilities.</u> Upon the terms and subject to the conditions contained herein, Buyer hereby assumes the Assumed Liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Excluded Liabilities.</u> Except for the Assumed Liabilities, Buyer does not and shall not assume, or otherwise be responsible for, any Damages, liabilities or other obligations, whether actual or contingent, matured or unmatured, liquidated or unliquidated, known or unknown, related or unrelated to the Business or the Assets, and whether arising prior to, on or after the date hereof (collectively, the <u>"Excluded Liabilities"),</u> and Seller shall remain responsible for all Excluded Liabilities. The Excluded Liabilities shall include, without limitation, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.1 any liability to or in respect of any Employees or former employees, including: any employment agreement, whether or not written, between Seller (or any Affiliate of Seller) and any person; any liability under any Employee Plan (including accrued, unused paid time off); any severance or worker's compensation liability relating to any occurrence(s) prior to the Closing Date; any claim of any unfair labor practice, discrimination or other violation of Applicable Law or Order that is based on acts or omissions that occurred prior to the Closing Date; any claim based on acts or omissions that occurred prior to the Closing Date; any contractual liability other than the Assumed Liabilities arising under the Assumed Contracts; any liability of Seller in respect of any Tax; any liability arising from any injury to or death of any person or damage to or destruction of any property, whether arising from defects in products manufactured or sold or services performed by or on behalf of Seller or any other Person prior to the Closing Date, or arising from any other cause (on a date of occurrence basis or otherwise) prior to the Closing Date; any liability of Seller arising out of or related to any Action that is based on acts or omissions that occurred prior to the Closing Date; any liability of Seller resulting from entering into, performing its obligations pursuant to or consummating the transactions contemplated by this Agreement; any liability related to the Facility occurring, accruing or arising prior to the Closing Date; any liability arising out of or related to any Environmental Law which is based on facts, events, circumstances or actions taken or omitted to be taken, or existing on or prior to the Closing Date, including, without limitation, any liability arising out of or related to any Excluded Asset(s) and any liability arising out of or related to Seller's termination or breach of any distributor or other Contract that Buyer does not assume.

7 <br>Classified as Secret

**ARTICLE III – CLOSING AND PURCHASE PRICE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>Closing.</u> Subject to the terms and conditions of this Agreement, the Closing shall take place remotely by exchange of documents and signatures (or their electronic counterparts), at 9:00 a.m. Eastern time, on the second Business Day after all of the conditions to Closing set forth in **ARTICLE VII** are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Seller and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the <u>"Closing Date",</u> or at such other time or place or in such other manner as Seller and Buyer may mutually agree upon in writing. No later than one week prior to the Closing Date, Seller shall have delivered to Buyer its written calculation of the Estimated Deposit Amount, set forth in reasonable detail, together with all work papers and other information reasonably required by Buyer to evaluate such calculations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <u>Closing Deliverables.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.1 At the Closing, Seller shall deliver to Buyer the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) an assignment of contract rights and assumption of certain liabilities related thereto substantially in the form of <u>Exhibit A</u> attached hereto (the <u>"Assignment and Assumption Agreement")</u> and duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a bill of sale substantially in the form of <u>Exhibit B</u> attached hereto (the <u>"Bill of Sale")</u> and duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Escrow Agreement, duly executed by Seller and the Escrow Agent substantially in the form of <u>Exhibit C</u> attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) intellectual property assignment documents substantially in the form of <u>Exhibit D</u> attached hereto (the <u>"IP Assignment Documents")</u> and duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) a new facility lease substantially in the form of <u>Exhibit E</u> attached hereto (the <u>"New Facility Lease")</u> and duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) a non-competition agreement substantially in the form of <u>Exhibit F</u> attached hereto (the <u>"Non-Competition Agreement")</u> and duly executed by Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) a certificate of the secretary of Seller, dated as of the Closing Date, as to the continued existence of Seller, and certifying the authorization of the execution, delivery and performance of this Agreement and the Ancillary Agreements, substantially in the form of <u>Exhibit G</u> attached hereto (the <u>"Secretary's Certificate of Seller");</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the Seller Closing Certificate required by **Section 7.2.11**, substantially in the form of <u>Exhibit H</u> attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the certificates required by **Section 7.2.12** and **Section 7.2.13**;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) the FIRPTA Certificate required by **Section 7.2.14**;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) a transition services agreement substantially in the form of <u>Exhibit I</u> attached hereto (the <u>"Transition Services Agreement")</u> and duly executed by Seller; and

8 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) such other customary instruments of transfer or assumption, filings, or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to the transactions contemplated by this Agreement or the Ancillary Agreements, including but not limited to all Permits, consents and other documents necessary to consummate the Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.2 At the Closing, Buyer shall deliver to Seller the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Purchase Price (minus the Escrow Amount, minus the Estimated Deposit Amount, and minus amounts required to be paid pursuant to **Section 3.7** and **Section 3.8**, and less any other deductions as set forth in this Agreement), by wire transfer in immediately available funds to an account designated in writing by Seller prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Assignment and Assumption Agreement, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) written confirmation that at least sixty percent (60%) of the Employees have accepted offers of employment with Buyer and executed a form of offer letter substantially in the form of <u>Exhibit J</u> attached hereto (collectively, the <u>"Offer Letters"),</u> each duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) written confirmation that all Key Employees have accepted offers of employment with Buyer and executed Offer Letters, each duly executed by the Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Escrow Agreement, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the IP Assignment Documents, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the New Facility Lease, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the Non-Competition Agreement, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Buyer Closing Certificate required by **Section 7.3.6**, substantially in the form of <u>Exhibit K</u> attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) the certificates required by **Section 7.3.7** and **Section 7.3.8**; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) the Transition Services Agreement, duly executed by Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.3 The Closing will be deemed to have occurred upon the opening of business local time in each time zone in which Seller operates on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <u>Purchase Price.</u> Upon the terms and subject to the conditions set forth herein, Buyer shall pay to Seller (or the Escrow Agent, as applicable) in consideration for the Assets the aggregate amount of $16,900,000 (the <u>"Purchase Price"), subject, however,</u> to the Purchase Price Adjustment. Buyer and Seller shall allocate the Purchase Price plus the aggregate value of the Assumed Liabilities among the Assets in such manner as the Parties shall agree within ten (10) Business Days after the Purchase Price Adjustment is finalized and such allocation shall be consistent with the requirements of Section 1060 of the Internal Revenue Code of 1986 and the regulations promulgated thereunder. Buyer and Seller shall timely file with the Internal Revenue Service substantially identical initial and supplemental Internal Revenue Service Forms 8594, giving effect to the Purchase Price Adjustment.

9 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <u>Escrow.</u> Notwithstanding anything to the contrary contained in this Agreement, at the Closing, Buyer shall deposit (via wire transfer of immediately available federal funds) the Escrow Amount with the Escrow Agent to hold in escrow pursuant to the Escrow Agreement. The Escrow Amount shall serve as a source (but not the sole source) from which Buyer may recover Damages sustained as a result of the occurrence of an Indemnifiable Event. Neither the existence nor the amount of the Escrow Amount shall serve as a limitation on Buyer's recovery for any Indemnifiable Event or Purchase Price Adjustment. Seller shall bear the sole responsibility for the fees and expenses of the Escrow Agent. The Escrow Agent shall pay to Seller, in accordance with the terms of the Escrow Agreement, the Escrow Amount, or the amount remaining, if any, after satisfaction of Buyer's claims pertaining to Indemnifiable Event, less pending and satisfied claims.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 <u>Purchase Price Adjustments.</u> Within the time periods after the Closing Date set forth in this **Section 3.5**, Buyer or Seller, as applicable, shall pay to the other, the net amount of the adjustments required by this **Section 3.5**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.1 Within sixty (60) calendar days after the Closing Date, Buyer shall deliver to Seller the Final Net Asset Value Statement setting forth the Final Net Asset Value, together with all work papers and other information reasonably required by Seller to evaluate such calculations, using the methodologies, principles and procedures set forth on <u>Schedule D;</u> provided that, notwithstanding anything else herein, the Final Net Asset Value shall specifically identify the Final Deposit Amount, which such Final Deposit Amount shall be included in the calculation of Final Net Asset Value. If Buyer fails to deliver such calculations and supporting information to Seller within such sixty (60) calendar day period, then Seller shall prepare the Final Net Asset Value Statement and calculate the Final Net Asset Value, each in the manner described hereinabove, and deliver a copy of same to Buyer within ninety (90) calendar days after the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.2 If, upon receipt by one Party (the <u>"Receiving Party")</u> of the Final Net Asset Value calculation from the other Party (the <u>"Delivering Party")</u> pursuant to **Section 3.5.1**, the Receiving Party objects to such calculation, the Receiving Party shall notify the Delivering Party of such objection in writing (including full documentation and support for such objections) within thirty (30) calendar days after the Receiving Party's receipt of the Final Net Asset Value Statement. Within five (5) Business Days of the Delivering Party's receipt of such objection notice, Seller or Buyer, as applicable, shall pay the undisputed portion of the Purchase Price Adjustment, if any, and the Parties shall work together to attempt to agree upon the disputed calculations. The Parties shall not consider issues outside of those raised in such notice of objection. If the Parties fail to resolve the issues outstanding with respect to the Final Net Asset Value within thirty (30) calendar days after the Delivering Party's receipt of such notice of objection, either Party shall submit the issues remaining in dispute to RSM US LLP at its offices located closest to the Facility (the <u>"Independent Accountants")</u> for resolution of the dispute. If issues are submitted to the Independent Accountants for resolution, (i) the Independent Accountants shall use the same accounting methodologies, principles, policies and procedures as set forth on <u>Schedule D;</u> (ii) each Party shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that Party or its Representatives and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (iii) the determination by the Independent Accountants, as set forth in a notice to be delivered by the Independent Accountants to both Seller and Buyer within thirty (30) calendar days after the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the Parties; and (iv) the Party whose calculation of the Final Net Asset Value (as of the date the issue(s) related thereto are submitted to the Independent Accountants) is furthest away from the Final Net Asset Value as determined by the Independent Accountants shall pay all of the fees and costs of the Independent Accountants for such determination.

10 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.3 If the Final Net Asset Value is <u>more than</u> the Target Net Asset Value, the Purchase Price shall be <u>increased</u> dollar-for-dollar by the amount that the Final Net Asset Value is more than the Target Net Asset Value. If the Final Net Asset Value is <u>less than</u> the Target Net Asset Value, the Purchase Price shall be <u>decreased</u> dollar-for-dollar by the amount that the Final Net Asset Value is less than the Target Net Asset Value. Notwithstanding anything else herein: (a) if the Final Deposit Amount is <u>more than</u> the Estimated Deposit Amount, the Final Net Asset Value shall be <u>decreased</u> dollar-for-dollar by the amount that the Final Deposit Amount is more than the Estimated Deposit Amount; and (b) if the Final Deposit Amount is <u>less than</u> the Estimated Deposit Amount, the Final Net Asset Value shall be <u>increased</u> dollar-for-dollar by the amount that the Final Deposit Amount is less than the Estimated Deposit Amount; in each case such that, without duplication, the Final Net Asset Amount shall be net of the difference between the Estimated Deposit Amount and the Final Deposit Amount. The Purchase Price Adjustment shall be paid (by Buyer or Seller, as applicable) within ten (10) Business Days after the Final Net Asset Value is established. If there is an upward adjustment in the Purchase Price, then Buyer shall pay or cause to be paid an aggregate amount equal to such upward adjustment to Seller by wire transfer of immediately available funds to an account or accounts designated in writing by Seller to Buyer. If there is a downward adjustment in the Purchase Price, then Seller shall be obligated to pay or cause to be paid, an aggregate amount of cash equal to such downward adjustment to Buyer by bank wire transfer of immediately available funds to an account or accounts designated in writing by Buyer to Seller. If the Party entitled to receive the Purchase Price Adjustment (the <u>"PPA Receiving Party")</u> has not received the Purchase Price Adjustment within such ten (10) Business Day period, the Party obligated to pay the Purchase Price Adjustment shall reimburse the PPA Receiving Party for all reasonable attorneys' fees and other costs incurred by the PPA Receiving Party in collecting the Purchase Price Adjustment plus interest on the Purchase Price Adjustment at a rate equal to seven percent (7%) (calculated from the second (2nd) Business Day after the amount of the Final Net Asset Value is established until the Purchase Price Adjustment is fully paid). If Buyer is the PPA Receiving Party then notwithstanding the foregoing, Buyer may, but shall not be obligated to, submit a claim against the Escrow for payment of such Purchase Price Adjustment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 <u>Prorations and Other Adjustments.</u> The personal property taxes, utilities, local business or other license fees or taxes, merchants' association dues and other similar periodic charges payable with respect to the Assets or the Business shall be prorated between Buyer and Seller as of the Closing Date.

11 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 <u>Transfer Taxes.</u> Seller shall be responsible for paying all Taxes imposed by reason of the transfer of the Assets to Buyer, provided that Buyer shall pay any applicable sales taxes resulting from the sale of the Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 <u>Release of Encumbrances.</u> Seller shall pay, or cause to be paid, all sums and take all actions necessary to release the Assets from any and all Encumbrances and shall satisfy all pre-Closing obligations of the Business, other than the Assumed Liabilities.

**ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER** 

Seller represents and warrants to Buyer as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>Organization of Seller.</u> Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Organizational Documents Seller has delivered to Buyer are accurate and complete as of the date hereof. Seller has no Affiliate, directly or indirectly, engaged in a business similar to the Business. Seller has no subsidiaries or investments in any other Persons that relate to the Business or the Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>Authorization and Enforcement.</u> Seller has the full power, right and authority, and any approval required by Applicable Law or Order, to make and enter into this Agreement and to consummate the Transaction, and has taken all action necessary, to own, lease and operate the Assets, to conduct the Business and to complete the Transaction. The Transaction Documents have been duly executed and delivered by Seller, and each is a legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as enforceability may be limited by creditors' rights, bankruptcy, insolvency and general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <u>Financial Statements; No Changes.</u> Seller has delivered, or caused to be delivered, to Buyer true and correct copies of Seller's financial statements consisting of the balance sheet of the Business as of December 31, in each of the years 2023, 2024, and 2025 and the related statements of income and retained earnings, stockholders' equity and cash flow for the years then ended (the <u>"Annual Financial Statements"),</u> and financial statements consisting of the balance sheet of the Business as of February 28, 2026, and the related statements of income and retained earnings, equity and cash flow for the two-month period then ended (the <u>"Interim Financial Statements"</u> and together with the Annual Financial Statements, the <u>"Financial Statements"),</u> copies of which are attached as <u>Schedule 4.3.</u> The Financial Statements are accurate and complete and consistent with the books and records of Seller (which books and records are accurate and complete) and fairly present in all material respects, in accordance with GAAP throughout the periods involved, the financial condition of the Business as of and at the respective dates and the results of operations and cash flows for the respective periods covered thereby. Except as previously disclosed to Buyer in writing, since the Lookback Date, (i) there has been no Material Adverse Change, (ii) Seller has operated the Business in the Ordinary Course and applied all reasonable efforts to preserve the Business and maintain the goodwill of its customers, suppliers, distributors, Employees and all other Persons with whom it has commercial dealings, (iii) the aggregate book value (at cost) of fixed assets included within the Assets has not decreased, except to the extent of depreciation in the Ordinary Course, (iv) there has been no material change to the compensation, benefits or terms of employment of any of the Employees, except changes in the Ordinary Course, (v) Seller has managed the Business in the Ordinary Course, with no material changes to the methods or procedures used in the Business for billing, collection or recording of accounts receivable, and (vi) Seller has not effected any transactions affecting or involving the Business or the Assets outside of the Ordinary Course.

12 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <u>Assets; Sufficiency and Condition.</u> Seller has good, valid and marketable title to, or a valid leasehold interest in or a valid license to use, all of the Assets, including without limitation the properties and assets used or held for use by it, located on its premises, or shown on the Balance Sheet or acquired after the date thereof, free and clear of any Encumbrances, except for properties and assets disposed of in the Ordinary Course since the Lookback Date. The Assets (together with the Excluded Assets), including without limitation the assets owned, leased or licensed by Seller and utilized solely or primarily in the operation of the Business, are all of the assets used or held for use in, and necessary for, the operation and conduct of the Business as presently conducted. Each of the tangible Assets is free from any material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is adequate and suitable for the purposes for which such asset is presently used.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <u>Assumed Contracts.</u> All of the Assumed Contracts are listed in <u>Schedule 4.5.</u> All of the Assumed Contracts are valid and in full force and effect. Seller has performed all of its obligations under the Assumed Contracts required to be performed to date. No default (or an event which, with the giving of notice or the lapse of time or both, would constitute a default), breach or repudiation of any Assumed Contract has occurred. Except as set forth on <u>Schedule 4.5,</u> all of the Assumed Contracts will be enforceable by Buyer after the Closing to the same extent they would have been enforceable by Seller if the Transaction had not been completed. Seller has delivered to Buyer accurate and complete copies of all Contracts. Except as set forth on <u>Schedule 4.5,</u> no Assumed Contract requires the consent of the counterparty thereto with respect to the Transaction. None of the Assumed Contracts include a Governmental Unit as a counterparty or an ultimate beneficiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <u>Insurance.</u> Seller has delivered to Buyer accurate and complete copies of all policies of insurance to which Seller is a party, or it or the Business is covered, a list of which is included on <u>Schedule 4.6. Schedule 4.6</u> sets forth: (i) any self-insurance arrangement relating to the Business; (ii) any other arrangement designed for the transfer or sharing of any risk relating to Seller and the Business; (iii) all obligations to provide insurance coverage to any third party relating to the assets of Seller or the conduct of the Business; and (iv) a summary of the loss experience of Seller and the Business under each policy of insurance or self-insurance arrangement and, with respect to claims in excess of $10,000, a complete description of such claims, since April 1, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <u>Permits and Consents.</u> Seller has all material Permits required to conduct the Business. All such Permits are valid and in full force and effect and are listed on <u>Schedule 4.7.</u> Except as set forth on <u>Schedule 4.7,</u> the Transaction does not require the consent of any Person with respect to such Permits, will not result in a breach or default of or default under such Permits, and will not otherwise cause such Permits to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing, without cost or other obligation. Except as disclosed on <u>Schedule 4.7,</u> no notice to, declaration, filing or registration with, or authorization, consent, approval or Permit is required to be made or obtained to transfer the Assets or complete the Transaction.

13 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8 <u>No Conflict or Violation.</u> After giving effect to Permits, consents and lien releases that have been obtained, the completion of the Transaction will not (i) violate any provision of the Organizational Documents of Seller, (ii) result in a breach of or constitute a default (or an event which, with the giving of notice or the lapse of time or both, would constitute a default) under, or create a right of termination or acceleration, or result in the creation of any Encumbrance under, any of the terms, conditions or provisions of any Contract or Permit, or (iii) violate any Order or Applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9 <u>Litigation.</u> Except as set forth on <u>Schedule 4.9,</u> there is no Order or any action, proceeding, litigation, appeal, audit or investigation (collectively, <u>"Actions")</u> pending, or to the Seller's knowledge, threatened or anticipated (and there is no reasonable basis for any pending, threatened or anticipated Action): (i) against, asserted by, related to or affecting Seller, the Business or the Assets or (ii) seeking to delay, limit or enjoin the Transaction. Neither Seller nor the Business is subject to any Order that constitutes or would reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10 <u>Product and Service Warranties.</u> Except as set forth on <u>Schedule 4.10,</u> all of the product and service warranty obligations of Seller involving more than $25,000 and related to the Business are expressly set forth in the Assumed Contracts. No product manufactured, sold, leased or delivered by Seller in the operation of the Business (each a <u>"Product")</u> or service delivered or provided by Seller in the operation of the Business (each a <u>"Service")</u> is subject to any guaranty, warranty, or other indemnity from Seller beyond the applicable standard terms and conditions of sale or lease set forth on <u>Schedule 4.10.</u> Except as set forth on <u>Schedule 4.10,</u> Seller has not received any claim with respect to any Product or Service, whether based on strict liability in tort, negligent manufacture or design of product, negligent provision of services or any other allegation of liability and there is no reasonable basis for any such claim. There has not been nor is there currently any investigation of any potential product recall, rework, retrofit or post-sale warning with respect to any Product. All Products sold by Seller have, and all Services provided by Seller have, where applicable, complied in all material respects with the requirements of applicable compliance agencies and industry safety standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11 <u>Asbestos. Schedule 4.11</u> contains a complete history of the presence of asbestos in any and all products sold, leased, delivered or serviced by the Business at any time, indicating the product in which asbestos was used, the first date that asbestos was introduced into the product and the last date that asbestos was used in the product or in connection with the service. None of the Assets contains any asbestos products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12 <u>Tax Matters.</u> Seller has timely filed with the appropriate taxing authorities all returns (including, without limitation, information returns and other material information) in respect of Taxes required to be filed through the date hereof and will timely file any such returns (or obtain valid extensions therefor) required to be filed on or prior to the Closing Date. The returns and other information filed are complete and accurate in all material respects. All Taxes due and owing by Seller (whether or not shown on any tax return) have been paid or reserved for and Seller does not have any liability for Taxes in excess of the amount so paid or reserved. There are no pending or to Seller's knowledge, threatened audits, investigations or claims for or relating to any additional liability in respect of Taxes. No extension of a statute of limitations relating to Taxes is in effect with respect to Seller. Each independent contractor and employee involved in the Business is properly classified as such under Applicable Law.

14 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13 <u>Compliance with Environmental Laws.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.1 <u>Definitions.</u> The following terms, when used in this **Section 4.13**, shall have the following meanings. Unless the context otherwise requires, any of these terms may be used in the singular or the plural depending on the reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> <u>"Environmental Laws"</u> shall mean all Applicable Laws, including without limitation any federal, state or local statutes, regulations, laws or orders pertaining to environmental matters, that (i) regulate or relate to the protection, investigation or clean-up of the environment, the use, treatment, storage, transportation, handling or disposal of Hazardous Substances, toxic or otherwise dangerous substances, wastes or materials (whether gas, liquid or solid), the preservation or protection of waterways, groundwater, drinking water, air, wildlife, plants or other natural resources, or the health and safety of persons or property, including protection of the health and safety of employees or (ii) impose liability with respect to any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> <u>"Hazardous Substance"</u> shall mean any quantity of asbestos in any form, urea formaldehyde, polychlorinated biphenyls, radon gas, crude oil or any fraction thereof, all forms of natural gas, petroleum products or by-products, polyfluoroalkyl substances, any other substances now or in the future referred to or classified as "PFOA," "PFOS," or "PFAS," any radioactive substance, any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound and any other contaminant, irritant, pollutant or hazardous substance, material or waste (as defined in or for purposes of any Environmental Law), whether solid, liquid or gas.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> <u>"Release"</u> shall mean and include any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, migrating, leaching, dumping or disposing into the environment or the workplace of any Hazardous Substance, and otherwise as defined in any Environmental Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.2 <u>Compliance with Environmental Laws.</u> Except as set forth on <u>Schedule 4.13,</u> (a) the Business and the Facility to the extent operated by Seller, are, and at all times have been, operated, maintained, owned and leased, as applicable, in full and complete compliance, in all material respects, with all Environmental Laws; (b) Seller has, and at all times has had, all Permits required under any Environmental Law with respect to the Business and the Facility, and the Business and the Facility are, and at all times have been, in compliance, in all material respects, with all such Permits; and (c) Seller has not received any notice at any time that it (with respect to the Business or the Facility), the Business or the Facility were claimed to be in violation of any Environmental Law or the conditions of any Permit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.3 <u>Hazardous Substances.</u> Except as set forth on <u>Schedule 4.13,</u> there is not now nor has there ever been any Hazardous Substance used, generated, treated, stored, transported, disposed of, handled or otherwise existing on, under, about or from the Facility, except for quantities of any such Hazardous Substances stored or otherwise held on, under or about the Facility in full compliance, in all material respects, with all Environmental Laws.

15 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.4 <u>Environmental Conditions.</u> There are no present or past (a) Environmental Conditions; or (b) events, conditions, circumstances, activities, practices, incidents or actions which interfere with or prevent continued compliance with all Environmental Laws and Permits required under any Environmental Law, each in any way relating to the Business or Facility. <u>"Environmental Conditions"</u> means the introduction into the soil, groundwater or environment of the Facility or elsewhere (through leak, spill, release, discharge, escape, emission, dumping, disposal or otherwise) of any pollution, including any Hazardous Substance (whether or not upon the property of the Business and whether or not constituting, at the time thereof, a violation of any Environmental Law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.5 <u>Storage Tank or Pipeline.</u> Except as set forth on <u>Schedule 4.13,</u> no underground or above-ground storage tank or pipeline has ever been located at any Facility and there has been no Release from or rupture of any such tank or pipeline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13.6 <u>Environmental Audits or Assessments.</u> All written environmental, health or safety reports, audits and/or assessments (including all drafts thereof and summaries of all oral reports, audits and/or assessments) that have been conducted at the Facility or otherwise relate in any way to the Business or Facility, either by Seller or any of its Representatives, are listed on <u>Schedule 4.13.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.14 <u>Compliance with Law.</u> Seller, the Assets, the Facility, and the conduct of the Business are in compliance in all material respects with Applicable Law and any applicable Orders, and Seller has not received any notice or advice to the contrary. None of Seller, any director, officer, employee, agent or any other Person acting for or on behalf of Seller or the Business has directly or indirectly: (i) made any bribe, influence payment, kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services (a) to obtain favorable treatment in securing business, (b) to pay for favorable treatment for business secured, or (c) to obtain special concessions or for special concessions already obtained, for or in respect of Seller, any Affiliate or the Business; or (ii) established or maintained any fund or asset that has not been recorded in the books and records of Seller. Neither Seller nor its Affiliates has received any notice (whether written or oral) to the effect that it is not or may not be in compliance with any Applicable Law or Order with respect to the conduct of the Business or the occupancy of the Facility, and to Seller's knowledge there is no reasonable basis for any such notice. None of Seller or any of the employees, agents, representatives or independent contractors of Seller has been (i) excluded from participation in any governmental program, (ii) suspended or declared ineligible to participate in or voluntarily excluded from any program by a Governmental Unit, or (iii) subject to any disciplinary or similar Action or other form of monitoring or review by any Governmental Unit, trade association professional review organization, accrediting board or certifying agency based upon any alleged improper activity on the part of Seller or any such individual. Seller has not received any notice of deficiency from any Governmental Unit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.15 <u>Undisclosed Liabilities.</u> Neither Seller nor the Business is subject to any liability (and to Seller's knowledge there is no basis for any present or future Action against it giving rise to any material liability), except for liabilities set forth in the Financial Statements and liabilities that have arisen after the Lookback Date in the Ordinary Course, which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

16 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.16 <u>No Brokers.</u> Neither Seller nor any of its Representatives has employed or made any agreement with any broker, finder or similar agent or any person or firm which will result in an obligation to pay any finder's fee, brokerage fee or commission or similar payment in connection with the Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.17 <u>Customers and Suppliers.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.17.1 <u>Schedule 4.17.1</u> lists the names and addresses of the fifteen (15) largest customers of the Business for each of the three (3) most recent fiscal years of Seller and sets forth opposite the name of each customer the dollar value, percentage of net sales to such customer for all sales for the applicable period. No customer has any material dispute with Seller. Seller has not received notice from any customer that such Person intends to cease conducting business with Seller, or to terminate its existing relationship with Seller, or otherwise materially decrease the rate of, or materially and adversely change the terms of any Contract (whether related to payment, price or otherwise) with respect to, buying Products from Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.17.2 <u>Schedule 4.17.2</u> lists the names and addresses of the ten (10) largest suppliers of the Business for each of the three (3) most recent fiscal years of Seller and sets forth opposite the name of each supplier the dollar value of all purchases from such supplier (by year). Seller has no material disputes concerning any products and/or services provided by any supplier or vendor, and no supplier or vendor has any material dispute with Seller. Seller has not received any notice from any supplier or vendor that such Person intends to cease conducting business with Seller or terminate its existing relationship with Seller, or otherwise materially decrease the rate of, or materially and adversely change the terms of any Contract (whether related to payment, price or otherwise) with respect to, supplying materials, products or services to Seller (whether as a result of the announcement or consummation of the Transaction or otherwise).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.18 <u>Intellectual Property.</u> The term <u>"Intellectual Property Assets"</u> includes all fictional business names, trading names, registered and unregistered trademarks/service marks, registered designs, and applications that are used or held for use in the Business (collectively, <u>"Marks");</u> all patents, patent applications, and inventions and discoveries that may be patentable and are used or held for use in the Business (collectively, <u>"Patents");</u> all copyrights in both published works and unpublished works used or held for use in the Business (collectively, <u>"Copyrights");</u> all rights in mask works used or held for use in the Business (collectively, <u>"Rights in Mask Works");</u> the internet domain name registrations and social media sites owned or used by or in the Business or that use any derivative of the Marks (collectively, <u>"Domain Names");</u> all know-how, trade secrets, manufacturing methods, confidential information, customer lists, supplier lists, software, technical information, data, process technology, schematics, plans, drawings, and blueprints, each as used or held for use in the Business (regardless of the stage of development) (collectively, <u>"Trade Secrets");</u> all computer software, including source code, executable code, data, databases, and related documentation, each as used or held for use in the Business (regardless of the stage of development) (the <u>"Software");</u> and all advertising and promotional materials used or held for use in the Business; all other proprietary rights used or held for use in the Business; and all copies and tangible embodiments thereof (in whatever form or medium) owned, used, or licensed by Seller as licensee or licensor and related to the Business. <u>Schedule 4.18</u> lists and summarizes all Intellectual Property Assets, including any royalties paid or received by Seller, and all Contracts relating to the Intellectual Property Assets to which Seller is a party or by which Seller is bound. The Intellectual Property Assets set forth on <u>Schedule 4.18</u> are all Intellectual Property Assets necessary for or useful in the operation of the Business. Except as set forth on <u>Schedule 4.18,</u> all former and current employees have executed written agreements with Seller that assign to Seller all rights to any inventions, improvements, discoveries, or information relating to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.18.1 To Seller's knowledge, no Patent, Mark, Copyright or Domain Name (i) is infringed or has been challenged or threatened in any way, (ii) infringes or is alleged to infringe on any intellectual property right of any Person, or (iii) has been or is now involved in any interference, reissue, reexamination, opposition, invalidation, cancellation or similar proceeding. No intellectual property or proprietary right of a third party (including any confidential information, proprietary information or trade secrets, any of which may be contained in any drawings, blueprints or specifications) has been used in the rebuilding, remanufacturing or reconditioning of any products, or in the performance of any services of the Business, without the prior written consent of such third party.

17 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.18.2 All products produced by the Business using any Patent owned by Seller have been marked with the proper patent notice. All products and materials containing a Mark bear all notices required by Applicable Law and any applicable Order. All works encompassed by the Copyrights owned by Seller and used or held for use in the Business have been marked with the proper copyright notice. All software used by the Business (including that developed in-house) is substantially performing in accordance with its specifications and/or its warranty (if any) and is adequately performing the function for which it is intended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.18.3 The documentation relating to each Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. Seller has taken all reasonable precautions to protect the secrecy, confidentiality and value of the Trade Secrets. Seller has an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature and have not been used, divulged or appropriated for the benefit of any Person (other than Seller) or to the detriment of Seller. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.19 <u>Employees and Employee Plans. Schedule 4.19</u> contains an accurate and complete list of (i) all of the Employees, including each such Employees' area of employment, FLSA classification (exempt/non-exempt), work location, start date, salary or hourly rate, annual bonuses, sales commissions, vacation entitlement, accrued and unused vacation, sick pay and paid time off, (ii) any employment contract or special arrangement with any Employee and (iii) all personnel policies, manuals, handbooks, summary plan descriptions and similar materials pertaining to the Business. Except as set forth on <u>Schedule 4.19,</u> the Employees do not receive any compensation from the Seller. Seller has delivered to Buyer all documents referred to in clauses (ii) and (iii) above. Except as set forth on <u>Schedule 4.19,</u> Seller has paid all accrued compensation and benefits due now or in the future under each contract, plan, arrangement, policy, program or commitment, whether oral or written, maintained, sponsored or contributed to or required to be contributed to, by Seller or any of its Affiliates for the benefit of any Employee or under which Seller or any of its Affiliates may incur any liability, with respect to providing for workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health, sick leave, disability or accident benefits or for deferred compensation, pension, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits <u>("Employee Plans")</u> to each of its Employees and former employees of the Business, including, all compensation and benefits to which its Employees and former employees may be entitled as a result of the Transaction. <u>Schedule 4.19</u> contains a complete list of all Employee Plans. There are no employee unions (nor any other similar labor or employee organizations) under local statutes, custom or practice covering Persons in their capacity as Employees, nor has there been any attempt to organize any such union or organization. Each Employee is properly classified as exempt or non-exempt under Applicable Law.

18 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.20 <u>Equipment and Machinery.</u> Each piece of Equipment and Machinery is located at the Facility and is identified on <u>Schedule 4.20.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.21 <u>Inventory.</u> All Inventory: (i) was acquired in the Ordinary Course; and (ii) is of a quality, quantity, and condition useable or saleable in the Ordinary Course, except as is reserved for in the Financial Statements. Except as set forth on <u>Schedule 4.21,</u> all Inventory is stored at the Facility. Since the Lookback Date, no Inventory has been sold or disposed of except in the Ordinary Course.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.22 <u>Affiliate Transactions.</u> Except as set forth on <u>Schedule 4.22,</u> no Representative or Affiliate of Seller is a party to any agreement, contract, commitment or transaction with Seller or has any material interest in any property or assets used or held for use in the Business. Except as set forth on <u>Schedule 4.22,</u> (i) no asset used in the Business is used by any of Seller or its Affiliates or Representatives for any other Person, and (ii) no Employee provides any services outside of the Business for Seller or any of its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.23 <u>Owned Real Property. Schedule 4.23</u> sets forth the address and legal description of each parcel of Real Property owned by Seller and used primarily in the Business. Seller does not lease (as lessor) or otherwise permit any Person to use or occupy pursuant to any license, concession or other agreement (written or oral), any Real Property used in the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.24 <u>Leased Real Property.</u> Seller has no interest in any leased Real Property used in connection with the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.25 <u>Fitness of Real Property.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.25.1 The Facility constitutes all of the Real Property used in the Business. Seller is not a party to any agreement or option to purchase any Real Property or any interest therein with respect to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.25.2 All buildings, structures, fixtures, building systems (including fire protection, security and surveillance systems) and equipment, and all components thereof, including the roof, foundation, load-bearing walls, and other structural elements thereof; heating, ventilation, air conditioning, mechanical, electrical, plumbing and other utility installations and systems, environmental control, remediation and abatement systems; sewer, storm, and waste water systems, irrigation and other water distribution systems, parking facilities, fire protection, security and surveillance systems, and telecommunications, computer, wiring, and cable installations, included in the Real Property (the <u>"Improvements")</u> are in good condition and repair and sufficient for the operation of the Business as presently conducted. There are no structural deficiencies or latent defects affecting any of the Improvements and there are no facts or conditions affecting, in any material respect, any of the Improvements which would, individually or in the aggregate, interfere in any material respect with the use or occupancy of the Improvements or any portion thereof in the operation of the Business as currently conducted thereon. The Improvements do not contain any asbestos whether or not in compliance with Applicable Law.

19 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.25.3 The Real Property is in compliance, in all material respects, with all applicable building, zoning, subdivision, health and safety, land use, ownership and other Applicable Laws and applicable Orders, and all insurance requirements affecting the Real Property (collectively, the <u>"Real Property Laws"),</u> and the current use and occupancy of the Real Property and operation of the Business thereon do not violate any Real Property Laws. Seller has not received any notice of violation of any Real Property Law and there is no basis for the issuance of any such notice. There is no pending or, to Seller's knowledge, anticipated change in any Real Property Law that will materially impair the ownership, lease, use or occupancy of any Real Property or any portion thereof in the continued operation of the Business as currently conducted thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.25.4 All certificates of occupancy, permits, licenses, franchises, approvals and authorizations of all Governmental Units that are required or appropriate to use or occupy the Real Property or operate the Business as currently conducted thereon collectively, (the <u>"Real Property Permits")</u> have been issued to Seller and are in full force and effect. <u>Schedule 4.25</u> lists all Real Property Permits held by Seller with respect to each parcel of Real Property. Seller has not received any notice from any Governmental Unit threatening a suspension, revocation, modification or cancellation of any Real Property Permit and there is no reasonable basis for the issuance of any such notice or the taking of any such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.25.5 Except as set forth on <u>Schedule 4.25,</u> there are no easements, covenants, conditions, restrictions or similar provisions in any instrument of record or unrecorded agreement affecting the Real Property. None of the Improvements encroaches on any real property which is not included in the Real Property or on any easement affecting such real property, or violates any building lines or set-back lines, and there are no encroachments onto any of the Real Property, or any portion thereof. None of the Real Property or any portion thereof is located in a flood hazard area (as defined by the Federal Emergency Management Agency).

20 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.26 <u>IT Systems; Privacy.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.26.1 The computer, information technology and data processing systems, facilities and services used by Seller in the Business, including all Software, hardware, networks, communications facilities, platforms and related systems and services used or accessed by Seller (collectively, the <u>"Systems"),</u> (i) are reasonably sufficient for the existing needs of the Business as currently conducted and (ii) are free of any material defects, bugs and errors, and do not contain or make available any disabling software, code or instructions, spyware, Trojan horses, worms, viruses or other software routines that permit or cause unauthorized access to, or disruption, impairment, disablement, or destruction of and of the Systems or data or information stored therein, in each case that have not been remediated in all material respects <u>("Contaminants").</u> Seller has taken commercially reasonable steps and implemented commercially reasonable safeguards designed to ensure that the Systems are free from Contaminants. All Systems included in the Assets have been used solely for and in the course of the conduct of the Business by Employees and other personnel of the Business, have not been used for any of Seller's business activities other than the conduct of the Business or by employees or personnel of Seller other than the Employees of the Business, nor integrated with the Systems used in the conduct of the Seller's business activities other than the Business. The Assets include all Systems used in and necessary for the operation of the Business in substantially the same manner as conducted prior to Closing, together with all data, records and information stored therein as of the date of this Agreement, except as would not be material or is otherwise required to be removed in the Ordinary Course pursuant to any Contracts, Orders or Applicable Laws applicable to Seller or policies of Seller, in each case which relate to the use, dissemination, or transfer of such data. All such Systems are in good working condition to effectively perform all computing, information technology and data processing operations necessary for the operation of the Business in the manner it is currently being conducted. The Systems included in the Assets contain no data, records or information constituting Excluded Assets or which Seller is prohibited by any Contract, Order, Applicable Law, or any applicable policy of Seller, from transmitting, delivering, conveying, assigning or transferring to Buyer. During the two (2) year period prior to Closing, there has been no failure, breakdown or substandard performance of any Systems that has caused a substantial disruption or interruption in or to any customer's use of the Systems or the operation of the Business. Seller makes timely back-up copies of data and information critical to the conduct of the Business and conducts periodic tests to ensure the effectiveness of such back-up systems. Seller maintains and is in compliance with commercially reasonable disaster recovery and security plans and procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.26.2 Seller has: (i) complied in all material respects with its published privacy policies, terms of use, and internal policies, and all Applicable Laws and Orders relating to data privacy, data protection and data security, including with respect to the collection, storage, transmission, transfer (including cross-border transfers), disclosure, destruction and use of Personally Identifiable Information; and (ii) taken reasonable measures to ensure that Personally Identifiable Information and other material information and data owned, held or controlled by Seller is protected against loss, damage, and unauthorized access, use, modification, or other misuse. Since December 31, 2022, Seller has not been subject to a security incident or data breach that led to the loss, damage, or unauthorized access, use, modification, disclosure, or other misuse of any data or information owned, held or controlled by any of Seller (including any Personally Identifiable Information). No Person has provided any written notice, made any written claim, or commenced any Action with respect to loss, damage, or unauthorized access, use, modification, or other misuse of any such data or information held or controlled by any of Seller, and there is no reasonable basis for any such notice, claim or Action. The execution and delivery of this Agreement and the other Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby will not violate any privacy policy, terms of use, Contract, Order or Applicable Laws applicable to Seller relating to the use, dissemination, or transfer of any data or information (including Personally Identifiable Information).

21 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.27 <u>No Adverse Change or Extraordinary Transactions.</u> Except as disclosed on <u>Schedule 4.27,</u> and solely with respect to the Business, since the Lookback Date: (i) Seller has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than $25,000 or outside the Ordinary Course; (ii) Seller has not transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Intellectual Property Assets used or held for use in the Business; (iii) Seller has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to the Assets; (iv) Seller has not adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of the Employees (or taken any such action with respect to any other Employee Plan); (v) Seller has not made any other change in employment terms for any of the Employees involved in the Business; (vi) Seller has not incurred any material liability other than trade payables incurred in the Ordinary Course; (vii) there has been no Material Adverse Change; (viii) there has not been any other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course involving the Business, and Seller has conducted the operations of the Business only in the Ordinary Course and applied all reasonable efforts to preserve the Business and maintain the goodwill of its customers, suppliers, distributors, Employees and all other Persons with whom it has commercial dealings; (ix) Seller has not disclosed any confidential information in violation of any confidentiality obligation; and (x) Seller has not committed to any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.28 <u>No Restrictions on Business.</u> Except as described on <u>Schedule 4.28,</u> none of the Assumed Contracts restricts the continued operation of the Business or the expansion thereof to other geographical areas, customers and suppliers or lines of business; no Order, Action, settlement or citation related to any Product or in connection with the Business is presently pending; and no Person has filed an Action or, to the Seller's knowledge, made any written threat that such Person has impaired health as a result of the operation of the Business or the ownership or use of any of the Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.29 <u>Quote Log. Schedule 4.29</u> contains the quote log of Seller as of March 18, 2026, listing all outstanding bids or proposals for a Contract under which the value of services to be performed or goods to be provided or sold by Seller is expected to exceed $25,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.30 <u>No Critical Technologies.</u> The Seller does not produce, design, test, manufacture, fabricate, or develop one or more "critical technologies" (as defined in 31 C.F.R. § 800.215).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.31 <u>Full Disclosure.</u> No representation or warranty by Seller contains any untrue statement of material fact or omits any material fact necessary, in light of the context in which it is made, to make any statement not misleading.

**ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER** 

Buyer hereby represents and warrants to Seller as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>Organization of Buyer.</u> Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>Authorization.</u> Buyer has all requisite power and authority, and has taken all action necessary, to complete the Transaction. The Transaction Documents are legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their terms, except as limited by creditors' rights, bankruptcy, insolvency and general principles of equity.

22 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <u>No Conflict or Violation.</u> The completion of the Transaction will not violate or conflict with any provision of the Organizational Documents of Buyer, Order, Applicable Law or any contract to which the Buyer or its assets are bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 <u>Consents and Approvals.</u> No notice to, declaration, filing or registration with, or authorization, consent or approval of, or permit from, any Person is required to be made or obtained by Buyer in connection with the completion of the Transaction, except as may be required by Buyer to operate the Business after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 <u>No Brokers.</u> Neither Buyer nor any of its Representatives has employed or made any agreement with any broker, finder or similar agent or any person or firm which will result in an obligation to pay any finder's fee, brokerage fee or commission or similar payment in connection with the Transaction.

**ARTICLE VI - COVENANTS OF SELLER AND BUYER**

Buyer and Seller each covenant with the other as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <u>Conduct of Business Prior to the Closing.</u> From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall (a) conduct the Business in the Ordinary Course consistent with past practice; and (b) use all reasonable efforts to maintain and preserve intact its current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Seller shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1 preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.2 pay the debts, Taxes and other obligations of the Business when due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.3 continue to collect Receivables and other such amounts as may be owing to Seller in connection with the Business in a manner consistent with past practice, without discounting such Receivables;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.4 maintain the Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5 continue in full force and effect without modification all insurance policies referenced in **Section 4.6**, except as otherwise required by Applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.6 defend and protect the Assets from infringement or usurpation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.7 perform all of its obligations under all Contracts;

23 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.8 maintain the books and records of the business in accordance with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.9 comply in all material respects with all Applicable Laws and any Orders applicable to the conduct of the Business or the ownership and use of the Assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.10 not take or permit any action that would cause any of the changes, events or conditions described in **Section 4.27** to occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <u>Access to Information.</u> From the date hereof until the Closing, Seller shall (a) afford Buyer and its Representatives full, reasonable, and free access to and the right to inspect all of the Real Property, properties, assets, premises, books and records, Contracts and other documents and data related to the Business; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Business as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of Seller to cooperate with Buyer in its investigation of the Business. Any investigation pursuant to this **Section 6.2** shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business or any other businesses of Seller. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6.3 <u>No Solicitation of Other Bids.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.1 Seller shall not, and shall not authorize or permit any of its Affiliates or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, <u>"Acquisition Proposal"</u> means any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any portion of the Business or the Assets, except for bona fide transactions of Products or Services of the Business in the Ordinary Course.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.2 In addition to the other obligations under this **Section 6.3**, Seller shall promptly (and in any event within three Business Days after receipt thereof by Seller or its Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.3 Seller agrees that the rights and remedies for noncompliance with this **Section 6.3** shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

24 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6.4 <u>Notice of Certain Events.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4.1 From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any fact, circumstance, event or action, the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Seller hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in **Section 7.2** to be satisfied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any notice or other communication from any Governmental Unit in connection with the transactions contemplated by this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any Actions commenced or, to Seller's knowledge, threatened against, relating to or involving or otherwise affecting the Business, the Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to **Section 4.9** or that relates to the consummation of the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4.2 Buyer's receipt of information pursuant to this **Section 6.4** shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement (including **Section 8.2.1** and **Section 9.1**) and shall not be deemed to amend or supplement the Schedules to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 <u>Further Assurances.</u> Each of the Parties agrees (i) to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Transaction, (ii) to execute any documents, instruments or conveyances of any kind which may be reasonably necessary or advisable to complete the Transaction as contemplated in the Transaction Documents, and (iii) to reasonably cooperate with each other in connection with the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 <u>Consents to Assignment.</u> Anything in the Transaction Documents to the contrary notwithstanding: (a) nothing herein shall constitute an assignment or an agreement to assign any Contract if such assignment, without the consent of any third party, would (i) constitute a breach or violation thereof, (ii) result in the loss or impairment of any rights thereunder, or (iii) give rise to any right of termination, modification, or acceleration thereunder; (b) the Parties shall work and cooperate in good faith and use all reasonable efforts prior to and after (as applicable) the Closing to obtain any required third-party consents to the assignment of the Assumed Contracts; and (c) Seller shall have no liability for breach of any Transaction Document with respect to any Assumed Contract that is not assigned to Buyer as a result of the failure to obtain a required consent if such consent was disclosed on <u>Schedule 4.5,</u> and such failure shall not constitute a breach of this Agreement or any other Transaction Document. If Seller does not obtain any consent necessary to assign any Assumed Contract to Buyer, or if an attempted assignment thereof would adversely affect Buyer's rights thereunder, Seller will provide the benefits of such Assumed Contract to Buyer. Notwithstanding any provision in this **Section 6.6** to the contrary, Buyer shall not be deemed to have waived its rights under **Section 7.2.4** hereof unless and until Buyer either provides written waivers thereof or elects to proceed to consummate the transactions contemplated by this Agreement at Closing.

25 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 <u>Name Change.</u> No later than thirty (30) calendar days after the Closing Date, Seller shall cease all use of "Stainless Design Concepts", "SDC", or any confusingly similar variant thereof in connection with the operation of any business segment or other commercial activity, and shall provide Buyer with written confirmation thereof, together with copies of any relevant documentation evidencing such cessation (including, without limitation, updates to websites, marketing materials, and business registrations reflecting the removal or discontinuation of such names).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6.8 <u>Employees.</u> Seller shall remain solely responsible for the payment of all compensation and benefits due to its Employees and former employees under its Employee Plans with respect to all periods prior to the Closing Date, including all employee benefit plans, severance, health care continuation coverage and other benefits to which its Employees or former employees may be entitled, whether as a result of the Transactions or otherwise and whether or not such Employees are hired by Buyer. Seller will terminate the employment of each Employee as of the Closing and pay each Employee all amounts due to vacation entitlement, accrued and unused vacation, sick pay and paid time off in the Employee's final paycheck. Buyer shall offer employment to the Employees on terms and conditions under which the total aggregate value of compensation and benefits package is no less favorable than those applicable to such Employee immediately prior to the Closing. All Employees that are employed by Buyer after the Closing will be at-will employees of Buyer and may be terminated by Buyer in its sole discretion at any time, subject only to the requirements of Applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9 <u>Receivables Repurchase.</u> Buyer shall use commercially reasonable efforts (but without an obligation to file litigation in connection therewith) after the Closing to collect all Receivables included in the Final Net Asset Value. Following the one hundred eightieth (180th) calendar day after the Closing Date, Buyer shall prepare and deliver to Seller a list of the Receivables outstanding as of the one hundred eightieth (180th) calendar day after the Closing Date (the <u>"AR Statement").</u> Such outstanding Receivables as Buyer shall identify on the AR Statement (determined at Buyer's sole and absolute discretion) shall be repurchased by Seller at the amount for such outstanding Receivables included within the calculation of the Final Net Asset Value, less the amount of any reserves for bad debt included in the Final Net Asset Value (the "AR <u>Purchase Price").</u> Seller shall repurchase such Receivables from Buyer within ten (10) Business Days after receipt by Seller of the AR Statement. Upon Buyer's receipt of the AR Purchase Price (i) Buyer shall deliver to Seller all instruments, documents and agreements reasonably requested by Seller in order to evidence Seller's right, title and interest in such Receivables; and (ii) Seller may engage collection agencies and/or initiate legal action to collect such Receivables (in each case only in Seller's name and on Seller's behalf). If Buyer receives any payment in respect of such Receivables after Seller has repurchased such Receivables, Buyer shall promptly remit such payment to Seller. Notwithstanding the foregoing, to the extent that it is reasonably apparent from the books and records of Seller that any Receivable included on the AR Statement is not then past due, in light of the historic billing and payment practices relating to such Receivable, then Buyer may prepare and deliver to Seller a supplemental AR Statement at such later time as such Receivable would be considered past due based on this standard, and the provisions of this **Section 6.9** regarding the obligation of Seller to purchase such Receivable shall be applicable *mutatis mutandis*.

26 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.10 <u>Closing Conditions.</u> From the date hereof until the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in **ARTICLE VII** hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.11 <u>Cooperation and Delivery of Assets.</u> The Parties shall cooperate with each other in connection with any dispute, Action or other matter related to the Business, including the preparation of any return, audit, or other examination by any taxing authority or any Action relating to liability for Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.12 <u>Confidentiality; Books and Records.</u> From and after the Closing Date, subject to reasonable confidentiality and logistical constraints: (a) Buyer shall provide Seller with access to copies of books and records related to the pre-Closing operation of the Business to the extent necessary for Seller's bona fide purposes in connection with (i) preparation of tax returns and other filings, (ii) regulatory or tax audits and related proceedings; and (iii) collection of Receivables as provided for in **Section 6.9** above; and (b) Seller will be entitled to retain a copy of such books and records of the Business as would be reasonably necessary to address pre-Closing matters; provided, for the sake of clarity, Seller will not have direct access to Buyer's ERP or other IT systems.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.13 <u>Payment of Liabilities; Bulk Sales Law.</u> Following the Closing Date, Seller shall pay promptly when due all of the debts and liabilities of Seller relating to the Business, including amounts owed Buyer and its Affiliates on inventory purchases prior to the Closing Date. Seller shall comply with the provisions of all bulk sales and similar laws applicable to this transaction, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.14 <u>Warranty Work.</u> Following the Closing Date, Buyer shall fulfill all warranty work for Products and Services provided by Seller in connection with the Business on or prior to the Closing Date (the <u>"Warranty Work").</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.15 <u>CFIUS Compliance.</u> The Parties have mutually determined that no filing to the Committee on Foreign Investment in the United States (CFIUS), under Section 721 of the United States Defense Production Act of 1950, as amended, and implementing regulations at 31 C.F.R. Part 800, is required based on their individual determinations that no such filing is necessary with respect to the Transactions. Further, the parties have resolved not to make a voluntary filing with CFIUS unless requested or indicated by the U.S. Government after consultation as specified in this paragraph. As promptly as practicable and, in any event, prior to Closing, the parties shall use reasonable best efforts: (1) to cooperate to prepare a brief summary of the Transaction, the justification for not filing with CFIUS and a list of transactions with the Department of Energy (DOE) (the <u>"USG Briefing"),</u> (2) to deliver the USG Briefing to CFIUS and DOE, and, as mutually determined by the Parties, to other member agencies of CFIUS if deemed appropriate, and (3) to provide responses or otherwise resolve any and all inquiries or requests by any Governmental Unit relating to the USG Briefing. If CFIUS, DOE or another Governmental Unit requests the parties to submit a filing to CFIUS or indicates that there are unresolved concerns after receiving the responses to their request, the Parties agree to, as promptly as practicable, supply any additional information and documentary material that may be requested by CFIUS in the form of a formal filing to CFIUS and any subsequent requests for information, and to take all other reasonably necessary, proper or advisable steps to seek expeditious conclusion of the CFIUS review process.

27 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.16 <u>Wrong Pockets.</u> In the event (a) Seller or any of its Affiliates receives any payment related to any Asset after the Closing, Seller agrees to promptly remit (or cause to be promptly remitted) such funds to Buyer, and (b) Buyer or any Affiliate of Buyer receives any payment related to any Excluded Asset after the Closing, Buyer agrees to promptly remit (or cause to be promptly remitted) such funds to Seller. For the avoidance of doubt, except for Assumed Contracts and Assumed Liabilities, any invoice for products and services with respect to accounts receivable, or any other Excluded Liability, is the responsibility of Seller and, in the event Buyer pays such an invoice, Seller is responsible to reimburse Buyer. In the event that the invoice relates to Assumed Liabilities, such invoice is the responsibility of the Buyer. A reconciliation will be performed on a monthly basis that is inclusive of accounts receivable as well as accounts payable. The balance of monies owed will be agreed upon by Sellers and Buyer or Buyer's Affiliate. The payments are to be remitted within 10 days of the agreement of the balance and no later than 30 days from the end of the reconcilable month. For the avoidance of doubt, the foregoing covenants in this **Section 6.16** are separate and in addition to those set forth in **Section 6.9** above, and not in limitation thereof.

**ARTICLE VII – CONDITIONS TO CLOSING**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <u>Conditions to Obligations of All Parties.</u> The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the condition that no Governmental Unit shall have, as of or prior to the Closing, enacted, issued, promulgated, enforced or entered any Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <u>Conditions to Obligations of Buyer.</u> The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer's waiver, at or prior to the Closing, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.1 Other than the representations and warranties of Seller contained in **Section 4.1**, **Section 4.2**, **Section 4.8** and **Section 4.16**, the representations and warranties of Seller contained in this Agreement and the Ancillary Agreements shall be true and correct in all respects (without giving effect to any limitation indicated by the words "Material Adverse Effect," "in all material respects," "in any material respect," "material," or "materially") on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The representations and warranties of Seller contained in **Section 4.1**, **Section 4.2**, **Section 4.8** and **Section 4.16** shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

28 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.2 Seller shall have duly performed and complied in all material respects with all agreements and covenants required by this Agreement and each of the Ancillary Agreements to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements and covenants that are qualified by materiality, Seller shall have performed such agreements and covenants, as so qualified, in all respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.3 No Action shall have been commenced against Buyer or Seller, which would prevent the Closing. No injunction or Order shall have been issued by any Governmental Unit, and be in effect, which restrains or prohibits any transaction contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.4 All approvals, consents and waivers that are listed on <u>Schedule 4.7</u> shall have been received, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.5 From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.6 Seller shall have delivered to Buyer duly executed counterparts to the Ancillary Agreements and such other documents and deliveries set forth in **Section 3.2.1**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.7 Buyer shall have received all Permits that are necessary for it to conduct the Business as conducted by Seller as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.8 At least sixty percent (60%) of the Employees shall have accepted offers of employment with Buyer and duly executed their respective Offer Letters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.9 All Key Employees shall have accepted offers of employment with Buyer and executed their respective Offer Letters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.10 All Encumbrances relating to the Assets shall have been released in full, and Seller shall have delivered to Buyer written evidence, in form satisfactory to Buyer in its sole discretion, of the release of such Encumbrances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.2.11 Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Seller, that each of the conditions set forth in **Section 7.2.1** and **Section 7.2.2** have been satisfied (the <u>"Seller Closing Certificate").</u>

29 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.12 Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.13 Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying the names and signatures of the officers of Seller authorized to sign this Agreement, the Ancillary Agreements and the other documents to be delivered hereunder and thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.14 Buyer shall have received a certificate pursuant to Treasury Regulations Section 1.1445-2(b) (the <u>"FIRPTA Certificate")</u> that Seller is not a foreign person within the meaning of Section 1445 of the Code duly executed by Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.15 Seller shall have delivered to Buyer its written calculation of the Estimated Deposit Amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.16 Seller shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 <u>Conditions to Obligations of Seller.</u> The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller's waiver, at or prior to the Closing, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.1 The representations and warranties of Buyer contained in this Agreement and the Ancillary Agreements shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Buyer's ability to consummate the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.2 Buyer shall have duly performed and complied in all material respects with all agreements and covenants required by this Agreement and each of the Ancillary Agreements to be performed or complied with by it prior to or on the Closing Date; provided that, with respect to agreements and covenants that are qualified by materiality, Buyer shall have performed such agreements and covenants, as so qualified, in all respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.3 No injunction or restraining order shall have been issued by any Governmental Unit, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

30 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.4 Buyer shall have delivered to Seller (i) the Purchase Price, less the Escrow Amount by wire transfer of immediately available funds, (ii) duly executed counterparts to the Ancillary Agreements, and (iii) such other documents and deliveries set forth in **Section 3.2.2**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.3.5 Buyer shall have delivered the Escrow Amount to the Escrow Agent pursuant to **Section 3.4**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.3.6 Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in **Section 7.3.1** and **Section 7.3.2** have been satisfied (the <u>"Buyer Closing Certificate").</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.3.7 Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.3.8 Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying the names and signatures of the officers of Buyer authorized to sign this Agreement, the Ancillary Agreements and the other documents to be delivered hereunder and thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.9 Buyer shall have delivered to Seller such other documents or instruments as Seller reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

**ARTICLE VIII - INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <u>Survival of Representations, Etc.</u> The representations, warranties, covenants and agreements of Seller and Buyer contained in the Transaction Documents shall survive the Closing without regard to any investigation made by any of the Parties. For purposes of the indemnification by Seller set forth in **Section 8.2.1**: (i) the representations and warranties of Seller (as set forth in **ARTICLE IV** of this Agreement, other than intentional misrepresentations and fraud) shall survive the Closing as follows: (a) the representations and warranties set forth in **Section 4.12** (Tax Matters) and **Section 4.13** (Compliance with Environmental Laws) shall survive until sixty (60) calendar days after the expiration of the applicable statute of limitations (with extensions and tolling), (b) the representations and warranties in **Section 4.1** (Organization of Seller), **Section 4.2** (Authorization and Enforcement), **Section 4.4** (Assets; Sufficiency and Condition), and **Section 4.9** (Litigation) shall survive indefinitely, and (c) all other representations and warranties set forth in **ARTICLE IV** of this Agreement shall survive for the Indemnity Period; (ii) the covenants of Seller (including all covenants and agreements of Seller set forth in this Agreement and the indemnification obligations set forth in **Section 8.2.1** in this Agreement, other than as set forth in **Section 8.2.1(i)**) shall survive as follows: (a) the covenants of Seller set forth in **ARTICLE VI** (other than **Section 6.1**, **Section 6.2**, **Section 6.3**, **Section 6.4** and **Section 6.5**) shall survive until sixty (60) days after the expiration of the applicable statute of limitations (with extensions and tolling), and (b) all other covenants of Seller (including **Section 6.5**) shall survive indefinitely; and (iii) Claims based on Excluded Liabilities or Excluded Assets, fraud or intentional misrepresentations by Seller shall survive indefinitely. For purposes of the indemnification by Buyer set forth in **Section 8.2.2**: (i) the representations and warranties of Buyer shall survive the Closing for the Indemnity Period; (ii) the covenants of Buyer set forth in **ARTICLE VI** (other than **Section 6.1**, **Section 6.2**, **Section 6.3**, **Section 6.4** and **Section 6.5**) shall survive until sixty (60) calendar days after the expiration of the applicable statute of limitations (with extensions and tolling); (iii) all other covenants of Buyer (including **Section 6.5**) shall survive indefinitely; and (iv) Claims based on or relating to Assumed Liabilities, fraud by Buyer or intentional misrepresentations by Buyer shall survive indefinitely. The expiration of the applicable survival period provided herein shall not affect the rights of a Party in respect of any Claim made by such Party in a writing received by the other Party prior to the expiration of the applicable survival period provided herein.

31 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <u>Indemnification.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.1 <u>By Seller.</u> Seller shall indemnify, defend, save and hold harmless Buyer, its Affiliates and their respective Representatives, from and against any and all Damages incurred in connection with, arising out of, resulting from or relating to: (i) the inaccuracy of any representation or warranty, made by Seller in any Transaction Document; (ii) any breach of any covenant or agreement made by Seller in any Transaction Document; (iii) any Excluded Liability or Excluded Asset; (iv) any liability imposed upon Buyer by reason of Buyer's status as transferee of the Business or the Assets, as a result of any action, fact or circumstance occurring prior to the Closing, including but not limited to the failure of the Facility to be in compliance in all respects with the Americans with Disabilities Act on or at any time prior to the Closing Date; (v) any liability arising under any Environmental Law based on the ownership and operation of the Business or the Facility, or related to any Environmental Condition existing, in each case on or at any time prior to the Closing Date, including, without limitation, any facts, matters, circumstances or conditions described in <u>Schedule 4.13;</u> (vi) Buyer's liability for Damages with respect to defective products sold and services provided by the Business prior to the Closing; or (vii) the failure of Seller to have obtained invention assignment agreements with Employees and former employees of Seller or the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.2 <u>By Buyer.</u> Buyer shall indemnify and save and hold harmless Seller, its Affiliates and its Representatives from and against any and all Damages incurred in connection with, arising out of, resulting from or relating to: (i) the inaccuracy of any representation or warranty, made by Buyer in or pursuant to any Transaction Document; (ii) any breach of any covenant or agreement made by Buyer in or pursuant to any Transaction Document; (iii) any Assumed Liability (except for amounts described in **Section 8.2.1(vi)**, or (iv) any conduct of the Business after the Closing Date which arises in connection with or on the basis of events, acts, omissions, conditions or other state of facts first occurring after the Closing Date and which is not an Indemnifiable Event under **Section 8.2.1**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.3 <u>Cooperation.</u> The indemnified Party shall cooperate in all reasonable respects with the indemnifying Party in the investigation, trial and defense of any Action and any appeal arising therefrom; provided, however, that the indemnified Party may, at its own cost, participate in the investigation, trial and defense of such Action and any related appeal.

32 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.4 <u>Defense of Claims.</u> A Party making a claim for indemnification (a <u>"Claim")</u> shall give written notice (a <u>"Claim Notice")</u> to the indemnifying Party as soon as practicable after becoming aware of any fact, condition or event which may give rise to indemnifiable Damages. The indemnified Party's failure to give timely notice shall not affect its right to indemnification, except to the extent that the indemnifying Party is damaged by such failure. If the Claim Notice relates to a third-party Action, the indemnifying Party shall have fifteen (15) calendar days after receipt of the Claim Notice (the <u>"Response Period")</u> to acknowledge its indemnification obligation in writing (a <u>"Confirmation Notice").</u> If the indemnifying Party sends a timely Confirmation Notice, the indemnifying Party shall be entitled (i) to control the defense of such Action, (ii) to engage attorneys (which shall be reasonably acceptable to the indemnified Party) to defend such Action, at the indemnifying Party's cost and expense and (iii) to settle such Action, which settlement shall be made only with the written consent of the indemnified Party, such consent not to be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, the indemnified Party shall have the right to control the defense of, engage attorneys in connection with and settle such Action at the indemnifying Party's cost and expense if: (a) the indemnifying Party fails to send a Confirmation Notice during the Response Period; (b) the indemnifying Party and the indemnified Party are both named parties to Action or (c) the Action involves an environmental remediation or involves issues beyond the payment of money that would be reasonably likely to have a Material Adverse Effect on the indemnified Party's business. In the event the indemnified Party controls the defense of the Claim, (i) the indemnifying Party may engage attorneys to participate in the defense of the Action at the indemnifying Party's cost and expense; and (ii) the indemnified Party shall be entitled to settle such Action, which settlement shall be made only with the written consent of the indemnifying Party, such consent not to be unreasonably withheld, conditioned or delayed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.5 <u>Limitations.</u> Neither Party shall be liable under this **Section 8.2** for any Damages until the amount otherwise due the indemnified Party exceeds $250,000 in the aggregate (the <u>"Deductible Amount"),</u> in which case the indemnifying Party will be liable to the indemnified Party for the amount such Claims exceed the Deductible Amount. Seller's liability for indemnification shall be capped at an aggregate amount of $3,500,000 (the <u>"Indemnification</u> Cap"). Notwithstanding the foregoing, neither the Deductible Amount nor the Indemnification Cap shall apply with respect to Claims with respect to Excluded Liabilities, Excluded Assets, Assumed Liabilities, Damages arising out of a breach of a representation or warranty contained in **Section 4.1** (Organization of Seller), **Section 4.2** (Authorization and Enforcement), **Section 4.3** (Title to Assets), **Section 4.12** (Tax Matters) and **Section 4.13** (Compliance with Environmental Laws), any breach of Seller's covenants listed in **Section 8.2.1(ii)**, Seller's breach of its covenants or of any of the Ancillary Agreements, Seller's obligations under **Section 8.2.1(iv) through (vii)** or any Damages arising out of Seller's fraud or intentional misrepresentations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.6 <u>Determination of Losses.</u> For purposes of determining breach of a representation and warranty and the amount of indemnification Damages, each representation or warranty contained in this Agreement shall be read without giving effect to any materiality or Material Adverse Effect or Material Adverse Change standard or qualification. Any indemnity payable pursuant to this **ARTICLE VIII** shall be paid within the later of ten (10) Business Days after the indemnified Party's request therefor (in the case of Claims not involving a third-party claim) or ten (10) Business Days prior to the date on which the loss or expense upon which the indemnity is based is required to be satisfied or paid by the indemnified Party. All indemnification payments shall include interest at a rate equal to seven percent (7%) per annum accruing from the date that the indemnified Party actually pays the indemnified Damages up to and including the date of payment. Any indemnity payable pursuant to this **ARTICLE VIII** shall include reasonable attorneys' fees incurred by the indemnified Party in its effort to collect such indemnity amounts from the indemnifying Party. Payments by an indemnifying Party pursuant to this **ARTICLE VIII** shall be reduced by the amount of any insurance proceeds actually received by the indemnified Party from an unaffiliated third party insurer in respect of such claim, less any related costs and expenses, including the aggregate cost of pursuing any related insurance claims and any related increases in insurance premiums or other chargebacks (it being agreed that neither Party shall have any obligation to seek to recover any insurance proceeds in connection with making a claim under this **ARTICLE VIII**).

33 <br>Classified as Secret

**ARTICLE IX - TERMINATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.1 <u>Termination.</u> This Agreement may be terminated at any time prior to the Closing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.1 by the mutual written consent of Seller and Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.2 by either Seller or Buyer, upon written notice to the other party, if the transactions contemplated by this Agreement have not been consummated on or before May 1, 2026 (the <u>"Drop Dead Date");</u> *provided, however*, that the right to terminate this Agreement pursuant to this **Section 9.1.2** shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in this Agreement has been the principal cause of, or primarily resulted in, the failure of the transactions contemplated by this Agreement to be consummated on or before the Drop Dead Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.3 by Buyer by written notice to Seller if Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in **ARTICLE VII**, and such breach, inaccuracy or failure has not been cured by Seller within ten days of Seller's receipt of written notice of such breach from Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.4 by Seller by written notice to Buyer if Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in **ARTICLE VII**, and such breach, inaccuracy or failure has not been cured by Buyer within ten days of Buyer's receipt of written notice of such breach from Seller; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.5 by Buyer or Seller if (i) there shall be any Applicable Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Unit shall have issued an Order restraining or enjoining the transactions contemplated by this Agreement, and such Order shall have become final and non-appealable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.2 <u>Effect of Termination.</u> In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

34 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.1 that the obligations set forth in this **ARTICLE IX** and **ARTICLE X** hereof shall survive termination (without limiting the effect of **Section 8.1**); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.2 that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.

**ARTICLE X - MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 <u>Notices.</u> All communications that are required or may be given pursuant to this Agreement <u>("Notices")</u> shall be in writing and shall be deemed to have been duly given when received if personally delivered; upon confirmation of transmission if sent by email; the day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service; and upon receipt, if sent by registered mail, return receipt requested. Notices shall be sent to:

---

| | |
|:---|:---|
| If to Seller, addressed to:<br>CVD Equipment Corporation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If to Buyer, addressed to:<br>Edwards Semiconductor Solutions LLC |
| 355 S. Technology Drive | 5 Tower Drive |
| Central Islip, NY 11722 | Saugerties NY 12477 |
| Attention: Emmanuel Lakios, CEO | Attention: Sara Farooq, General Manager |
| E-Mail: [\*\*\*]<br>| E-Mail: [\*\*\*] |
| and a copy to:<br>| and a copy to:<br>|
| Ruskin Moscou Faltischek P.C. | Atlas Copco North America LLC |
| 1425 RXR Plaza | 6 Century Drive, Suite 310 |
| East Tower, 15<sup>th</sup> Floor | Parsippany, New Jersey 07054 |
| Uniondale, NY 11556 | Attn: Natalya Vasilchenko, Esq. |
| Attn: Adam Silvers, Esq. | Facsimile: [\*\*\*] |
| E-Mail: [\*\*\*] | E-Mail: [\*\*\*] |

---

or to such other place and with such other copies as any Party may designate as to itself by written notice to the others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 <u>Entire Agreement; Amendments and Waivers; Assignment.</u> This Agreement, together with its exhibits and schedules, the Confidentiality Agreement and the Ancillary Agreements by and among the Parties (i) constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements whether oral or written and (ii) may only be amended in a writing executed by all Parties. No waiver of any provision of this Agreement shall constitute a waiver of any other provision hereof (whether or not similar) or constitute a continuing waiver. Seller may not assign this Agreement or any of its rights or obligations hereunder without Buyer's prior written consent. Buyer may freely assign this Agreement and/or any of its rights hereunder; provided Buyer remains liable for its obligations hereunder.

35 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 <u>Expenses.</u> Except as otherwise specified in this Agreement, each Party hereto shall pay its own legal, accounting, and other expenses related to the Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 <u>Invalidity.</u> To the maximum extent permitted by Applicable Law, the invalidity, illegality or unenforceability of any provision in any Transaction Document shall not affect any other provision in any Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.5 <u>Publicity; Confidentiality.</u> No Party shall issue any press release or make any public statement regarding, or disclose to any third party, any of the terms of any Transaction Document without the prior written approval of the other Party, except as required by Applicable Law (including securities laws and regulations or stock exchange listing requirements). If a Party determines that it is required by Applicable Law to make such a disclosure, it shall, to the extent permitted by Applicable Law and reasonably practicable under the circumstances, provide the other Party with prior notice of such disclosure and a reasonable opportunity to review and comment on the proposed disclosure, which comments the disclosing Party shall consider in good faith. Notwithstanding the foregoing, after the Closing, Buyer may disclose such terms as it determines appropriate to evidence its ownership of, and rights in and to, the Business and the Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6 <u>Cumulative Remedies.</u> Except as otherwise provided in **ARTICLE VIII** and **ARTICLE IX** all rights and remedies are cumulative of each other and of every other right or remedy a Party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice the exercise of other rights or remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.7 <u>Dispute Resolution.</u> Any dispute arising out of, relating to, or concerning this Agreement or any of the Ancillary Agreements, the subject matter hereof or thereof, or the relationship between the Parties created hereby or thereby, whether in contract or tort, in law or in equity (other than a dispute over establishing the Final Net Asset Value, which must be resolved solely as set forth in **Section 3.5** and its sub-sections) <u>("Dispute")</u> shall be resolved in accordance with the procedures of this **Section 10.7**. Upon the occurrence of any Dispute, the Parties will first attempt in good faith to resolve the Dispute by negotiation between management level persons who have authority to settle the Dispute. Either Party may initiate such negotiations by providing written notice of the Dispute to the other Party describing the nature of the Dispute in reasonable detail. The Parties shall use commercially reasonable efforts to meet (virtually or in person) within fifteen (15) days following such notice. If the Dispute has not been resolved within thirty (30) calendar days of the original notice of such Dispute given by one Party to the other (or such longer period as the Parties may mutually agree in writing), the Dispute shall be finally resolved through binding arbitration as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.7.1 The Dispute shall be resolved pursuant to the rules of the American Arbitration Association ("AAA") and the following procedures. In the event of a conflict, the procedures included in this **Section 10.7** shall control over the rules of the AAA. The number of arbitrators shall be one (1) if the monetary value of the Dispute is $500,000.00 (or its currency equivalent) or less, and such arbitrator shall be chosen pursuant to the rules of the AAA. The number of arbitrators shall be three (3) if the monetary value of the Dispute is greater than $500,000.00 (or its currency equivalent), and Seller and Buyer shall each name an arbitrator, and the two arbitrators so named shall promptly thereafter choose a third arbitrator. If the two arbitrators fail within ten (10) Business Days from their appointment to agree upon and appoint the third arbitrator, then the third arbitrator shall be selected in accordance with the rules of the AAA. All arbitrators selected to act hereunder shall be qualified by education, experience and training to pass upon the particular matter or matters in Dispute.

36 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.7.2 The arbitration shall take place in the State of New York, in accordance with the laws (including the rules of evidence) of the State of New York, without reference to the choice of law provisions thereof, except with respect to matters of law concerning the internal legal organizational affairs of any entity which is a Party to, or the subject of, this Agreement or the Ancillary Agreements and, as to those matters, the law of the jurisdiction under which such entity is organized shall govern. The Parties shall submit true copies of all documents considered relevant to their respective positions regarding the Dispute. Neither Party may compel the other to produce additional documents, unless such documents were specifically required to be delivered under the terms of this Agreement. However, the arbitrator(s) may decide to require the submission of additional documents limited to specific, narrow, and well-defined classes of documents that the arbitrator(s) considers necessary for the arbitrator'(s) understanding and resolution of the Dispute. The maximum number of witnesses each Party (Seller or Buyer) may call to give evidence on its behalf, including by oral testimony, declaration or witness statement, is three witnesses of fact and one expert witness. The testimony of any witness must be given under lawful oath or affirmation, and all witnesses shall be subject to cross examination by the other party and to questions from any of the arbitrators. The arbitrator(s) has no authority to appoint or retain expert witnesses for any purpose unless agreed to by both Seller and Buyer. The arbitrator(s) shall proceed promptly to hear and determine the matters in Dispute, after giving the Parties due notice of hearing and a reasonable opportunity to be heard. The award of the arbitrator(s) shall be made no later than three (3) months after the appointment of the last arbitrator, subject to the arbitrator'(s) right to extend the deadline due to significant, unavoidable and unforeseen circumstances. All arbitration fees and costs shall be borne equally regardless of which Party prevails. The arbitrators, exercising equitable discretion, may award the prevailing Party its costs of legal representation and expert witness expenses. The arbitrator(s) must render a written reasoned award in accordance with the substantive law as provided in this **Section 10.7**. Such award shall be final and binding on the Parties. The Parties waive, and the arbitrator(s) may not award, any punitive or exemplary damages. The Parties waive irrevocably their right to any form of appeal, review or recourse to any court or other judicial authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.7.3 Except for proceedings to preserve property pending determination by the arbitrator(s) or to enforce an award, the mandatory exclusive venue for any judicial proceeding permitted in this Agreement is the court of competent jurisdiction in the State of New York (the <u>"Venue").</u> The Parties consent to the jurisdiction of these courts and waive any defenses they have regarding jurisdiction. Proceedings to confirm an award may be filed as provided in this **Section 10.7** at any time within one year after the award is made. The Parties agree that service of process may be made upon Buyer or Seller by mailing a copy thereof by registered or certified mail, postage pre-paid to such Party at its address as provided for in **Section 10.1** hereof. Proceedings to enforce judgment entered on an award may be brought in any court. The prevailing Party may seek, in any court in the Venue, judicial recognition of the award, or order of enforcement or any other order or decree that is necessary to give full effect to the award. Nothing herein contained shall prevent either Party from seeking specific performance or an injunction, together with any relief ancillary to specific performance or injunctive relief from a court of competent jurisdiction. The Parties agree that any Dispute and any negotiation and arbitration proceedings between the Parties in relation to any Dispute shall be confidential and shall not be disclosed to any third party. The Parties further agree that any information, documents or materials produced for the purposes of, or used in, negotiations or arbitration of any Dispute shall be confidential and shall not be disclosed to any third party.

37 <br>Classified as Secret

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.8 <u>No Third-Party Beneficiaries.</u> Except as provided in **ARTICLE VIII**, this Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9 <u>Governing Law; Jurisdiction and Venue; Waiver of Jury Trial.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9.1 This Agreement shall be governed by the laws of the State of New York, without reference to the principals of conflicts of laws of that or any other jurisdiction. Any Action arising out of or relating to this Agreement or any Ancillary Agreement (other than as expressly provided in **Section 3.5**) shall be brought exclusively in the United States District Court for the Eastern District of New York or, if such court does not have jurisdiction, the state courts of the State of New York located in Suffolk County, New York, and each Party irrevocably submits to the exclusive jurisdiction of such courts. Each Party irrevocably waives, to the fullest extent permitted by Applicable Law, any objection to the laying of venue in such courts and any claim that any such Action has been brought in an inconvenient forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9.2 EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.10 <u>Multiple Counterparts.</u> This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[SIGNATURES APPEAR ON NEXT PAGE]

38 <br>Classified as Secret

The Parties have executed this Agreement as indicated below.

---

| | |
|:---|:---|
| **SELLER:** | **SELLER:** |
| CVD EQUIPMENT CORPORATION | CVD EQUIPMENT CORPORATION |
| By: | */s/ Emmanuel Lakios* |
| Name: | Emmanuel Lakios |
| Its: | Chief Executive Officer |
| **BUYER:** | **BUYER:** |
| EDWARDS SEMICONDUCTOR SOLUTIONS LLC | EDWARDS SEMICONDUCTOR SOLUTIONS LLC |
| By: | */s/ Sara Farooq* |
| Name: | Sara Farooq |
| Its: | General Manager |

---

[*Signature Page to Asset Purchase Agreement*]

Classified as Secret

## Exhibit 10.2

**Exhibit 10.2**

**CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. [\*\*\*] INDICATES THAT INFORMATION HAS BEEN REDACTED.** 

**LEASE**

THIS LEASE <u>("Lease")</u> is made and entered into as of the 1st day of April 2026, by and between **CVD EQUIPMENT CORPORATION**, a New York corporation, having an address at 355 S Technology Drive, Central Islip, NY 11722 (hereinafter <u>"Lessor"),</u> and **EDWARDS SEMICONDUCTOR SOLUTIONS LLC**, a Delaware limited liability company, having an address at 5 Tower Drive, Saugerties, NY 12477 (hereinafter <u>"Lessee").</u>

**W I T N E S S E T H:**

**WHEREAS**, Lessor is the owner of the following real property known as *1117 Kings Highway, Saugerties, New York, 12477* (the <u>"Demised Premises"):</u> (a) the land described in **<u>Exhibit "A"</u>** annexed hereto (the "Land"); (b) the building located on the Land (the <u>"Building");</u> (c) the parking area located on the Land (the <u>"Parking Area")</u> and any and all other structures and other improvements and appurtenances now or hereafter located on the Land (the <u>"Other Improvements;"</u> said Building and Other Improvements being hereinafter collectively referred to as the <u>"Improvements");</u> (d) all right, title, and interest of Lessor, if any, in and to the land lying in the bed of any street or highway in front of or adjoining the Land to the center line of such street or highway; (e) the appurtenances and all the estate and rights of Lessor in and to the Land; (f) any strips or gores adjoining the Land; and (g) all fixtures attached or appurtenant to any of the foregoing;

**WHEREAS**, Lessor desires to lease the Demised Premises to Lessee, and Lessee desires to lease the Demised Premises from Lessor;

**WHEREAS**, the parties desire to enter into this Lease to set forth their rights and obligations to each other relating to the Demised Premises; and

**NOW, THEREFORE,** for good and valuable consideration, Lessor leases and demises the Demised Premises to Lessee, and Lessee takes and hires the Demised Premises from Lessor, subject only to Permitted Exceptions, for the Term, upon the terms and conditions of this Lease.

**ARTICLE I**

**LEASED PROPERTY AND LEASE TERM**

Section 1.01 <u>Leased Property and Lease Term.</u> Lessor hereby leases to Lessee, and Lessee hereby hires on the terms and conditions hereinafter set forth, the Demised Premises, subject to the <u>"Permitted Exceptions"</u> described on **<u>Exhibit "B"</u>** annexed hereto**.**

TO HAVE AND TO HOLD, the Demised Premises unto Lessee, for a term of ***two (2) years*** commencing on the date hereof (the <u>"Commencement Date"),</u> and expiring at 12:00 noon on the last day of the calendar month containing the second (2<sup>nd</sup>) anniversary of the Commencement Date (the <u>"Expiration Date"),</u> unless this Lease shall be sooner terminated as hereinafter provided. The use of the word <u>"Term"</u> in this Lease shall mean the period commencing on the Commencement Date and ending on the Expiration Date, unless sooner terminated as provided herein.

Section 1.02 <u>Condition of Demised Premises.</u> Except as otherwise expressly provided herein, Lessor shall not be required to perform any work within the Demised Premises, and Lessee agrees to accept them in their "as is" condition with "all faults," and without any representation or warranty by Lessor with respect thereto. Notwithstanding the foregoing, Lessor represents and warrants that, as of the Commencement Date,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the roof (including the membrane, insulation, flashing, and all related appurtenances) shall be in good condition, watertight, and free from leaks, and defects; and

(b)all building systems serving the Demised Premises, including the heating, ventilation and air conditioning system (including all equipment, distribution, controls, and related components, collectively, the <u>"HVAC System"),</u> plumbing (including supply, waste, vent and fixtures), electrical (including service, panels, distribution, lighting), mechanical, life safety, fire protection, elevator and security systems (collectively, the <u>"Building Systems"),</u> shall be in good working order.

Section 1.03 <u>Renewal Option.</u> Lessee shall have one (1) option <u>("Renewal Option"),</u> to be exercised as hereinafter provided, to extend the Term of this Lease for one (1) year <u>("Renewal Term")</u> upon the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) That at the time of the exercise of the Renewal Option, no Lessee Default shall be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That there shall be no further privilege for extension of the Term of this Lease beyond the Renewal Term;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To exercise the Renewal Option, Lessee must so advise Lessor by written notice (a <u>"Renewal Notice")</u> given at least six (6) months prior to the last day of the Term; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Renewal Term shall commence immediately upon the expiration of the Term and shall be on all of the terms, covenants and conditions of this Lease, except that the Net Rent for the Renewal Term shall be equal to the amounts set forth in the rent schedule in <u>Section</u> 2.01 below.

**ARTICLE II**

**RENT**

Section 2.01 <u>Net Rent.</u> (a) Lessee shall pay to Lessor a net annual minimum rent for the Demised Premises during the initial Term of this Lease without any deduction, defense, credit, abatement, setoff or offset for any circumstances whatsoever, and without prior notice or demand, in lawful money of the United States, as follows <u>("Net Rent"):</u>

---

| | | |
|:---|:---|:---|
| **LEASE YEAR** | **ANNUAL** | **MONTHLY** |
| First Lease Year | $182750.00 | $15229.17 |
| Second Lease Year | $188232.50 | $15686.04 |
| Third Lease Year | $193879.48 | $16156.62 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) An amount equal to the first month's installment of Net Rent and the last month's installment of Net Rent shall be due and payable upon the execution and delivery of this Lease by Lessee, which payment shall be applied to the first and last installments of Net Rent, respectively, that become due and payable under this Lease. During the Term, Lessee shall pay the Net Rent in equal monthly installments in advance on the first day of each month; *provided, however*, that if the Commencement Date is not the first day of a calendar month, then the Net Rent for such month shall be pro-rated. Lessee shall pay Net Rent and other sums payable by Lessee to Lessor (i) by good and sufficient check payable to Lessor, or (ii) if Lessor so elects by written notice to Lessee, by ACH, wire transfer or other electronic means, to an account or accounts designated by Lessor in such notice from time to time. The Net Rent shall in all respects be absolutely net to Lessor. As used herein, a <u>"Lease Year"</u> shall mean each consecutive period of twelve (12) calendar months following the Commencement Date; *provided, however*, that if the Commencement Date is not the first day of a calendar month, then the first Lease Year shall be deemed to be such partial month plus the eleven (11) full calendar months thereafter, and each succeeding Lease Year shall be each consecutive period of twelve (12) calendar months following the first Lease Year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything to the contrary contained herein, provided that Lessee completes the Re-Paving Work (as defined herein) in a good and workmanlike manner, Lessor shall grant Lessee an abatement of Net Rent for a period of three (3) consecutive months (the <u>"Abatement Period").</u> The Abatement Period shall commence on the first day of the calendar month immediately following the date of substantial completion of the Re-Paving Work. During the Abatement Period, Lessee shall remain responsible for all other sums due under this Lease, including without limitation Additional Rent (as defined herein), utilities, taxes, insurance, and any other charges payable by Lessee.

Section 2.02 <u>Additional Rent.</u> This Lease is entered into by Lessor for the express purpose of providing Lessor with net income from rent, free and clear of any and all costs, expenses, charges, taxes, assessments, fines, penalties, liens or impositions, of any kind. In addition to the Net Rent required under <u>Section 2.01,</u> Lessee shall, in accordance with the provisions of this Lease, pay all Impositions (as defined below), insurance premiums, construction costs of any improvements, additions, alterations and repairs (except as otherwise provided in <u>Article X</u> hereof) and any other charges, costs and expenses arising out of, or in any way connected with the Demised Premises and the Improvements occurring during the Term of this Lease so that the Net Rent shall in all respects be absolutely net to Lessor. All Impositions, insurance premiums and other charges, costs, expenses or amounts due under this Lease other than Net Rent are sometimes hereinafter collectively referred to as <u>"Additional Rent."</u> Additional Rent and Net Rent are sometimes hereinafter collectively referred to as <u>"Rent."</u> In the event of the non-payment of all or any portion of Additional Rent, Lessor shall have the same rights and remedies as provided in this Lease or at law, in equity or otherwise for failure of Lessee to pay Net Rent.

Section 2.03 <u>Address for Payment.</u> Payment of the Net Rent required hereunder together with any other amounts payable by Lessee to Lessor shall be paid at the following address:

**355 S Technology Drive**

**Central Islip, NY 11722**

**Attention: Emanuel Lakios, President and CEO**

or to such other address as Lessor shall, from time to time, designate in writing in accordance with Section 23.15 below.

Section 2.04 <u>Rent Regulation.</u> During any period when any Net Rent shall be or become uncollectible, reduced, or required to be refunded because of any rent control law or regulation (a <u>"Rent Regulation Period"),</u> Lessee shall enter into such agreement(s) and take such other steps as Lessor may reasonably request and as may be legally permissible to permit Lessor to collect the maximum Net Rent that, from time to time during such Rent Regulation Period, may be legally permissible (and not in excess of the amounts then reserved therefor under this Lease to the extent then due and payable under this Lease). After any Rent Regulation Period: (a) Net Rent shall become and thereafter be payable in accordance with this Lease; and (b) Lessee shall promptly pay in full to Lessor, unless prohibited by law, an amount equal to the excess, if any, of the following during the Rent Regulation Period: (1) the Net Rent that this Lease required Lessee to pay; less (2) the Net Rent Lessee actually paid.

**ARTICLE III**

**TAXES**

Section 3.01 <u>Lessee's Obligation to Pay Taxes.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee shall pay or cause to be paid (except as hereinafter provided in this <u>Article III),</u> before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all real estate taxes, assessments (including, without limitation, special taxes or assessments for improvements to the Improvements) and assessments by business improvement districts, water and sewer rates and charges, any rent tax, occupancy tax or similar tax (including, without limitation, any tax on rental imposed by State or local law), whether or not imposed on or measured by the rents payable by Lessee, and other governmental or quasi-governmental levies and charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever, which are now or at any time hereafter levied, imposed or become a lien upon ***the entire tax lot designated as Section 17.4, Block 2, Lot 31*** and the land and all Improvements thereon (all of which are hereinafter referred to collectively as <u>"Impositions"</u> and individually as <u>"Imposition").</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If, by law, any Imposition is payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments as the same respectively become due and before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest. However, Lessee shall not be required to pay any installment which shall fall due after the expiration of the Term of this Lease. Any Imposition relating to a fiscal period of the taxing authority, in which the Term of this Lease shall begin or end (whether or not such Imposition shall be levied, imposed or become a lien upon the Demised Premises or the Improvements or any part of either thereof, or become payable in respect thereto during the Term of this Lease), shall be apportioned so that Lessee shall pay only that proportion of such Imposition which corresponds with the portion of said fiscal period as is within the Term of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Lessee shall not be obligated to pay any capital levy, franchise, estate, inheritance, succession, or transfer tax of Lessor, or any income or excess profits tax or any other tax, assessment, charge or levy upon the income of Lessor, nor shall any of the foregoing be deemed to be included within the term "Impositions" as defined in <u>Section 3.01</u> above. However, if a tax other than a tax of the nature specified in the foregoing sentence is levied upon the Net Rent, whether or not such tax is imposed upon Lessor in the first instance, Lessee shall pay it, or promptly reimburse Lessor for such tax, *provided, however*, that Lessee shall not be obligated to pay any greater amount than would have been payable by Lessor if the Net Rent had been the sole taxable income and the Demised Premises the sole asset of Lessor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Lessee, upon request of Lessor, shall furnish to Lessor for its inspection, within five (5) days after the date when any Imposition is payable pursuant to any provision of this <u>Article III,</u> official receipts of the appropriate taxing authority, or other proof satisfactory to Lessor, evidencing the payment thereof.

Section 3.02 <u>Tax Escrow.</u> Lessee shall, upon Lessor's request, deposit with the Lessor 1/12th of the annual Impositions as estimated by Lessor. On the 1st day of each and every calendar month thereafter during the Term of this Lease, Lessee shall deposit with the Lessor, to be held by the Lessor, a sum equal to 1/12th of the annual Impositions for each then current or ensuing year. In the event that the amount of the Impositions shall not have been fixed at the time when any such monthly deposit is required to be made, Lessee shall make such deposit based upon the amount of the Imposition for the immediately preceding year, subject to adjustment as and when the amount of such Impositions is ascertained. Lessee shall provide Lessor with copies of tax bills within ten (10) days after receipt thereof by Lessee. All sums deposited with the Lessor pursuant to this Section shall be applied to the payment of Impositions. No interest shall accrue on the sums so deposited. In the event the sums deposited hereunder are not sufficient to pay the Impositions when due, then Lessee shall, within ten (10) days of notice of the insufficiency, deposit with the Lessor any such deficiency and shall also deposit such additional sums as shall be necessary to ensure that the amounts deposited hereunder plus such deposits as are required to be made in the future hereunder are sufficient to pay all Impositions then due or which will become due. In the event of a conveyance by Lessor of its interest in and to the Demised Premises, Lessor shall have no further liability with respect to the deposits for Impositions upon delivery thereof by Lessor to the transferee, *provided that* the transferee of the Lessor assumes the Lessor's liability hereunder.

Section 3.03 <u>Lessee May Contest Taxes.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee may contest any Impositions in any manner permitted by law, in Lessee's name, and whenever necessary in Lessor's name. Lessor will cooperate with Lessee and execute any documents or pleadings required for such purpose, *provided that* such action is without expense to Lessor and that Lessor will not incur any liability by reason thereof. If such contest is instituted in the name of Lessor, Lessee shall so advise Lessor on at least thirty (30) days' prior notice, giving full details as to the tribunal in which the contest will be brought, the Imposition contested and the amount thereof and such additional information relating thereto as Lessor may request to enable it to understand and evaluate the facts. Such contest may include appeals from any judgments, decrees or orders until a final determination is made by a court or governmental department or authority having final jurisdiction in the matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At Lessee's election, Lessee may defer payment of the Imposition if prior to the due date thereof Lessee shall have deposited with the Lessor the amount of the contested Imposition and an estimated amount of interest, penalties and charges which might be assessed against or become a charge on the Demised Premises and/or the Improvements by reason of such contest, *provided that* the Demised Premises and/or the Improvements or any part thereof would not be in imminent danger of being forfeited or lost by reason of such deferment. Upon the termination of the contest, Lessee shall pay the Imposition, as finally determined, together, with the interest, penalties and other charges in connection therewith, and upon such payment the sums deposited with the Lessor shall be returned to Lessee or, if Lessee so elects, the funds deposited with the Lessor may be used for such payment; any surplus to be returned to Lessee and any deficiency to be made good by Lessee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If at any time during the pendency of the contest, Lessor reasonably shall deem the amount deposited with the Lessor insufficient to cover the contested Imposition, interest, penalties and charges, Lessee, upon demand of Lessor, shall deposit with the Lessor such additional sums as Lessor may reasonably request. Upon failure of Lessee to make such additional deposit Lessor may pay the contested Imposition and interest, penalties and charges out of the funds held by the Lessor; any surplus to be returned to Lessee and any deficiency to be made good by Lessee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any tax refund with respect to Impositions paid by Lessee or paid by Lessor and for which Lessor has been reimbursed shall be the property of Lessee after deduction and payment of the reasonable costs of procuring such refund.

Section 3.04 <u>Miscellaneous.</u> The certificate, advice, receipt or bill of the appropriate official designated by law to make or issue the same or to receive payment of any Imposition, or of non-payment of such Imposition shall be prima facie evidence that such Imposition is due and unpaid or has been paid at the time of the making or issuance of such certificate, advice, receipt or bill.

**ARTICLE IV**

**USE**

Section 4.01 <u>Permitted Use.</u> The Demised Premises and the Improvements may be used for light manufacturing, general warehouse and executive offices and ancillary uses. In no event may the Demised Premises be used for any other purpose, including, without limitation, any of the "Prohibited Uses" described on **<u>Exhibit "C</u>**<u>"</u> annexed hereto. Lessee shall have access to the Demised Premises twenty-four (24) hours per day, seven (7) days per week, subject to Legal Requirements.

Section 4.02 <u>Licenses and Permits.</u> If any license or permit of a governmental authority shall be required for the proper and lawful conduct of Lessee's business or other activity carried on in the Demised Premises, and if the failure to secure such license or permit might or would, in any way, affect Lessor, then Lessee, at Lessee's expense, shall duly procure and thereafter maintain such license or permit and submit the same for inspection by Lessor. Lessor shall join in the application for such permits or authorizations whenever such action is necessary, *provided that* such action is without expense to Lessor. Lessee, at Lessee's expense, shall, at all times, comply with the requirements of each such license or permit. Lessee will not at any time use or occupy the Demised Premises in violation of the certificate of occupancy (temporary or permanent) issued for the Improvements.

Section 4.03 <u>Impairment of Title.</u> Lessee shall not suffer or permit the Demised Premises, the Improvements or any portion thereof to be used by the public or any person, without restriction or in such manner as would violate or cause a default under any of the provisions of any mortgage encumbering the fee interest of Lessor (a <u>"Fee Mortgage")</u> or any other agreement or instrument affecting title to the Demised Premises or which might reasonably tend to impair Lessor's title to the Demised Premises, the Improvements or any portion thereof, or in such manner as might reasonably make possible a claim or claims of adverse usage, adverse possession or prescription by the public or any person, or of implied dedication, of the Demised Premises, the Improvements or any portion thereof. Lessee hereby acknowledges that Lessor does not hereby consent, expressly or by implication, to the unrestricted use or possession of the whole or any portion of the Demised Premises or the Improvements by the public or any person, and Lessee does not have the power or authority and nothing contained in this Lease is intended or shall be deemed or interpreted to grant Lessee the power or authority to create, grant or approve any such use, possession or condition.

Section 4.04 <u>Parking Area.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee shall be permitted to use the entire Parking Area on the Land adjacent to the Building for parking of motor vehicles of the Lessee, Lessee's customers and employees. Parking shall be at Lessee's own risk. Lessor shall have no obligation to monitor, patrol or police any portion of the Parking Area, or to take any action to prevent other persons from entering or parking in the Parking Area. Lessor shall have no liability for any loss or damage to vehicles or personal property. In no event may Lessee or any of Lessee's customers, employees, contractors, subtenants, licensees or invitees use any parking spaces or access roads on any properties adjacent to the Land without the prior written consent of Lessor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Landlord hereby consents to Lessee's performance, at its sole cost and expense, of repaving, resurfacing, and repairing the Parking Area in accordance with paving specifications reasonably approved by Lessor (the <u>"Re-Paving Work").</u> The Re-Paving Work shall be deemed an Alteration (as hereinafter defined) for all purposes hereunder. Prior to commencement of the Re-Paving Work, Lessee shall, at its sole cost and expense, apply for and obtain all required permits and approvals related to such Re-Paving Work. Lessor shall join in any permit or approval applications when reasonably necessary, *provided that* such action is without expense to Lessor. Subject to any delays due to Force Majeure or caused by any governmental authority in connection with the issuance of any necessary permit or approval application for the Re-Paving Work (provided that Lessee is using commercially reasonable efforts, in good faith in the pursuit of such permit or approval application), Lessee shall cause the Re-Paving Work to be completed within six (6) months following the Commencement Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Lessee shall, at Lessee's sole cost and expense, use commercially reasonable efforts consistent with applicable federal, state and local laws to maintain the Parking Area, drive aisles and pedestrian paths serving the Building in a condition reasonably safe for Lessee's use during winter weather, including snow plowing, ice pretreatment, and application of salt at a frequency reasonably appropriate to prevailing conditions, it being understood that temporary accumulations may occur during and immediately following weather events.

Section 4.05 <u>Injunctive Relief.</u> Any violation of this <u>Article IV</u> shall be deemed a material breach of this Lease and Lessor shall be entitled to injunctive relief in addition to any other remedies available to Lessor under this Lease.

**ARTICLE V**

**UTILITIES & SERVICES**

Section 5.01 <u>Utilities.</u> Lessee shall be solely responsible for and shall promptly pay, prior to delinquency, the cost of all gas, heat, water, electricity, power, telephone, internet connections, sewage, and any other utilities supplied to the Demised Premises and the Improvements including all connection fees for any utilities or services. Lessor shall not be liable in any way to Lessee for any failure or defect in the supply or character of electric energy furnished to the Demised Premises by reason of any requirement, act or omission of the public utility servicing the Demised Premises with electricity or for any other reason not attributable to Lessor. Lessee's use of electric energy in the Demised Premises shall not at any time exceed the capacity of any of the electrical conductors and equipment in or otherwise servicing the Demised Premises. In order to ensure that such capacity is not exceeded and to avert possible adverse effect upon the electric service, Lessee shall not, without prior written consent in each instance (which shall not be unreasonably withheld) connect any additional fixtures, appliances or equipment to the electric distribution system of the Demised Premises or make any alteration or addition to the electric system of the Demised Premises existing on the Commencement Date of this Lease. Should Lessor grant such consent, all additional risers or other equipment required therefor shall be provided by Lessor and the cost thereof shall be paid by Lessee upon Lessor's demand.

Section 5.02 <u>Facilities or Services.</u> Lessor shall not be required to furnish to Lessee any facilities or services of any kind whatsoever during the Term of this Lease, such as, but not limited to, gas, heat, water, steam, electricity, light, power, telephone, internet access and sewage. Lessor shall in no event be required to make any alterations, re-buildings, replacements, changes, additions, improvements or repairs to such facilities or services at any time during the Term of this Lease.

**ARTICLE VI**

**ENTRY BY LESSOR**

Section 6.01 <u>Right of Entry.</u> Lessee shall permit Lessor and its authorized representatives to enter the Demised Premises and the Improvements at all reasonable times for the purpose of (a) inspecting the same, (b) making any necessary repairs thereto and performing any work therein that may be necessary by reason of Lessee's failure to make any such repairs or perform any such work or to commence the same for ten (10) days after written notice from Lessor (or without notice in case of emergency), and (c) exhibiting the Demised Premises and the Improvements for sale, lease or financing, *provided that* Lessor shall use all reasonable good-faith efforts to deliver Lessee at least one (1) day's prior written notice of any such exhibition. Nothing herein shall imply any duty upon the part of Lessor to do any such work and performance thereof by Lessor shall not constitute a waiver of Lessee's default in failing to perform the same.

Section 6.02 <u>Right to Store Materials.</u> During the progress of any work in the Demised Premises and the Improvements performed by Lessor pursuant to the provisions of <u>Section 6.01</u> hereof, Lessor may keep and store therein all necessary materials, tools, supplies and equipment. Lessor shall not be liable for any inconvenience, annoyance, disturbance, loss of business or other damage of Lessee or any sublessee by reason of making such repairs or the performance of any such work, or on account of bringing materials, tools, supplies and equipment into the Demised Premises and the Improvements during the course thereof and the obligations of Lessee under this Lease shall not be affected thereby. During the course of any such work, Lessor shall exercise reasonable efforts not to cause a breach of Lessee's obligations pursuant to an approved sublease.

Section 6.03 <u>Naming Rights.</u> Lessor shall also have the right, at any time, to name the Building, including, but not limited to, appropriate signs and/or lettering on any or all entrances to the Building, and to change the name, number or designation by which the Building is commonly known.

Section 6.04 <u>No Constructive Eviction.</u> The exercise by Lessor or its agents of any right reserved to Lessor in this <u>Article VI</u> shall not constitute an actual or constructive eviction, in whole or in part, by reason of inconvenience or annoyance to Lessee.

**ARTICLE VII**

**COMPLIANCE WITH LAW**

Section 7.01 <u>Compliance With Legal Requirements and Insurance Requirements.</u> Lessee shall comply, or will cause all persons claiming by, through or under Lessee, promptly to comply, with all laws, statutes and ordinances (including, without limitation, all building codes, wetlands and zoning regulations and ordinances) and the orders, rules, regulations, directives and requirements of all federal, state, county, city and borough departments, bureaus, boards, agencies, offices, commissions and other subdivisions thereof, or of any official thereof, or of any other governmental, public or quasi-public authority or any other body hereafter constituted exercising similar functions, whether now or hereafter in force, which may be applicable to the Demised Premises, the Improvements or any landscaped areas or the sidewalks, roadways, streets, curbs and vaults at or adjoining the Demised Premises or to the use or manner of use of the Demised Premises or the Improvements (collectively, <u>"Legal Requirements").</u> Lessee shall likewise observe and comply or commence and diligently pursue compliance with all requirements of all policies of liability, fire and all other policies of insurance at any time in force with respect to the Demised Premises, the Improvements and the landscaped areas, sidewalks, curbs and vaults at or adjoining the Demised Premises or to the use or manner of use of the Demised Premises or the Improvements and all requirements of the issuers of any such policies and all orders, rules, regulations, recommendations and other requirements of the applicable Board of Fire Underwriters or the Insurance Service Office or any other body exercising the same or similar functions and having jurisdiction over the Demised Premises (collectively, the <u>"Insurance Requirements").</u>

Section 7.02 <u>Right to Contest Laws, Ordinances, Rules, Etc.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee shall have the right to contest by appropriate legal proceedings, in the name of Lessee or Lessor, or both, but without cost or expense to Lessor, the validity of any law, ordinances, certificate, order, rule, regulation or requirement of the nature referred to herein, and, if permitted by law, may defer compliance therewith pending such contest (which contest shall be diligently prosecuted by Lessee), *provided that*, and so long as: (i) such noncompliance shall not subject Lessor to criminal or civil liability or penalty; (ii) such non-compliance is permitted under all Fee Mortgages; (iii) Lessor's estate in the Demised Premises shall not be subject to sale or be in imminent jeopardy by reason of such non-compliance; and (iv) Lessee first shall deliver to Lessor security reasonably satisfactory to Lessor securing compliance with the contested Legal Requirement and payment of all interest, penalties, fines, fees and expenses in connection therewith and protecting and indemnifying Lessor and any Fee Mortgagee against any loss, claim, expense, penalty, fine or injury by reason of such non-compliance. Such contest may include appeals from any judgments, decrees or orders until a final determination is made by a court or governmental department or authority having final jurisdiction in the matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessor shall cooperate with Lessee and execute any documents or pleadings required for such contest, *provided that* such action is without expense to Lessor and that Lessor will not incur any liability by reason thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If Lessee shall initiate or carry on any such legal proceeding in the name of Lessor, or of Lessor and Lessee, Lessee shall so advise Lessor in writing within ten (10) days after the commencement thereof and shall give Lessor full details as to the tribunal in which said proceedings were filed, the law, ordinance, certificate, order, ruling, regulation or requirement contested, and such additional data as Lessor may require to enable it to understand the facts and evaluate them.

Section 7.03 <u>Environmental Matters.</u> Lessee shall not undertake, permit or suffer any Environmental Activity at the Demised Premises except to the extent such Environmental Activity is limited to (i) ordinary cleaning, maintenance or operation of the Improvements or (ii) work required in connection with any construction, Alterations or restorations or similar work required or permitted to be made in and to the Demised Premises; *provided, however*, that all of the following requirements are strictly complied with in connection with such work and activity:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All such work or activity must: (A) comply with all applicable Insurance Requirements and Legal Requirements; (B) be performed by qualified and, if required, licensed contractors, subcontractors, engineers or other professionals or qualified personnel in a manner customarily performed, undertaken or permitted or caused to be performed or undertaken by prudent property owners of comparable properties exercising due care and which will not result in a Hazardous Discharge or any other Environmental Activity in violation of applicable Insurance Requirements or Legal Requirements; (C) be performed, undertaken or permitted or caused to be performed or undertaken in such a manner as (1) shall keep the Demised Premises free from any lien imposed in respect or as a consequence of such Environmental Activity, and (2) shall safeguard against potential risks to human health or the environment or to the Demised Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessee shall notify Lessor within forty-eight (48) hours after first becoming aware of a Hazardous Discharge from or at the Demised Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon reasonable prior notice to Lessee, Lessor shall have the right, exercisable no more than once every year (and at any time in connection with investigating a suspected Environmental Activity at the Demised Premises that is not permitted hereunder, and then in connection with such Environmental Activity), to cause an environmental audit and inspection of the Demised Premises to be conducted by one or more reputable environmental engineering firms, and Lessee shall cooperate in the conduct of such environmental audit. The reasonable cost of such audit shall be payable by Lessee upon Lessor's demand therefor if such audit reveals the presence of any Hazardous Discharge. If any such audit contemplates the performance of any intrusive investigations or testing (which shall not include a mere walk-through of the Demised Premises), then prior to such entry onto the Demised Premises, Lessor shall procure from the contractor engaged to carry out the work a copy of its liability insurance policy naming Lessee as an additional insured in an amount and under a policy that is commercially reasonable in form, scope and substance. Lessor shall furnish Lessee with a copy of such audit, including the results of any such testing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If Lessee shall breach the covenants provided in this Section, in addition to any other rights and remedies which may be available to Lessor under this Lease or otherwise at law or in equity, Lessor may require Lessee to take reasonable actions, or to reimburse Lessor for the costs of any and all actions reasonably taken by Lessor, as are necessary or reasonably appropriate to cure such breach. Lessee's obligations under this Section shall survive the expiration or earlier termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Lessee hereby acknowledges that Lessor may suffer irreparable harm by reason of a breach or threatened breach of the provisions of this Section, and, accordingly, in addition to any other remedy that Lessor may have under this Lease or as may be permitted by applicable law, Lessor shall be entitled to enjoin the action, activity or inaction that gives rise to such breach or threatened breach by Lessee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) As used herein:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The term <u>"Environmental Activity"</u> shall mean any use, storage, installation, existence, release, threatened release, discharge, generation, abatement, removal, disposal, handling or transportation from, under, into or on the Demised Premises (or any portion thereof) of any Hazardous Materials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The term <u>"Hazardous Discharge"</u> shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of Hazardous Materials from or onto the Demised Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The term <u>"Hazardous Materials"</u> shall mean (A) any "hazardous substance" as defined in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601(14), as amended; (B) petroleum or petroleum products, crude oil or any by-products thereof, natural gas or synthetic gas used for fuel; (C) any asbestos, asbestos containing material or polychlorinated biphenyl; and (D) any additional substances or materials which at such time are classified or considered to be hazardous or toxic or a pollutant or contaminant under the laws of the State of New York, the United States of America, or under any other Legal Requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Lessee hereby agrees to indemnify, defend and hold harmless the Lessor and Lessor's directors, officers, shareholders, members, managers, owners, affiliates and subsidiaries, employees, and agents (collectively, the <u>"Lessor Parties,"</u> and individually, a <u>"Lessor Party")</u> from any and all claims, damages, fines, judgments, penalties, costs, expenses or liabilities (including, without limitation, any and all sums paid for settlement of claims or reasonable attorneys' fees, consultant and expert fees) arising during or after the Term from any Environmental Activity or Hazardous Discharge in, on or about the Demised Premises by Lessee, Lessee's agents, employees, contractors, licensees or invitees. For the avoidance of doubt, Lessee's indemnification obligations under this subparagraph (g) shall not include any conditions identified in the Phase I ESA (as hereinafter defined), any matters encompassed by <u>Section 10.05</u> or the performance (or omission to perform) thereunder; but shall expressly include, without limitation, subject to the terms of this Lease, any and all costs incurred due to any investigation of the site or any cleanup, removal, transportation, disposal or restoration mandated by or pursuant to any Legal Requirements due to the actions or inactions (when action was required) by Lessee, Lessee's agents, employees, contractors, licensees or invitees. The indemnification contained herein shall survive any expiration or termination of the Term.

Section 7.04 <u>Lessor's Environmental Representations.</u> Except as otherwise disclosed in the Phase I ESA, Lessor represents that to Lessor's actual knowledge, without a duty to investigate, (i) the Building, the Land, and the Demised Premises are free of Hazardous Materials, including mold in concentrations that exceed permissible indoor air quality standards, in each case in violation of or requiring remediation under Environmental Laws; (ii) Lessor has complied with all Environmental Laws applicable to the ownership, operation, and maintenance of the Building, the Land, and the Demised Premises; (iii) there are no underground storage tanks located at the Demised Premises in violation of Environmental Laws; and (iv) Lessor has received no written notice of any pending or threatened investigation, claim, or enforcement action regarding Hazardous Materials affecting the Building, the Land, or the Demised Premises as of the Commencement Date. Lessor shall, at its sole cost and expense, remediate, remove, and otherwise respond to the presence of any Hazardous Materials released in, on, under, or about the Building, the Land, or the Demised Premises prior to the Commencement Date, and shall repair any damage caused thereby. Lessor shall defend, indemnify, and hold harmless Lessee from and against all losses, costs, damages, claims, liabilities, and expenses (including reasonable attorneys' and consultants' fees) arising out of or related to a breach of this Section. For avoidance of doubt, the obligations of Lessor under this Section shall not extend to any Hazardous Materials introduced by Lessee or any Lessee Parties.

**ARTICLE VIII**

**LIENS**

Section 8.01 <u>Creation of Lien.</u> Lessee shall not create or permit to be created or to remain, and shall discharge, any mechanic's, laborer's or materialmen's lien or any conditional sale, title retention agreement or chattel mortgage, which might be or become a lien, encumbrance or charge upon the Demised Premises, the Improvements or any part thereof having any priority or preference over or ranking on a parity with the estate, rights and interest of Lessor in the Demised Premises, the Improvements or any part thereof.

Section 8.02 <u>Discharge of Lien.</u> If any mechanic's, laborer's or materialman's lien shall at any time be filed against the Demised Premises, the Improvements or any part thereof, Lessee, within thirty (30) days after notice of the filing thereof, shall cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise. If Lessee shall fail to cause such lien to be discharged within the period aforesaid, then, in addition to any other right or remedy, Lessor may, after twenty (20) days' notice to Lessee, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Lessor shall be entitled if Lessor so elects, to compel the prosecution of an action for the foreclosure of such lien by the lienor and to pay the amount of the judgment in favor of the lienor with interest, costs and allowances. Any amount so paid by Lessor and all costs and expenses incurred by Lessor in connection therewith shall constitute additional rent payable by Lessee under this Lease and shall be paid by Lessee to Lessor on demand.

Section 8.03 <u>No Consent or Request by Lessor.</u> NOTICE IS HEREBY GIVEN THAT LESSOR SHALL NOT BE LIABLE FOR ANY LABOR OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE UPON CREDIT, AND THAT NO MECHANIC'S OR OTHER LIEN FOR ANY SUCH LABOR OR MATERIALS SHALL ATTACH TO OR AFFECT THE FEE ESTATE. NOTHING IN THIS LEASE SHALL BE DEEMED OR CONSTRUED IN ANY WAY TO CONSTITUTE LESSOR'S CONSENT OR REQUEST, EXPRESS OR IMPLIED, BY INFERENCE OR OTHERWISE, TO ANY CONTRACTOR, SUBCONTRACTOR, LABORER, EQUIPMENT OR MATERIAL SUPPLIER FOR THE PERFORMANCE OF ANY LABOR OR THE FURNISHING OF ANY MATERIALS OR EQUIPMENT FOR ANY CONSTRUCTION, NOR AS GIVING LESSEE ANY RIGHT, POWER OR AUTHORITY TO CONTRACT FOR, OR PERMIT THE RENDERING OF, ANY SERVICES, OR THE FURNISHING OF ANY MATERIALS THAT WOULD GIVE RISE TO THE FILING OF ANY LIENS AGAINST THE FEE ESTATE. LESSEE SHALL INDEMNIFY LESSOR AGAINST ANY CONSTRUCTION UNDERTAKEN BY LESSEE OR ANYONE CLAIMING THROUGH LESSEE, AND AGAINST ALL PROHIBITED LIENS.

**ARTICLE IX<br> INSURANCE**

Section 9.01 <u>Required Insurance.</u> Lessee shall throughout the Term of this Lease, at its sole cost and expense, provide and cause to be maintained (and shall cause its sublessees and licensees, if any, to provide and maintain) the following required insurance, each of which may be satisfied, for the avoidance of doubt, to the extent covered by any blanket, umbrella or other similar such policies or coverage as described in <u>Section 9.07</u> below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) commercial general liability insurance, including Blanket Broad Form contractual liability insurance, protecting and indemnifying Lessee and Lessor, from and against any and all claims for damages or injury to person or property or for loss of life or of property occurring upon, in, or about the Demised Premises and the adjoining streets, vaults, sidewalks and passageways, such insurance to afford immediate protection, to the limit of not less than Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate for all occurrences within each policy year and in such greater or lesser limits as may be determined pursuant to <u>Section 9.01(f)</u> hereof. Such policy shall include a provision, if available, that said aggregate limit shall apply separately at the Demised Premises and that said insurer will provide notice to the Lessor if said aggregate is reduced by either payments of a claim or establishment of a reserve for claims if said payments or reserves exceed Five Million Dollars ($5,000,000). Lessee agrees that if the aggregate limit applying to the Demised Premises is reduced by the payment of a claim or establishment of a reserve to take all reasonably practical immediate steps to have the aggregate limit restored by endorsement to the existing policy or the purchase of an additional insurance policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) workers' compensation insurance covering all persons employed by Lessee at the Demised Premises and with respect to whom death or bodily injury claims could be asserted against Lessor, Lessee or the Demised Premises, with statutorily required limits. Lessee shall include a covenant in its subleases, if any, for sublessees to keep and maintain such insurance covering all persons employed by sublessees at the Demised Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) business automobile liability insurance covering liability arising out of any vehicle including owned, non-owned, leased, rented and/or hired vehicles insuring against liability for bodily injury and death and for property damage in an amount as may from time to time be reasonably determined by Lessor but not less than Five Million Dollars ($5,000,000) each accident;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) during the performance of any Alteration, builder's risk completed value form covering the perils insured under the ISO Special Causes of Loss form (CP 10 30) or any other form providing substantially equivalent coverage, including collapse, water damage, flood (if the Demised Premises is located in a flood zone), sink hole, earthquake and transit coverage, with deductible reasonably approved by Lessor, in nonreporting form, covering the total value of work performed and equipment supplies and materials furnished (with an appropriate limit for soft costs in the case of construction) and covering the full insurable value of all materials, tools and equipment at any off-site storage location used with respect to the Demised Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) during the performance of any Alteration, commercial general liability insurance, which shall include coverage for independent contractors and completed operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Such other insurance and/ or such amounts as may from time to time be reasonably required by Lessor and/or any Fee Mortgagee against other insurable hazards which at the time are customarily insured against in the case of premises and buildings similarly situated in ***Ulster County, New York***, due regard being, or to be given to the height and type of building, its construction, use and occupancy.

Section 9.02 <u>Lessor's Insurance.</u> Lessor shall throughout the Term of this Lease, at the sole cost and expense of Lessee, provide and cause to be maintained:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) commercial property insurance on the Improvements written on an "Agreed Amount" basis, in amounts at all times sufficient to prevent Lessor or Lessee from becoming a coinsurer under the terms of the applicable policies, but in any event, in an amount not less than the then Full Insurable Value of the Improvements. The term "Full Insurable Value" shall mean actual replacement cost of the Improvements (exclusive of the cost of noninsurable portions thereof, such as excavation, foundations and footings) without deduction being made for depreciation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Insurance upon the Improvements against loss or damage due to war, acts of terrorism, flood, earthquake or nuclear reaction, as and when such insurance shall be customary for premises similarly situated in ***Ulster County, New York*,** in an amount not less than the Full Insurable Value thereof or the maximum amount of such insurance obtainable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Insurance against loss or damage from leakage of sprinkler systems now or hereafter installed in the Improvements, in such amount as Lessor may reasonably require;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Boiler and pressure vessel and miscellaneous equipment insurance, including steam pipes, air conditioning systems, electric motors, air tanks, compressors and pumps, in such amounts as Lessor may reasonably require;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Comprehensive general liability insurance for bodily and personal injury (including contractor's liability) and property damage occurring in, on or about the Demised Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Such other insurance and in such amounts as may from time to time be reasonably required by Lessor against other insurable hazards which at the time are customarily insured against in the case of premises and buildings similarly situated in ***Ulster County, New York***, due regard being, or to be given to the height and type of building, its construction, use and occupancy.

Section 9.03 <u>Payment by Lessee.</u> Lessee shall pay to Lessor an amount equal to one hundred (100%) percent of all insurance premiums or installments thereof for the policies of insurance described in <u>Section 9.02</u> hereof, as Additional Rent, thirty (30) days prior to the date on which such insurance premiums or any installments thereof are payable, upon the receipt of a statement from Lessor specifying the amount of any such insurance premium or installment; *provided, however*, that any increase in insurance premiums passed through to Lessee shall be capped at an amount equal to five percent (5%) of the premiums paid or payable for the immediately preceding Lease Year, *provided that* such cap shall not apply to any increase directly attributable to a change in the scope, type, or amount of coverage required or carried.

Section 9.04 <u>Policies of Insurance.</u> All policies of insurance shall be from a company rated on the A.M. Best Key Rating Guide with ratings of at least A- and of at least VI and such company shall be licensed to do business in the ***State of New York***. Lessee shall provide to Lessor and to the holder of any Fee Mortgage on the Demised Premises, originals or true copies of certificates of the policies, bearing notations evidencing the payment of premiums or accompanied by other evidence reasonably satisfactory to said parties of such payments. Each such policy shall contain a provision that no act or omission of Lessee shall affect or limit the obligation of the insurance company to pay the amount of any loss sustained and an agreement by the insurer that such policy shall not be cancelled without at least thirty (30) days' prior written notice to Lessor and to the holder of any Fee Mortgage on the Demised Premises.

Section 9.05 <u>Compliance by Lessee.</u> Lessee shall conform to the customary provisions of any such policies in all material respects and shall comply with the customary requirements of the companies writing such policies pertinent to the conduct of Lessee's business on the Demised Premises and the Improvements. Lessee may contest any provisions thereof, and Lessor shall cooperate in Lessee's reasonable efforts in connection therewith, but not in any manner which would result in the cancellation of such policy without available substitution.

Section 9.06 <u>Named Insureds.</u> All policies of insurance required under <u>Sections 9.01</u> and 9.02 shall name Lessor and the holder of any Fee Mortgage on the Demised Premises, as their interests may appear.

Section 9.07 <u>Blanket Policies.</u> Any insurance provided for in this <u>Article IX</u> may be effected by a blanket policy or policies of insurance, or under so-called "all risk" or "multi-peril" insurance policies, *provided that* the amount of the total insurance available in respect of the Demised Premises and the Improvements shall be at least the protection equivalent to separate policies in the amounts herein required, and *provided, further*, that in other respects, any such policy or policies shall comply with the provisions of this <u>Article IX.</u> An increased coverage or "umbrella policy" may be provided and utilized by Lessee to increase the coverage provided by individual or blanket policies in lower amounts and the aggregate liabilities provided by all such policies covering the Demised Premises and the Improvements and Lessee's liability hereunder shall be satisfactory, *provided that* they otherwise comply with the provisions of this <u>Article IX.</u> In any such case, it shall not be necessary to deliver the original of any such blanket policy to the Lessor, but Lessor shall be furnished with a certificate or duplicate of such policy reasonably acceptable to Lessor upon request.

Section 9.08 <u>Subrogation Rights.</u> Each of the parties hereto and their successors or assigns hereby waives any and all rights of action for negligence against the other party hereto which may hereafter arise for damage to the Demised Premises or to property therein resulting from any Casualty of the kind covered by standard fire insurance policies with extended coverage, regardless of whether or not or in what amounts, such insurance is now or hereafter carried by the parties hereto, or either of them. Both parties agree to use their best efforts to obtain and maintain a waiver of subrogation from their respective carriers if they are insured.

**ARTICLE X**

**REPAIRS AND MAINTENANCE**

Section 10.01 <u>Repairs and Maintenance by Lessee.</u> Lessee, at its sole cost and expense, shall take commercially reasonable care of the Demised Premises and shall keep and maintain all portions of the Demised Premises and all Improvements, including any parking areas, landscaping, streets and sidewalks, in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice. Lessee, at its sole cost and expense, shall make all non-structural repairs to the Demised Premises and all Improvements, including, but not limited to, the Building Systems, the parking areas, landscaped areas, sidewalks, private roadways and streets, curbs and vaults. When used in this <u>Article X,</u> the word "repairs" shall include replacements, renewals or substitutions when necessary, and all such repairs shall be of such class and character as are appropriate at the time for the Improvements giving due consideration to the age, character and class of the Improvements.

Section 10.02 <u>Repairs by Lessor.</u> Lessor shall, except as otherwise provided herein, at its sole cost and expense (i) repair and maintain the roof of the Building and (ii) make all structural repairs to the Building. Notwithstanding the forgoing, if any of the repairs described in this <u>Section 10.02</u> are necessitated by the negligence, improper care or use by Lessee, its agents, employees, licensees or invitees, such repairs shall be made by Lessor at Lessee's sole cost and expense. Lessor shall invoice Lessee upon completion of any work performed on Lessee's behalf. There shall be no allowance to Lessee for a diminution of rental value and no liability on the part of Lessor by reason of inconvenience, annoyance or injury to business arising from Lessor, Lessee or others making any repairs, alterations, additions or improvements in or to any portion of the Demised Premises, or in or to the fixtures, appurtenances or equipment thereof, and no liability upon Lessor for failure of Lessor or others to make any repairs, alterations, additions or improvements in or to any portion of the Demised Premises, or in or to the fixtures, appurtenances or equipment thereof.

Section 10.03 <u>Excavation on Adjoining Premises.</u> If an excavation or other building operation shall be about to be made or shall be made upon any adjoining premises or streets, Lessee shall permit the owner or tenant of such adjoining premises, and their respective representatives, to enter the Demised Premises and the Improvements to shore the foundations and walls of the Improvements and to do any other act or thing necessary for the safety and preservation thereof, and upon the failure or refusal of such owner or tenant or their respective representatives, so to do, Lessee shall undertake such shoring or such other act or things necessary for such safety and preservation.

Section 10.04 <u>HVAC System.</u> Except as otherwise expressly provided herein, Lessee shall, at its sole cost and expense, maintain, service, and keep in good order, condition, and repair the HVAC System. Throughout the Term, Lessee shall, at its sole cost and expense, maintain in full force and effect a service and maintenance contract for the HVAC System with an independent contractor reasonably approved by Lessor, which contract shall provide for maintenance at least in accordance with the recommendations of the HVAC System manufacturer and/or recommendations made by the independent contractor to provide routine maintenance for the HVAC system. Lessee shall deliver to Lessor a copy of such executed service contract within thirty (30) days following the Commencement Date and upon each renewal or replacement thereof.

Lessee shall not make any alterations, additions, or modifications to the HVAC System without the prior written consent of Lessor, which consent may be granted or withheld in Lessor's reasonable discretion. Any approved alterations, additions, or modifications shall be performed at Lessee's sole cost and expense and in accordance with all applicable laws and the terms of this Lease. In addition to the foregoing maintenance obligations, Lessee shall, at its sole cost and expense, perform all repairs to the HVAC System required during the Term, up to an aggregate amount of Ten Thousand Dollars ($10,000.00) in any Lease Year (the <u>"HVAC Repair</u> Cap"). In the event that the cost of any single repair or series of repairs to the HVAC System in any Lease Year exceeds the HVAC Repair Cap, Lessee shall be responsible for the HVAC Repair Cap, and Lessor shall pay seventy-five percent (75%) of the portion of such costs in excess of the HVAC Repair Cap, with Lessee remaining responsible for the balance. Lessee shall not perform any repairs to the HVAC System which exceed the HVAC Repair Cap without Lessor's prior written approval of the scope of work thereof and the contractor (if any) proposed to perform such work, *provided that* such approval shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary, Lessee shall be solely responsible, without limitation, for the entire cost of any repairs to the HVAC System to the extent necessitated by the acts, omissions, misuse, or negligence of Lessee or its agents, employees, contractors, or invitees.

Section 10.05 <u>ESA Work.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Pursuant to that certain Phase I Environmental Site Assessment dated as of January 28, 2026 (the <u>"Phase I</u> ESA"), Lessor acknowledges the existence of three abandoned water wells and a sinkhole. Lessor shall, at its sole cost and expense, plug the wells and complete all backfilling and compaction to the existing sinkhole condition (collectively, the <u>"ESA Work")</u> in accordance with all applicable federal, state, and local environmental laws, regulations, industry standard geotechnical practices, and agency requirements, including, without limitation, those of the New York State Department of Environmental Conservation ("NYSDEC"). Subject to any delays due to Force Majeure or caused by any governmental authority in connection with the issuance of any necessary permit or approval application for the ESA Work (provided that Lessor is using commercially reasonable efforts, in good faith in the pursuit of such permit or approval application), Lessor shall cause the ESA Work to be completed within three (3) months following the Commencement Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Follow-up Remediation.</u> If at any time following completion of the ESA Work, the sinkhole reappears, settlement or subsidence is detected, or conditions reasonably indicate renewed sinkhole activity, Lessee shall promptly provide notice to Lessor, and Lessor shall, at Lessor's sole cost and expense, promptly perform any additional remediation, stabilization, corrective work necessary to restore and maintain the affected area in a safe and stable condition, all in compliance with applicable laws.

**ARTICLE XI<br> ALTERATIONS**

Section 11.01 <u>Alterations By Lessee.</u> Lessee shall make no alterations, installations, additions or improvements in or to the Demised Premises (collectively, <u>"Alterations")</u> without Lessor's prior written consent (which consent shall not be unreasonably withheld or delayed with respect to nonstructural Alterations) and then only by contractors or mechanics approved by Lessor, which approval or denial shall be made in accordance with <u>Section 11.09</u> below, and at such times and in such manner as Lessor may from time to time designate. All Alterations done by Lessee shall at all times comply with all Legal Requirements and plans and specifications prepared by and at the sole cost and expense of Lessee theretofore submitted to Lessor for its prior written approval, which approval shall not be unreasonably withheld or delayed. No Alterations shall be undertaken by Lessee, its agents, servants or employees, until Lessor has approved such plans and specifications in writing (which approval shall not be unreasonably withheld or delayed), and no amendments or additions to such plans and specifications shall be made without the prior written consent of Lessor (which consent shall not be unreasonably withheld or delayed).

Section 11.02 <u>Permitting.</u> No Alteration, structural or otherwise, shall be undertaken until Lessee shall have procured and paid for all municipal and other governmental permits and authorizations of the various municipal departments and governmental subdivisions having jurisdiction relating to the particular phase of said Alteration to be undertaken. Lessor shall join in the application for such permits or authorizations whenever such action is necessary, *provided that* such action is without expense to Lessor. If by reason of any Alteration a new certificate of occupancy for the Improvements is required, Lessee shall obtain it promptly upon completion and shall furnish a copy thereof to Lessor promptly after its issuance.

Section 11.03 <u>Standard of Alteration Work.</u> All work done in connection with any Alteration shall be done promptly and in a good and workmanlike manner of first-class materials and in compliance with all Legal Requirements including the building and zoning laws and all other laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and the appropriate departments, commissions, boards and officers thereof, and in accordance with the orders, rules and regulations of the State Board of Fire Underwriters or any other body hereafter constituted exercising similar functions.

Section 11.04 <u>Lessor Rights.</u> The Lessor reserves the right to (i) to designate reasonably the time and manner in which all work with respect to Alterations may be performed and (ii) require compliance with such other reasonable rules as the Lessor may prescribe with respect to such work; *provided that* same are not inconsistent with the terms and provisions of this Lease.

Section 11.05 <u>Indemnification by Lessee.</u> Lessee shall indemnify and defend all Lessor Parties and hold them harmless from and against all claims, liens, costs (including reasonable attorneys' fees) and other liabilities which the Lessor Parties may incur, arising out of or due to any such Alterations. The provisions of the preceding sentence shall survive the expiration or earlier termination of this Lease. At all times when any Alteration, structural or otherwise, is in progress Lessee shall, at Lessee's sole cost and expense, maintain or cause to be maintained the insurance required to be maintained by Lessee pursuant to <u>Section 9.01.</u> All such insurance for bodily injury and property damage shall name the Lessor as an insured thereunder; and the policies therefor shall be submitted to the Lessor for its approval of the coverage and insurer before any work is commenced.

Section 11.06 <u>Health and Safety Compliance.</u> The Lessee, at its sole cost and expense, shall obtain forthwith the cancellation or discharge of all notices of violation issued against the Demised Premises or the Building for violation of any building, fire, safety, health, sanitary or other code, statute, ordinance or rule or regulation promulgated under them, arising from or otherwise connected with any work performed by or on behalf of the Lessee with respect to the Demised Premises.

Section 11.07 <u>Standard of Performance.</u> The Lessee agrees that in the exercise of any rights pursuant to the provisions of this <u>Article XI,</u> any other provision of this Lease and/or pursuant to any consent to any Alteration in or to the Demised Premises, it shall perform its work in a diligent and expeditious manner.

Section 11.08 <u>Fees.</u> The Lessee shall make arrangements for and pay the fees of any architect or engineer retained by Lessor to review Lessee's plans and specifications in connection with any proposed Alterations. Upon completion of each Alteration, Lessee shall deliver to Lessor a copy of the "as built" plans with respect thereto.

Section 11.09 <u>Contractors and Vendors.</u> In the performance of any Alteration work, the Lessee shall employ only those construction companies, contractors, laborers, suppliers and vendors as shall first have been approved by the Lessor, which approval shall (i) be made by Lessor within ten (10) Business Days of Lessee's written submission to Lessor of the identity of the proposed contractors to be used by the Lessee; and (ii) not be unreasonably withheld or delayed. All such construction companies, contractors, vendors and suppliers shall work in harmony and without labor strife with the Lessor's contractors, vendors or suppliers. If the Lessee or any of its construction companies, contractors, vendors and suppliers materially interferes with or materially delays prosecution or completion of any alteration work being performed by or on behalf of Lessor, the Lessee shall cease such work and discharge such construction company, contractor, laborer, supplier or vendor; but the Lessor shall have no liability or responsibility for any damage or any injury sustained by the Lessee due to such cessation of work and/or discharge.

**ARTICLE XII**

**FIRE AND OTHER CASUALTY**

Section 12.01 <u>Event of Casualty.</u> If the Demised Premises shall be damaged by fire or other casualty (a <u>"Casualty"),</u> Lessor, at Lessor's expense, shall repair such damage. However, Lessor shall have no obligation to repair any damage to, or to replace, Lessee's personal property or any other property or effects of Lessee. If the entire Building shall be rendered untenantable by reason of any such damage, the Rent shall abate for the period from the date of such damage to the date when such damage shall have been repaired, and if only a part of the Demised Premises shall be so rendered untenantable, the Rent shall abate for such period in the proportion which the rentable area of the part of the Building so rendered untenantable bears to the total rentable area of the Building. However, if prior to the date when all of such damage shall have been repaired, any part of the Building so damaged shall be rendered tenantable and shall be used or occupied by Lessee or any person or persons claiming through or under Lessee, then the amount by which the Rent shall abate shall be equitably apportioned for the period from the date of any such use or occupancy to the date when all such damage shall have been repaired.

Section 12.02 <u>Total Loss.</u> Notwithstanding the foregoing provisions of this <u>Article XII,</u> if, prior to or during the Term (i) the Building shall be totally damaged or rendered wholly untenantable by a Casualty, and if Lessor shall decide not to restore the Building, or (ii) the Building shall be so damaged by a Casualty that in Lessor's opinion, substantial alteration, demolition, or reconstruction of the Building shall be required, then, in any of such events, Lessor, at Lessor's option, may give to Lessee within ninety (90) days after such Casualty, a thirty (30) days' notice of termination of this Lease and, in the event such notice is given, this Lease and the Term shall come to an end and expire (whether or not the Term shall have commenced) upon the expiration of said thirty (30) days with the same effect as if the date of expiration of said thirty (30) days were the Expiration Date. The Rent shall be apportioned as of the date of the Casualty and any prepaid portion of Rent for any period after such date shall be refunded by Lessor to Lessee.

Section 12.03 <u>Partial Loss.</u> Notwithstanding anything set forth to the contrary in this <u>Article XII,</u> in the event that any Casualty rendering a <u>"Material Portion"</u> (as hereinafter defined) of the Building wholly untenantable occurs during the final twelve (12) months of the Term, either Lessor or Lessee may terminate this Lease by providing notice to the other party within thirty (30) days after the occurrence of such Casualty, this Lease shall expire on the 30th day after the date of such notice, the Rent shall be apportioned as of the date of the Casualty and any prepaid portion of Rent for any period after such date shall be refunded by Lessor to Lessee. For purposes of this <u>Article XII,</u> a "Material Portion" of the Building shall be deemed untenantable if due to such Casualty, (a) Lessee shall be precluded from using more than 50% of the area of the Building for the conduct of its business and (b) Lessee's inability to so use the Building is reasonably expected to continue until at least the earlier of the (i) Expiration Date, or (ii) the 90th day after the date when such Casualty occurred.

Section 12.04 <u>Late-Term Loss.</u> If the Building is destroyed or damaged by any Casualty during the final six (6) months of the Term, and such damage cannot reasonably be repaired, or is not repaired by Lessor, within thirty (30) days after the happening of such Casualty, Lessor or Lessee shall have the right to terminate this Lease effective as of the date of such Casualty by delivering written notice thereof to Lessor.

Section 12.05 <u>Applicable Law.</u> This <u>Article XII</u> constitutes an express agreement governing any case of damage or destruction of the Demised Premises or the Building by fire or other Casualty, and any law which provides for such contingency in the absence of an express agreement now or hereafter in force, shall have no application in any such case.

Section 12.06 <u>Insurance Recovery Deficit.</u> Notwithstanding any of the foregoing provisions of this <u>Article XII,</u> if Lessor or any Fee Mortgagee shall be unable to collect all of the insurance proceeds (including rent insurance proceeds) applicable to damage or destruction of the Demised Premises or the Building by reason of any willful action or inaction on the part of Lessee then, without prejudice to any other remedies which may be available against Lessee, Lessor shall have no obligation to expend any sums for repair or restoration in excess of the insurance proceeds actually received and available to Lessee for such purpose. If the cost to complete Lessor's repair obligations exceeds the insurance proceeds, Lessee may, at its option and as a condition to requiring Lessor to continue with restoration of the Demised Premises, deposit with Lessor, within ten (10) days after written notice of the funding shortfall, the amount of such excess, which funds shall be applied to the restoration. If Lessee does not timely fund such excess, Lessor may elect to limit or cease restoration to the extent of the insurance proceeds without liability to Lessee.

**ARTICLE XIII<br> CONDEMNATION**

Section 13.01 <u>Event of Condemnation.</u> In the event that the whole of the Demised Premises or the Building shall be lawfully condemned or taken in any manner for any public or quasi-public use, this Lease and the Term and estate hereby granted shall forthwith cease and terminate as of the date of vesting of title. In the event that only a part of the Building shall be so condemned or taken, then effective as of the date of vesting of title, the Rent hereunder shall be abated in an amount thereof apportioned according to the rentable area of the Building so condemned or taken. In the event that only a part of the Demised Premises shall be so condemned or taken, then (a) Lessor may, at its option, terminate this Lease and the Term and estate hereby granted as of the date of such vesting of title by notifying Lessee in writing of such termination within sixty (60) days following the date on which Lessor shall have received notice of vesting of title, and (b) if such condemnation or taking shall be of a Material Portion of the Building or a substantial part of the means of access thereto, Lessee shall have the right, by delivery of notice in writing to Lessor within sixty (60) days following the date on which Lessee shall have received notice of vesting of title, to terminate this Lease and the Term and estate hereby granted as of the date of vesting of title or (c) if neither Lessor nor Lessee elects to terminate this Lease, as aforesaid, this Lease shall be and remain unaffected by such condemnation or taking, except that the Rent shall be abated to the extent, if any, hereinabove provided in this <u>Article XIII.</u> In the event that only a part of the Building shall be so condemned or taken and this Lease and the Term and estate hereby granted are not terminated as hereinabove provided, Lessor will, at its expense, restore the remaining portion of the Building as nearly as practicable to the same condition as it was in prior to such condemnation or taking. In the event of a termination in any of the cases hereinabove provided, this Lease and the Term and estate granted shall expire as of the date of such termination with the same effect as if that were the Expiration Date of this Lease, and the Rent hereunder shall be apportioned as of such date. For purposes of this <u>Article XIII,</u> a <u>"Material Portion"</u> of the Building shall be deemed taken if due to such condemnation or taking, (a) Lessee shall be precluded from using more than 50% of the area of the Building for the conduct of its business and (b) Lessee's inability to so use the Building is reasonably expected to continue until at least the earlier of the (i) Expiration Date, or (ii) the 90th day after the date of the vesting of title.

Section 13.02 <u>Entitlement to Insurance Proceeds.</u> In the event of any condemnation or taking hereinabove mentioned of all or part of the Demised Premises, Lessor shall be entitled to receive the entire award in the condemnation proceeding, including any award made for the value of the estate vested by this Lease in Lessee, and Lessee hereby expressly assigns to Lessor any and all right, title and interest of Lessee now or hereafter arising in or to any such award or any part thereof, and Lessee shall be entitled to receive no part of such award; *provided, however*, that the Lessee shall be entitled to assert any and all claims which it may be entitled to pursue under applicable law, and to receive and retain for its own account all such amounts, rights or other remedies as may be available to it in connection with: (a) the value of Lessee's leasehold interest; (b) the unamortized cost of any improvements made by Lessee to the Demised Premises; (c) any taking of nonmovable fixtures owned by Lessee; and (d) any disruption to Lessee's business (including relocation damages). It is expressly understood and agreed that the provisions of this <u>Article XIII</u> shall not be applicable to any condemnation or taking for governmental occupancy for a limited period.

Section 13.03 <u>Eminent Domain.</u> In the event any action is filed to condemn the Demised Premises or any part thereof by any public or quasi-public authority under the power of eminent domain, or in the event that any action is filed to acquire the temporary use of the Demised Premises or any part thereof, or in the event that any such action is threatened or any public or quasi-public authority communicates to Lessor or Lessee its desire to acquire the Demised Premises or any part thereof, or the temporary use thereof, by a voluntary conveyance or transfer in lieu of condemnation, either Lessor or Lessee shall give prompt notice thereof to the other.

**ARTICLE XIV**

**INDEMNITY; WAIVER**

Section 14.01 <u>Indemnification of Lessee.</u> Lessee shall indemnify, defend and save harmless the Lessor Parties from and against all claims, demands, causes of action, losses, liabilities, damages (including property damage and bodily injury), fines, penalties, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to (a) the negligence or willful misconduct of Lessee or Lessee's employees, agents, contractors, or invitees; (b) Lessee's breach of this Lease; or (c) Lessee's use, occupancy, or operation at the Demised Premises during the Term of this Lease; *provided, however*, that in no event shall Lessee have any obligation to indemnify, defend, or hold harmless any Lessor Party to the extent of any negligence or willful misconduct of any Lessor Party.

Section 14.02 <u>Indemnification of Lessor.</u> Lessor shall indemnify, defend, and hold harmless the Lessee and Lessee's directors, officers, shareholders, members, managers, owners, affiliates and subsidiaries, employees, and agents (collectively, the <u>"Lessee Parties,"</u> and individually, a <u>"Lessee Party")</u> from and against all claims, demands, causes of action, losses, liabilities, damages (including property damage and bodily injury), fines, penalties, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to: (a) the negligence or willful misconduct of Lessor or Lessor's employees, agents, contractors, or invitees; or (b) Lessor's breach of this Lease, *provided, however*, that in no event shall Lessor have any obligation to indemnify, defend, or hold harmless any Lessee Party to the extent of any negligence or willful misconduct of any Lessee Party.

Section 14.03 <u>Inspection by Lessee.</u> Lessee has inspected and is fully familiar with the physical condition of the Demised Premises and the Improvements and Building Systems presently situated thereon. Except as otherwise expressly provided herein, Lessor has made no representations of whatever nature in connection with the condition of the Demised Premises or of the Improvements or Building Systems situated thereon and Lessor shall not be liable for any latent or patent defect therein.

Section 14.04 <u>Costs and Charges.</u> Lessee shall pay, and indemnify Lessor against, all legal costs and charges, including counsel fees, lawfully and reasonably incurred by Lessor in enforcing any provision of this Lease or in any suit or proceeding affecting the Demised Premises, the Improvements or this Lease to which Lessor is joined as a party other than a suit affecting the title to the Demised Premises and other than in connection with any suit or proceeding brought or steps taken by Lessor to obtain possession of the Demised Premises and the Improvements after default of Lessee.

**ARTICLE XV**

**ASSIGNMENT AND SUBLETTING**

Section 15.01 <u>Restrictions on Assignment and Subletting.</u> Lessee shall not mortgage, pledge, encumber or otherwise hypothecate this Lease or the Demised Premises or any part thereof in any manner whatsoever, and any attempt to do so shall be void and a material breach of this Lease. Lessee shall not, whether voluntarily, involuntarily, by operation of law or otherwise: (a) assign or otherwise transfer this Lease or offer or advertise to do so; or (b) sublet the Demised Premises or any part thereof, or offer or advertise to do so, without in each instance, obtaining the prior written consent of the Lessor, which consent shall not be unreasonably withheld or delayed. Any attempt by Lessee to assign or transfer this Lease (or its Term and estate) or offer or advertise to do so, or sublet the Demised Premises or any part thereof or offer or advertise to do so, without strictly complying with the requirements of this <u>Article XV</u> shall be void and a material breach of this Lease. Use or occupancy of the Demised Premises by a licensee, concessionaire, or any person other than Lessee is a sublease subject to this <u>Article XV.</u>

Section 15.02 <u>Exceptions to Consent Requirement.</u> Consent shall not be required in the event of: (a) a transfer to a wholly-owned affiliate or subsidiary of Lessee; (b) any corporate reorganization involving Lessee; (c) a merger or consolidation with a parent entity; or (d) assignment to an affiliate of Lessee, *provided that* the successor to Lessee has a net worth (computed in accordance with generally accepted accounting principles consistently applied) at least equal to the net worth of the Lessee named herein on the date prior to such merger or consolidation or assignment. Written notice of the intent to consummate such a transaction shall be delivered to Lessor at least thirty (30) days prior to the effective date thereof, and Lessee shall provide reasonable documentary demonstrating the satisfaction of the foregoing net worth criterion promptly upon request. The term "affiliate" as used herein shall mean any corporation which controls or is controlled by Lessee or is under common control with Lessee.

Section 15.03 <u>Binding of Assignee.</u> No assignment of this Lease shall be valid or binding on Lessor unless and until the assignee executes and delivers to Lessor an agreement in form and substance satisfactory to Lessor, whereby the assignee assumes and agrees to be bound by all of the provisions of this Lease and to perform all of the obligations of Lessee hereunder.

Section 15.04 <u>Assignor Liability.</u> Notwithstanding any assignment or sublease to any other person, Lessee shall remain fully liable for the payment of Rents and for the performance of all the other obligations of Lessee contained in this Lease. Any act or omission of an assignee or subtenant or any person claiming under or through any of them that violates this Lease shall be deemed a violation of this Lease by Lessee.

Section 15.05 <u>Subsequent Assignments.</u> The consent by Lessor to any assignment or sublease shall not relieve Lessee or any person claiming through or under Lessee of the obligation to obtain the consent of Lessor, pursuant to the provisions of this <u>Article XV,</u> to any future assignment or sublease.

Section 15.06 <u>Reimbursement of Expenses.</u> Lessee shall reimburse Lessor on demand for any reasonable costs that Lessor may incur in connection with any proposed assignment or sublease, including, without limitation, the costs of making investigations as to the acceptability of the proposed assignee or subtenant, and legal costs incurred in connection with any request for consent.

Section 15.07 <u>Assignment of Profits.</u> If Lessor shall consent to any assignment of this Lease, Lessee shall, in consideration therefor, pay to Lessor, as Additional Rent, an amount equal to one hundred (100%) percent of the Net Assignment Profits, which amount shall be paid to Lessor within thirty (30) days of Lessee's receipt thereof. The <u>"Net Assignment Profits"</u> shall mean an amount equal to (i) all sums and other consideration paid to Lessee by an assignee for or in connection with such assignment (including sums paid for the purchase or rent of Lessee's property and all or any part of the improvements in excess of their then fair market value) less (ii) Lessee Expenses (as hereinafter defined) in connection with such assignment.

Section 15.08 <u>Application of Sublease Rent.</u> If Lessor shall consent to any sublease, each rental or other payment (a <u>"Sublease Rent Payment")</u> received by Lessee under such sublease (including each sum received by Lessee for the sale or rental of improvements and/or Lessee's property) shall be applied as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) first, such Sublease Rent Payment shall be retained by Lessee until Lessee shall have retained under this clause an amount equal to all Rent payable under this Lease with respect to the subleased space during or in respect of the period to which such Sublease Rent Payment relates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>second,</u> the balance of such Sublease Rent Payment shall be retained by Lessee until Lessee shall have retained under this clause an amount equal to Lessee Expenses in connection with such sublease; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>third,</u> fifty (50%) percent of the balance of such Sublease Rent Payment shall be paid by Lessee to Lessor.

The Rents allocable to the subleased space for any period shall equal the total Rents accruing during such period with respect to the Demised Premises multiplied by a fraction, the numerator of which is the rentable area of the subleased space and the denominator of which is the rentable area of the Demised Premises. Lessee shall make payment to Lessor with respect to each Sublease Rent Payment within thirty (30) days of Lessee's receipt thereof. Such payment shall be accompanied by a detailed computation of the amount paid.

Section 15.09 <u>Lessee Expenses.</u> For purposes of this <u>Article XV, "Lessee Expenses"</u> in connection with an assignment or sublease shall mean all brokerage commissions, legal fees and cash contributions, free rent or monetary concessions or alteration expenses incurred, or to be incurred, by Lessee in connection with such assignment or sublease.

Section 15.10 <u>Collection of Sublessee Rent.</u> If this Lease is assigned, whether or not in violation of the provisions of this Lease, Lessor may collect rent from the assignee. If the Demised Premises or any part thereof are sublet, whether or not in violation of this Lease, Lessor may, after default by Lessee and expiration of Lessee's time to cure such default, collect rent from the sublessee. In either event, Lessor may apply the net amount collected to payment of Rent, but no such assignment, subletting, or collection shall be deemed a waiver of any of the provisions of this Lease, an acceptance of the assignee or sublessee as a lessee or a release of Lessee from the performance by Lessee under this Lease.

**ARTICLE XVI**

**SUBORDINATION**

Section 16.01 <u>Subordination of Lease.</u> This Lease is subject and subordinate in all respects to all underlying leases, ground leases, licenses or agreements and to all Fee Mortgages which may now or hereafter be placed on or affect such leases and/or the real property of which the Demised Premises form a part, or parts of such real property, and/or Lessor's interest or estate therein, and to each advance made and/or hereafter to be made under any such Fee Mortgages, and to all renewals, modifications, consolidations, replacements and extensions thereof and all substitutions therefore. This <u>Section 16.01</u> shall be self-operative, and no further instrument of subordination shall be required. In confirmation of such subordination, Lessee shall execute and deliver promptly any certificate that Lessor and/or any mortgagee and/or the lessor under any ground or underlying Lease and/or their respective successors in interest may request as to the subordination of this Lease.

Section 16.02 <u>Mortgagees; Subordination, Non-Disturbance and Attornment.</u> Lessor shall obtain from the holder of each Fee Mortgage now or hereafter encumbering the Demised Premises, an agreement from such mortgagee, in form reasonably acceptable to such mortgagee, to the effect that so long as no default exists under this Lease, Lessee shall not be joined as a party defendant in any action or proceeding which may be instituted or taken by such mortgagee for the purpose of foreclosing any such Fee Mortgage and, so long as no default shall exist, (x) Lessee shall not be evicted from the Demised Premises, (y) Lessee's leasehold estate hereunder shall not be terminated or disturbed and (z) the mortgagee shall recognize this Lease. Lessor represents that no Fee Mortgage encumbers the Demised Premises as of the Commencement Date. Lessor shall obtain from any mortgagee of a Fee Mortgage that encumbers the Demised Premises subsequent to the Commencement Date, such mortgagee's standard form of Subordination, Non-Disturbance and Attornment Agreement ("SNDA") within sixty (60) days following the closing of the financing secured by such Fee Mortgage.

Section 16.03 <u>Effect of Mortgage Assignment.</u> Without limitation of any of the provisions of this Lease, in the event that any mortgagee and/or its assigns shall succeed to the interest of Lessor or of any successor lessor and/or shall have become lessee under a new ground or underlying lease, then, at the option of such mortgagee, this Lease shall nevertheless continue in full force and effect and Lessee shall and does hereby agree to attorn to such mortgagee or its assigns and to recognize such mortgagee or its respective assigns as its lessor.

Section 16.04 <u>Subsistence.</u> Lessee shall, at any time and from time to time upon not less than ten (10) days' prior notice by Lessor, execute, acknowledge and deliver to Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modification) and the dates to which the rent, additional rent and other charges have been paid in advance, if any, and stating whether or not to the best knowledge of the signer of such certificate Lessor is in default in performance of any covenant, agreement, term, provision or condition contained in this Lease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by any prospective purchaser or lessee of said real property or any interest or estate therein, any mortgagee or prospective mortgagee thereof or any prospective assignee of any mortgage thereof.

Section 16.05 <u>Accommodation of Financing Parties.</u> If, in connection with obtaining financing for the Demised Premises, a banking, insurance or other recognized institutional lender shall request reasonable modifications in this Lease as a condition to such financing, Lessee will not unreasonably withhold, delay or defer its consent thereto, *provided that* such modifications do not increase the obligations of Lessee hereunder, alter Lessor's obligations to Lessee or materially adversely affect the leasehold interest hereby created. Lessee hereby agrees to deliver to any lender designated by Lessor such financial statements of Lessee concerning the Demised Premises and the Improvements as may be reasonably required by such lender. All such financial statements shall be received by Lessor in confidence and shall be used only for the purposes herein set forth.

**ARTICLE XVII**

**QUIET ENJOYMENT**

Section 17.01 <u>Quiet Enjoyment.</u> Lessor covenants and agrees with Lessee that as to those claiming by, through or under Lessor and upon Lessee paying the Net Rent and other monetary sums due under the Lease and performing its covenants and conditions hereunder, Lessee shall and may peaceably and quietly have, hold and enjoy the Demised Premises and the Improvements for the entire Term of this Lease without hindrance or molestation of anyone claiming by, through or under Lessor, subject however to the provisions of this Lease.

**ARTICLE XVIII** 

**SIGNS**

Section 18.01 <u>Signs.</u> Lessee shall also have the right to erect signs on the facade of the Building *provided that*: (i) the size, design, location and content of such sign is approved by Lessor (not to be unreasonably withheld) and complies with all applicable Legal Requirements, (ii) Lessee obtains all required permits therefor, and (iii) Lessee pays all costs and expenses attributable to Lessee's installation and use of such sign, including, without limitation, labor and material costs and permit fees. Lessor does not represent or warrant that permits are obtainable for any particular sign.

**ARTICLE XIX**

**CONDITIONAL LIMITATIONS; EVENTS OF DEFAULT**

Section 19.01 <u>Lessee Default.</u> Any one or more of the following events herein shall constitute a <u>"Lessee Default":</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee shall totally desert or completely abandon the Demised Premises and/or the Improvements and such desertion or abandonment shall continue for a period of fifteen (15) days after notice by Lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessee shall default in making payment to Lessor of any Rent or any other amounts due hereunder, as and when the same shall become due and payable, and such default in payment shall continue for a period of ten (10) days after notice by Lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Lessee shall default in complying with any other agreements, terms, covenants or conditions of this Lease and such default shall continue for a period of thirty (30) days after notice by Lessor specifying the claimed default; *provided, however, that* if the nature of such default is such that the same cannot reasonably be cured within such thirty (30) day period, Lessee shall not be deemed to be in default if Lessee shall within such thirty (30) day period commence such cure and thereafter diligently prosecutes the same to completion; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If at any time during the Term of this Lease (i) any proceedings in bankruptcy, insolvency or reorganization shall be instituted against Lessee pursuant to any federal or state law now or hereafter enacted, or any receiver or trustee shall be appointed of all or any portion of Lessee's business or property, or any execution or attachment shall issue against Lessee or any of Lessee's business or property or against the leasehold estate created hereby, and any of such proceedings, process or appointment be not discharged and dismissed within sixty (60) days from the date of such filing, appointment or issuance; or (ii) Lessee shall be adjudged a bankrupt or insolvent, or Lessee shall make an assignment for the benefit of creditors, or Lessee shall file a voluntary petition in bankruptcy or petition for (or enter into) an arrangement or for reorganization, composition or any other arrangement with Lessee's creditors under any federal or state law now or hereafter enacted, or this Lease or the estate of Lessee herein shall pass to or devolve upon, by operation of law or otherwise, anyone other than Lessee (except as herein provided).

Section 19.02 <u>Termination Upon Lessee Default.</u> In event of a Lessee Default, Lessor, upon the fifteenth (15th) day of continuance of such Lessee Default may serve a written fifteen (15) day notice of cancellation and termination of this Lease (the <u>"Termination Notice")</u> upon Lessee, and upon the expiration of said 15 days, this Lease and the Term hereunder shall end and expire as fully and completely as if the date of expiration of such 15 day period were the day herein definitely fixed for the end and expiration of this Lease and the Term thereof, and Lessee shall then quit and surrender to Lessor the Demised Premises, the Improvements and each and every part thereof, and Lessor may enter into or repossess the Demised Premises, the Improvements and each and every part thereof, either by force, summary proceedings or otherwise.

Section 19.03 <u>Lessee's Liability.</u> No such expiration or termination of this Lease as a result of a Lessee Default shall relieve Lessee of its liability and obligation to pay Net Rent, Impositions, insurance premiums and any other amounts due Lessor hereunder, and such liability and obligations shall survive any such expiration or termination.

Section 19.04 <u>Right to Re-Enter and Re-Let.</u> If this Lease shall terminate pursuant to any of the provisions of this <u>Article XIX</u> or if this Lease shall terminate by expiration, forfeiture, cancellation, surrender, operation of law, issuance of final court order or otherwise then in any of said events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessor may re-enter the Demised Premises, and enter the Improvements to remove therefrom Lessee, its agents, employees, licensees and any sublessees, persons, firms or corporations and all of their respective property, using such reasonable force for that purpose as may be necessary without being liable for prosecution or damages therefor, and thereupon Lessor shall be entitled to retain possession of the Demised Premises and the Improvements with all additions, alterations and improvements thereon, fixtures and appurtenances thereto, free from any estate or interest of Lessee therein. Lessee does hereby expressly waive service of any notice of intention to re-enter or enter except as herein otherwise expressly provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessor, at Lessor's option, may relet the whole or any part of parts of the Demised Premises and the Improvements, from time to time, either in the name of Lessor or otherwise, to such lessee or lessees, for such term or terms ending before, on or after the date fixed in this Lease for the expiration of the Term; at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Lessor, in its sole discretion, may determine. Lessor shall have no obligation to relet the Demised Premises, the Improvements or any part thereof and shall in no event be liable for refusal or failure to relet the Demised Premises, the Improvements or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon such reletting, and no such refusal or failure shall operate to relieve Lessee of any liability under this Lease or otherwise to affect any such liability. Lessor, at Lessor's option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Demised Premises and the Improvements as Lessor, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Lessee of any liability under this Lease or otherwise affecting any such liability.

Section 19.05 <u>Late Charge.</u> Lessee hereby acknowledges that late payment by Lessee to Lessor of Net Rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, if any installment of Net Rent or any other sum due from Lessee hereunder shall not be received by Lessor or Lessor's designee within ten (10) days after such amount shall be due, Lessee shall pay to Lessor a late charge equal to three percent (3%) of such overdue amount. The parties hereby agree that such a late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. Amounts owed for such interest shall be deemed Additional Rent.

Section 19.06 <u>Waiver of Rights.</u> Lessee, for itself and for any and all persons claiming through or under Lessee, including its creditors, upon the termination of this Lease in accordance with the terms hereof, or in the event of entry of judgment for the recovery of the possession of the Demised Premises and the Improvements in any action or proceeding, or if Lessor shall enter the Demised Premises and the Improvements by process of law or otherwise, hereby waives any right of redemption provided or permitted by any statute, law or decision now or hereafter in force, and does hereby waive, surrender and give up all rights or privileges which it or they may or might have, under and by reason of any present or future law or decision, to redeem the Demised Premises and the Improvements or for a continuation of this Lease for the Term hereby demised after having been dispossessed or ejected therefrom by process of law.

Section 19.07 <u>Receipt of Rent.</u> No receipt of moneys by Lessor from Lessee after the termination hereof in any lawful manner shall reinstate, continue or extend the Term, or affect any notice theretofore given to Lessee, or operate as a waiver of the right of Lessor to enforce the payment of any Net Rent then due or thereafter falling due, or operate as a waiver of the right of Lessor to recover possession of the Demised Premises and the Improvements by proper suit, action, proceedings or other remedy; it being agreed that after the service of the Termination Notice as herein provided and the expiration of the time therein specified, after the commencement of any suit, action, proceedings or other remedy, or after a final order or judgment for possession of the Demised Premises and the Improvements, Lessor may demand, receive and collect any moneys due, or thereafter falling due, without in any manner affecting such notice, suit, action, proceedings, order or judgment; and any and all such moneys so collected shall be deemed to be payments on account of the use and occupation of the Demised Premises and the Improvements, or, at the election of Lessor, on account of Lessee's liability hereunder.

Section 19.08 <u>Lessor's Remedies.</u> If this Lease and the demised Term shall expire and come to an end as provided in this <u>Article XIX</u> or by or under any summary proceeding or any other action or proceeding, or if Lessor shall re-enter the Demised Premises as provided above, or by or under any summary proceeding or any other action or proceeding, then, in any of said events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessee shall pay to Lessor all Rent and other charges payable under this Lease by Lessee to Lessor to the date upon which this Lease and the demised Term shall have expired and come to an end or to the date of re-entry upon the Demised Premises by Lessor, as the case may be; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessee shall also be liable for and shall pay to Lessor, as damages, any deficiency (referred to as <u>"Deficiency")</u> between the Net Rent and other amounts payable by Lessee under this Lease for the period which otherwise would have constituted the unexpired portion of the demised Term and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of <u>Section 19.04</u> above, for any part of such period (first deducting from the rents collected under any such reletting all of Lessor's expenses in connection with the termination of this Lease or Lessor's re-entry upon the Demised Premises and the Improvements and with such reletting including, but not limited to, all repossession costs, brokerage commissions, legal expenses, attorneys' fees, alteration costs and other expenses of preparing the Demised Premises and the Improvements for such reletting). Any such Deficiency shall be paid in monthly installments by Lessee on the days specified in this Lease for payment of installments of Net Rent. Lessor shall be entitled to recover from Lessee each monthly Deficiency as the same shall arise, and no suit to collect the amount of Deficiency for any month shall prejudice Lessor's right to collect the Deficiency for any subsequent month by a similar proceeding; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any time after the demised Term shall have expired and come to an end or Lessor shall have re-entered upon the Demised Premises and the Improvements, as the case may be, whether or not Lessor shall have collected any monthly Deficiency as aforesaid, Lessor shall be entitled to recover from Lessee, and Lessee shall pay to Lessor, on demand, as and for liquidated and agreed final damages, a sum equal to the amount by which the Net Rent and other amounts payable by Lessee under this Lease for the period which otherwise would have constituted the unexpired portion of the demised Term exceeds the then fair and reasonable rental value of the Demised Premises and the Improvements for the same period, both discounted to present worth at the rate of four (4%) percent per annum, less the aggregate amount of Deficiency theretofore collected by Lessor pursuant to the provisions of <u>Section 19.08(b)</u> for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Demised Premises, the Improvements or any part thereof, shall have been relet by Lessor for the period which otherwise would have constituted the unexpired portion of the demised Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prime facie, to be the fair and reasonable rental value for the part or whole of the Demised Premises and the Improvements so relet during the term of reletting.

Section 19.09 <u>Interest.</u> Any damages payable under this Lease and not paid when due shall bear interest from the due date until paid at the lesser of (a) the prime rate, as reported on the date on such due date in the *Wall Street Journal* or other publication or electronic information service of similar repute with respect to such matters, plus three percent (3%); and (b) the maximum rate permitted by law (the <u>"Interest Rate").</u> Amounts owed for such interest shall be deemed Additional Rent.

Section 19.10 <u>Remedies Not Exclusive.</u> Lessor's remedies provided in this Lease shall be in addition to, and not in lieu of, all other rights and remedies available to Lessor at law or in equity or otherwise.

Section 19.11 <u>Lessor's Right to Cure.</u> Whenever Lessee shall fail to comply with and perform any term, covenant, or condition of this Lease, then, following (a) ten (10) days prior written notice as to any monetary default; or (b) following thirty (30) days' prior written notice as to other defaults; or (c) following shorter notice if reasonably necessary to meet an emergency situation or governmental time limitation, Lessor may perform, or cause to be performed, such term, covenant or condition, and take such other steps, including entry onto the Demised Premises and the Improvements, as it may deem advisable, to achieve such performance or compliance, in which event Lessee shall reimburse Lessor upon demand for all costs and expenses suffered or incurred by it in connection therewith, together with interest at the Interest Rate. Acting in accordance with the immediately preceding sentence shall not be deemed to obligate Lessor to commence or complete the curing of any term, covenant, or condition which is in default within said time limits or otherwise. Lessee hereby waives any claim and releases Lessor and Lessor's agents, contractors and employees from all liability for damage occasioned by any action taken by Lessor pursuant to this Section. Such action by Lessor shall not constitute or be deemed a waiver or release of Lessee from any obligation of Lessee contained in this Lease or from any default by Lessee and without waiving Lessor's right to take such action as may be permissible under this Lease as a result of such default. Any sum of money (other than Net Rent) accruing from Lessee to Lessor pursuant to this Section, may, at Lessor's option, be deemed Additional Rent, and Lessor shall have the same remedies as are available for Lessee's failure to pay any installment of Net Rent when due. Lessee's obligations under this <u>Article XIX</u> shall survive the expiration of sooner termination of the Term.

**ARTICLE XX**

**LESSOR DEFAULT**

Section 20.01 <u>Events of Default.</u> Any one or more of the following events herein shall constitute a <u>"Lessor Default":</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lessor's failure to perform, complete, or diligently prosecute any structural, roof or other repairs required of Lessor under <u>Section 10.02</u> hereof within the time periods specified therein, or, if no time period is specified, within thirty (30) days after Lessor's receipt of written notice from Lessee; *provided, however*, that if such repairs cannot reasonably be completed within said thirty (30) day period, Lessor shall not be in default so long as Lessor commences such repairs within such thirty (30) day period and thereafter diligently and continuously prosecutes the same to completion within a commercially reasonable period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessor's failure to obtain, keep in force, or maintain any insurance required of Lessor under <u>Section 9.02,</u> which failure continues for ten (10) days after maturity or earlier termination of Lessor's insurance; *provided, however*, that if the nature of the failure is such that coverage cannot reasonably be bound or reinstated within such ten (10) day period despite Lessor's diligent efforts, Lessor shall not be in default so long as Lessor commences cure within such ten (10) day period and thereafter diligently and continuously prosecutes the same to completion within a commercially reasonable period not to exceed thirty (30) days, and maintains in the interim such reasonable protective measures as are customarily available (including, if applicable, binders or temporary certificates); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any material breach by Lessor of any representation, warranty, covenant or agreement of Lessor under this Lease that remains uncured thirty (30) days after Lessor's receipt of written notice from Lessee; *provided, however*, that if such breach is not reasonably capable of cure within thirty (30) days, Lessor shall not be in default so long as Lessor commences cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the same to completion within a commercially reasonable period.

Section 20.02 <u>Lessee's Self-Help Items.</u> (a) Subject to the provisions of this <u>Article XX,</u> except in the event of a fire, casualty or condemnation, if Lessor fails to make any repair which Lessor is obligated to perform or provide under this Lease, and such failure by Lessor is not the result of Force Majeure or due to the act or omission of Lessee or any Lessee Party, Lessee shall have the right (but not the obligation) to perform and fulfill Lessor's obligation with respect thereto in accordance with the provisions of this <u>Article XX.</u> The extent of the work performed by Lessee in curing any such Lessor default shall not exceed the work that is reasonably necessary, in Lessee's reasonable judgment, to effectuate such remedy and the cost of such work shall be reasonable under the circumstances. The defaults of Lessor that Lessee is permitted to cure in accordance with the provisions of this Section 20.02 are hereinafter referred to as <u>"Self-Help Items."</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Lessee believes that Lessor has failed to perform any Self-Help Item as required by this Lease, then Lessee shall give Lessor a notice (herein called a <u>"Self-Help Notice")</u> of Lessee's intention to perform such Self-Help Item on Lessor's behalf, which Self-Help Notice shall contain a statement in bold type and capital letters at the top of such Self-Help Notice and on the envelope containing such Self-Help Notice stating **"THIS IS A TIME SENSITIVE SELF-HELP NOTICE AND LANDLORD SHALL BE DEEMED TO WAIVE ITS RIGHTS IF IT FAILS TO RESPOND IN THE TIME PERIOD PROVIDED"** as a condition to the effectiveness thereof. If, within ten (10) Business Days (or within two (2) Business Days if the situation requiring performance is an emergency in that the Demised Premises cannot be operated for business to the public due to life-safety conditions) after its receipt of such Self-Help Notice, Lessor fails to either (i) commence (and thereafter continue to diligently perform) the cure of such Self-Help Item or (ii) give a notice to Lessee, which in good faith disputes Lessee's right to perform the cure of such Self-Help Item pursuant to the terms of this <u>Article XX,</u> Lessee shall have the right, but not the obligation, to commence and thereafter diligently prosecute the cure of such Self-Help Item in accordance with the provisions of this <u>Article XX</u> at any time thereafter, but prior to the date on which Lessor commences to cure such Self-Help Item. Upon completion of the cure of such Self-Help Item, as provided herein, by Lessee, Lessee shall give notice thereof (the <u>"Self-Help Item Completion Notice")</u> to Lessor, together with a copy of paid invoices setting forth the reasonable out-of-pocket costs and expenses incurred by Lessee to complete such Self-Help Item (herein called the <u>"Self-Help Amount").</u> Lessor shall reimburse Lessee the Self-Help Amount, plus interest accruing thereon at the Interest Rate from the date of payment by Lessee until reimbursed in full to Lessee, within thirty (30) days after receipt of the Self-Help Item Completion Notice. If Lessor fails to reimburse Lessee the Self-Help Amount, together with the interest earned thereon, then Lessee shall have the right to offset such amount against the next installments of Net Rent coming due hereunder. Tenant shall diligently prosecute any Self-Help Item to completion in accordance with all applicable laws.

Section 20.03 <u>Lessee's Termination Right.</u> In event of a Lessor Default that constitutes a material breach and such breach remains uncured for sixty (60) days after Lessee's written notice to Lessor (or such longer period as may be required if cure cannot reasonably be completed within sixty (60) days, *provided that* Lessor commences cure within such sixty (60) day period and thereafter diligently prosecutes cure to completion), Lessee may terminate this Lease upon written notice to Lessor. Upon such termination, the Lease and the Term shall end as of the date specified in Lessee's notice, which date shall not be less than ten (10) days from the date Lessor is in receipt of such notice. All Net Rent and Additional Rent shall be paid through such date of termination and Lessee shall quit and surrender the Demised Premises in the condition required under this Lease on or before such date of termination, and thereafter Lessor may enter and repossess the same.

**ARTICLE XXI**

**SECURITY DEPOSIT**

Section 21.01 <u>Submission and Application of Security Deposit.</u> (a) Lessee shall deposit with Lessor upon execution and delivery of this Lease the sum equal to one (1) month's Net Rent (the <u>"Security Deposit")</u> as security for the faithful performance and observance by Lessee of the terms, covenants and conditions of this Lease, including the surrender of possession of the Demised Premises to Lessor as herein provided. If Lessee defaults in the payment or performance of any of the terms, covenants or conditions of this Lease, including the payment of Rent, Lessor may use, apply or retain the whole or any part of the Security Deposit and use, apply, or retain the whole or any part of such proceeds, as the case may be, to the extent required for the payment of any Rent or any other sum as to which Lessee is in default, including (i) any sum which Lessor may expend or may be required to expend by reason of Lessee's default, and (ii) any damages or Deficiency to which Lessor is entitled pursuant to this Lease or applicable law, whether such damages or Deficiency accrue before or after summary proceedings or other reentry by Lessor. If Lessor uses, applies or retains any part of the Security Deposit, Lessee, upon demand, shall deposit with Lessor the amount so applied or retained so that Lessor shall have the full Security Deposit on hand at all times during the Term. If Lessee shall fully and faithfully comply with all of the terms, covenants and conditions of this Lease, the Security Deposit (or so much thereof as remains) shall be returned to Lessee after the Expiration Date and after delivery of possession of the Demised Premises to Lessor in the manner required by this Lease. Lessee expressly agrees that Lessee shall have no right to apply any portion of the Security Deposit against any of Lessee's obligations to pay Rent hereunder.

Section 21.02 <u>Effect of Sale or Transfer.</u> Upon a sale or other transfer of the Demised Premises or any of Lessor's interest therein, Lessor shall have the right to transfer the Security Deposit to the transferee. Lessee shall look solely to the new lessor for the return of such Security Deposit and the provisions of this Section shall apply to every transfer or assignment made of the Security Deposit to a new lessor. Lessee will not assign or encumber, or attempt to assign or encumber, the Security Deposit, and neither Lessor nor its successors or assigns shall be bound by any such actual or attempted assignment or encumbrance.

**ARTICLE XXII**

**SURRENDER**

Section 22.01 <u>Conditions of Surrender.</u> Except as is herein otherwise provided, Lessee shall on the last day of the Term or upon any earlier termination of this Lease, well and truly surrender and deliver up the Demised Premises and the Improvements to the possession and use of Lessor without fraud or delay and in good order, condition and repair, except for reasonable wear and tear after the last necessary repair, replacement, restoration or renewal made by Lessee, pursuant to its obligations hereunder, free and clear of all lettings and occupancies other than subleases then terminable at the option of the Lessor thereof or subleases to which Lessor shall have specifically consented, and free and clear of all liens and encumbrances other than those, if any, presently existing or created or suffered by Lessor.

Section 22.02 <u>Holding Over.</u> Unless otherwise agreed by the parties hereto in a writing executed by both parties prior to the Expiration Date of this Lease, there shall be no holding over by Lessee after the expiration or earlier termination of this Lease, and the failure by Lessee to deliver possession of the Demised Premises to Lessor shall be an unlawful holdover. During the first thirty (30) days in which Lessee so holds over, at Lessor's option, the rental value of the Demised Premises, payable from the date immediately following the date on which Lessee was to deliver the Demised Premises through and including the last day of the calendar month in which Lessee so delivers the Demised Premises, shall be one hundred fifty percent (150%) of the Net Rent payable immediately preceding the expiration or earlier termination of this Lease. Thereafter, the holdover rent shall escalate to two hundred percent (200%) of the Net Rent payable immediately preceding the expiration or earlier termination of this Lease. Acceptance by Lessor of any such rent during the period in which Lessee so holds over shall not cure or waive Lessee's default, nor prevent Lessor from exercising, before or after such acceptance, any of the remedies provided by this Lease or at law or in equity. Payment of any such rent and other sums during any period in which Lessee holds over shall not excuse Lessee's obligation to vacate and surrender the Demised Premises on the date, and in the manner and condition, required under this Lease. Lessee waives any rights it may have under applicable law in connection with any holdover proceedings that Lessor may institute against Lessee. If the Demised Premises are not surrendered upon the expiration or earlier termination of this Lease with respect to all or any portion of the Demised Premises, Lessee hereby indemnifies Lessor against loss, cost, injury, damage, claim, expense, or liability (including attorneys' fees and disbursements) resulting from delay by Lessee in so surrendering the same, including any claims made by any succeeding tenant or prospective tenant or prospective tenant founded upon such delay. Lessee's obligations under this <u>Article XXII</u> shall survive the expiration or earlier termination of the Term.

Section 22.03 <u>Ownership of Permanent Improvements.</u> All appurtenances, fixtures, improvements, additions and other property attached to or built into the Demised Premises, whether by Lessor or Lessee or others, and whether at Lessor's expense, or Lessee's expense, or the joint expense of Lessor and Lessee, shall be and remain the property of Lessor, except that any such fixtures, improvements, additions and other property installed at the sole expense of Lessee with respect to which Lessee has not been granted any credit or allowance by Lessor, and which are removable without material damage to the Demised Premises may be removed by Lessee on condition that Lessee shall repair at its expense any damage to the Demised Premises or the Building resulting from such removal.

Section 22.04 <u>Disposition of Personal Property.</u> Any personal property of Lessee or any sublessee which shall remain in the Improvements after the termination of this Lease and the removal of Lessee or such sublessee from the Improvements, may, at the option of Lessor, be deemed to have been abandoned by Lessee or such sublessee and either may be retained by Lessor as its property or be disposed of, without accountability, in such manner as Lessor may see fit, or if Lessor shall give written notice to Lessee to such effect, such property shall be removed by Lessee at Lessee's sole cost and expense.

Section 22.05 <u>Survival.</u> The provisions of this <u>Article XXII</u> shall survive any termination of this Lease.

**ARTICLE XXIII<br> MISCELLANEOUS**

Section 23.01 <u>Force Majeure.</u> If, by reason of strikes or other labor disputes, fire or other casualty (or reasonable delays in adjustment of insurance), accidents, orders or regulations of any Federal, State, County or Municipal authority, pandemic (including, without limitation, the COVID-19 virus), or any other cause beyond either party's reasonable control (collectively, <u>"Force Majeure"),</u> whether or not such other cause shall be similar in nature to those hereinbefore enumerated, either party is unable to fulfill or is delayed in fulfilling any of such party's obligations under this Lease, provided that no such inability or delay on Lessor's part shall constitute an actual or constructive eviction, in whole or in part or entitle Lessee to any abatement or diminution of rent, or relieve Lessee from any of its obligations under this Lease, or impose any liability upon Lessor or its agents by reason of inconvenience or annoyance to Lessee, or injury to or interruption of Lessee's business, or otherwise. Notwithstanding the foregoing, if, as a result of a Force Majeure event, Lessor reasonably determines that the Building is rendered entirely unusable for the conduct of Lessee's business and such condition continues for a period of ninety (90) consecutive days, commencing on the ninety-first (91st) day following such determination, Net Rent shall be equitably abated solely to the extent, and only for the period, that the use of the Demised Premises is so materially diminished.

Section 23.02 <u>Reimbursement of Lessor's Expenses.</u> Lessee shall reimburse Lessor upon demand for all reasonable expenses, including reasonable attorneys' fees, incurred by it in connection with the enforcement of Lessee's obligations under this Lease, protection of Lessor's rights under this Lease or otherwise incurred by Lessor on Lessee's behalf.

Section 23.03 <u>Waiver of Trial by Jury.</u> To the extent permitted by law, Lessor and Lessee hereby waive trial by jury in any litigation brought by either of the parties hereto against the other on any matter in any way connected with this Lease.

Section 23.04 <u>Payments of Money.</u> In the event of nonpayment by Lessee of any sum of money whatsoever which is payable by Lessee under any provision of this Lease, Lessor shall have the same rights and remedies by reason of such nonpayment as if Lessee had failed to pay an installment of Net Rent.

Section 23.05 <u>No Waiver of Rights.</u> No failure by Lessor to insist upon the strict performance of any covenant, agreement, term or condition of this Lease or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such covenant, agreement, term or condition. No covenant, agreement, term or condition of this Lease to be performed or complied with by Lessee, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Lessor. No waiver of any breach shall affect or alter this Lease, but each and every covenant, agreement, term and condition of this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.

Section 23.06 <u>Rights and Remedies Cumulative.</u> Each right and remedy of Lessor provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Lessor of any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Lessor of any or all other rights or remedies.

Section 23.07 <u>Transfer of Lessor's Interest.</u> In the event of a sale or conveyance by Lessor of Lessor's interest in the Demised Premises, other than a transfer for security purposes only, Lessor shall be relieved, from and after the date specified in such notice of transfer, of all obligations and liabilities accruing thereafter on the part of the Lessor. This Lease shall not be affected by any such sale and Lessee agrees to attorn to the purchaser or assignee provided all Lessor's obligations hereunder are assumed in writing by the transferee.

Section 23.08 <u>Liability of Lessor.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Anything elsewhere to contrary notwithstanding, Lessee shall look solely to the estate and property of Lessor in the Demised Premises for the satisfaction of Lessee's remedies for the collection of a judgment (or other judicial process) requiring the payment of money by Lessor in the event of any default or breach by Lessor with respect to any of the terms, conditions and covenants of this Lease to be observed and/or performed by Lessor, and no other property or assets of Lessor shall be subject to levy, execution or other enforcement procedure for the satisfaction of Lessee's remedies. If Lessor or a successor in interest is an individual (which term as used herein includes aggregates of individuals, such as joint ventures, general or limited partnerships or associations) such individual shall be under no personal liability with respect to any of the provisions of this Lease, and if such individual hereto is in breach or default with respect to its obligations under this Lease, in no event shall Lessee attempt to secure any personal judgment against any partner, employee or agent of Lessor by reason of such default by Lessor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Lessee shall not be entitled to claim a constructive eviction from the Demised Premises unless Lessee shall have first notified Lessor of the condition or conditions giving rise thereto, and if the complaints be justified, unless Lessor shall have failed to remedy such conditions within a reasonable time after receipt of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Lessor or its agents shall not be liable for any damage to property of Lessee or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Lessee by theft or otherwise. Lessor or its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, electrical disturbance, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the negligence of Lessor, its agents, servants or employees; nor shall Lessor or its agents be liable for any such damage caused by operations in construction of any private, public or quasi-public work; nor shall Lessor be liable for any latent defect in the Demised Premises or in the Building. If at any time any windows of the Demised Premises are temporarily closed or darkened incident to or for the purpose of repairs, replacements, maintenance and/or cleaning in, on, to or about the Building or any part or parts thereof, Lessor shall not be liable for any damage Lessee may sustain thereby and Lessee shall not be entitled to any compensation therefor nor abatement of rent nor shall the same release Lessee from its obligations hereunder nor constitute an eviction. Lessee shall reimburse and compensate Lessor as Additional Rent for all expenditures made by, or damages or fines sustained or incurred by Lessor and not reimbursed by insurance due to nonperformance or non-compliance with or breach or failure to observe any term, covenants or conditions of this Lease upon Lessee's part to be kept, observed, performed or complied with. Lessee shall give immediate notice to Lessor in case of fire or accidents in the Demised Premises or in the Building or of defects therein or in any fixtures or equipment.

Section 23.09 <u>No Waste.</u> Lessee shall not do or suffer any waste, damage, or injury to the Demised Premises, the Improvements or any part thereof, but this provision shall not be deemed to prevent Lessee's from making repairs or Alterations to the Improvements in accordance with other provisions of this Lease.

Section 23.10 <u>Captions; Attachments; Defined Terms.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The captions of the sections of the Lease are for convenience only and shall not be deemed to be relevant in resolving any question of interpretation or construction of any Section of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Exhibits attached hereto, and addendums and schedules initiated by the parties, are deemed by attachment to constitute part of this Lease and are incorporated herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The words <u>"Lessor"</u> and <u>"Lessee",</u> as used in this Lease, shall include the plural as well as the singular. The obligations contained in this Lease to be performed by Lessor shall be binding on Lessor's successors and assigns only during their respective periods of ownership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The term <u>"Business Days",</u> as used in this Lease shall mean all days other than Saturdays, Sundays and all days observed by the State or Federal Government as legal holidays.

Section 23.11 <u>Entire Agreement.</u> This Lease along with any exhibits and attachments hereto constitutes the entire agreement between Lessor and Lessee relative to the Demised Premises and the Improvements and this Lease and the exhibits and attachments may be altered, amended or revoked only by an instrument in writing signed by both Lessor and Lessee.

Section 23.12 <u>Severability.</u> If any term or provision of this Lease shall, to any extent, be determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforceable to the fullest extent permitted by law.

Section 23.13 <u>Time of the Essence.</u> Time is of the essence of this Lease and each and every provision hereof.

Section 23.14 <u>Binding Effect.</u> The parties hereto agree that all the provisions hereof are to be construed as both covenants and conditions as though the words importing such covenants and conditions were used in each separate paragraph hereof; all of the provisions hereof shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

Section 23.15 <u>Notices.</u> All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered, sent pre-paid by FEDEX or other nationally-recognized overnight delivery service that provides evidence of delivery (a <u>"Courier Service"),</u> or if mailed by United States certified or registered mail, postage prepaid, as follows:

---

| | |
|:---|:---|
| If to Lessor, addressed to: | If to Lessee, addressed to: |
| CVD Equipment Corporation | Edwards Semiconductor Solutions LLC |
| 355 S. Technology Drive | 5 Tower Drive |
| Central Islip, NY 11722 | Saugerties NY 12477 |
| Attention: Emmanuel Lakios, CEO | Attention: Sara Farooq, General Manager |
| E-mail: [\*\*\*] | E-mail: [\*\*\*] |
| and a copy to: | and a copy to: |
| Ruskin Moscou Faltischek | Atlas Copco North America LLC |
| P.C. 1425 RXR Plaza | 6 Century Drive, Suite 310 |
| East Tower, 15<sup>th</sup> Floor | Parsippany, New Jersey 07054 |
| Uniondale, NY 11556 | Attn: Natalya Vasilchenko, Esq. |
| Attn: Adam Silvers, Esq. | Facsimile: [\*\*\*] |
| E-mail: [\*\*\*] | E-mail: [\*\*\*] |

---

or at such other place as any party shall from time to time notify the other in writing as provided herein. The date of service of any communication hereunder shall be the date of personal delivery, the date of delivery by Courier Service or forty-eight (48) hours after the postmark on the certified or registered mail, as the case may be.

Section 23.16 <u>Waiver.</u> No covenant, term or condition or the breach thereof shall be deemed waived, except by written consent of the party against whom the waiver is claimed, and any waiver or the breach of any covenant, term or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other covenant, term or condition.

Section 23.17 <u>Negation of Partnership.</u> Lessor shall not become or be deemed a partner or a joint venturer with Lessee by reason of the provisions of this Lease.

Section 23.18 <u>No Broker.</u> Lessee and Lessor each represents that it ***has not*** dealt with any brokers in connection with the negotiation of this Lease. Lessee and Lessor hereby agree to indemnify, defend and hold each other harmless from and against all liability, loss, cost and expenses (including, without limitation, reasonable legal fees) arising out of any inaccuracy or alleged inaccuracy of their respective representations set forth in this <u>Section 23.18.</u> Lessor shall have no liability for brokerage commissions arising out of an assignment or a sublease by Lessee and Lessee shall and does hereby indemnify Lessor and hold it harmless from any and all liability for brokerage commissions arising out of any such assignment or sublease.

Section 23.19 <u>No Recording.</u> Neither this Lease nor any short form or memorandum of this Lease shall be recorded. Any attempt to record this Lease or any short form or memorandum thereof shall constitute a default under this Lease.

Section 23.20 <u>Choice of Law; Jurisdiction.</u> This Lease shall be governed and construed under the laws of the ***State of New York***. All disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of the ***State of New York*** located in ***Ulster County, New York*** or the federal courts for the ***Northern District of New York***; and for that purpose Lessee expressly and irrevocably submits to the jurisdiction of such courts. Lessee agrees that so far as is permitted under applicable law, this consent to personal jurisdiction shall be self-operative and no further instrument or action, other than service of process in one of the manners specified in this Lease, or as otherwise permitted by law, shall be necessary in order to confer jurisdiction upon it in any such court. Lessee further agrees that judgment against it in any such action or proceeding shall be conclusive and, to the extent permitted by applicable law, may be enforced in any other jurisdiction within or outside the United States of America by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of its indebtedness.

***[The balance of this page is intentionally left blank. Signature page follows.]***

 ****

## Exhibit 31.1

**Exhibit 31.1**

**Certifications of Principal Executive Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Emmanuel Lakios, certify that:

1. I
 have reviewed this quarterly report on Form 10-Q of CVD Equipment Corporation;

2. Based
 upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by this report;

3. Based
 upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
 this report;

4. The
 registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
 (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
 Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
 to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this report is being prepared;

b. Designed
 such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

c. Evaluated
 the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
 and

d. Disclosed
 in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
 or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The
 registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
 reporting, to the registrant's auditors and the audit committee of the registrants' board of directors (or persons performing
 the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
 and

b. Any
 fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
 internal control over financial reporting.

---

| |
|:---|
| Dated: May 14, 2026 |
| */s/ Emmanuel Lakios* |
| President and Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certifications of Principal Financial Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Richard Catalano, certify that:

1. I
 have reviewed this quarterly report on Form 10-Q of CVD Equipment Corporation;

2. Based
 upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by this report;

3. Based
 upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
 this report.

4. The
 registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
 (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act
 Rules 13a-15(f) and 15d-15(f) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
 to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this report is being prepared;

b. Designed
 such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

c. Evaluated
 the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
 and

d. Disclosed
 in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
 or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The
 registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
 reporting, to the registrant's auditors and the audit committee of the registrants' board of directors (or persons performing
 the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
 and

b. Any
 fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
 internal controls over financial reporting.

---

| |
|:---|
| Dated: May 14, 2026 |
| */s/ Richard Catalano* |
| Richard Catalano |
| Executive Vice President and Chief Financial Officer |
| (Principal Financial Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Emmanuel Lakios, President and Chief Executive Officer of CVD Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending March 31, 2026 of CVD Equipment Corporation (the "Form 10-Q") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

---

| | |
|:---|:---|
| Dated: May 14, 2026 | */s/ Emmanuel Lakios* |
|  | Emmanuel Lakios |
|  | President and Chief Executive Officer |
|  | (Principal Executive Officer) |

---

## Exhibit 32.2

**Exhibit 32.2**

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Richard Catalano, Chief Financial Officer of CVD Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending March 31, 2026 of CVD Equipment Corporation (the "Form 10-Q") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

---

| | |
|:---|:---|
| Dated: May 14, 2026 | */s/ Richard Catalano* |
|  | Richard Catalano |
|  | Executive Vice President and |
|  | Chief Financial Officer |
|  | (Principal Financial Officer) |

---