EX-10.2 3 exchangeagreement.htm EXHIBIT 10.2 exchangeagreement
Execution Version EXCHANGE AGREEMENT This EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of February 27, 2019 by and among Kratos Defense & Security Solutions, Inc., a Delaware corporation (the "Acquiror"), FTT CORE, LLC, a Delaware limited liability company ("FTT Core"), Florida Turbine Technologies Inc., a Florida corporation ("FTT Inc." and, together with FTT Core, each an "Issuer" and, collectively, the "Issuers"), Shirley C. Brostmeyer and Joseph D. Brostmeyer as Trustees of The Shirley C. Brostmeyer Revocable Trust, u/a/d August 25, 2002, as amended and restated August 13, 2014, a Florida revocable trust ("SB Trust"), Joseph D. Brostmeyer and Sara J. Brostmeyer as Trustees of The Shirley Brostmeyer 2018 Family Trust, u/a/d December 17, 2018, a Florida irrevocable trust ("2018 SB Trust"), Joseph D. Brostmeyer and Shirley C. Brostmeyer as Trustees of The Joseph D. Brostmeyer Revocable Trust, u/a/d August 25, 2002, as amended and restated August 13, 2014, a Florida revocable trust ("JB Trust"), Shirley C. Brostmeyer and Julia A. Brostmeyer as Trustees of The Joseph D. Brostmeyer 2018 Irrevocable Trust, u/a/d December 17, 2018, a Florida irrevocable trust ("2018 JB Trust" and, together with SB Trust, 2018 SB Trust and JB Trust, each a "Holder" and, collectively, the "Holders"). Capitalized terms used herein without definition have the meanings given in the Purchase Agreement (defined below). RECITALS WHEREAS, Acquiror and the Holders are parties to that certain Purchase Agreement, dated as of the date first set forth above (as the same may be amended or modified from time to time in accordance with its terms, the "Purchase Agreement"), pursuant to which Acquiror has purchased from the Holders and the other Sellers named therein (i) 80.1 %, on a fully diluted basis, of the issued and outstanding Company Units of FTT Core, and (ii) 80.1 %, on a fully diluted basis, of the issued and outstanding Shares of FTT Inc. (the "Purchase"); WHEREAS, following the Purchase, the Holders own, collectively, (i) 19 .9% of the issued and outstanding Company Units of FTT Core, and (ii) 19. 9% of the issued and outstanding Shares of FTT Inc., as set forth opposite each Holder's name in the column labeled "Interests Owned Prior to Exchange" on Schedule A hereto; WHEREAS, the Purchase Agreement contemplates the execution and delivery of this Agreement which provides for, among other things, (i) the conversion of FTT Core into a Delaware corporation with the name "KTT Core, Inc." ("KTT Core") and the conversion of all Company Units in FTT Core held by the Holders into shares of Class B non-voting common stock of KTT Core and (ii) the amendment and restatement of the articles of incorporation of FTT Inc. and the exchange of all Shares of FTT Inc. held by the Holders into shares of Class B non-voting capital stock of FTT Inc. (the "Exchange"); WHEREAS, the execution and delivery of this Agreement and the covenants and agreements set forth herein were a material inducement to the Acquiror to enter into the Purchase Agreement and to consummate the Purchase; and WHEREAS, this Agreement and the Exchange have been approved by the respective boards of directors of Acquiror and FTT Inc. and by the manager of FTT Core.


 
Now, THEREFORE, in consideration of the foregoing and the respective covenants, agreements and representations and warranties set forth herein, the parties to this Agreement, intending to be legally bound, agree as follows: ARTICLE I THE EXCHANGE Section 1.1 Exchange. (a) Immediately following the Closing (as defined in the Purchase Agreement): (i) FTT Core shall (A) file with the Secretary of State of the State of Delaware (the "Delaware Secretary of State") the Cetiificate of Conversion, including the Plan of Conversion, attached hereto as Exhibit A (the "Certificate of Conversion"); (B) file with the Delaware Secretary of State the Certificate of Incorporation of KTT Core, attached hereto as Exhibit B ("Certificate of Incorporation"), and (C) adopt the Bylaws of KTT Core, attached hereto as Exhibit C; and (ii) FTT Inc. shall (A) file with the Florida Department of State, Division of Corporations, the Amended and Restated Articles of Incorporation of Florida Turbine Technologies Inc., attached hereto as Exhibit D (the "Restated Articles"), and (B) adopt the Amended and Restated Bylaws of Florida Turbine Technologies Inc., attached hereto as Exhibit E. (b) Upon the effectiveness of the Certificate of Conversion: (i) each Company Unit in FTT Core held by Acquiror shall automatically and without any further action on the part of FTT Core or Acquiror, convert into one share of Class A common stock of KTT Core, par value $0.001, with the rights and privileges set fotih in the Certificate of Incorporation; and (ii) each Company Unit in FTT Core held by a Holder shall automatically and without any further action on the pati of FTT Core or such Holder, convert into one share of Class B common stock of KTT Core, par value $0.001, with the rights and privileges set forth in the Ce1iificate of Incorporation. (c) Upon the effectiveness of the Restated Articles: (i) each Share of FTT Inc. held by Acquiror is hereby exchanged, without any further action on the part of FTT Inc. or Acquiror, for one share of Class A capital stock of FTT Inc., with the rights and privileges set fotih in the Restated Articles; and (ii) each Share of FTT Inc. held by a Holder is hereby exchanged, without any further action on the part of FTT Inc. or such Holder, for one share of Class B capital stock of FTT Inc., with the rights and privileges set fotih in the Restated Articles. (d) Following the completion of the Exchange, the ownership of the issued and outstanding securities of KTT Core and FTT Inc. shall be as set fotih opposite each patties name under in the column labeled "Interests Owned After Exchange" on Schedule A hereto. 2


 
ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the Issuers. Each Issuer hereby severally, and not jointly, represents and warrants to Acquiror and the Holders as of the date hereof as follows: (a) Such Issuer is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now being conducted. (b) Such Issuer has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Exchange. The execution and delivery of this Agreement, the performance by such Issuer of its obligations hereunder and the consummation by such Issuer of the Exchange have been duly authorized. This Agreement has been duly executed and delivered by such Issuer and constitutes the legal, valid and binding obligation of such Issuer, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting the rights of creditors generally and the availability of equitable remedies. ( c) The execution, delivery and performance by such Issuer of this Agreement and the consummation of the Exchange will not: (i) violate, contravene or conflict with any provision of the operating agreement, certificate of formation, certificate of incorporation, bylaws, trust deed or similar organizational documents of such Issuer; or (ii) violate, contravene or conflict with any Law or Order applicable to such Issuer. Section 2.2 Representations and Warranties of the Holders. Each Holder hereby severally, and not jointly, represents and warrants to the Issuers and Acquiror as of the date hereof as follows: (a) Such Holder has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Exchange. The execution and delivery of this Agreement, the performance by such Holder of its obligations hereunder and the consummation by such Holder of the Exchange have been duly authorized. This Agreement has been duly executed and delivered by such Holder and constitutes the legal, valid and binding obligation of such Holder, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting the rights of creditors generally and the availability of equitable remedies. (b) The execution, delivery and performance by such Holder of this Agreement and the consummation of the Exchange will not: (i) violate, contravene or conflict with any provision of the operating agreement, certificate of formation, certificate of incorporation, bylaws, trust deed or similar organizational documents of such Holder; or (ii) violate, contravene or conflict with any Law or Order applicable to such Holder. 3


 
( c) Such Holder has the sole voting power and sole power of disposition with respect to all of the Company Units and Shares held by such Holder with no limitations, qualifications or restrictions on such rights and powers. Such Holder is not subject to any agreements, arrangements, options, warrants, calls, rights, commitments or other restrictions relating to the sale, transfer, purchase, redemption or voting of its Company Units or its Shares. (d) Such Holder is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated by the SEC under the Securities Act. Such Holder will execute and deliver to the Issuers such documents as the Issuers may reasonably request in order to confirm the accuracy of the foregoing. Such Holder has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of engaging in this Agreement and the Exchange. (e) Such Holder is acquiring the Class B common stock, par value $0.001, of KTT Core and the Class B capital stock of FTT Inc. (together, the "Minority Interests") for investment for the Holder's own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof except as permitted by Law, including securities Laws. No Holder has any present intent to resell or distribute all or any part of the Minority Interests, other than to the Holding Company (as defined below). (f) Such Holder understands that the Minority Interests are being issued to the Holder in reliance upon the exemptions from the registration requirements of the United States federal securities Laws, and that the Issuers are relying upon the truth and accuracy of such Holder's representations and warranties contained herein in order to determine the availability of such exemptions and the eligibility of Holder to acquire the Minority Interests in accordance with the terms and provisions hereof. (g) Such Holder understands and agrees that upon the closing of the Exchange set forth in this Agreement, Holder shall have no further right or interest in or to the Company Units or the Shares. Section 2.3 Representations and Warranties of Acquiror. Acquiror hereby represents and warrants to the Issuers and the Holders as of the date hereof as follows: (a) Acquiror has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Exchange. The execution and delivery of this Agreement, the performance by Acquiror of its obligations hereunder and the consummation by Acquiror of the Exchange have been duly authorized. This Agreement has been duly executed and delivered by Acquiror and constitutes the legal, valid and binding obligation of Acquiror, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting the rights of creditors generally and the availability of equitable remedies. (b) The execution, delivery and performance by Acquiror of this Agreement and the consummation of the Exchange will not: (i) violate, contravene or conflict with any provision of the operating agreement, certificate of formation, certificate of incorporation, bylaws, trust deed 4


 
or similar organizational documents of Acquiror; or (ii) violate, contravene or conflict with any Law or Order applicable to Acquiror. (c) Acquiror has the sole voting power and sole power of disposition with respect to all of the Company Units and Shares held by Acquiror with no limitations, qualifications or restrictions on such rights and powers. Acquiror is not subject to any agreements, arrangements, options, warrants, calls, rights, commitments or other restrictions relating to the sale, transfer, purchase, redemption or voting of its Company Units or its Shares. (d) Acquiror is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated by the SEC under the Securities Act. Acquiror will execute and deliver to the Issuers such documents as the Issuers may reasonably request in order to confirm the accuracy of the foregoing. Acquiror has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of engaging in this Agreement and the Exchange. ( e) Acquiror is acquiring the Class A common stock, par value $0.001, of KTT Core and the Class A capital stock of FTT Inc. (together, the "Majority Interests") for investment for the Acquiror' s own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof except as permitted by Law, including securities Laws. Acquiror does not have any present intent to resell or distribute all or any part of the Majority Interests. (f) Acquiror understands that the Majority Interests are being issued to Acquiror in reliance upon the exemptions from the registration requirements of the United States federal securities Laws, and that the Issuers are relying upon the truth and accuracy of Acquiror's representations and warranties contained herein in order to determine the availability of such exemptions and the eligibility of Acquiror to acquire the Majority Interests in accordance with the terms and provisions hereof. (g) Acquiror understands and agrees that upon the closing of the Exchange set forth in this Agreement, Acquiror shall have no further right or interest in or to the Company Units or the Shares. ARTICLE III AGREEMENTS Section 3.1 Minority Interest Lock-up. Each Holder hereby acknowledges and agrees that it will not be permitted to sell, pledge, assign, transfer, hypothecate or otherwise dispose of (each a "Transfer") or otherwise encumber any portion of the Minority Interests without the prior written consent of Acquiror; provided that the Holders may Transfer the Minority Interests to the Holding Company (as defined herein), in accordance with this Section 3.1. The Holders shall be permitted, without the need to obtain the consent of Acquiror, to Transfer all of the Minority Interests owned by the Holders to a holding company formed and controlled by the Holders (the "Holding Company"), provided that such Transfer shall become effective only upon the Holding Company becoming a patiy to this Agreement and agreeing to be bound by the terms and conditions hereof by executing and delivering a counterpart signature 5


 
page Right") the Schedule of in and Price"). which based Section which include Price Minority Companies trailing The Purchase reported sale Holders Acquiror earlier Business and of sale. their following have below) year that or of entity, The March violation the a 14 the effectiveness void no price number FTT Put is hereto. an minus Put are The times upon Transfer is than as 20 resulting 31 Section (a) Minority later (b) (c) 90-day or all 4.1 to annual that Right by equal Interest ab will set For applicable, Days Price Right A Change the Holders per following Business the Company sell hereof. for the an than March of the Bloomberg any to initio. of forth it The last have illustration Issuers share Beginning If If, this Exercise assumed period to right, the this 3.2 intends all following with date shares trailing of at of amount Reduction Interests the Purchase prior day Holders of 12 on must a of the previous an the Section For Any Days Agreement of that the purchase that at Control, beginning Units times Holders experience Schedule Purchase of the ending annual of Minority Exchange. the to to least 12 31 Financial notify all last Period enterprise the is Transfer they is purposes Acquiror following the Minority exercise in January shall at months Price Acquiror following 20 purposes of the 3 Amount. then applicable day fiscal 50% .1 January right the on as last intend do Business FTT price Acquiror trailing B and shall, the provide and and applicable of will the Interests a Minority (iii) not attached or cash, Markets day 2024, year (the EBITDA the value FTT only, first Common the Core Interests the the that Trading provide Common to attempted Sale under the be 2024, to exercise multiplied of Call The fiscal "Call applicable 12 exercise exercise Days less January and prompt calculated Change that last the last Acquiror and derived sample is the Rights. to months hereto. or this Interest (the Holders calculated Right, the fullest (ii) the they day of the day year. Day to Right"), a Stock Shares following applicable an Stock the copy Transfer 6 the Agreement, Acquiror notice "Put the the following balance of Holders procedures Holding of calculations of equivalent, from intend by immediately fiscal EBITDA experiences in by Put Acquiror extent Control Acquired the to Put Purchase Reduction the must of of on Right writing, 19 beginning reference be to based the Right applicable FTT Right, the .9% year applicable same of the to fiscal in Acquiror will issued at Company, permitted the notify following exercise any last (as shares Commencement (as the NASDAQ described a Inc. reliable agrees (the (the upon Companies of on Price. occurrence no to in purchase have prior year Amount a defined portion day to defined term in for the writing, Change all owned or the "Put earlier "Minority fiscal the of January following fiscal an the to and of the before to parties by an Minority and reporting calculation: "Minority Acquiror Acquiror Acquiror volume assumed in pay the Right the of below), Global Put applicable (as year. below) stock annual price no than by the no of year of for Acquiror the applicable consummation the 2025, Right, defined by the later a in Control earlier preceding Date"), Interest Exercise the the the Change Minority component that weighted Interest and Minority Select service, March accordance or Common the Holders of enterprise must right Interests" than previous consummation (i) to date in the the Law, no is than Holders shall below), purchase the (as writing, to fiscal calculated Market notify in (the Purchase 31, March later that Acquired acquiring Period''). Purchase Interests over sentence exercise average the prior amount Interest Control defined be update Stock. of of 2024, value fiscal "Put shall is with year than null date will and the the the the no all 20 31 as to


 
shall continue annually following the Put Right Commencement Date, until the Put Right is exercised by the Holders or the Call Right is exercised by Acquiror. For purposes of this Agreement, "Change of Control" means the occurrence of any one or more of the following: (a) the acquisition of direct or indirect ownership or voting control, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) or of record, by any Person or group (within the meaning of Sections l 3d and 14d of the Exchange Act), of more than fifty percent (50%) of the issued and outstanding shares of Acquiror Common Stock, whether by merger, consolidation, sale or other transfer (other than a merger or consolidation where the stockholders of Acquiror prior to the merger or consolidation are the holders of a majority of the voting securities of the entity that survives such merger or consolidation), or (b) a sale of all or substantially all of the assets of Acquiror; provided, however, that acquisitions of Acquiror Common Stock or securities convertible into Acquiror Common Stock directly from Acquiror primarily for financing purposes shall not constitute a Change of Control for the purposes of this Agreement. For purposes of this Agreement, "FTT Change of Controf' means the occurrence of any one or more of the following: (a) the acquisition of direct or indirect ownership or voting control, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) or of record, by any Person or group (within the meaning of Sections 13d and 14d of the Exchange Act), of more than eighty percent (80%) of the issued and outstanding shares of Class A common stock of KTT Core and the Class A capital stock of PTT Inc., whether by merger, consolidation, sale or other transfer (other than a merger or consolidation where the stockholders of the Issuers prior to the merger or consolidation are the holders of a majority of the voting securities of the entity or entities that survives such merger or consolidation), or (b) a sale of all or substantially all of.the assets of the Issuers (considered on a combined basis). (d) If, at any time following the Closing, Joseph Brostmeyer ("JB") is terminated by Acquiror without Cause (as defined in the Employment Agreement) or resigns for Good Reason (as defined in the Employment Agreement) (a "Covered Termination"), the Holders will have the ability to exercise their Put Right at a purchase price that is calculated based upon an assumed enterprise value of 14 times the trailing 12 months EBITDA of the Acquired Companies minus any Reduction Amount. In such circumstances, the Holders must notify Acquiror that they intend to exercise the Put Right, in writing, no later than 20 calendar days following the last day of the month in which the Covered Termination occurred. For example, if in October 2022, JB experiences a Covered Termination, the Holders will have the right to sell the Minority Interest to Acquiror at a purchase price that is calculated based upon an assumed enterprise value of 14 times the trailing 12 months EBITDA of the Acquired Companies for the 12 month period ending October 31, 2022 (with such Put Right to be exercised, in writing, no later than November 20, 2022). For purposes of this Agreement, "Employment Agreement" means that certain Employment Agreement, by and between Acquiror and JB, dated as of even date herewith. (e) If, at any time following the Closing, JB is terminated by Acquiror for Cause (as defined in the Employment Agreement) or voluntarily resigns other than for Good Reason (as defined in the Employment Agreement) (a "Covered Departure"), the Acquiror will have the ability to exercise its Call Right at a purchase price that is calculated based upon an assumed enterprise value of 10 times the trailing 12 months EBITDA of the Acquired Companies minus any Reduction Amount. In such circumstances, Acquiror must notify the Holders that it intends to exercise the Call Right, in writing, no later than 20 calendar days following the last day of the 7


 
November of from ending month experiences amortization, operating directly Companies of corporate business to amount, the Purchase of Right acknowledge Minority outstanding the (the either warranties the longer Put/Call pro Section the of to of Interests, Put/Call payment Closing continued 10 EBITDA any such such Acquiror Holders Put/Call account rata foregoing "Put/Call the times or Acquiror (f) period (g) of (h) (i) in October attributable Holder in 3.2, if Put/Call Call Right of Right Interest and plan Holders free the allocations Agreement) costs 20, proportion which any, related the the or on shares a in for Right review, the Right; determined and foregoing Covered Common and 2022). as shall For For Notwithstanding In accounts connection Right attached Closing clause trailing Minority a by or in Closing. purposes 31, incurred closing Purchase the the Right agree consolidated at the the connection clear purposes Closing, of which purposes to to provided 2022 discussion be a Closing") parties Acquiror event to of Holders, the shall authority, Covered purchase Departure, 12 and shall that designated representations of the hereto Closing. subject Stock of Interest indirect in by the of Business. months with The Price. all (with the and the accordance amount of the the require the of may be Acquiror), total that with liens Common this the as cash Put and this as shall basis transactions the shall issuable made business Put Departure price to last Purchase ownership such costs applicable. any mutually EBITDA Acquiror cash Shares Schedule Put/Call in the Agreement, and Right foregoing, modification of Agreement, Right registration a consideration be be writing before day by reduction consideration that Put/Call cotTesponding Call with spent and (including, encumbrances. consummated several but Stock wire plan pursuant or of Price and of is Right will occurred. agree) of warranties to GAAP. Right the shall and C, corporate Acquiror by by calculated Any attached transfer fiscal the in the as effectuate 8 "EBITDA" and Right in have the shall between the Call Acquiror by rights no the of Closing Acquired include Acquiror following Call representations payable to to without the not Holders immediately paid 2023, term event For Right the be ability Closing within increase be of this made as Common parties. joint tax, Right For The in based issued the to right immediately the the "Reduction Schedule shall exercised, in shall costs exceeds means is favor such Section by limitation, Companies Common liability at interest example, avoidance with furtherance by delivery to ninety Transfer will Closing exercised shall to least on be on Acquiror in the such convey Holder incurred prior purchase Stock any limited and of the not an the the C be 3.2 aggregate two (90) $25 for expense, in Holder the Stock assumed other is Amount" of date available to include warranties earnings of limited Date if normal cash of for included in in (2) indemnification, a exceed writing, title of million. the the calendar to the to in by doubt, working Holders connection the accordance of the the Person, Business issued representations the exercise (as component in exercise October Minority Acquiror the to number any to Minority depreciation public 12 execution enterprise of connection 19.99% federal shall Holders defined the such the to Put/Call as no days month the Acquired the post-Closing as draft The and and be patt calculation inaccuracy Days of later a 2022, notice with mean company of with Minority made Interests result (or funds that Interest any shall subject of parties related period of if in shares of of at value Right prior than such with such any, and this and Put the the the the are the the the JB by by be of to


 
indemnification obligations that are no less favorable to the Holders than the registration rights and related indemnification obligations provided in the Purchase Agreement. ARTICLE IV MISCELLANEOUS Section 4.1 Notices. Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received (a) when received if hand delivered, (b) on the first Business Day of confirmation by sender of receipt if sent by facsimile or electronic mail or ( c) on the first Business Day after being sent by registered overnight mail, return receipt requested, by overnight courier or by overnight express delivery service, to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto): (a) if to the Holders, to the following address: c/o Joseph Brostmeyer 1701 Military Tr., Suite 110 Jupiter, FL 33458 Email: JBrostmeyer@fttamerica.com with a copy, which shall not constitute notice, to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, GA 30309 Attention: Jeremy C. Silverman, Esq. Jeniffer Roberts, Esq. Email: Jeremy.Silverman@alston.com Jeniffer .Ro berts@alston.com (b) if to the Issuers or the Acquiror, to the following address: Kratos Defense & Security Solutions, Inc. 10680 Treena St., Suite 600 San Diego, California 92131 Attention: General Counsel Telephone no.: (858) 812-7300 Email address: marie.mendoza@kratosdefense.com with a copy, which shall not constitute notice, to: Paul Hastings LLP 4747 Executive Drive, 12th Floor San Diego, California 92121 9


 
transmission, or counterparts, electronic document, electronic a communicated shall provisions relates Agreement the (whether application determined provided courts. Proceeding. and may Castle State Acquiror, (and, and permitted to Issuers to Parties") purposes assign financing contrary contract, referred any the negotiation, irrevocably may be constitute in of benefit to Person this County, Section Section Section Section The or provided the Delaware, notwithstanding, by at lack and, any be agreements to any assigns the means delivery (whether Agreement and or shall of in law, case parties Applicable enforced in The each by of of without Attention: by Telephone E-mail any or the upon through Holders), 4.2 4.3 of 4.4 4.5 each Delaware, this one validity waive be authenticity. the in electronic of under all patties combination Laws Acquiror's intended state of (Acquiror, hereto contract, governed Agreement, without appeals, the agreement. parties or of at forever party of which address: Time between Counterparts; Governing Successors the or in the the Law. the the occurrence the or or its of Teri at no.: agree any other consent Acquiror agree and use Federal performance Applicable defense any mail rights hereto any State of to fact shall giving in the by O'Brien, (858) rights teriobrien@paulhastings.com permitted of any such the the tort of that rsre the preserve jurisdiction jurisdictions time that time, and appropriate in This facsimile Law; that and of constitute of under and such Essence. court waives parties such and or "portable 458-3031 shall effect of service or a interpreted assigns, the Delaware is Delivery. final Assigns. Agreement otherwise) and their Esq. any Laws obligations an of during Consent of lender means. other of this assigns, have the inconvenient irrevocably to any or this in judgment competent of signature other successors an appellate or With by electronic essence. any document and Agreement original its patties the the 10 any and any and such Agreement or original and court This suit to sole This arising No than or right may choice any continuance such hereunder regard court Jurisdiction; enforced defense, Agreement any in on hereto. rules party discretion, court or subject submit Agreement the other graphic and of be (without any delivery forum and format" Affiliates, the out paper to of to Affiliates this the executed and State governing assigns such may therefrom), all all any judgment jurisdiction) Law of in (by except Anything Acquiror to matter of to Agreement the may accordance or and dates of as the shall of (".pd/') the Proceeding operation lender to raise Waiver any the or relating Exchange which, may a (if collectively, Delaware. of prior and assign be jurisdiction defense pictorial to jurisdiction conflict and service be maintenance event any). the or Parties, in the Acquiror made in be providing binding delivered form, written time of that this when in to any with of was use extent executed for of Jury shall to Neither shall this of any of law in Agreement appearance default would periods such such All the security or of the process taken transmitted upon any the of Laws sitting consent Agreement or be other Trial. or such by be by facsimile formation financing of Proceedings Laws such Proceeding lender Acquiror's conclusive patty otherwise) manner "Acquiror in heard any cause under and facsimile any together, set rules defense manner in in interest several courts of of This to other inure forth New of shall such such may and the the the the the or or or or of as to a


 
exercise any or all of the rights, interests, and remedies of any of the Acquiror Parties under this Agreement, but does not release any Acquiror Party from any obligation hereunder. Section 4.6 Remedies Cumulative; Specific Performance. The rights and remedies of the parties hereto shall be cumulative (and not alternative). The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. The parties accordingly agree that, in addition to any other remedy to which they are entitled at law or in equity, the parties are entitled to injunctive relief to prevent breaches of this Agreement and otherwise to enforce specifically the provisions of this Agreement. Each party expressly waives any requirement that any other party obtain any bond or provide any indemnity in connection with any action seeking injunctive relief or specific enforcement of the provisions of this Agreement. Section 4.7 Waiver. No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the patt of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy, and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or fu1ther exercise thereof or of any other power, right, privilege or remedy. No Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Person; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. Section 4.8 Amendments. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of all of the parties hereto. Section 4.9 Severability. In the event that any provision of this Agreement, or the application of any such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by Law. Section 4.10 Entire Agreement. This Agreement, the Purchase Agreement and the other Related Agreements set forth the entire understanding of the patties hereto relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or between any of the parties relating to the subject matter hereof and thereof. Section 4.11 Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement. Section 4.12 Interpretations. Whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and 11


 
neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 12


 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. By~:::::_~~~ Name: Eric M. DeMarco Title: President and Chief Executive Officer [Signature Page to Exchange Agreement]


 
FTT CORE, LLC, a Delaware limited liability company ./ By: :<'.;>>· ~(... / Name: Io.$eph D. Broshy)eyer Title:// ,Manager FLORIDA TURBINE TECHNOLOGIES, INC., a Florida corporation By:~~~~~~~~~~~~. Name: Shirley C. Brostmeyer Title: President and Secretary The Shirley C. Brostrneyer Revocable Trust u/a/d August 25, 2002, as amended and restated August 13,2014 By:~~~~~~~~~~~~~~ Name: Shirley C. Brostmeyer Title: Trustee , By: /·' Name: Joseph D. Brostri1eyer Title:~:Trustee ;> The Joseph D. Brostmeyer Revocable Trust u/a/d August 25, 2002, as amended and restated August 13, 2014 ~' By: ,~> Name: Joseph D. Brosnneyer Title: }'fustee / By:~~~~~~~~~~~~~~ Name: Shirley C. Brostmeyer Tit1e: Trustee [Signature Page to Exchange Agreement]


 
[Signature Page By:~~~~~~~~~~~~~~~ FTT Name: Title: company Name: FLORIDA By: Title: corporation The August 25, Name: Title: By:~---"'~-LL:.~•~--+-~~~--~-=~,__;,,_~~~­ Name: By: Title: The Name: August Name: Title: 13, Title: By:~~~~~~~~~~--~~~~~~ By: 13,2014 to Exchange 2014 Shirley Joseph CORE, ,//}{,.~/~ Joseph Manager President Shirley Trustee Joseph Trustee Trustee Trustee Joseph Shirley 25, v//l.vi TURBINE Agreement] 2002, 2002, -- D. C. l, LLC, D. D. D. C. Brostmeyer Brostmeyer C. . and Brostmeyer ->-/{·\:'."'·~-- Brostmeyer as Brostmeyer Brostmeyer as Brostmeyer - (' TECHNOLOGIES, a amended amended Secretary Delaware r-~L r - -~------ c--~:-~--~~---­ Revocable Revocable ... - _-.- and and -, ___ limited "' restated restated INC., - Trnst Trust liability ~~ August August a u/a/d u/a/d Florida


 
The Shirley Brostm~yer20 I 8 f:'amily Trust u/a/d December 17, 20Jl / c.,:;:)4_,_, By: / / Name: Jos<;iphD. Brosttfieyer Title: Trlistee ./f/ By: ~~~~~~~~~~~~~~~~~-/ Name: Sara J. Brostmeyer Title: Trustee The Joseph D Brostmeyer 20 I 8 Irrevocable Trust u/a/d December I 7, 2018 By:~~~~~~~~~~~~~~ Name: Shirley C. Brostmeyer Title: Trustee By:~~~~~~~~~~~~~~ Name: Julia A. Brostmeyer Title: Trustee [Signature Page to Exchange Agreement]


 
The Shirley Brostmeyer 2018 Family Tmst uM i December 17,2018 B y:____ ________________________ ______ Name: Joseph D. Brostmeyer Title: Trastee __________________ Name: Sara I. Brostmeyer Title: Trustee The Joseph D Brostmeyer 2018 Irrevocable Trust u/a/d December 17,2018 By: _____:___ :_______ :____________________ Name: Shirley C. Brostmeyer Title: Trustee By; --------------------------------------- ---------------- Name: Julia A. Brostmeyer Title: Trastee {.Signature Pap* to Exchange Agreement}


 
[Signature Page The Name: Name: December By: By: Title: The Title: Title: Name: Name: u/a/d By: By: Title: to Exchange ~~~~~~~~~~~~~~~---·-- ~~~~~~~~--~~~~~~~~ --~----~~------~-~-~~~~~---·····-· Shirley Joseph December Trustee Trustee Sara Trustee Shirley Julia Trustee ,,.// 17, Agreement] D ~- J. Brostmeyer A. Brostmeyer t:v' Brostmeyer 2018 D. C. Brostmeyer 17, Brostmeyer Br 2018 2018 2018 Family Irrevocable Trust u/a/d Trust


 
[Signature Page By: The Name: Name: December Title: By: Title: The Narne:~yer By:~~~~~~~~~~~~~~ Name: u/a/d Title: Title: By:. to Exchange ~~~~~~~~~~~~~~~~- ~~~~~~~~~~~~~~~~- Shirley Joseph December Joseph Trustee Sara Trustee ~ Trustee Shirley Trnstee ~······- 17, Agreement] D Brostmeyer J. Brostmeyer 2018 Brostmeyer D. C. 17, Brostmeyer Brostrneyer 2018 2018 2018 Family Irrevocable Trust u/a/d Trust


 
SCHEDULE A KTT CORE, Inc. (formerly FIT CORE, LLC) Kratos Defense & Security 8,431.33 Company Units 8,431.33 shares of Class A Solutions, Inc. common stock The Shirley C. Brostmeyer 963.55 Company Units 963.55 shares of Class B Revocable Trust u/a/d August 25, common stock 2002, as amended and restated August 13, 2014 The Joseph D. Brostmeyer 921.66 Company Units 921.66 shares of Class B Revocable Trust u/a/d August 25, common stock 2002, as amended and restated August 13, 2014 Shirley C. Brostmeyer 2018 104.73 Company Units 104.73 shares of Class B Family Trust u/a/d December 17, common stock 2018 The Joseph D. Brostmeyer 2018 104.73 Company Units 104.73 shares of Class B Irrevocable Trust u/a/d December common stock 17,2018 :l~t~r~stsOwned.Pri~rfo ' Interests ()"'n~d After · ·····;' ~J£~e,hajige :••.,•..• · ··•E;~n~llg~} - ' - --- - ' ,' _r,:__, =- - ' Florida Turbine Technologies, Inc. Kratos Defense & Security 8,431.33 shares of capital 8,431.33 shares of Class A Solutions, Inc. stock capital stock The Shirley C. Brostmeyer 963.55 shares of capital 963.55 shares of Class B Revocable Trust u/a/d August 25, stock capital stock 2002, as amended and restated August 13, 2014 15


 
The Joseph D. Brostmeyer 921.66 shares of capital 921.66 shares of Class B Revocable Trust u/a/d August 25, stock capital stock 2002, as amended and restated August 13, 2014 Shirley C. Brostmeyer 2018 104.73 shares of capital 104.73 shares of Class B Family Trust u/a/d December 17, stock capital stock 2018 The Joseph D. Brostmeyer 2018 104. 73 shares of capital 104.73 shares of Class B Irrevocable Trust u/a/d December stock capital stock 17,2018 16


 
SCHEDULEB EXAMPLE CALCULATIONS OF MINORITY INTEREST PURCHASE PRICE EBITDA of Acquired Assumed Less the Resulting Equals the Companies for the 12 Enterprise Value Reduction Difference, Minority months ended (12x multiple of Amount multiplied by Interest December 31, 2023 EBITDA) 19.9% Purchase Price $20,000,000 $240,000,000 ($0) $240 '000 '000 $47,760,000 x 0.1999 $20,000,000 $240,000,000 ($5,000,000) $235,000,000 $46,765,000 x 0.1999 The Minority Interest Purchase Price will be paid with at least 50% cash, as provided by Section 3 .2 of the Agreement.