Document:

Unassociated Document

1,170,000 Common Stock

 

 

AIR INDUSTRIES GROUP

 

PLACEMENT AGENT AGREEMENT

 

May 28, 2014

 

Taglich Brothers, Inc.

275 Madison Avenue, Suite 1618

New York, NY 10016

Ladies and Gentlemen:

 

1.           Introduction.  Air Industries Group, a Nevada corporation (the “Company”), proposes to issue and sell to the purchasers, pursuant to the terms of this Placement Agent Agreement (this “Agreement”) and the Subscription Agreements in the form of Exhibit A attached hereto (the “Subscription Agreements”) entered into with the purchasers identified therein (each a “Purchaser” and collectively, the “Purchasers”), up to an aggregate of 1,170,000 shares of common stock (the “Shares”), par value $0.001 per share (the “Common Stock”), of the Company.  The Company hereby confirms its agreement with Taglich Brothers, Inc. (“the “Placement Agent”) to act as Placement Agent in accordance with the terms and conditions hereof.

 

2.           Agreement to Act as Placement agent; Placement of Securities.  On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement:

 

2.1           The Company has authorized and hereby acknowledges that the Placement Agent has acted as its exclusive agent to solicit offers for the purchase of all or part of the Shares from the Company in connection with the proposed offering of the Shares (the “Offering”).  Until the Closing Date (as defined in Section 4 hereof) or earlier upon the termination of this Agreement pursuant to Section 10, the Company shall not, without the prior written consent of the Placement Agent, solicit or accept offers to purchase the Shares otherwise than through the Placement Agent.

 

2.2           The Company hereby acknowledges that the Placement Agent, as agent of the Company, used its reasonable commercial efforts to solicit offers to purchase the Shares from the Company on the terms and subject to the conditions set forth in the Prospectus (as defined below). The Placement Agent shall use commercially reasonable efforts to assist the Company in obtaining performance by each Purchaser whose offer to purchase Shares was solicited by the Placement Agent and accepted by the Company, but the Placement Agent shall not, except as otherwise provided in this Agreement, be obligated to disclose the identity of any potential purchaser or have any liability to the Company in the event any such purchase is not consummated for any reason. Under no circumstances will the Placement Agent be obligated to underwrite or purchase any Shares for its own account and, in soliciting purchases of Shares, the Placement Agent acted solely as the Company’s agent and not as principal. Notwithstanding the foregoing and except as otherwise provided in Section 2.3, it is understood and agreed that the Placement Agent (or its affiliates) may, solely at its discretion and without any obligation to do so, purchase Shares as principal.

 

  

  

  

 

2.3           Subject to the provisions of this Section 2, offers for the purchase of Shares were solicited by the Placement Agent as agent for the Company at such times and in such amounts as the Placement Agent deemed advisable.  The Placement Agent shall communicate to the Company, orally or in writing, each reasonable offer to purchase Shares received by it as agent of the Company. The Company shall have the sole right to accept offers to purchase the Shares and may reject any such offer, in whole or in part. The Placement Agent shall have the right, in its discretion reasonably exercised, without notice to the Company, to reject any offer to purchase Shares received by it, in whole or in part, and any such rejection shall not be deemed a breach of this Agreement.

 

2.4           The Shares are being sold to the Purchasers at a price of $9.00 per Share.  The purchases of the Shares by the Purchasers shall be evidenced by the execution of Subscription Agreements by each of the Purchasers and the Company.

 

2.5           As compensation for services rendered, on the Closing Date (as defined in Section 4 hereof), the Company shall pay to the Placement Agent by wire transfer of immediately available funds to an account or accounts designated by the Placement Agent, an aggregate amount equal to eight percent (8%) of the gross proceeds received by the Company from the sale of the Shares on such Closing Date (the “Placement Fee”).

 

2.6       Placement Agent’s Warrant.

(a)           The Company hereby agrees to issue and sell to the Placement Agent (and/or its designees) on the Closing Date a warrant (“Placement Agent’s Warrant”) for the purchase of an aggregate of 46,800 shares of Common Stock, representing four percent (4%) of the Shares being sold in the Offering. The Placement Agent’s Warrant agreement, in the form attached hereto as Exhibit B (the “Placement Agent’s Warrant Agreement”), shall be exercisable, in whole or in part, commencing on a date which is one (1) year after the date of the commencement of sales of the Offering and expiring on the five-year anniversary of the date of the commencement of sales of the Offering at an initial exercise price per share of Common Stock of $11.25. The Placement Agent’s Warrant and the shares of Common Stock issuable upon exercise thereof are hereinafter referred to together as the “Placement Agent’s Securities.” The Placement Agent understands and agrees that there are significant restrictions pursuant to FINRA Rule 5110 against transferring the Placement Agent’s Warrant and the underlying shares of Common Stock during the one hundred eighty (180) days after the commencement of sales of the Offering and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or hypothecate the Placement Agent’s Warrant, or any portion thereof, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of one hundred eighty (180) days following the commencement of sales of the Offering to anyone other than (i) an underwriter or a selected dealer in connection with the Offering, or (ii) a bona fide officer or partner of the Placement Agent or of any such underwriter or selected dealer; and only if any such transferee agrees to the foregoing lock-up restrictions.

 

  

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(b)           Delivery of the Placement Agent’s Warrant Agreement shall be made on the Closing Date and shall be issued in the name or names and in such authorized denominations as the Placement Agent may request.

 

2.7           No Shares which the Company has agreed to sell pursuant to this Agreement and the Subscription Agreements shall be deemed to have been purchased and paid for, or sold by the Company, until such Shares shall have been delivered to the Purchaser thereof against payment by such Purchaser. If the Company shall default in its obligations to deliver Shares to a Purchaser whose offer it has accepted, the Company shall indemnify and hold the Placement Agent harmless against any loss, claim, damage or expense arising from or as a result of such default by the Company in accordance with the procedures set forth in Section 8(a) herein.

 

3.           Representations and Warranties of the Company.  The Company represents and warrants to, and agrees with, the Placement Agent and the Purchasers as follows;  any references to the “Company” shall include any and all subsidiaries (as defined in Section 16 hereof) of the Company unless the context otherwise requires:

 

(a)           The Company has prepared and filed in conformity with the requirements of the Securities Act of 1933, as amended (the “Securities Act”), and published rules and regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange Commission (the “Commission”) a “shelf” Registration Statement (as hereinafter defined) on Form S-3 (File No. 333-191748), which became effective as of December 11, 2013 (the “Effective Date”), including a base prospectus relating to the securities registered pursuant to such Registration Statement (the “Base Prospectus”), and such amendments and supplements thereto as may have been required on or prior to the date of this Agreement. The term “Registration Statement” as used in this Agreement means the registration statement (including all exhibits, financial schedules and all documents and information deemed to be a part of the Registration Statement pursuant to Rules 430A, 430B and 430C of the Rules and Regulations), as amended and/or supplemented to the date of this Agreement, including the Base Prospectus.  The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.  The Company, if required by the Rules and Regulations of the Commission, will file the Prospectus (as defined below), with the Commission pursuant to Rule 424(b) of the Rules and Regulations. The term “Prospectus” as used in this Agreement means the prospectus and prospectus supplement, in the form in which they are to be filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, or, if the prospectus or prospectus supplement is not to be filed with the Commission pursuant to Rule 424(b), then the prospectus in the form included as part of the Registration Statement as of the Effective Date, except that if any revised prospectus or prospectus supplement shall be provided to the Placement Agent by the Company for use in connection with the offering and sale of the Shares which differs from such prospectus or prospectus supplement (whether or not such revised prospectus or prospectus supplement is required to be filed by the Company pursuant to Rule 424(b) of the Rules and Regulations), the term “Prospectus” shall refer to such revised prospectus or prospectus supplement, as the case may be, from and after the time it is first provided to the Placement Agent for such use. Any preliminary prospectus or prospectus subject to completion included in the Registration Statement or filed with the Commission pursuant to Rule 424 of the Rules and Regulations is hereafter called a “Preliminary Prospectus.”  Any reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before the last to occur of the Effective Date, the date of the Preliminary Prospectus, or the date of the Prospectus, and any reference herein to the terms “amend,” “amendment,” or “supplement” with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include (i) the filing of any document under the Exchange Act after the Effective Date, the date of such Preliminary Prospectus or the date of the Prospectus, as the case may be, which is incorporated by reference and (ii) any such document so filed. If the Company has filed an abbreviated registration statement to register additional securities pursuant to Rule 462(b) under the Rules and Regulations (the “462(b) Registration Statement”), then any reference herein to the Registration Statement shall also be deemed to include such 462(b) Registration Statement.

 

  

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(b)           As of the Applicable Time (as defined below) and as of the Closing Date, neither (i) any General Use Free Writing Prospectus (as defined below) issued at or prior to the Applicable Time, and the Pricing Prospectus (as defined below) and the information included on Schedule A hereto, all taken together (collectively, the “General Disclosure Package”) nor (ii) any individual Limited Use Free Writing Prospectus (as defined below), included or will include, any untrue statement of a material fact or omitted or as of the Closing Date will omit, to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by the Placement Agent specifically for inclusion therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).  As used in this paragraph (b) and elsewhere in this Agreement:

 

“Applicable Time” means 4:30 p.m., New York time, on the date of this Agreement.

 

“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is identified on Schedule A to this Agreement.

 

  

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“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the Rules and Regulations relating to the Shares in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) of the Rules and Regulations.

 

 “Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

 

“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and supplemented immediately prior to the Applicable Time, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof.

 

(c)           No order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus relating to the Offering has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been instituted or threatened by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Securities Act and the Rules and Regulations, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Preliminary Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by the Placement Agent specifically for inclusion therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).

 

(d)           The Company was at the time of the filing of the Registration Statement eligible to use Form S-3. As of the date of this Agreement and at the Closing Date, the Company is eligible to use Form S-3, including the transaction requirements with respect to the aggregate market value of securities being sold pursuant to this Offering and during the twelve (12) months prior to this Offering, in accordance with General Instruction I.B.6 of Form S-3.

 

(e)           At the time the Registration Statement became or becomes effective, at the date of this Agreement and at the Closing Date, the Registration Statement conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, at the time the Prospectus was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this paragraph (e) shall not apply to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Placement Agent specifically for inclusion therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).

 

  

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(f)           Each Issuer Free Writing Prospectus, if any, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Shares or until any earlier date that the Company notified or notifies the Placement Agent as described in Section 5(e), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, Pricing Prospectus or the Prospectus, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof that has not been superseded or modified, or includes an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances prevailing at the subsequent time, not misleading.  The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Placement Agent specifically for inclusion therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).

 

(g)           The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and none of such documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.

 

(h)           The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the Offering other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Securities Act and consistent with Section 5(b) below.  The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 or 433 under the Securities Act. The Company will file with the Commission all Issuer Free Writing Prospectuses, if any, in the time and manner required under Rules 163(b)(2) and 433(d) of the Rules and Regulations.

 

(i)           The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Nevada.  The Company is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification and has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to so qualify or have such power or authority (i) would not have, singularly or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets or business or prospects of the Company, or (ii) impair in any material respect the ability of the Company to perform its obligations under this Agreement or to consummate any transactions contemplated by this Agreement, the General Disclosure Package or the Prospectus (any such effect as described in clauses (i) or (ii), a “Material Adverse Effect”). Except as disclosed in the General Disclosure Package and the Prospectus, the Company does not own or control, directly or indirectly, any interest in any corporation, partnership, limited liability partnership, limited liability company, association or other entity.  The Company has the following “Subsidiaries” (as defined in Section 16): Gales Acquisition Group, Inc., Air Industries Machining, Corp., Miller Stuart, Inc., Nassau Tool Works, Inc., Welding Metallurgy, Inc., Woodbine Products, Inc.

 

  

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(j)           The Company has all necessary corporate power and authority to enter into this Agreement and each of the Subscription Agreements, and to perform and to discharge its obligations hereunder and thereunder; and each of this Agreement, the Placement Agent’s Warrant and the Subscription Agreements has been duly authorized, executed and delivered by the Company, and constitutes a valid and binding obligation of the Company enforceable in accordance with its terms.

 

(k)           The Shares to be issued and sold by the Company to the Purchasers hereunder and under the Subscription Agreements have been duly and validly authorized and the Shares, when issued and delivered against payment therefor as provided herein, in the Placement Agent’s Warrant and in the Subscription Agreements will be duly and validly issued, fully paid and non-assessable and free of any preemptive rights, rights of first refusal, registration rights or similar rights and will conform to the descriptions thereof contained in the General Disclosure Package and the Prospectus. All corporate action required to be taken for the authorization, issuance and sale of the Placement Agent’s Warrant has been duly and validly taken; the shares of Common Stock issuable upon exercise of the Placement Agent’s Warrant have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company and when paid for and issued in accordance with the Placement Agent’s Warrant and the Placement Agent’s Warrant Agreement, such shares of Common Stock will be validly issued, fully paid and non-assessable.

 

(l)           The Company has an authorized capitalization as set forth in the Pricing Prospectus, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable, have been issued in all material respects in compliance with federal and state securities laws, and conform to the description thereof contained in the General Disclosure Package and the Prospectus.  As of May 27, 2014, there were 5,903,245 shares of Common Stock issued and outstanding, no shares of preferred stock were issued and outstanding and 556,717 shares of Common Stock were issuable upon the exercise of all options, warrants and convertible securities outstanding as of such date. Since the date of the Base Prospectus, the Company has not issued any securities, other than Common Stock issued pursuant to this Agreement or pursuant to the exercise of rights previously outstanding under the Company’s equity compensation plans, outstanding warrants, outstanding convertible notes, and other such outstanding agreements.  None of the outstanding shares of Common Stock was issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.  There are no authorized or outstanding shares of capital stock, options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Prospectus or accurately described in the General Disclosure Package.  The description of the Company’s stock option, stock bonus and other equity compensation plans or arrangements, and the options or other rights granted thereunder, as described in the General Disclosure Package and the Prospectus, accurately and fairly present, in all material respects, the information required to be shown with respect to such plans, arrangements, options and rights.

 

  

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(m)           The execution, delivery and performance of this Agreement and the Subscription Agreements by the Company, the issue and sale of the Shares by the Company, the issuance of the Placement Agent’s Warrant and the consummation of the transactions contemplated hereby and thereby will not (with or without notice or lapse of time or both): (i) conflict with or result in a breach or violation of any of the terms or provisions of, constitute a default or Debt Repayment Triggering Event (as defined below) under, give rise to any right of termination or other right or the cancellation or acceleration of any right or obligation or loss of a benefit under, or give rise to the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets of the Company pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject; (ii) result in any violation of the provisions of the charter or by-laws (or analogous governing instruments, as applicable) of the Company; (iii) result in the violation of any law, statute, rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, specifically naming the Company and having jurisdiction over the Company or any of its properties or assets.  A “Debt Repayment Triggering Event” means any event or condition that gives, or with the giving of notice or lapse of time would give the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company.

 

(n)           Except for the registration of the securities offered in the Offering under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws, the Financial Industry Regulatory Authority, Inc. (“FINRA”) and The NYSE MKT (the “NYSE MKT”) in connection with the Offering and sale of the Shares by the Company, no consent, approval, authorization or order of, or filing, qualification or registration with, any court or governmental agency or body, foreign or domestic, which has not been made, obtained or taken and is not in full force and effect, is required for the execution, delivery and performance of this Agreement and the Subscription Agreements by the Company, the offer or sale of the Shares or the consummation of the transactions contemplated hereby or thereby.

 

  

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(o)           Rotenberg Meril Solomon Bertiger & Guttilla, P.C. (“Rotenberg Meril”), who has certified certain financial statements and related schedules included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to the Company as required by the Securities Act and the Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the “PCAOB”).  Except as disclosed in the Registration Statement and as pre-approved in accordance with the requirements set forth in Section 10A of the Exchange Act, Rotenberg Meril has not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).

 

(p)           The financial statements, together with the related notes and schedules, included or incorporated by reference in the General Disclosure Package, the Prospectus and in the Registration Statement fairly present the financial position and the results of operations and changes in stockholders’ equity and cash flows of the Company at the respective dates or for the respective periods therein specified.  Such statements and related notes and schedules have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis throughout the periods involved except as may be set forth in the related notes included or incorporated by reference in the General Disclosure Package.  The financial statements, together with the related notes and schedules, included or incorporated by reference in the General Disclosure Package and the Prospectus comply in all material respects with the Securities Act, the Exchange Act, and the Rules and Regulations and the rules and regulations under the Exchange Act.  No other financial statements or supporting schedules or exhibits are required by the Securities Act or the Rules and Regulations to be described, or included or incorporated by reference in the Registration Statement, the General Disclosure Package or the Prospectus.  There is no pro forma or as adjusted financial information which is required to be included in the Registration Statement, the General Disclosure Package, or the Prospectus or a document incorporated by reference therein in accordance with the Securities Act and the Rules and Regulations which has not been included or incorporated as so required.

 

(q)           The Company has not sustained, since the date of the latest audited financial statements included or incorporated by reference in the General Disclosure Package, any Material Adverse Effect, otherwise than as set forth or contemplated in the General Disclosure Package; and, since such date, there has not been any change in the capital stock or long-term debt of the Company or any development involving a prospective adverse change, in or affecting the business, assets, general affairs, management, financial position, prospects, stockholders’ equity or results of operations of the Company otherwise than as set forth or contemplated in the General Disclosure Package.

 

  

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(r)           Except as set forth in the General Disclosure Package, there is no legal or governmental action, suit, claim or proceeding pending to which the Company is a party or of which any property or assets of the Company is the subject which is required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or a document incorporated by reference therein and is not described therein, or which, singularly or in the aggregate, if determined adversely to the Company could have a Material Adverse Effect or prevent the consummation of the transactions contemplated hereby; and to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others.

 

(s)           The Company is not (i) in violation of its charter or by-laws, (ii) in default in any respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject or (iii) in violation in any respect of any statute, law, ordinance, governmental rule or regulation or any judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or its property or assets, except with respect to clauses (ii) and (iii), any violations or defaults which, singularly or in the aggregate, would not have a Material Adverse Effect.

 

(t)           The Company possesses all licenses, certificates, authorizations and permits issued by, and has made all declarations and filings with, the appropriate state, federal or foreign regulatory agencies or bodies which are necessary or desirable for the ownership of its properties or the conduct of its business as described in the General Disclosure Package and the Prospectus, except where any failures to possess or make the same, singularly or in the aggregate, would not have a Material Adverse Effect, and the Company has not received notification of any revocation or modification of any such license, certificate, authorization or permit and has no reason to believe that any such license, certificate, authorization or permit will not be renewed.

 

(u)            The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the General Disclosure Package and the Prospectus, will not become an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

 

(v)           Neither the Company nor, to the Company’s knowledge, any of the Company’s officers, directors or affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which might in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.

 

(w)           The Company owns or possesses adequate rights to use all patents, patent applications, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, trademark registrations, service marks, service mark registrations, trade names, mask work rights and other intellectual property necessary to carry on the business now operated by it or proposed to be operated by it as described in the General Disclosure Package and the Prospectus (collectively, “Intellectual Property”), except where the lack of such ownership or rights to use would not have a Material Adverse Effect. Except as disclosed in the General Disclosure Package or the Prospectus, there is no litigation or other proceeding pending or, to the Company’s knowledge, threatened and no claims are presently being asserted by any third party challenging or questioning the ownership, validity, or enforceability of the Company's right to use or own any Intellectual Property or asserting that the use of the Company’s Intellectual Property by the Company or the operation of the Company’s business infringes upon or misappropriates the Intellectual Property of any third party, and the Company is unaware of any facts which would form a reasonable basis for any such claim. Except as disclosed in the General Disclosure Package or the Prospectus, the Company is not otherwise aware of any infringement of or conflict with asserted rights of others with respect to any of the Company's Intellectual Property or the operation of the Company’s business.  Except as disclosed in the General Disclosure Package or the Prospectus, the Company is not otherwise aware of any facts or circumstances which would render any of the Company's Intellectual Property invalid or inadequate to protect the interests of the Company therein, or with respect to the patent applications contained in the Intellectual Property, unpatentable. Except as disclosed in the General Disclosure Package or the Prospectus, or as would not, individually or in the aggregate have a Material Adverse Effect, to the best of the Company’s knowledge, (i) there is no infringement by third parties engaged in commercial activity of any Intellectual Property of the Company relating to the Company’s business and (ii) there are no non-commercial activities being performed by any third parties which, upon commercialization thereof, could reasonably be expected to infringe on the Intellectual Property of the Company. The Company has taken all steps necessary to perfect its ownership of and interest in the Intellectual Property.

 

  

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(x)           The Company has good and marketable title in fee simple to, or has valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company, in each case free and clear of all liens, encumbrances, security interests, claims and defects that may result in a Material Adverse Effect.

 

(y)           No organized labor disturbance by the employees of the Company exists or, to the best of the Company’s knowledge, is imminent and the Company has no actual knowledge of any existing or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers, customers or contractors, which might be expected to have a Material Adverse Effect. The Company is not aware that any key employee or significant group of employees of the Company plans to terminate employment with the Company.

 

(z)           No “prohibited transaction” (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with respect to which the thirty (30)-day notice requirement under Section 4043 of ERISA has been waived) has occurred or could be reasonably expected to occur with respect to any employee benefit plan of the Company which could, singularly or in the aggregate, have a Material Adverse Effect.  Each employee benefit plan of the Company is in compliance in all material respects with applicable law, including ERISA and the Code. The Company has not incurred and could not be reasonably expected to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any pension plan (as defined in ERISA).  Each pension plan for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which could, singularly or in the aggregate, cause the loss of such qualification.

 

  

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(aa)           The Company is in compliance with all foreign, federal, state and local rules, laws and regulations relating to the use, treatment, storage and disposal of hazardous or toxic substances or waste and protection of health and safety or the environment which are applicable to its business (“Environmental Laws”), except where the failure to comply would not, singularly or in the aggregate, have a Material Adverse Effect.  There has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances regulated by Environmental Laws (“Hazardous Substances”) or caused by the Company (or, to the Company’s knowledge, any other entity for whose acts or omissions the Company is or may otherwise be liable) upon any of the property now or previously owned or leased by the Company, or upon any other property, in violation of any law, statute, ordinance, rule, regulation, order, judgment, decree or permit or which would, under any law, statute, ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability, except for any violation or liability which would not have, singularly or in the aggregate with all such violations and liabilities, a Material Adverse Effect; and there has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property of any Hazardous Substances, except for any such disposal, discharge, emission, or other release of any kind which would not have, singularly or in the aggregate with all such discharges and other releases, a Material Adverse Effect.

 

(bb)           The Company (i) has timely filed all federal, state, local and foreign tax returns required to be filed or has requested extensions thereof and all such returns were true, complete and correct, (ii) has paid all federal, state, local and foreign taxes, assessments, governmental or other charges due and payable for which it is liable, including, without limitation, all sales and use taxes and all taxes which the Company is obligated to withhold from amounts owing to employees, creditors and third parties, and (iii) does not have any tax deficiency or claims outstanding or assessed or, to the best of its knowledge, proposed against any of them, except those, in each of the cases described in clauses (i), (ii) and (iii) of this paragraph (bb), that would not, singularly or in the aggregate, have a Material Adverse Effect.  The Company has not engaged in any transaction which is a corporate tax shelter or which could be characterized as such by the Internal Revenue Service or any other taxing authority.  The Company reasonably believes that the accruals and reserves on the books and records of the Company in respect of tax liabilities for any taxable period not yet finally determined are adequate to meet any assessments and related liabilities for any such period, and since December 31, 2012, the Company has not incurred any liability for taxes other than in the ordinary course.

 

  

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(cc)           The Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its business and the value of its properties and as is customary for companies engaged in similar businesses in similar industries. The Company has no reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect.  The Company has not been denied any insurance coverage that it has sought or for which it has applied.

 

(dd)           The Company maintains a system of internal accounting and other controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the General Disclosure Package, since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

(ee)           The minute books of the Company have been made available to the Placement Agent and counsel for the Placement Agent, and such books (i) contain a complete summary of all meetings and actions of the board of directors (including each board committee) and stockholders of the Company (or analogous governing bodies and interest holders, as applicable), since January 1, 2012 through the date of the latest meeting and action, and (ii) accurately in all material respects reflect all transactions referred to in such minutes.

 

(ff)           There is no franchise, lease, contract, agreement or document required by the Securities Act or by the Rules and Regulations to be described in the General Disclosure Package and in the Prospectus or a document incorporated by reference therein or to be filed as an exhibit to the Registration Statement or a document incorporated by reference therein which is not described or filed therein as required; and all descriptions of any such franchises, leases, contracts, agreements or documents contained in the Registration Statement or in a document incorporated by reference therein are accurate and complete descriptions of such documents in all material respects.  Other than as described in the General Disclosure Package, no such franchise, lease, contract or agreement has been suspended or terminated for convenience or default by the Company or any of the other parties thereto, and the Company has not received notice nor does the Company have any other knowledge of any such pending or threatened suspension or termination, except for such pending or threatened suspensions or terminations that would not reasonably be expected to, singularly or in the aggregate, have a Material Adverse Effect.

 

  

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(gg)           No relationship, direct or indirect, exists between or among the Company on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of its affiliates on the other hand, which is required to be described in the General Disclosure Package and the Prospectus or a document incorporated by reference therein and which is not so described.

 

(hh)           No person or entity has any right to require, or cause the Company to effect, registration of shares of Common Stock or other securities of the Company because of the filing or effectiveness of the Registration Statement or otherwise, except for persons and entities who have expressly waived such right in writing or who have been given timely and proper written notice and have failed to exercise such right within the time or times required under the terms and conditions of such right.

 

(ii)           The Company does not own any “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of the sale of the Shares will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Shares to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.

 

(jj)           Except for this Agreement and the letter agreement between the Company and the Placement Agent dated May 27, 2014 (the “Engagement Letter”), the Company is not a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or the Placement Agent for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares or any transaction contemplated by this Agreement, the Registration Statement, the General Disclosure Package or the Prospectus.

 

(kk)           No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in either the General Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

(ll)           The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.  The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the NYSE MKT, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NYSE MKT, nor has the Company received any notification that the Commission or NYSE MKT LLC is contemplating terminating such registration or listing.  The Company has obtained or will make, as applicable, all necessary consents, approvals, authorizations or orders of, or filing, notification or registration with, the NYSE MKT is required for the listing and trading of the Common Stock on the NYSE MKT.

 

  

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(mm)           The Company is in compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the provisions thereof (the “Sarbanes-Oxley Act”) that are currently in effect, and any and all applicable rules and regulations promulgated by the Commission thereunder that are currently in effect.

 

(nn)           From the time the Registration Statement has been declared effective by the Commission through the Applicable Time, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Act (an “Emerging Growth Company”).

 

(oo)           The Company is in compliance with all applicable corporate governance requirements set forth in the NYSE MKT Company Guide that are currently in effect.

 

(pp)           There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act) and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company’s liquidity or the availability of or requirements for its capital resources required to be described in the General Disclosure Package and the Prospectus or a document incorporated by reference therein which have not been described as required.

 

(qq)           There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company to or for the benefit of any of the officers or directors of the Company or any of their respective family members, except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(rr)           The statistical and market related data included in the Registration Statement, the General Disclosure Package and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate.

 

(ss)           No approval of the stockholders of the Company under the rules and regulations of NYSE MKT (including Rule 713 of the NYSE MKT Company Guide) is required for the Company to issue and deliver the Shares to the Purchasers.

 

(tt)           Neither the Company nor to the knowledge of the Company, any employee or agent of the Company has made any contribution or other payment to any official of, or candidate for, any federal, state, local or foreign office in violation of any law (including the Foreign Corrupt Practices Act of 1977, as amended) or of the character required to be disclosed in the Registration Statement, the General Disclosure Package or the Prospectus or a document incorporated by reference therein.

 

  

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(uu)           The operations of the Company are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending, or to the best knowledge of the Company, threatened.

 

(vv)           Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

 

Any certificate signed by or on behalf of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed to be a representation and warranty by the Company to the Placement Agent and the Purchasers as to the matters covered thereby.

 

4.           The Closing.  The time and date of closing and delivery of the documents required to be delivered to the Placement Agent pursuant to Sections 5 and 7 hereof shall be at 10:00 a.m., New York time, on June 3, 2014 (the “Closing Date”) at the office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., The Chrysler Center, 666 Third Avenue, New York, New York 10017.

 

5.           Further Agreements of the Company.  The Company agrees with the Placement Agent and the Purchasers:

 

(a)           To prepare the Rule 462(b) Registration Statement, if necessary, in a form approved by the Placement Agent and file such Rule 462(b) Registration Statement with the Commission on the date hereof; to prepare the Prospectus in a form approved by the Placement Agent containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B and 430C and to file such Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than the second  (2nd) business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430B of the Rules and Regulations; to notify the Placement Agent immediately of the Company’s intention to file or prepare any supplement or amendment to any Registration Statement or to the Prospectus and to make no amendment or supplement to the Registration Statement, the General Disclosure Package or to the Prospectus to which the Placement Agent shall reasonably object by notice to the Company after a reasonable period to review; to advise the Placement Agent, promptly after it receives notice thereof, of the time when any amendment to any Registration Statement has been filed or becomes effective or any supplement to the General Disclosure Package or the Prospectus or any amended Prospectus has been filed and to furnish the Placement Agent copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) or 163(b)(2), as the case may be; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) is required in connection with the Offering or sale of the Shares; to advise the Placement Agent, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement, the General Disclosure Package or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or suspending any such qualification, and promptly to use its best efforts to obtain the withdrawal of such order.

 

  

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(b)           The Company represents and agrees that, unless it obtains the prior consent of the Placement Agent, it has not made and will not, make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 of the Rules and Regulations unless the prior written consent of the Placement Agent has been received (each, a “Permitted Free Writing Prospectus”); provided that the prior written consent of the Placement Agent hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectuses included in Schedule A hereto.  The Company represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and 433 of the Rules and Regulations applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping and will not take any action that would result in the Placement Agent or the Company being required to file with the Commission pursuant to Rule 433(d) of the Rules and Regulations a free writing prospectus prepared by or on behalf of the Placement Agent that the Placement Agent otherwise would not have been required to file thereunder.

 

(c)           If at any time when a Prospectus relating to the Shares is required to be delivered under the Securities Act, any event occurs or condition exists as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or the Registration Statement, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, or if for any other reason it is necessary at any time to amend or supplement any Registration Statement or the Prospectus to comply with the Securities Act or the Exchange Act, the Company will promptly notify the Placement Agent, and upon the Placement Agent’s request, the Company will promptly prepare and file with the Commission, at the Company’s expense, an amendment to the Registration Statement or an amendment or supplement to the Prospectus that corrects such statement or omission or effects such compliance and will deliver to the Placement Agent, without charge, such number of copies thereof as the Placement Agent may reasonably request.  The Company consents to the use of the Prospectus or any amendment or supplement thereto by the Placement Agent.

 

  

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(d)           If the General Disclosure Package is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Placement Agent, it becomes necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, or to make the statements therein not conflict with the information contained or incorporated by reference in the Registration Statement then on file and not superseded or modified, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply with any law, the Company promptly will either (i) prepare, file with the Commission (if required) and furnish to the Placement Agent and any dealers an appropriate amendment or supplement to the General Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference in the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of the circumstances then prevailing, be misleading or conflict with the Registration Statement then on file, or so that the General Disclosure Package will comply with law.

 

(e)           If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or will conflict with the information contained in the Registration Statement, Pricing Prospectus or Prospectus, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof and not superseded or modified or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances prevailing at the subsequent time, not misleading, the Company has promptly notified or will promptly notify the Placement Agent so that any use of the Issuer Free Writing Prospectus may cease until it is amended or supplemented and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.  The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Placement Agent specifically for inclusion therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).

 

  

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(f)           Upon request, to furnish promptly to the Placement Agent and to counsel for the Placement Agent a signed copy of the Registration Statement as originally filed with the Commission, and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith.

 

(g)           To deliver promptly to the Placement Agent in New York City such number of the following documents as the Placement Agent shall reasonably request:  (i) conformed copies of the Registration Statement as originally filed with the Commission (in each case excluding exhibits), (ii) each Preliminary Prospectus, if any, (iii) any Issuer Free Writing Prospectus, (iv) the Prospectus (the delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this paragraph (g) to be made not later than 10:00 a.m., New York time, on the business day following the execution and delivery of this Agreement), (v) conformed copies of any amendment to the Registration Statement (excluding exhibits), (vi) any amendment or supplement to the General Disclosure Package or the Prospectus (the delivery of the documents referred to in clauses (v) and (vi) of this paragraph (g) to be made not later than 10:00 a.m., New York City time, on the business day following the date of such amendment or supplement) and (vii) any document incorporated by reference in the General Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of the documents referred to in clause (vi) of this paragraph (g) to be made not later than 10:00 a.m., New York City time, on the business day following the date of such document).

 

(h)           To make generally available to its stockholders as soon as practicable, but in any event not later than eighteen (18) months after the effective date of each Registration Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of the Company (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); and to furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flows of the Company certified by independent public accountants) and as soon as possible after each of the first three fiscal quarters of each fiscal year (beginning with the first fiscal quarter after the effective date of such Registration Statement), consolidated summary financial information of the Company for such quarter in reasonable detail.

 

(i)           To take promptly from time to time such actions as the Placement Agent may reasonably request to qualify the Shares for offering and sale under the securities or Blue Sky laws of such jurisdictions (domestic or foreign) as the Placement Agent may designate and to continue such qualifications in effect, and to comply with such laws, for so long as required to permit the offer and sale of Shares in such jurisdictions; provided that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or to file a general consent to service of process in any jurisdiction.

 

(j)           To the extent not available on the Commission’s EDGAR system or any successor system, upon request, during the period of two (2) years from the date hereof, to deliver to the Placement Agent, (i) as soon as they are available, copies of all reports or other communications furnished to stockholders, and (ii) as soon as they are available, copies of any reports and financial statements furnished or filed with the Commission or any national securities exchange or automatic quotation system on which the Company’s securities are listed or quoted.

 

  

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(k)           That, except for the issuance of up to 20,000 and 100,000 shares of Common Stock in connection with the acquisitions of Eur-Pac Corp., a New York corporation, and Valco, Inc., an Oklahoma corporation, respectively, the Company will not, for a period of one hundred eighty (180) days from the date of the Prospectus (the “Lock-Up Period”), without the prior written consent of the Placement Agent, directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, other than (i) the Company’s sale of the Shares hereunder, (ii) the issuance of Common Stock or options to acquire Common Stock pursuant to the Company’s employee benefit plans, qualified stock option plans or other employee compensation plans as such plans are in existence on the date hereof and described in the Prospectus, and (iii) the issuance of Common Stock pursuant to the valid exercises of options, warrants or rights outstanding on the date hereof.  The Company will cause each executive officer, director and five percent (5%) or more stockholders listed in Schedule B to furnish to the Placement Agent, prior to the Closing Date, a letter, substantially in the form of Exhibit C hereto, pursuant to which each such person shall agree, among other things, not to directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, not to engage in any swap or other agreement or arrangement that transfers, in whole or in part, directly or indirectly, the economic risk of ownership of Common Stock or any such securities and not to engage in any short selling of any Common Stock or any such securities, during the Lock-Up Period, without the prior written consent of the Placement Agent.  The Company also agrees that during such period, the Company will not file any registration statement, preliminary prospectus or prospectus, or any amendment or supplement thereto, under the Securities Act for any such transaction or which registers, or offers for sale, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, except for a registration statement on Form S-8 relating to employee benefit plans.  The Company hereby agrees that (i) if it issues an earnings release or material news, or if a material event relating to the Company occurs, during the last seventeen (17) days of the Lock-Up Period, or (ii) if prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this paragraph (k) or the letter shall continue to apply until the expiration of the eighteen (18)-day period beginning on the date of issuance of the earnings release or the occurrence of the material news or material event.

 

(l)           The Company will notify promptly the Placement Agent if the Company ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the period when a prospectus relating to the Shares is required to be delivered under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act) and (b) completion of the Lock-Up Period.

 

  

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(m)           The Company and the Placement Agent shall have received from National Securities Corporation (the “QIU”) a letter, dated as of the Closing Date and in form and substance satisfactory to the Placement Agent that:

 

(i)           The QIU is a member of FINRA and is qualified to act as a “qualified independent underwriter” within the meaning of FINRA Rule 5121.

 

(ii)           The QIU does not have a conflict of interest and is not an affiliate of any member that has a conflict of interest pursuant to FINRA Rule 5121(f)(12)(A)

 

(iii)           The QIU does not beneficially own as of the Closing Date more than 5% of the class of securities that would give rise to a conflict of interest, including any right to receive any such securities exercisable within 60 days pursuant to FINRA Rule 5121(f)(12)(B).

 

(iv)           The QIU has reviewed the registration statement and has participated in the preparation of the Prospectus and the transaction documents relating to the Offering and will exercise the usual standards of “due diligence” in respect thereto.

 

(v)           The QIU has taken the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act.

 

(vi)           The QIU has served as an underwriter in at least three public offerings of a similar size and type during the three-year period immediately preceding the date hereof pursuant to FINRA Rule 5121(f)(12)(D).

 

(vii)           The QIU does not have supervisory personnel responsible for organizing, structuring or performing due diligence with respect to corporate public offerings of securities that has been convicted, enjoined, suspended or barred within ten years prior to filing of the offering pursuant to FINRA Rule 5121(f)(12)(E).

 

(n)           To supply the Placement Agent with copies of all correspondence to and from, and all documents issued to and by, the Commission in connection with the registration of the Shares under the Securities Act or the Registration Statement, any Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto or document incorporated by reference therein.

 

(o)           Prior to the Closing Date, to furnish to the Placement Agent, as soon as they have been prepared, copies of any unaudited interim consolidated financial statements of the Company for any periods subsequent to the periods covered by the financial statements appearing in or incorporated by reference into the Registration Statement and the Prospectus (if any).

 

  

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(p)           Prior to the Closing Date, not to issue any press release or other communication directly or indirectly or hold any press conference with respect to the Company, its condition, financial or otherwise, or earnings, business affairs or business prospects (except for routine oral marketing communications in the ordinary course of business and consistent with the past practices of the Company and of which the Placement Agent is notified), without the prior written consent of the Placement Agent, which shall not be unreasonably withheld or delayed, unless in the judgment of the Company and its counsel, and after notification to the Placement Agent, such press release or communication is required by law.

 

(q)           Until the Placement Agent shall have notified the Company of the completion of the offering of the Shares, that the Company will not, and will cause its affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Shares, or attempt to induce any person to purchase any Shares; and not to, and to cause its affiliated purchasers not to, make bids or purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Shares.

 

(r)           Not to take any action prior to the Closing Date which would require the Prospectus to be amended or supplemented pursuant to Section 5.

 

(s)           To at all times comply with all applicable provisions of the Sarbanes-Oxley Act in effect from time to time.

 

(t)           To apply the net proceeds from the sale of the Shares as set forth in the Registration Statement, the General Disclosure Package and the Prospectus under the heading “Use of Proceeds.”

 

(u)           To use its best efforts to list, effect and maintain, subject to notice of issuance, the Common Stock on the NYSE MKT.

 

(v)           To use its best efforts to assist the Placement Agent with any filings with FINRA and obtaining clearance from FINRA as to the amount of compensation allowable or payable to the Placement Agent.

 

(w)           To use its best efforts to do and perform all things required to be done or performed under this Agreement by the Company prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Shares.

 

6.           Payment of Expenses.  The Company agrees to pay, or reimburse if paid by the Placement Agent, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated:  (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Shares to the Purchasers and any taxes payable in that connection; (b) the costs incident to the registration of the Shares under the Securities Act; (c) the costs incident to the preparation, printing and distribution of the Registration Statement, the Base Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus, any amendments, supplements and exhibits thereto or any document incorporated by reference therein and the costs of printing, reproducing and distributing any transaction document by mail, facsimile or other means of communications; (d) the fees and expenses (including related fees and expenses of counsel for the Placement Agent) incurred in connection with securing any required review by FINRA of the terms of the sale of the Shares and any filings made with FINRA; (e) any applicable listing, quotation or other fees; (f) the fees and expenses (including related reasonable, documented fees and expenses of counsel to the Placement Agent) of qualifying the Shares under the securities laws of the several jurisdictions as provided in Section 5(i) and of preparing, printing and distributing wrappers, Blue Sky Memoranda and Legal Investment Surveys; (g) the cost of preparing and printing stock certificates; (h) all fees and expenses of the registrar and transfer agent of the Shares, (i) all reasonable out-of-pocket costs and expenses incident to the Offering and the performance of the obligations of the Placement Agent under this Agreement (including, without limitation, the fees and expenses of counsel to the Placement Agent and the fees and expenses referenced in Section 6(d) herein) not to exceed 0.8333 % of the gross proceeds of the Offering; provided, however, except as otherwise provided in this Section 6 and in Sections 8 and 11, the Placement Agent shall pay their own costs and expenses.

 

  

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7.           Conditions to the Obligations of the Placement Agent and the Purchasers, and the Sale of the Shares.  The respective obligations of the Placement Agent hereunder and the Purchasers under the Subscription Agreements, and the Closing of the sale of the Shares, are subject to the accuracy, when made and as of the Applicable Time and on the Closing Date, of the representations and warranties of the Company contained herein, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions:

 

(a)           No stop order suspending the effectiveness of the Registration Statement or any part thereof, preventing or suspending the use of any Base Prospectus, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities Act shall have been initiated or threatened by the Commission, and all requests for additional information on the part of the Commission (to be included or incorporated by reference in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent; the Rule 462(b) Registration Statement, if any, each Issuer Free Writing Prospectus, if any, and the Prospectus shall have been filed with the Commission within the applicable time period prescribed for such filing by, and in compliance with, the Rules and Regulations and in accordance with Section 5(a) hereof, and the Rule 462(b) Registration Statement, if any, shall have become effective immediately upon its filing with the Commission; and FINRA shall have raised no objection to the fairness and reasonableness of the terms of this Agreement or the transactions contemplated hereby.

 

(b)           The Placement Agent shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading, or that the General Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an untrue statement of fact which, in the opinion of such counsel, is material or omits to state any fact which, in the opinion of such counsel, is material and is necessary in order to make the statements, in the light of the circumstances in which they were made, not misleading.

 

  

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(c)           All corporate proceedings and other legal matters incident to the authorization, form and validity of each of this Agreement, the Subscription Agreements, the Shares, the Registration Statement, the General Disclosure Package, each Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.

 

(d)           Eaton & Van Winkle LLP shall have furnished to the Placement Agent such counsel’s written opinion, as corporate counsel to the Company, addressed to the Placement Agent dated the Closing Date, in the form attached hereto as Exhibit D.

 

(e)           The Placement Agent shall have received from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel for the Placement Agent, such opinion or opinions, addressed to the Placement Agent, dated the Closing Date, with respect to such matters as the Placement Agent may reasonably require, and the Company shall have furnished to such counsel such documents as they request for enabling them to pass upon such matters.

 

(f)           At the time of the execution of this Agreement, the Placement Agent shall have received from Rotenberg Meril, a letter, addressed to the Placement Agent, executed and dated such date, in form and substance satisfactory to the Placement Agent (i) confirming that they are an independent registered accounting firm with respect to the Company within the meaning of the Securities Act and the Rules and Regulations and PCAOB and (ii) stating the conclusions and findings of such firm, of the type ordinarily included in accountants’ “comfort letters” to underwriters, with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(g)           On the effective date of any post-effective amendment to any Registration Statement that is filed prior to the Closing Date and on the Closing Date, the Placement Agent shall have received a letter (the “Bring-Down Letter”) from Rotenberg Meril, addressed to the Placement Agent and dated the Closing Date confirming, as of the date of the Bring-Down Letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the General Disclosure Package and the Prospectus, as the case may be, as of a date not more than two (2) business days prior to the date of the Bring-Down Letter), the conclusions and findings of such firm, of the type ordinarily included in accountants’ “comfort letters” to underwriters, with respect to the financial information and other matters covered by its letter delivered to the Placement Agent concurrently with the execution of this Agreement pursuant to paragraph (f) of this Section 7.

 

  

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(h)           The Company shall have furnished to the Placement Agent and the Purchasers a certificate, dated the Closing Date, of its President and Chief Executive Officer and its Chief Accounting Officer and Secretary stating that (i) such officers have carefully examined the Registration Statement, the General Disclosure Package, any Permitted Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, at the Applicable Time and as of the date of this Agreement and as of the Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the General Disclosure Package, as of the Applicable Time and as of the Closing Date, any Permitted Free Writing Prospectus as of its date and as of the Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the effective date of  the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the General Disclosure Package or the Prospectus that was not so set forth, (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Company in this Agreement are true and correct and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the General Disclosure Package, any material adverse change in the financial position or results of operations of the Company, or any change or development that, singularly or in the aggregate, would involve a material adverse change or a prospective material adverse change, in or affecting the condition (financial or otherwise), results of operations, business, assets or prospects of the Company, except as set forth in the Prospectus.

 

(i)           Since the date of the latest audited financial statements included in the General Disclosure Package or incorporated by reference in the General Disclosure Package as of the date hereof, (i) the Company shall not have sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the General Disclosure Package, and (ii) there shall not have been any change in the capital stock or long-term debt of the Company, or any change, or any development involving a prospective change, in or affecting the business, general affairs, management, financial position, stockholders’ equity or results of operations of the Company, otherwise than as set forth in the General Disclosure Package, the effect of which, in any such case described in clause (i) or (ii) of this paragraph (i), is, in the judgment of the Placement Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Shares on the terms and in the manner contemplated in the General Disclosure Package.

 

  

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(j)           No action shall have been taken and no law, statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would prevent the issuance or sale of the Shares or materially and adversely affect or which is, as of Closing Date, reasonably expected to materially and adversely affect, the business or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued which would prevent the issuance or sale of the Shares or materially and adversely affect, or which is, as of Closing Date, reasonably expected to materially and adversely affect, the business or operations of the Company.

 

(k)           Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following:  (i) trading in securities generally on the New York Stock Exchange or The NASDAQ Stock Market LLC or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or materially limited, or minimum or maximum prices or maximum range for prices shall have been established on any such exchange or such market by the Commission, by such exchange or market or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, (iii) there shall have been an outbreak of or escalation in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Placement Agent, impracticable or inadvisable to proceed with the sale or delivery of the Shares on the terms and in the manner contemplated in the General Disclosure Package and the Prospectus.

 

(l)           The Company shall have filed such applications as are necessary to include the Common Stock on the NYSE MKT and satisfactory evidence of such action shall have been provided to the Placement Agent.

 

(m)           The Placement Agent shall have received the written agreements, substantially in the form of Exhibit C hereto, of the executive officers and directors of the Company listed in Schedule B to this Agreement.

 

(n)           The Company shall have entered into Subscription Agreements with each of the Purchasers and such agreements shall be in full force and effect.

 

(o)           The Placement Agent shall have received executed copies of the Placement Agent’s Warrant Agreement.

 

(p)           The Placement Agent shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Placement Agent as described in the Pricing Prospectus.

 

  

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(q)           Prior to the Closing Date, the Company shall have furnished to the Placement Agent such further information, opinions, certificates, letters or documents as the Placement Agent shall have reasonably requested.

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Placement Agent.

 

8.           Indemnification and Contribution.

 

(a)           The Company shall indemnify and hold harmless the Placement Agent, its affiliates and each of its directors, officers, members, employees, representatives and agents and each person, if any, who controls the Placement Agent within the meaning of Section 15 of the Securities Act of or Section 20 of the Exchange Act (collectively the “Placement Agent Indemnified Parties,” and each a “Placement Agent Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or proceeding in respect thereof), joint or several, to which such Placement Agent Indemnified Party may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (A) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto or document incorporated by reference therein, or (B)  the omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto or document incorporated by reference therein, a material fact required to be stated therein or necessary to make the statements therein not misleading, or (C) any breach of the representations and warranties of the Company contained herein or failure of the Company to perform its obligations hereunder or pursuant to any law, any act or failure to act, or any alleged act or failure to act, by the Placement Agent in connection with, or relating in any manner to, the Shares or the Offering, and which is included as part of or referred to in any loss, claim, damage, expense, liability, action, investigation or proceeding arising out of or based upon matters covered by subclause (A), (B) or (C) above of this Section 8(a) (provided that the Company shall not be liable in the case of any matter covered by this subclause (C) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, expense or liability resulted directly from any such act, or failure to act, undertaken or omitted to be taken by the Placement Agent through its gross negligence or willful misconduct), and shall reimburse the Placement Agent Indemnified Party promptly upon demand for any legal fees or other expenses reasonably incurred by that Placement Agent Indemnified Party in connection with investigating, or preparing to defend, or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding, as such fees and expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement or alleged untrue statement in, or omission or alleged omission from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information furnished to the Company by the Placement Agent specifically for use therein, which information the parties hereto agree is limited to the Placement Agent’s Information (as defined in Section 18).  This indemnity agreement is not exclusive and will be in addition to any liability, which the Company might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Placement Agent Indemnified Party.

 

  

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(b)           The Placement Agent shall indemnify and hold harmless the Company and its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the “Company Indemnified Parties” and each a “Company Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or proceeding in respect thereof), joint or several, to which such Company Indemnified Party may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii) the omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Placement Agent specifically for use therein, which information the parties hereto agree is limited to the Placement Agent’s Information as defined in Section 18, and shall reimburse the Company for any documented legal fees or other expenses reasonably incurred by such party in connection with investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss, claim, damage, liability, action, investigation or proceeding, as such fees and expenses are incurred.  Notwithstanding the provisions of this Section 8(b), in no event shall any indemnity by the Placement Agent under this Section 8(b) exceed the total compensation received by the Placement Agent in accordance with Section 2.5.

 

  

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(c)           Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this Section 8, notify such indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8.  If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except with the written consent of the indemnified party, be counsel to the indemnifying party).  After notice from the indemnifying party to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party shall not be liable to the indemnified party under Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense of such action other than reasonable costs of investigation; provided, however, that any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense of such action but the fees and expenses of such counsel (other than reasonable costs of investigation) shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing by the Company in the case of a claim for indemnification under Section 8(a) or Section 2.6 or the Placement Agent in the case of a claim for indemnification under Section 8(b), (ii) such indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party within a reasonable period of time after notice of the commencement of the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of (or, in the case of a failure to diligently defend the action after assumption of the defense, to continue to defend) such action on behalf of such indemnified party and the indemnifying party shall be responsible for legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action; provided, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties (in addition to any local counsel), which firm shall be designated in writing by the Placement Agent if the indemnified parties under this Section 8 consist of any Placement Agent Indemnified Party or by the Company if the indemnified parties under this Section 8 consist of any Company Indemnified Parties.  Subject to this Section 8(c), the amount payable by an indemnifying party under Section 8 shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified party and any other expenses in investigating, or preparing to defend or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement of any of the foregoing.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which indemnification or contribution could be sought under this Section 8 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.  Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement of any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.  In addition, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated herein effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

  

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(d)           If the indemnification provided for in this Section 8 is unavailable or insufficient to hold harmless an indemnified party under Section 8(a) or Section 8(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid, payable or otherwise incurred by such indemnified party as a result of such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Placement Agent on the other hand from the offering of the Shares, or (ii) if the allocation provided by clause (i) of this Section 8(d) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) of this Section 8(d) but also the relative fault of the Company on the one hand and the Placement Agent on the other with respect to the statements, omissions, acts or failures to act which resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof) as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand and the Placement Agent on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Shares purchased under this Agreement (before deducting expenses) received by the Company bear to the total Placement Fee received by the Placement Agent in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus.  The relative fault of the Company on the one hand and the Placement Agent on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Placement Agent on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company by the Placement Agent for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Placement Agent’s Information as defined in Section 18.  The Company and the Placement Agent agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein.  The amount paid or payable by an indemnified party as a result of the loss, claim, damage, expense, liability, action, investigation or proceeding referred to above in this Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding.  Notwithstanding the provisions of this Section 8(d), the Placement Agent shall not be required to contribute any amount in excess of the total compensation received by the Placement Agent in accordance with Section 2.5 less the amount of any damages which the Placement Agent has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or failure to act or alleged failure to act.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

  

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9.           Qualified Independent Underwriter.  The Company hereby confirms that at its request and pursuant to a letter agreement dated May 27, 2014, by and among the Company, the Placement Agent and the QIU, the terms of which are incorporated herein by reference, the QIU acted as “qualified independent underwriter” within the meaning of FINRA Rule 5121 in connection with the placement of the Shares.  The Company will indemnify and hold harmless the QIU and each person who controls the QIU within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which the QIU may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon the QIU’s acting (or alleged failing to act) as such “qualified independent underwriter” and will reimburse the QIU for any legal or other expenses reasonably incurred by the QIU in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, or liability results from the gross negligence or willful misconduct of the QIU or any misrepresentation or breach of warranty by the QIU under the terms of such letter agreement.  As compensation for the services of the QIU hereunder, the Company agrees to pay the QIU $50,000 on the Closing Date and to reimburse the QIU for all reasonable expenses, including fees and disbursements of counsel, incurred by it as the QIU in an amount not to exceed $10,000; provided, however, that if the gross proceeds to the Company from the Offering is less than $9 million, the Company will only be responsible to pay the QIU 0.5556% of the gross proceeds of the Offering as compensation for its services and up to 0.1111% of the gross proceeds of the Offering as expense reimbursement and the Placement Agent will be responsible to pay the balance out of its own commission received in this Offering.

 

  

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10.           Termination.  The obligations of the Placement Agent and the Purchasers hereunder and under the Subscription Agreements may be terminated by the Placement Agent, in its absolute discretion by notice given to the Company prior to delivery of and payment for the Shares if, prior to that time, any of the events described in Sections 7(j), 7(k) and 7(l) have occurred or if all of the Purchasers shall decline to purchase the Shares for any reason permitted under this Agreement or the Subscription Agreements.

 

11.           Reimbursement of Placement Agent’s Expenses.  Notwithstanding anything to the contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to Section 10, (b) the Company shall fail to tender the Shares for delivery to the Purchasers for any reason not permitted under this Agreement, (c) all of the Purchasers shall decline to purchase the Shares for any reason permitted under this Agreement or (d) the sale of the Shares is not consummated because any condition to the obligations of the Purchasers or the Placement Agent set forth herein is not satisfied or because of the refusal, inability or failure on the part of the Company to perform any agreement herein or to satisfy any condition or to comply with the provisions hereof, then in addition to the payment of amounts in accordance with Section 6, the Company shall reimburse the Placement Agent for the reasonable fees and expenses of the Placement Agent’s counsel and for such other out-of-pocket expenses as shall have been reasonably incurred by them in connection with this Agreement and the proposed purchase of the Shares.

 

12.           Absence of Fiduciary Relationship.  The Company acknowledges and agrees that:

 

(a)           the Placement Agent’s responsibility to the Company is solely contractual in nature, the Placement Agent has been retained solely to act as Placement Agent in connection with the Offering and no fiduciary, advisory or agency relationship between the Company and the Placement Agent has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Placement Agent has advised or are advising the Company on other matters;

 

(b)           the price of the Shares set forth in this Agreement was established by the Company following discussions and arms-length negotiations with the Placement Agent, and the Company is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement;

 

(c)           it has been advised that the Placement Agent and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Placement Agent has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and

 

  

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(d)           it waives, to the fullest extent permitted by law, any claims it may have against the Placement Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Placement Agent shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.

 

13.           Successors; Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the Placement Agent, the Company, the QIU, and their respective successors and assigns.  This Agreement shall also inure to the benefit of the Purchasers, and each of their respective successors and assigns, which shall be third party beneficiaries hereof.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, other than the persons mentioned in the preceding sentences, any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person; except that the representations, warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall also be for the benefit of the Placement Agent Indemnified Parties and the QIU and the indemnities of the Placement Agent shall be for the benefit of the Company Indemnified Parties.  It is understood that the Placement Agent’s and QIU’s responsibility to the Company is solely contractual in nature and the Placement Agent and QIU do not owe the Company, or any other party, any fiduciary duty as a result of this Agreement.

 

14.           Survival of Indemnities, Representations, Warranties, etc.  The respective indemnities, covenants, agreements, representations, warranties and other statements of the Company and the Placement Agent, as set forth in this Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Company, the Purchasers or any person controlling any of them and shall survive delivery of and payment for the Shares.  Notwithstanding any termination of this Agreement, including without limitation any termination pursuant to Sections 10 or 11, the indemnity and contribution agreements contained in Section 8 and the covenants, representations, warranties set forth in this Agreement shall not terminate and shall remain in full force and effect at all times.

 

15.           Notices.  All statements, requests, notices and agreements hereunder shall be in writing, and:

 

(a)           if to the Placement Agent, shall be delivered or sent by mail, overnight courier or facsimile transmission to Taglich Brothers, Inc., 275 Madison Avenue, Suite 1618, New York, New York 10016, Attention: Robert Schroeder, Fax: (212) 661-6824, with a copy, which shall not constitute notice, to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111, Attention: William C. Hicks, Esq., Fax: (617) 542-2241; and

 

(b)           if to the Company, shall be delivered or sent by mail, overnight courier, or electronic mail to Air Industries Group, 1479 North Clinton Avenue, Bay Shore, New York 11706, Attention: Chief Executive Officer, E-mail: sglassman@airindmc.com, with a copy, which shall not constitute notice, to Eaton & Van Winkle LLP, 3 Park Avenue, 16th Floor, New York, New York, Attention: Vincent J. McGill, Esq., E-mail: kciaccio@airindmc.com and vmcgill@evw.com; and

 

  

33

  

 

(c)           if to the QIU, shall be delivered or sent by mail, overnight courier or facsimile transmission to National Securities Corporation, 410 Park Avenue, 14th Floor, New York, New York 10022, Attention: Jonathan C. Rich, EVP–Director of Investment Banking, Fax: (212) 380-2828.

 

16.           Definition of Certain Terms.  For purposes of this Agreement, (a) “business day” means any day on which NYSE MKT is open for trading and (b) “subsidiary” has the meaning set forth in Rule 405 of the Rules and Regulations.

 

17.           Governing Law, Agent for Service and Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, including without limitation Section 5-1401 of the New York General Obligations Law.  No legal proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company and the Placement Agent each hereby consent to the jurisdiction of such courts and personal service with respect thereto.  The Company and the Placement Agent each hereby consent to personal jurisdiction, service and venue in any court in which any legal proceeding arising out of or in any way relating to this Agreement is brought by any third party against the Company or the Placement Agent.  The Company and the Placement Agent each hereby waive all right to trial by jury in any legal proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement.  The Company agrees that a final judgment in any such legal proceeding brought in any such court shall be conclusive and binding upon the Company and the Placement Agent and may be enforced in any other courts in the jurisdiction of which the Company is or may be subject, by suit upon such judgment.

 

18.           Placement Agent’s Information.  The parties hereto acknowledge and agree that, for all purposes of this Agreement, the Placement Agent’s Information consists solely of the following information in the Prospectus: (i) the seventh paragraph on the front cover page concerning the terms of the offering by the Placement Agent; and (ii) the statements concerning the Placement Agent contained in the first paragraph under the heading “Plan of Distribution.”

 

19.           Partial Unenforceability.  The invalidity or unenforceability of any section, paragraph, clause or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph, clause or provision hereof.  If any section, paragraph, clause or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

20.           General.  This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof, including, without limitation, the Engagement Letter.  In this Agreement, the masculine, feminine and neuter genders and the singular and the plural include one another.  The section headings in this Agreement are for the convenience of the parties only and will not affect the construction or interpretation of this Agreement.  This Agreement may be amended or modified, and the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Placement Agent.

 

21.           Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument and such signatures may be delivered by facsimile.

 

  

34

  

 

If the foregoing is in accordance with your understanding of the agreement between the Company and the Placement Agent, kindly indicate your acceptance in the space provided for that purpose below.

 

 

	 	
Very truly yours,

 

 

AIR INDUSTRIES GROUP

	 
	 	 	 	 
	
 

	
By: 

	/s/ Peter D. Rettaliata	 
	 	 	

Name: Peter D. Rettaliata

	 
	 	 	

Title:   CEO

	 
	 	 	 	 

 

Accepted as of the date

 

first above written:

 

TAGLICH BROTHERS, INC.

	 	 
	 	 	 
	
By: 

	/s/ Robert Schroeder	 
	 	Name: Robert Schroeder	 
	 	Title:   Vice President	 
	 	 	 

NATIONAL SECURITIES CORPORATION

	 	 
	 	 	 
	
By: 

	
/s/ Jonathan C. Rich

	 
	 	Name:  Jonathan C. Rich	 
	 	Title:    EVP	 
	 	 

 

  

35

  

 

SCHEDULE A

 

General Use Free Writing Prospectuses

 

None.

 

  

  

  

 

SCHEDULE B

List of executive officers, directors and 5% or more stockholders subject to Lock-Up

 

Peter D. Rettaliata

Dario A. Peragallo

Gary Settoducato

Scott A. Glassman

Seymour G. Siegel

David J. Buonanno

Michael N. Taglich

Robert F. Taglich

Robert Schroeder

Michael BrandEMPLOYMENT
AGREEMENT

 

THIS
AGREEMENT (this "Agreement'') is made as of May 16, 2014 (the "Effective Date"), between Cube, Inc.,
a Nevada corporation (the "Company"), doing business at 833 South 4th Street, Las Vegas, Nevada 89101 and Paul
Turino (the "Employee"), residing at 542 Lynn St., Ridgewood, NJ 07450. The Company and the Employee are sometimes
hereinafter referred to individually as a "Party" and together as "Parties." Capitalized terms used in this
Agreement but not otherwise defined herein shall have the meaning given to them in Section 12 below.

 

WHEREAS,
the Employee has substantial business knowledge, expertise and experience in the conduct of the business of the Company and the
Company desires to retain the knowledge, expertise and experience of the Employee to assist in the operations and management of
the Company and its Subsidiaries;

 

WHEREAS,
Employee acknowledges that the Company and its Subsidiaries expend substantial resources establishing long term relationships
with their Customers and Employee will from time to time during the course of his employment be exposed to such Customers and
prospective customers and clients;

 

WHEREAS,
Employee acknowledges that in connection with his employment Employee will have access to valuable Confidential Information (as
defined in Section 8 below) including, but not limited to, the Company's and its Subsidiaries' methods of doing business, business
plans and trade secrets; and

 

WHEREAS,
the Company desires that the Employee not directly or indirectly compete with the Company or its Subsidiaries for a reasonable
period of time because of the detrimental effect such competition would have on the business of the Company and it's Subsidiaries;

 

NOW
THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, agree as follows:

 

1.                  
Employment. The Company hereby employs the Employee and the Employee hereby accepts employment, pursuant to the terms and
conditions of this Agreement.

 

2.                  
Employment; Term. The Company hereby employs Employee, and Employee hereby accepts employment with the Company, upon the
terms and conditions set forth in this Agreement for the period beginning on the Effective Date and continuing until terminated
as provided in Section 6 hereof (such period being the "Employment Period").

 

3.                  
Position and Duties.

 

(a)                
During the Employment Period, Employee wil1 serve as Chief Operating Officer of the Company and will have the normal duties, responsibilities
and authority of this office, subject to the power of the Board to expand or limit such duties, responsibilities and authority
and to override Employee's actions.

 

(b)                
During the Employment Period, Employee will report to the Board and will devote his full time, best efforts and attention (except
for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company
and its Subsidiaries and to the performance of such duties, as aforesaid and as may be assigned to him from time to time by the
Company. Employee will act in the best interest of the Company and its Subsidiaries and, except as may be specifically permitted
by the Board, will not engage in any other business activity. Employee will perform his duties, responsibilities and functions
on behalf of the Company and its Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy, businesslike
and efficient manner. However, nothing in this Agreement shall bar or impair the Employee from continuing his existing Corporate
Board Affiliations.

 

    	 

    	 

    

 

4.                  
Compensation.

 

(a)                
During the Employment Period, Employee's base salary will be no less than $150,000 per annum (as adjusted from time to time, the
"Base Salary"). Employee's Base Salary will be paid by the Company in regular installments in accordance with
the Company's general payroll practices and may be increased in the sole discretion of the Board.

 

(b)                
In addition to the Base Salary, for each complete calendar year during the Employment Period so long as Employee is employed by
the Company on the last day of such calendar year Employee will be eligible to earn a performance bonus ("Performance
Bonus"). Employee's target Performance Bonus for each complete fiscal year will be equal to fifty percent (50%) of his
Base Salary for such fiscal year (the "Target Bonus"). The actual amount of the Performance Bonus payable to
Employee for any fiscal year may be greater than or less than the Target Bonus for such fiscal year and will be determined by
the decision of the disinterested members of the Board based on the achievement of certain financial and individual performance
goals to be established annually by the Board. Any Performance Bonus payable pursuant to this Section 3(b) will be payable in
a lump sum at such time as may be determined by the Board, but no later than the earlier of (i) ten (10) business days after the
Company finalizes its audited financial statements for the applicable year or (ii) 150 days following the end of such fiscal year.

 

(c)                
Upon Employee's execution of this Agreement, the Company will immediately grant to Employee an option to purchase 1,000,000 shares
of the Company's Common Stock with a vesting and strike price set as follows:

 

(i)           
300,000 shares vested 60 days from the date of this agreement with a strike price of One ($1.00) Dollar per share

 

(ii)         
250,000 shares vested on the first anniversary of this agreement if Employee is still working for the Company with a strike price
of One Dollars and Fifty Cents ($1.50) per share.

 

(iii)        
250,000 shares vested on the second anniversary of this agreement if Employee is still working for the Company with a strike price
of Two Dollars and Fifty Cents ($2.50) per share.

 

(iv)        
200,000 shares vested if and only if the Company is cash flow positive (gross receipts less expenses) within 6 months of the Effective
Date of this Agreement, at a strike price of One Dollar and Fifty Cents ($1.50) per share.

 

(d)                                            
Upon any merger and/or acquisition transaction involving the Company, or a Change in Control of the Company, all of the stock
options referred to in Paragraphs 4(c) shall vest automatically and immediately.

 

5.                  
Benefits. In addition to the Base Salary and other compensation provided for in Section 4 above, Employee will be entitled
to the following benefits during the Employment Period:

 

(a)                
Employee will be entitled to participate in the Company's health and welfare benefit programs and vacation and other benefit programs
for which other employees of the Company are generally eligible, subject to any eligibility requirements of such plans and programs.

 

(b)                
The Company will reimburse Employee for all reasonable expenses incurred by him in the course of performing his duties and responsibilities
under this Agreement which are consistent with the Company's policies in effect from time to time with respect to travel, entertainment
and other business expenses, subject to the Company's requirements with respect to reporting and documentation of such expenses.
For purposes of Code Section 409A, any reimbursements otherwise payable to Employee under this Section 4(b) shall be paid no later
than December 31st of the calendar year following the year in which related expense was incurred, the amount of expenses reimbursed
in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Employee's right to reimbursement
under this Agreement will not be subject to liquidation or exchange for another benefit. In addition, the Company will reimburse
Employee for all travelling expenses and pay Employee's temporary living expenses.

 

(c)                
The Company shall indemnify and hold harmless the Employee against all claims arising out of Employee's actions or omissions occurring
during Employee's employment with the Company to the fullest extent provided (A) by the Company's Certificate of Incorporation
and/or Bylaws, and (B) under the Nevada General Corporation Law, as each may be amended from time to time. The Company shall maintain
a Directors & Officers liability insurance policy ("D&O Coverage") covering Employee to the same extent as the
Company provides such coverage for its other executive officers and directors. The Company agrees to make such policy available
to Employee within 30 days of the commencement of his employment. The aforesaid indemnification and bold harmless obligations
shall include any costs or expenses (including attorneys' fees), judgments, fines, losses, claims, damages or liabilities incurred
in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative,
by reason of the fact that the Employee is or was a director, officer, employee or agent of the Company or any Subsidiary, whether
asserted or claimed prior to, at or after the date of the Employee's termination of employment, to the fullest extent permitted
under applicable law and on a basis no less favorable than in existence under the Company's Bylaws and Certificate of Incorporation
in effect as of the Effective Date of this Agreement. This provision shall survive the Employee's employment and require the Company
to maintain a Directors & Officers liability insurance policy ("D&O Coverage") on behalf of the Employee, for
a period of two (2) years.

 

6.                  
Termination.

 

(a)                
Notwithstanding Section 1 of this Agreement, Employee's employment with the Company and the Employment Period will end
on the earlier of (i) the Employee's death or mental or physical disability or incapacity, such that he is unable to fulfill his
duties and responsibilities, with or without a reasonable accommodation (as determined by a physician selected by the Company
in its good faith judgment), (ii) the Employee's resignation or (iii) termination by the Company at any time with or without Cause
(as defined below). Except as otherwise provided herein, any termination of the Employment Period by the Company or by the Employee
will be effective as specified in a written notice from the terminating Party to the other Party.

 

(b)                
If during the Employment Period the Employee's employment with the Company is terminated pursuant to Section 6(a)(i) above,
or is terminated by the Company with Cause or if the Employee resigns for any reason other than Good Reason, then Employee
will only be entitled to receive his Base Salary through the date of termination and payment (at the rate of base salary then
in effect) for any vacation time accrued during the portion of the then-current calendar year ending with the date of such termination
and not used prior to that date and will not be entitled to any other salary, bonus, severance, compensation or benefits from
the Company or any of its Subsidiaries or affiliates or their benefit plans, other than vested retirement benefits or insurance
continuation rights expressly required under applicable law (such as the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA").

 

    	2

    	 

    

 

(c)                
If (i) Employee's employment with the Company is terminated during the Employment Period by the Company without Cause or by the
Employee with Good Reason and, in either case, (ii) Employee executes a general release (the "Release") in favor
of the Company, their Subsidiaries and their affiliates in form and substance satisfactory to the Company within 25 days of such
termination and such release becomes effective and is not revoked or rescinded, (iii) Employee complies with the terms of this
Agreement and the Release, and (iv) Employee has worked for the company for at least 1month, Employee will be entitled to receive
as severance his Base Salary for a period equal to the number of complete months he has worked for the Company, up to a maximum
of twelve (12) months The severance payments payable to Employee pursuant to this clause (c) of this Section will be paid over
time at the times and in the manner that his Base Salary is paid pursuant to Section 3 hereof, beginning at the end of
the first complete pay period following the sixtieth (60th) day after such termination. Notwithstanding the foregoing, if the
Company is a "public company" within the meaning of Internal Revenue Code Section 409A, any amounts payable to Employee
during the first six months and one day following the date of termination pursuant to this Section S(c) will be deferred until
the date which is six (6) months and one day following such termination, and if such payments are required to be so deferred the
first payment will be in an amount equal to the total amount to which Employee would otherwise have been entitled during the period
following the date of termination of employment if deferral had not been required.

 

(d)                
Except as otherwise expressly provided herein, all of Employee' s rights to salary, bonuses, fringe benefits, severance and other
compensation hereunder or under any policy or program or benefit plans of the Company or any of its Subsidiaries which might otherwise
accrue or become payable on or after the termination of the Employment Period will cease upon such termination other than vested
retirement benefits or insurance continuation rights expressly required under applicable law (such as COBRA).

 

(e)                
For purposes of this Agreement, "Cause" will mean (i) conviction of a felony, (ii) repeated and continuous failure
to perform lawful duties as reasonably directed by the Board and only after written notice has been provided to Employee within
10 days after each such incident of failure, (iii) gross negligence or willful misconduct with respect to the Company or any of
its Subsidiaries or affiliates or in the performance of Employee's duties hereunder, (iv) violating any of the terms of the Company's
established rules or policies which, if curable, is not cured to the Board's reasonable satisfaction within forty-five (45) days
after written notice thereof to Employee, (v) any other material breach of this Agreement or any other agreement between the Employee
and the Company or any of its Subsidiaries which, if curable, is not cured to the Board's reasonable satisfaction within fifteen
(15) days after written notice thereof to Employee.

 

(f)                 
For purposes of this Agreement, "Good Reason" will mean (i) Employee is demoted to a position other than Chief
Operating Officer, (ii) any material breach of this Agreement by the Company, which breach is not cured within forty-five (45)
business days following written notice to the Company of such breach, or (iii) the Company requiring Employee, without Employee'
s prior consent, to be permanently based at any office located more than ten (10) miles from the Company's office at which Employee
is based as of the date of this Agreement, excluding travel reasonably required in the performance of Employee's duties hereunder,
(iv) a Change of Control, or (v) the Company's liquidation, insolvency, assignment for the benefit of creditor(s), or upon the
filing of a petition in bankruptcy provided that in the case of clauses (i), (ii), (iii), or (iv) an event or circumstance, (x)
shall only constitute "Good Reason" during the ninety (90) day period following the date of such assignment (after which
it shall be deemed waived by Employee if prior thereto Employee has not exercised his right to resign for "Good Reason"),(y)
shall only constitute "Good Reason" if Employee gives written notice to the Company of his intent to terminate this
Agreement and the Company fails to remedy the same within forty five (45) days after such notice.

 

7.                  
Non-Disparagement. Employee agrees not to disparage or impugn the Company, its subsidiaries or any members of its Board.
Likewise, the Company, its subsidiaries, the members of its Board and its management level employees will not disparage or impugn
Employee. Any inquiries regarding Employee will be forwarded to the Chairman of the Company's Board, who will provide a neutral
employment reference for Employee (which includes dates of employment, the position held, the duties of that position and with
Employee's authorization, compensation information).

 

8.                  
Confidential Information.

 

(a)                
Employee recognizes and acknowledges that the continued success of the Company and its Subsidiaries depends upon the use and protection
of a large body of confidential and proprietary information and that Employee will have access to certain Confidential Information
of the Company, its Subsidiaries and affiliates and Persons with which the Company and its Subsidiaries do business, and that
such Confidential Information constitutes valuable, special and unique property of the Company, its Subsidiaries and affiliates
and such other Persons. "Confidential Information" will be interpreted to include all information of any sort (whether
merely remembered or embodied in a tangible or intangible form) that is (i) related to the Company's or its Subsidiaries' or affiliates'
(including their predecessors) current or potential business and (ii) not generally or publicly known. Confidential Information
includes, without limitation, the information and data obtained by Employee while employed by the Company and its Subsidiaries
concerning the business or affairs of the Company or any of its Subsidiaries or affiliates, including information concerning acquisition
opportunities in or reasonably related to the Company's or its Subsidiaries' or affiliates' business or industry, the identities
of the current, former or prospective employees, suppliers and customers of the Company or its Subsidiaries, development, transition
and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, financial and
business plans, financial data, pricing information, employee lists and telephone numbers, locations of sales representatives,
new and existing customer or supplier programs and services, customer terms, customer service and integration processes, requirements
and costs of providing service, support and equipment, any or all of which are not generally or publicly known. The Employee agrees
that he will use the Confidential Information only as necessary and only in connection with the performance of his duties hereunder.
Employee agrees that he will not knowingly disclose to any unauthorized Person or use for his own or any other purposes (except
as described in the immediately preceding sentence) any Confidential Information without the prior written consent of the Board,
unless and to the extent that (a) the Confidential Information becomes generally known to and available for use by the public
other than as a result of Employee's acts or omissions or (b) Employee is ordered by a court of competent jurisdiction to disclose
Confidential Information, provided that Employee must (i) provide prompt written notice to the Company of any relevant process
or pleadings that could lead to such an order and (ii) cooperate with the Company to contest, object to or limit such a request
and, in any case, when revealing, such Confidential Information to such court order.

 

(b)                
Employee understands that the Company and its Subsidiaries and affiliates will receive from third parties confidential or proprietary
information ("Third Party Information") subject to a duty on the Company and its Subsidiaries and affiliates
to maintain the confidentiality of such information and to use it only for certain limited purposes. During the Employment Period
and thereafter, and without in any way limiting the foregoing provisions of this Section 8, Employee will hold Third Party Information
in the strictest confidence and will not knowingly disclose to anyone (other than personnel and consultants of the Company or
its Subsidiaries and affiliates who need to know such information in connection with their work for the Company or its Subsidiaries
and affiliates) or use Third Party Information unless expressly authorized by such third party or by the Board.

 

    	3

    	 

    

 

(c)                
Employee will use in the performance of his duties only information which is (i) generally known and used by persons with training
and experience comparable to Employee's and which is (x) common knowledge in the industry or (y) is otherwise legally in the public
domain, (ii) is otherwise provided or developed by the Company or any of its Subsidiaries or affiliates or (iii) in the case of
materials, property or information belonging to any former employer or other person or entity to whom Employee has an obligation
of confidentiality, approved for such use in writing by such former employer or other Person.

 

9.                  
Return of Corporate Property. Employee acknowledges and agrees that all notes, records, reports, sketches, plans, unpublished
memoranda or other documents, whether in paper, electronic or other form (and all copies thereof), held by Employee concerning
any information relating to the business of the Company or any of its Subsidiaries, whether confidential or not, are the property
of the Company. Employee will deliver to the Company at the termination or expiration of the Employment Period, or at any other
time the Company may request, all equipment, files, property, memoranda, notes, plans, records, reports, printouts and software
and other documents and data (and all electronic, paper or other copies thereof) belonging to the Company or any of its Subsidiaries
which he may then possess or have under his control.

 

10.               
Intellectual Property Rights. Employee acknowledges and agrees that all inventions, technology, processes, innovations,
ideas, improvements, developments, methods, designs, analyses, trademarks, service marks, and other indicia of origin, writings,
audiovisual works, concepts, drawings, reports and all similar, related, or derivative information or works (whether or not patentable
or subject to copyright), including but not limited to all patents, copyrights, copyright registrations, trademarks, and trademark
registrations in and to any of the foregoing, along with the right to practice, employ, exploit, use, develop, reproduce, copy,
distribute copies, publish, license, or create works derivative of any of the foregoing, and the right to choose not to do or
permit any of the aforementioned actions, which relate to the Company's or any of its Subsidiaries' or affiliates' actual or anticipated
business, research and development or existing or future products or services and which are conceived, developed or made by Employee
while employed by the Company and its Subsidiaries or any of their predecessors (collectively, the "Work Product")
belong to the Company or such Subsidiary. All Work Product created by Employee while employed by the Company or any of its predecessors
will be considered "work made for hire," and as such, the Company is the sole owner of all rights, title, and interests
therein. All other rights to any new Work Product and all rights to any existing Work Product, including but not limited to all
of Employee's rights to any copyrights or copyright registrations related thereto, are conveyed, assigned and transferred to the
Company pursuant to this Agreement. Employee will promptly disclose and deliver such Work Product to the Company and, at the Company's
expense, perform all actions reasonably requested by the Company (whether during or after the Employment Period) to establish,
confirm and protect such ownership (including, without limitation, the execution of assignments, copyright registrations, consents,
licenses, powers of attorney and other instruments).

 

11.               
Employee's Representations. Employee hereby represents and warrants to the Company that (i) he has entered into this Agreement
of his own free will for no consideration other than as referred to herein, (ii) the execution, delivery and performance of this
Agreement by Employee does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Employee is a party or by which Employee is bound, (iii) Employee is not a party to or bound
by any employment, non-competition, confidentiality or other similar agreement with any other Person and (iv) upon the execution
and delivery of this Agreement by the Company, this Agreement will be the valid and binding obligation of Employee, enforceable
in accordance with its terms. Employee hereby acknowledges and represents that Employee has had the opportunity to consult with
independent legal counsel regarding Employee's rights and obligations under this Agreement and that Employee fully understands
the terms and conditions contained herein.

 

12.               
Definitions.

 

"Board"
means the Board of Directors of the Company.

 

"Business"
means the business (whether conducted or to be conducted in the future) of (a) developing, providing, marketing and selling specialized
software, specifically a cloud-based, three-dimensional multimedia cube, and (b) providing any other products or services which
the Company or any of its Subsidiaries provide during the Employment Period.

 

"Change
of Control" means the occurrence of any of the following events, whether in one or a series of related transactions:
(a) the acquisition of at least fifty percent (50%) of the then outstanding shares of common stock of Cube, Inc. by any Person
or entity, (b) the acquisition of all or substantially all of the assets of Cube, Inc., or (c) any merger or consolidation of
Cube, Inc., provided that the events described in clause (b) or (c) of this definition will not be deemed a Change of Control
if more than fifty percent (50%) of the then outstanding shares of common stock of the acquiring entity or surviving entity (in
the case of a merger) are owned by Persons who, immediately prior to such event, owned more than fifty percent (50%) of the then
outstanding shares of common stock of Cube, Inc., as the case may be. In determining whether the fifty percent (50%) threshold
discussed above has been met, shares which are subject to voting control by a Person or Persons acting under a voting agreement
(but not a revocable proxy) will be counted, even though such shares may not be owned by such Person.

 

"Customer"
means any Person who: (a) purchased products or services from the Company or any Subsidiary during the two years prior to the
date of termination of Employee's employment.

 

"Person"
means any natural person, corporation, general partnership, limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or governmental or regulatory entities, department, agency or authority.

 

"Subsidiaries"
means any corporation, limited liability company or other entity of which the securities or other ownership interests having the
voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by
the Company or any corporation or other entity of which the Company or one of its Subsidiaries serves as the managing member or
in a similar capacity, in each case either directly or through one or more Subsidiaries, the names and addresses of which will
be provided to the Employee upon execution of this Agreement .

 

    	4

    	 

    

 

13.               
Survival. Sections 7, 8, 9 and 10 will survive and continue in full force in accordance with their terms notwithstanding
the termination of the Employment Period.

 

14.               
Notices. Any notice provided for in this Agreement will be in writing and will be either personally delivered, sent by
reputable overnight courier service, sent by facsimile (with hard copy to follow by regular mail) or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:

 

Notices
to the Employee:

Paul
Turino

PO
Box 231

Hohokus,
NJ 07423

Email:
pt@velocitymediapartners.com

 

Notices
to the Company:

Cube,
Inc.

830
South 4th Avenue

Las
Vegas,NV 89IO1

Attn:
Stephen White

Email:
sw@teaml 1.us

 

or
such other address or to the attention of such other person as the recipient Party will have specified by prior written notice
to the sending Party. Any notice under this Agreement will be deemed to have been given when so delivered, sent or mailed.

 

15.               
Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective
and valid under applicable Jaw, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction ,such invalidity, illegality or unenforceability will not affect
any other provision or any action in any other jurisdiction, but this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

16.               
Complete Agreement. This Agreement embodies the complete agreement and understanding among the Parties and supersedes and
preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related
to the subject matter hereof in any way.

 

17.               
Counterparts. This Agreement may be executed in separate counterparts (including by facsimile and electronic signature
pages), each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

18.               
No Strict Construction. The parties hereto jointly participated in the negotiation and drafting of this Agreement. The
language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their collective mutual
intent, this Agreement will be construed as if drafted jointly by the parties hereto, and no rule of strict construction will
be applied against any Person.

 

19.               
Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee,
the Company and their respective heirs, successors and assigns. Employee may not assign his rights or delegate his duties or obligations
hereunder without the prior written consent of the Company. The Company may assign its rights and obligations hereunder (including
without limitation its rights under Section IO), without the consent of, or notice to, the Employee, to any of the Company's affiliates
or any Subsidiary of the Company. In the event of a Change of Control, the Company will assign this Agreement to the Person that
acquires the Company and retains the Employee, in which case all references to the Company will refer to such assignee.

 

20.               
Choice of Law; Exclusive Venue. THIS AGREEMENT, AND ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OFNEVADA,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS {WHETHER OF THE STATE OF NEVADA OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. THE PARTIES AGREE
THAT ALL DISPUTES, LEGAL ACTIONS, SUITS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT MUST BE BROUGHT EXCLUSIVELY
IN A FEDERAL DISTRICT COURT LOCATED IN LAS VEGAS, NEVADA OR THE SUPERIOR COURT LOCATED IN LAS VEGAS, NEVADA(COLLECTIVELY THE "DESIGNATED
COURTS"). EACH PARTY HEREBY CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE DESIGNATED COURTS. NO LEGAL ACTION,
SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY OTHER FORUM. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL
CLAIMS OF IMMUNITY FROM JURISDICTION AND ANY OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING IN ANY DESIGNATED COURT, INCLUDING ANY RIGHT TO OBJECT ON THE BASIS THAT ANY DISPUTE, ACTION, SUIT
OR PROCEEDING BROUGHT IN THE DESIGNATED COURTS HAS BEEN BROUGHT IN AN IMPROPER OR INCONVENIENT FORUM OR VENUE. EACH OF THE PARTIES
ALSO AGREES THAT DELIVERY OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT TO A PARTY HEREOF IN COMPLIANCE WITH SECTION 13 OF THIS
AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN A DESIGNATED COURT WITH RESPECT TO ANY MATTERS
TO WHICH THE PARTIES HAVE SUBMITTED TO JURISDICTION AS SET FORTH ABOVE.

 

    	5

    	 

    

 

21.                
Mutual Waiver of Jury Trial. THE PARTIES EACH WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS OR OTHERWISE. THE PARTIES EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION WILL BE TRIED BY A JUDGE WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
OF THIS SECTION AS TO ANY ACTION , COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT.

 

22.                
Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday
or legal holiday in the state in which the Company's chief-executive office is located, the time period shall automatically be
extended to the business day immediately following such Saturday, Sunday or legal holiday.

 

23.               
Withholding. The Company and its Subsidiaries will be entitled to deduct or withhold from any amounts owing to Employee
any federal, state, local or foreign withholding taxes, excise tax, or employment taxes ("Taxes") imposed with
respect to Employee' s compensation or other payments from the Company or any of its Subsidiaries or Employee' s ownership interest
in the Company or any of its Subsidiaries or its parent (including, without limitation, wages, bonuses, dividends, the receipt
or exercise of equity options and/or the receipt or vesting of restricted equity).

 

24.               
Assistance in Proceedings. During the Employment Period and for twelve (12) months thereafter, Employee will reasonably
cooperate with the Company and its Subsidiaries in any internal investigation or administrative, regulatory or judicial proceeding
as reasonably requested by the Company (including, without limitation, Employee being available to the Company and its Subsidiaries
upon reasonable notice for interviews and factual investigations, appearing at the Company's request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the Company and its Subsidiaries all pertinent information
and turning over to the Company and its Subsidiaries all relevant documents which are or may come into Employee' s possession,
all at times and on schedules that are reasonably consistent with Employee' s other permitted activities and commitments). In
the event the Company requires Employee's cooperation in accordance with this Section 24, the Company will pay Employee
a reasonable per diem as determined by the Board and reimburse Employee for reasonable expenses incurred in connection therewith
(including lodging and meals, upon submission of receipts).

 

25.               
Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of
the Company and Employee, and no course of conduct or course of dealing or failure or delay by any Party hereto in enforcing or
exercising any of the provisions of this Agreement will affect the validity, binding effect or enforceability of this Agreement
or be deemed to be an implied waiver of any provision of this Agreement.

 

26.               
409A. It is intended that any amounts payable under this Agreement shall comply with the provisions of Section 409A of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement shall be construed and interpreted consistent
with that intent. Employee and the Company agree to agree to make such reasonable amendments to this Agreement as may be necessary
to avoid the imposition of penalties and additional taxes on Employee under Code Section 409A of the Code. For purposes of Code
Section 409A, (i) references herein to the Employee's ''termination of employment" or like references shall refer to the
Employee's "separation from service" with the Company within the meaning of Section 409A of the Code and the Treasury
Regulations thereunder and (ii) each amount payable under this Agreement as a result of the separation of the Employee's service
shall constitute a "separate payment within the meaning of Treasury Regulation §l.409A- 2(b)(2)(iii),and each such payment
shall at all times be considered a separate and distinct payment for all purposes of Code Section 409A. Employee acknowledges
and agrees that notwithstanding this Section 26 or any other provision of this Agreement, the Company is not providing any tax
advice with respect to Code Section 409A or otherwise and is not making any guarantees or other assurances of any kind to Employee
with respect to the tax consequences or treatment of any amounts paid or payable to Employee hereunder.

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Employment Agreement as of the date first written above.

 

CUBE,
INC.

 

/s/
Joseph White

Joseph
White

Its:
CEO

 

EMPLOYEE

 

/s/
Paul Turino

Paul
Turino

    	6

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