UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): December 23, 2014
Car Charging Group, Inc.
(Exact name of registrant as specified in
its charter)
Nevada |
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333-149784 |
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03-0608147 |
(State or other jurisdiction of
incorporation) |
|
(Commission File Number) |
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(IRS Employer Identification No.) |
1691 Michigan Avenue, Suite 601
Miami Beach, Florida 33139
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including
area code: (305) 521-0200
N/A
(Former name or
former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2.below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
o Soliciting
material pursuant to Rule I4a-12 under the Exchange Act (17CFR240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Cautionary Note on Forward-Looking Statements
This Current Report on Form 8-K (this “Report”)
and any related statements of representatives and partners of the Company contain, or may contain, among other things, certain
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking
statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect
to the Company’s plans, objectives, projections, expectations and intentions and other statements identified by words such
as “projects,” “may,” “will,” “could,” “would,” “should,”
“believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,”
or similar expressions. These statements are based upon the current beliefs and expectations of the Company’s
management and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with
the Securities and Exchange Commission (the “SEC”). Actual results may differ significantly from
those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties
that are subject to change based on various factors (many of which are beyond the Company’s control). The Company
undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
Item 1.01 Entry into a Material Definitive Agreement.
On December 23, 2014, the Company entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors (the “Purchaser(s)”)
for an aggregate of $6,000,000 (the “Aggregate Subscription Amount”). Pursuant to the Securities Purchase
Agreement, the Company issued the following to the Purchaser: (i) 60,000 shares of Series C Preferred Stock convertible into 8,571,429
shares of the Company’s common stock, par value $0.001, (the “Common Stock”); and (ii) warrants (the “Warrants”)
to purchase an aggregate of 8,571,429 shares of Common Stock (the “Warrant Shares”) for an exercise price of
$1.00 per share.
Escrow Agreement
The release of the Aggregate Subscription
Amount to the Company is subject to the Company meeting certain milestones. On December 23, 2014, all the initial closing conditions
were met so the Company received Two Million Dollars ($2,000,000) of the Aggregate Subscription Amount. The remaining Four Million
Dollars ($4,000,000) was deposited into an escrow account. If the first set of milestones is achieved on or before March 31, 2015,
the Company will receive Two Million Dollars ($2,000,000) from the escrow proceeds. The remaining Two Million Dollars ($2,000,000)
will be released from escrow based on whether or not the second set of milestones is achieved on or before June 30, 2015.
If the milestones are not achieved on or
before July 31, 2015 then the amounts remaining in escrow will be returned to the Purchasers, pro rata based upon the relative
cash contributions.
Series C Certificate of Designation
A total of 250,000 shares of Series C Preferred
Stock have been designated for issuance under the Certificate of Designations, Preferences and Rights of Series C Convertible Preferred
Stock (the “Series C Certificate of Designation”). The shares of Series C Preferred Stock have a stated value
of $100 per share with an initial conversion price of $0.70 per share (subject to adjustment as provided in the Series C Certificate
of Designation).
Under the Series C Certificate of Designation,
the holders of the Series C Preferred Stock have the following rights, preferences and privileges:
The Series C Preferred Stock may, at the
option of the Purchaser, be converted at any time or from time to time into fully paid and non-assessable shares of Common Stock
at the conversion price in effect at the time of conversion; provided, that a holder of Series C Preferred Stock may at
any given time convert only up to that number of shares of Series C Preferred Stock so that, upon conversion, the aggregate beneficial
ownership of the Company’s Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act) of such Purchaser
and all persons affiliated with such Purchaser, is not more than 9.99% of the Company’s Common Stock then outstanding. The
number of shares into which one share of Series C Preferred Stock shall be convertible is determined by dividing the stated value
of $100 per share by the initial Conversion Price of $0.70 (subject to appropriate adjustment for certain events, including stock
splits, stock dividends, combinations, recapitalizations or other recapitalizations affecting the Series C Preferred Stock).
Shares of the Series C Preferred Stock
shall receive dividends at a quarterly rate. The dividend is payable in either cash or additional shares of Series C Preferred
Stock. If the dividend is paid in cash the quarterly dividend payment shall be equal to 2% of the Stated Value per share for each
of the then outstanding shares of Series C Preferred Stock. If, however, the quarterly dividend is paid in shares of Series C Preferred
Stock the quarterly dividend payment shall be equal to 2.5% of the Stated Value per share for each of the then outstanding shares
of Series C Preferred Stock.
In the event of a liquidation, the Series
C Preferred Stock is also entitled to a liquidation preference equal to the Stated Value in respect of such Series C Preferred
Stock plus any accrued and unpaid dividends.
Except as otherwise required by law, the
holders of shares of Series C Preferred Stock shall vote on an as-if-converted-to-Common-Stock basis with the Common Stock. However,
as long as any shares of Series C Preferred Stock are outstanding, the Company shall not, without the prior written consent of
at least sixty percent (60%) of the then outstanding Series C Preferred Stock: (a) alter or change adversely the powers, preferences
or rights given to the Series C Preferred Stock or alter or amend this Series C Certificate of Designation or the Articles of Incorporation,
(b) issue any Series C Preferred Stock or create, or authorize the creation of, any additional class or series of capital stock
unless the same ranks junior to the Series C Preferred Stock with respect to the distribution of assets, the payment of dividends
and redemption rights; (c) take any action which would be in breach of the Securities Purchase Agreement; (d) reclassify, alter
or amend any existing security of the Corporation that is junior to the Series C Preferred Stock in respect of the distribution
of assets, the payment of dividends, or redemption rights, if such classification, alteration or amendment would render such other
security senior to or pari passu with the Series C Preferred Stock; or (e) enter into any agreement or commitment with respect
to any of the foregoing.
At any time following the second anniversary
following the issuance of the Series C Preferred Stock, at the option of the holder, each share of Series C Preferred Stock shall
be redeemable for an amount equal to the Stated Value plus all accrued but unpaid dividends plus 1% per month, compounded monthly
from the closing date.
Warrants
The Warrants issued in the Securities Purchase
Agreement, are exercisable for an aggregate of 8,571,429 shares of the Company’s Common Stock for a period of five years
from the original issue date. The exercise price for the Warrant Shares is $1.00 per share, subject to applicable adjustments.
Registration Rights Agreement
In connection with the sale of the Securities
Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”)
with the Purchasers, pursuant to which the Company agreed to register all of the shares of Common Stock underlying the Series C
Preferred Stock and Warrant Shares (the “Registrable Securities”) on a Form S-1 registration statement
(the “Registration Statement”) to be filed with the Securities and Exchange Commission and to use best efforts
to cause the Registration Statement to be declared effective under the Securities Act within 180 days following the Closing Date
(or, in the event of a “full review” by the SEC, within 210 calendar days following the Closing Date) (the “Effectiveness
Deadline”). If the Company does not meet the Effectiveness Deadline, the Company will have to pay the Purchaser a penalty
equal to 1% of the Aggregate Subscription Amount.
The foregoing description of the terms
of the Securities Purchase Agreement, the Series C Certificate of Designation, the form of Warrant, the Registration Rights Agreement
and the Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the provisions of such
agreements filed as exhibits 10.1, 3.1, 4.1, 10.2 and 10.3 to this Current Report on Form 8-K (this “Report”).
Item 3.02 Unregistered Sales of Equity Securities
Reference
is made to the disclosure set forth under Items 1.01 of this Report, which disclosure is incorporated herein by reference.
On December 23, 2014, we issued and sold
an aggregate of 60,000 shares of Series C Preferred Stock and Warrants to purchase an aggregate of 8,571,429 shares of Common Stock
for an aggregate purchase price of $6,000,000 in cash.
The Company issued the Shares and Warrant
in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”) and Rule 506(b). The Company’s reliance on Section 4(2)
of the Securities Act was based upon the following factors: (a) the issuance of the securities was an isolated private transaction
by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller
denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and the Company.
Item 5.02 Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 23, 2014, in connection with
the closing and as a condition to the closing of the Securities Purchase Agreement, we entered into an amended and restated employment
agreement with our Chief Executive Officer, Michael Farkas. The First Amendment to the Executive Employment Agreement
provides that Mr. Farkas shall have a salary of Forty Thousand Dollars ($40,000) per month. However, for such time as any of the
Aggregate Subscription Amount is still held in escrow, Mr. Farkas shall receive Twenty Thousand Dollars ($20,000) in cash and the
remaining amount of his compensation: (i) shall be deferred; and (ii) must be determined by the compensation committee of the Company’s
Board of Directors to be fair and equitable. Additionally, beginning on the date that the Aggregate Subscription Amount is released
from escrow and continuing for so long as the Series C Preferred Stock remain issued and outstanding, Mr. Farkas’ salary
shall only be paid in cash if doing so would not put the Company in a negative operating cash flow position.
Additionally, beginning on the date that
the Aggregate Subscription Amount is released from escrow and continuing for so long as the Series C Preferred Stock remain issued
and outstanding, Mr. Farkas’ salary shall only be paid in cash if doing so would not put the Company in a negative operating
cash flow position.
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year
The disclosures set forth in Item 1.01
of this Current Report on Form 8-K are hereby incorporated by reference into this Item 5.03.
Amendment Number 2 to Series A Certificate
of Designations, Preferences and Rights
On December 29, 2014, pursuant to the terms
of the Securities Purchase Agreement, we filed an Amendment Number 2 to our Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock with the Secretary of State of the State of Nevada that, for so long as the shares of the
Series C Preferred Stock remains issued and outstanding, (i) limits the Voting rights of the Series A shareholders to an as-converted
basis; and (ii) removes the liquidation preference rights.
The foregoing description of the terms
of the Amendment Number 2 to our Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock do
not purport to be complete and are qualified in their entirety by reference to the provisions of such agreements filed as exhibit
3.2 to this Report.
Item 8.01 Other Events.
Press Release
On December 29, 2014, the Company issued
a press release announcing the closing of the $6,000,000 financing transaction, a copy of which is filed as exhibit 99.1 to this
Report.
Item 9.01 Financial Statement and Exhibits
Exhibit
Number |
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Description |
3.1 |
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Certificate of Designation, Rights and Preferences of the Series C Preferred Stock |
3.2 |
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Amendment Number 2 to the Certificate of Designations, Preferences and Rights of Series A Preferred Stock |
4.1 |
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Form of Warrant |
10.1 |
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Securities Purchase Agreement, dated December 23, 2014 |
10.2 |
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Registration Rights Agreement, dated December 23, 2014 |
10.3 |
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Escrow Agreement, dated December 23, 2014 |
10.4 |
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First Amendment to Michael Farkas Employment Agreement, dated December 23, 2014 |
99.1 |
|
Press Release, dated December 29, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: December 29, 2014
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Car Charging Group, Inc. |
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By: |
/s/ Michael D. Farkas |
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Michael D. Farkas |
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Chief Executive Officer |
Exhibit
3.1
EXECUTION COPY
CERTIFICATE
OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS OF
SERIES C PREFERRED STOCK OF
CAR
CHARGING GROUP, INC.[1]
PURSUANT
TO SECTIONS 78.195 AND 78.1955 OF THE
NEVADA
REVISED STATUTES
Car
Charging Group, Inc., a Nevada Corporation (the “Corporation”), DOES HEREBY CERTIFY:
Pursuant
to authority expressly granted and vested in the Board of Directors of the Corporation by the provisions of the Corporation’s
Articles of Incorporation, as amended, and in accordance with the provisions of Sections 78.195 and 78.1955 of the Nevada Revised
Statutes, the Board of Directors adopted the following resolution on December 23, 2014 providing for the designations, preferences
and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 250,000
shares of Series C Convertible Preferred Stock of the Corporation, as follows:
RESOLVED,
that pursuant to the authority vested in the Board of Directors of the Corporation by the Corporation’s Articles of Incorporation
(the “Articles of Incorporation”) as amended, a series of Preferred Stock of the Corporation be, and it hereby
is, created out of the 17,500,000 authorized but undesignated shares of the capital preferred stock of the Corporation, such series
to be designated Series C Preferred Stock (the “Series C Preferred Stock”), to consist of 250,000 shares, par
value $0.001 per share, which shall have the following preferences, powers, designations and other special rights;
TERMS
OF SERIES C PREFERRED STOCK
Section 1. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“ 2013
Transactions” shall have the meaning set forth in the Purchase Agreement.
EXECUTION COPY
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 8(e).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Cash
Dividend Rate” shall have the meaning set forth in Section 3(a).
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or waived.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“Conversion
Amount” means the sum of the Stated Value at issue.
EXECUTION COPY
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Price” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.
“Corporation
Redemption Request” shall have the meaning set forth in Section 7(b).
“Escrow
Agreement” shall have the meaning set forth in the Purchase Agreement.
“Escrow
Funds” shall have the meaning set forth in the Purchase Agreement.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Fundamental
Transaction” shall have the meaning set forth in Section 8(e).
“GAAP”
means United States generally accepted accounting principles.
“Holder”
shall have the meaning set forth Section 2.
“Holder
Redemption Request” shall have the meaning set forth in Section 7(a).
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.
“Liquidation”
shall have the meaning set forth in Section 5.
“New
York Courts” shall have the meaning set forth in Section 9(d).
“Notice
of Conversion” shall have the meaning set forth in Section 6(a).
“Optional
Redemption Amount” shall have the meaning set forth in Section 7(b).
EXECUTION COPY
“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred
Stock.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“PIK”
shall have the meaning set forth in Section 3(a).
“PIK
Dividend Rate” shall have the meaning set forth in Section 3(a).
“PIK
Shares” shall have the meaning set forth in Section 3(a).
“Preferred
Stock” shall have the meaning set forth in Section 2.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of the Original Issue Date, among the Corporation and the
original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“Qualified
Transaction” shall have the meaning set forth in Section 7(b)(i)(2).
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Corporation and the original holders of the Preferred Stock, in the form of Exhibit B attached to the Purchase Agreement.
“Registration
Statement” shall have the meaning set forth in the Purchase Agreement.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Securities”
means the Preferred Stock, the Conversion Shares, the Warrants and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
EXECUTION COPY
“Share
Delivery Date” shall have the meaning set forth in Section 6(c).
“Stated
Value” shall have the meaning set forth in Section 2.
“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock and Warrants purchased
pursuant to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement
and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.
“Successor
Entity” shall have the meaning set forth in Section 8(e).
“Trading
Day” means a day on which the principal Trading Market is open for business.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Markets (or any successors to any of the foregoing).
“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, the Registration Rights Agreement,
the Escrow Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated pursuant to the Purchase Agreement.
“Transfer
Agent” means Worldwide Stock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 433
Hackensack Avenue, Hackensack, New Jersey 07601 and a facsimile number of (201) 820-2010, and any successor transfer agent of the
Company.
EXECUTION COPY
“VWAP”
shall mean, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not
a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the shares then outstanding and reasonably acceptable to the Corporation, the fees
and expenses of which shall be paid by the Corporation.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
of the Purchase Agreement in the form of Exhibit C attached to the Purchase Agreement.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
Section
2. Designation,
Amount and Par Value. The series of preferred stock shall be designated as its Series C Preferred Stock (the “Preferred
Stock”) and the number of shares so designated shall be up to 250,000 (which shall not be subject to increase without
the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $100, subject to increase
set forth in Section 3 below (the “Stated Value”).
Section 3. Dividends.
a)
Holders
shall be entitled to receive, as, when, and if declared by the Board, out of funds legally available therefor, quarterly cumulative
dividends payable either, at the Corporation’s sole discretion: (i) in kind in additional Preferred Shares (“PIK
Shares”) or (ii) in cash. In the event of a cash dividend, the dividend rate shall be 2.00% on the Stated Value (subject
to the adjustments in Section 8(a)) (the “Cash Dividend Rate”), compounded quarterly. In the event of a payment-in-kind
(“PIK”), the dividend rate shall be 2.50% on the Stated Value (subject to the adjustments in Section 8(a)) (the
“PIK Dividend Rate”), compounded quarterly. Such dividends shall begin to accrue and shall accumulate (to the
extent not otherwise declared and paid as set forth above) at the PIK Dividend Rate (unless the Corporation elects to pay in cash)
on each share of Preferred Stock from the date of issuance of such share of Preferred Stock, whether or not declared.
EXECUTION COPY
b)
Any
dividends accrued and unpaid for a period of thirty days after such dividend is due shall be considered a PIK dividend.
c)
Board
may fix a record date for the determination of Holders entitled to receive payment of the dividends payable pursuant to this Section
3(a), which record date shall not be more than 60 days nor less than 10 days prior to the date on which any such dividend is paid.
d)
All
dividends paid with respect to shares of Preferred Stock shall be paid pro rata to the Holders entitled thereto.
e)
Holders shall also be entitled to receive, and the
Corporation shall pay, dividends on shares of Preferred Stock (including PIK Shares) equal (on an
as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when,
as and if such dividends are paid on shares of the Common Stock.
f) The
Corporation shall pay accrued and unpaid dividends in cash only (not in PIK Shares) in connection with any redemption
or Liquidation as provided herein.
g)
The Corporation shall not declare, pay or set aside any
cash dividends on shares of any other class or series of capital stock of the Corporation while the Preferred Stock remains
outstanding.
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Section
4. Voting
Rights.
(a)
On
any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of
the Corporation (or by written consent of stockholders in lieu of meeting), each Holder shall be entitled to cast the number of
votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such Holder are convertible
as of the record date for determining stockholders entitled to vote on such matter (the “Holder Votes”). In the event
that, based on the number of Holder Votes such Holder would be deemed an Affiliate of the Corporation, the number of Holder Votes
will be limited to such quantity whereby such Holder shall not be deemed an Affiliate and the number of votes will remain under
the Beneficial Ownership Limitation. Except as provided by law or by the other provisions of the Articles of Incorporation, Holders
of Preferred Stock shall vote together with the holders of Common Stock as a single class; provided, however, that
as long as any Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of 60% of
the then outstanding shares of the Preferred Stock: (a) alter or change adversely the powers, preferences or rights given to the
Preferred Stock or alter or amend this Certificate of Designation or the Articles of Incorporation; (b) issue any Series B Preferred
Stock or create, or authorize the creation of, any additional class or series of capital stock unless the same ranks junior to
the Preferred Stock with respect to the distribution of assets, the payment of dividends and redemption rights; (c) take any action
which would be in breach of the Purchase Agreement; (d) reclassify, alter or amend any existing security of the Corporation that
is junior to the Preferred Stock in respect of the distribution of assets, the payment dividends, or redemption rights, if such
reclassification, alteration or amendment would render such other security senior to or pari passu with the Preferred Stock; or
(e) enter into any agreement or commitment with respect to any of the foregoing.
(b)
The Holders of Preferred Stock, exclusively and as a separate class, shall be entitled to elect one director of the Corporation.
Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of
the holders of the shares of the Preferred Stock, given either at a special meeting of such stockholders duly called for that purpose
or pursuant to a written consent of stockholders. If the Holders fail to elect a director then such directorship not so filled
shall remain vacant until such time as the Holders elect a person to fill such directorship.
Section
5. Liquidation.
Upon any Fundamental Transaction or liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary
(a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of
the Corporation an amount in cash equal to the Stated Value, plus any accrued and unpaid dividends thereon at the Cash Dividend
Rate and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share
of Preferred Stock before any distribution or payment shall be made to the holders of Series A Preferred Stock, any Junior Securities,
and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed
to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. After payment of the Stated Value, plus any accrued and unpaid dividends
thereon, to each Holder, the remaining balance of any proceeds from the Liquidation shall be allocated to the Holders, holders
of Series A Preferred Stock and holders of any Common Stock on an as-if-converted-to-Common-Stock basis. The Corporation shall
mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.
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Section
6. Conversion.
a)
Conversions
at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the
Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (as adjusted as provided herein
and subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock
by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached
hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares
of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number
of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation
(such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of
manifest or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender
the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly
following the Conversion Date at issue. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the
terms hereof shall be canceled and shall not be reissued.
b) Conversion
Price. The conversion price for the Preferred Stock shall equal $0.70, subject to adjustment herein (the “Conversion
Price”).
c)
Mechanics of Conversion
i. Delivery
of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder the number of Conversion
Shares being acquired upon the conversion of the Preferred Stock which shall be free of restrictive legends and trading restrictions
The Corporation shall deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.
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ii. Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation
at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall
promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly
return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.
iii. Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of
any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged
violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such
Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may
not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained. In the absence
of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion.
Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion
Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law. If the Corporation fails for any reason to deliver to the Holder the Conversion Shares subject to a Notice of Conversion by
the Share Delivery Date, the Corporation shall pay to the Holder, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Conversion Shares subject to such conversion (based on the VWAP of the Common Stock on the date of the applicable
Notice of Conversion), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages
begin to accrue) for each Trading Day after such Share Delivery Date until such Conversion Shares are delivered or Holder rescinds
such conversion.
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iv. Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock, free from
preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the
Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions
set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 6) upon the conversion
of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
v. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
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vi. Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion
Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares
of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established
to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
d) Beneficial
Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the
right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the
applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together
with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation
(as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion
of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation
on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the
Warrants) beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination
of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates)
and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of
a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be
converted (in relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred
Stock are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction,
each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion
has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm
the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report
filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent
written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and in writing to such Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder
or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. The
Holder, upon not less than 61 days’ prior notice to the Company, may increase, decrease or eliminate the Beneficial Ownership
Limitation provisions of this Section 2(e). Any such increase, decrease or elimination will not be effective until the
61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of Preferred Stock.
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Section
7. Redemption.
a)
Redemption
at Option of Holder.
i. At
any time and from the two year anniversary of the Original Issue Date, the Preferred Stock may be redeemed, at the request of Holder(s)
representing at least sixty percent (60%) of the outstanding Preferred Shares, at a price equal to 100% of the Stated Value plus
all accrued but unpaid dividends plus 1% per month, compounded monthly from the Original Issue Date (the “Holder Redemption
Request”). The Corporation may choose to honor such Holder Redemption Request from funds legally available for distribution.
In the event that the Corporation chooses not to honor the Holder Redemption Request, the Cash Dividend Rate and the PIK Dividend
Rate shall thereafter be increased by a multiple of two (2), commencing in the first quarter following the Holder Redemption Request.
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ii. Holders
shall effect the redemption by providing the Corporation with the form of conversion notice attached hereto as Annex B (a
“Holder Notice of Redemption”). Each Notice of Redemption shall specify the number of shares of Preferred Stock
owned prior to the redemption at issue, which date may not be prior to the date the applicable Holder delivers by facsimile such
Holder Notice of Redemption to the Corporation (such date, the “Holder Redemption Date”). If no Holder Redemption
Date is specified in a Holder Notice of Redemption, the Holder Redemption Date shall be the date that such Holder Notice of Redemption
to the Corporation is deemed delivered hereunder. No ink-original Holder Notice of Redemption shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Holder Notice of Redemption form be required. The calculations
and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. If the Corporation
chooses to redeem any Preferred Shares upon a Holder Redemption Request, then all Preferred Shares shall be Redeemed. Shares of
Preferred Stock redeemed in accordance with the terms hereof shall be canceled and shall not be reissued. Notwithstanding anything
to the contrary, no such redemption under this Section shall result in any Holder exceeding the Beneficial Ownership Limitation.
iii. A
Holder Notice of Redemption may be withdrawn at any time prior to the Corporation’s acceptance and effectuation of the requested
redemption.
iv. Notwithstanding
the above, (a) the aggregate redemption payment by the Corporation under this Section 6(a) shall be reduced by (i) the amount of
Escrow Funds, if any, that were released to the Purchasers in accordance with the Purchase Agreement (with any such reduction in
the aggregate redemption payment applied pro rata to the Holders who received (or whose predecessors received) distributions from
the Escrow Funds, in proportion to such distributions received and (ii) if any Escrow Funds have been released to the Purchasers,
the value, when issued, of any PIK Dividends that were issued and attributable to the Preferred Shares directly associated with
the Escrow Funds from and after the date such Escrow Funds were released to the Purchasers, in accordance with the Purchase Agreement
and Escrow Agreement, and (b) the Corporation may pay the redemption payment in a lump sum or in eight equal quarterly installments,
as its election.
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b)
Redemption
at Option of the Corporation.
i. Commencing
sixty (60) days after the Original Issue Date, the Preferred Stock may be redeemed at the option of the Corporation, at a price
equal to 120% of the Stated Value plus all accrued but unpaid dividends in cash at the Cash Dividend Rate (the “Optional
Redemption Amount”), upon occurrence of either of the following:
1)
(A) the VWAP of the Corporation’s Common Stock exceeds a minimum of three (3.0) times the Conversion Price in effect for
fifteen (15) consecutive trading days; (B) for such fifteen (15) consecutive trading days, the Corporation’s Common Stock
has a daily trading volume exceeding 150,000 shares per Trading Day; and (C) the Corporation has an effective Registration Statement
that covers not only the shares contemplated by the Purchase Agreement but also all shares issued or receivable in accordance with
the 2013 Transactions or such shares are available for resale under Rule 144, without regard to volume or manner of sale limitation;
OR
2)
the
Corporation completes a Qualified Transaction. For the purposes of this Section 8(b)(i)(2), a “Qualified Transaction”
shall mean a transaction or transactions by the Corporation (A) resulting in grosss proceeds greater than 120% of (x) the Stated
Value per Preferred Share multiplied by (y) the number of outstanding Preferred Shares and (B) such transaction closes within one
year from the Closing Date.
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In the event of (1) or (2) above,
the holders of Preferred Shares shall have the option to either receive the Optional Redemption Amount or convert their Preferred
Shares into underlying Common Shares upon thirty (30) days written notice from the Corporation (the “Corporation Redemption
Request”). Upon the expiration of such notice period, any Preferred Shares that had not been converted shall no longer
have conversion rights. In the event of (1) above, the Corporation shall provide a mechanism (e.g., blocker, or cashless exercise
of warrants or other similar provision) such that when the Holders convert their Preferred Shares, each Holder’s respective
holdings remain under a 9.99% ownership threshold. In the event of a Corporation Redemption Request, any funds held in the Escrow
Account will be released to the Corporation upon either (A) payment of the Optional Redemption Amount or (B) conversion of all
of the Preferred Shares. In the event of (1) above, the Corporation shall provide a mechanism (e.g., blocker, or cashless exercise
of warrants or other similar provision), subject to the approval or waiver of any Holder whose holdings would otherwise exceed
the Beneficial Ownership Limitation such that when the Holders convert their Preferred Shares, each Holders' respective holdings
remain within the Beneficial Ownership Limitation. If any such Holder does not approve such mechanism, the Corporation will
limit its Corporate Redemption Request to such quantity that the Holder's holdings will remain under the Beneficial Ownership Limitation.
Section
8. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common
Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion
of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number
of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the
Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section
8(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b)
Subsequent Equity Sales.
If the Corporation shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents,
at a price per share less than the Conversion Price then in effect (such lower price, the “Base Share Price”
and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of
the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share that is less than
the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Conversion Price shall
be reduced and only reduced in accordance with the following formula: [EP2 = EP1 * (A+B) / (A+C)], where:
EP2 = New Conversion Price
EP1 = Conversion Price in effect
immediately prior to Dilutive Issuance
(A) = Number of shares of Common
Stock deemed to be outstanding immediately prior to the Dilutive Issuance (including all shares of outstanding common stock, and
all shares issuable hereunder)
(B) = Aggregate consideration received
by the Corporation with respect to the Dilutive Issuance divided by EP1
(C) = Number of shares of Common
Stock or common Stock Equivalents issued or subject to the Dilutive Issuance
Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made,
paid or issued under this Section 8(b) in respect of an Exempt Issuance. The Corporation shall notify the Holder, in writing,
no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject
to this Section 8(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price
and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 8(b), upon the occurrence of any Dilutive Issuance,
the Purchaser is entitled to receive a reduction in the Conversion Price that will equal the New Conversion Price. If the Corporation
enters into a Variable Rate Transaction, despite the prohibition from incurring any debt or equity transactions in the Purchase
Agreement, the Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion
or exercise price at which such securities may be converted or exercised.
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c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 8(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred
Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation, unless the Holders waives such limitation).
d) Pro
Rata Distributions. Subject to Section 3, during such time as this Preferred Stock is outstanding, if the Corporation declares
or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Preferred Stock (without regard
to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to
the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall
be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation, unless the Holder waives such limitation).
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e)
Fundamental Transaction.
If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more
than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section
6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation
or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred
Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the
conversion of this Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred Stock
following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation
or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions
and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to
convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction
in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations
of the Corporation under this Certificate of Designation and the other Transaction Documents (as defined in the Purchase Agreement)
in accordance with the provisions of this Section 8(e) pursuant to written agreements in form and substance reasonably satisfactory
to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option
of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible for
a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of
this Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder
to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being
for the purpose of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation”
shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of
the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Corporation herein. Each Holder shall have the right to elect prior to the consummation
of a Fundamental Transaction to give effect to the provisions of Section 5, if applicable, instead of giving effect to the provisions
contained in this Section 8(e) with respect to such Holder’s Preferred Shares.
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f) Calculations.
All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 8, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
g) Notice
to the Holders.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 8, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
ii. Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least thirty (30) calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date
as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation
or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during
the 30-day period commencing on the date of such notice through the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.
EXECUTION COPY
Section
9. Reserved.
Section 10. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at the address set forth above, facsimile number (503) 477-5545, or such other facsimile
number or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section
10. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address
appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement.
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior
to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
EXECUTION COPY
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.
c) Lost
or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of
such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding
to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.
EXECUTION COPY
e) Waiver.
Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as
or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate
of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to
any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or
any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of
Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.
f) Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law.
g) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
EXECUTION COPY
h) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions hereof.
i) Status
of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement
and the terms hereof. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series C Preferred
Stock.
*********************
IN WITNESS WHEREOF,
the undersigned has executed this Certificate of Designation as of December __, 2014.
EXECUTION COPY
ANNEX
A
NOTICE OF CONVERSION
(TO
BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)
The undersigned hereby elects to convert
the number of shares of Series C Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “Common
Stock”), of Car Charging Group, Inc., a Nevada corporation (the “Corporation”), according to the conditions
hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions
as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be charged to the Holders for any
conversion, except, in the case of issuance in the name of a Person other than the undersigned, for any such transfer taxes.
Date to Effect Conversion: |
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Number of shares of Preferred Stock owned prior to Conversion: |
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Number of shares of Preferred Stock to be Converted: |
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Number of shares of Common Stock to be Issued: |
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Applicable Conversion Price: |
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Number of shares of Preferred Stock subsequent to Conversion: |
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or
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[HOLDER] |
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By: |
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Name: |
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Title: |
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ANNEX
B
NOTICE OF REDEMPTION
(TO
BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO REDEEM SHARES OF PREFERRED STOCK)
The undersigned hereby elects to redeem
the number of shares of Series C Preferred Stock of Car Charging Group, Inc., a Nevada corporation (the “Corporation”)
indicated below, according to the conditions hereof, as of the date written below. No fee will be charged to the Holders for any
redemption.
Redemption calculations:
Date to Effect Redemption: |
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Number of shares of Preferred Stock outstanding prior to Redemption: |
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Applicable Conversion Price: |
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Redemption Amount to be Paid: |
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Address or wire instructions for delivery of payment: |
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[HOLDER] |
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By: |
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Name: |
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Title: |
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Exhibit
3.2
CAR
CHARGING GROUP, INC.
AMENDMENT NO. 2 TO
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS
OF SERIES A CONVERTIBLE PREFERRED STOCK
Car Charging Group,
Inc., a Nevada corporation (the “Corporation”), does hereby certify:
Pursuant to authority
expressly granted and vested in the Board of Directors of the Corporation by the provisions of the Corporation’s Certificate
of Incorporation, as amended, the Board of Directors adopted the Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock on December 7, 2009 (i) authorizing a series of the Corporation’s previously authorized 20,000,000
shares of preferred stock, par value $0.001 per share, and (ii) providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions thereof, of 20,000,000 shares of Series A Convertible
Preferred Stock of the Corporation, which was subsequently amended on December 6, 2012 (the “Series A Certificate of Designation”).
Recitals
WHEREAS, the Board of
Directors of the Corporation and the Majority Shareholders of the Series A Convertible Preferred Stock wish to amend the Series
A Certificate of Designation.
WHEREAS, the Corporation
has negotiated a financing transaction for the sale of shares of Series C Preferred Stock, par value $0.001, (the “Series
C Preferred Stock”) with certain investors (the “Series C Financing”). As a condition to that Series
C Financing, the investors have required that the Series A Certificate of Designation be amended, for so long as the shares of
the Series C Preferred Stock remains issued and outstanding, to (i) limit the Voting rights of the Series A shareholders to an
as-converted basis; and (ii) remove the liquidation preference rights.
Amendment
1) Defined Terms.
Unless otherwise indicated herein, all terms which are capitalized but are not otherwise defined herein shall have the meaning
ascribed to them in the Series A Certificate of Designation.
2) Amendment to
Series A Certificate of Designation.
Section 1”Voting”
of the Series A Certificate of Designation is hereby amended and restated in its entirety as follows:
For so long as
the Series C Preferred Stock remains issued and outstanding and is not either redeemed or converted into shares of common stock,
the Holders of the Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series A Preferred Stock held by such Holder are convertible as of the record date for determining
stockholders entitled to vote on such matter (the “Holder Votes”). Holders of Series A Preferred Stock shall vote together
with the holders of Common Stock as a single class; provided, however, that as long as any Series A Preferred Stock
are outstanding, the Corporation shall not, without the affirmative vote of the Holders of 60% of the then outstanding shares of
the Series A Preferred Stock: (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter
or amend this Certificate of Designation or the Articles of Incorporation; (b) issue any Series A Preferred Stock or, [except with
issuance of Series C Preferred Stock] create, or authorize the creation of, any additional class or series of capital stock unless
the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets, the payment of dividends and
redemption rights; (c) take any action which would be in breach of the Purchase Agreement; (d) reclassify, alter or amend any existing
security of the Corporation that is junior to the Series A Preferred Stock in respect of the distribution of assets, the payment
dividends, or redemption rights, if such reclassification, alteration or amendment would render such other security senior to or
pari passu with the Series A Preferred Stock; or (e) enter into any agreement or commitment with respect to any of the foregoing.
At such time
that the Series C Preferred Stock is either redeemed by the Corporation or converted to common stock and no shares of Series C
Preferred Stock remain outstanding, the Board of Directors, in their sole discretion, shall have the right to reinstate the following
voting rights (or such other preferential voting rights as the Board of Directors shall then determine): Holders of the Series
A Preferred Stock shall have five (5) times that number of votes on all matters submitted to the shareholders that is equal to
the number of shares of Common Stock (rounded to the nearest whole number) into which such holder’s shares of Series A Preferred
Stock are then convertible, as provided in Section 4, at the record date for the determination of the shareholders entitled to
vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of such shareholders
is effected.
Section 3. “Liquidation
Preference” if the Series A Certificate of Designation is hereby amended and restated in its entirety as follows:
For so long as the
Series C Preferred Stock remains issued and outstanding and is not either redeemed or converted into shares of common stock, shareholders
of the Series A Preferred Stock shall not have a liquidation preference and shall be treated on an as-converted to common stock
basis for any liquidation rights that may be asserted.
At such time that the
Series C Preferred Stock is either redeemed by the Corporation or converted to common stock and no shares of Series C Preferred
Stock remain outstanding, the Board of Directors, in their sole discretion, shall have the right to reinstate the following liquidation
preference (or such other liquidation preference as the Board of Directors shall then determine): Upon the liquidation, dissolution
and winding up of the Corporation, whether voluntary or involuntary, the holders of the Series A Preferred Stock then outstanding
shall be entitled to receive out of the assets of the Corporation, whether from capital or from earnings available for distribution
to its stockholders, before any amount shall be paid to the holders of common stock, eight times that sum available for distribution
to common stock holders.
3) Ratification; Inconsistent
Provisions. Except as otherwise expressly provided herein, the Series A Certificate of Designation is, and shall continue to
be, in full force and effect and is hereby ratified and confirmed in all respects. Notwithstanding the foregoing to the contrary,
to the extent that there is any inconsistency between the provisions of the Series A Certificate of Designation and this Amendment,
the provisions of this Amendment shall control and be binding.
4) Lost or Mutilated
Preferred Stock Certificate. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered
Holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares
of Series A Preferred Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity reasonably satisfactory
to the Corporation (provided that if the Holder is a financial institution or other institutional investor
its own agreement will be satisfactory) or in the
case of any such mutilation upon surrender of such certificate, the Corporation will, at its expense, execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.
5) Headings. The
headings contained herein are for convenience only and will not be deemed to limit or affect any of the provisions hereof.
RESOLVED, FURTHER,
that the chairman, chief executive officer, chief financial officer, president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and
file this Amendment to the Series A Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing
resolution and the provisions of Nevada law.
IN WITNESS WHEREOF,
the undersigned have executed this Certificate this day of December, 2014.
Signed: |
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Name: |
Michael D. Farkas |
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Title: |
Chief Executive Officer |
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Exhibit 4.1
EXECUTION COPY
NEITHER THIS SECURITY
NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
COMMON STOCK PURCHASE WARRANT
car
charging group, inc.
Warrant Shares: [_______] |
Initial Exercise Date: December 23, 2014 |
THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, [_____________] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time following
the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary
of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from
Car Charging Group, Inc., a Nevada corporation (the “Company”), up to [______] shares (as subject to adjustment
hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this
Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated December 23, 2014, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing
on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise in the form annexed hereto and within
three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States
bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below. No ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form
be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of
the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $1.00, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless
Exercise. If there is no effective Registration Statement registering, or no current prospectus available for, the resale of
the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
| (A) = | the VWAP on the Trading Day immediately preceding the
date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable
Notice of Exercise; |
| (B) = | the Exercise Price of this Warrant, as adjusted hereunder;
and |
| (X) = | the number of Warrant Shares that would be issuable upon
exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather
than a cashless exercise. |
For purposes of this Section 2(c)(A),
“VWAP” shall be defined, for any date, the price determined by the first of the following clauses that applies: (a)
if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported
by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if
the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or
a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers of a majority in interest of the Shares then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading
Days after latest of (A) the delivery to the Company of the Notice of Exercise and (B) surrender of this Warrant (if required)
(such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance
of such shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date
of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered
or Holder rescinds such exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before
the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company
may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The
Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant. The Holder, upon not less than 61 days’
prior notice to the Company, may increase, decrease or eliminate the Beneficial Ownership Limitation provisions of this Section
2(e). Any such increase, decrease or elimination will not be effective until the 61st day after such notice is
delivered to the Company.
f) Forced
Exercise.
(i) If
at any time following the Effective Date, (A) the Closing Bid Price of the Common Stock is equal to or greater than $2.625 (subject
to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Initial Exercise
Date) (the “Trigger Price”) for a period of ten (10) consecutive Trading Days (the ten (10) consecutive Trading
Days on which the condition in this clause (A) is satisfied are referred to herein as the “Forced Exercise Measuring Period”),
and (B) no Equity Conditions Failure shall exist (collectively, the “Forced Exercise Conditions”), the Company
shall have the right to require the Holder to exercise all or any portion of this Warrant as designated in a Forced Exercise Notice
(as defined below), as of the Forced Exercise Date (as defined below) (a “Forced Exercise”); provided, that
any Forced Exercise hereunder shall be cancelled and deemed null and void if the Company fails to satisfy any of the Forced Exercise
Conditions during any of the Trading Days in the period commencing on and including the Forced Exercise Notice Date and ending
on and including the Forced Exercise Date. The Company may exercise its right to require exercise of this Warrant under
this Section 2(f) by delivering a written notice thereof by facsimile and overnight courier to the Holder and the Transfer Agent
(the “Forced Exercise Notice” and the date such notice is deemed delivered to all of the holders is referred
to as the “Forced Exercise Notice Date”) no later than two (2) Trading Days after the applicable Forced Exercise
Measuring Period. The Forced Exercise Notice delivered shall be irrevocable and shall state (A) the date on which the
Forced Exercise shall occur (the “Forced Exercise Date”) which date shall be the fifth (5th) Trading Day after
the Forced Exercise Notice Date, (B) the aggregate number of Warrant Shares of which the Company has elected to be subject to Forced
Exercise from all of the holders of Warrants pursuant to this Section 2(f) (and such similar section in the other Warrants), (C)
(x) that the Closing Bid Price of the Common Stock during each Trading Day in the Forced Exercise Measuring Period equaled or exceeded
the Trigger Price and (y) no Equity Conditions Failure exists, and (D) the number of shares of Common Stock to be issued to the
Holder on the Forced Exercise Date (the “Forced Exercise Warrant Share Amount”). Each Forced Exercise
shall either be effected as a cash exercise or on a cashless basis, at the Holder’s sole discretion. Notwithstanding anything
to the contrary, no such redemption under this Section shall result in any Holder exceeding the Beneficial Ownership Limitation.
(ii) Pro
Rata Redemption Requirement. If the Company elects to cause an Forced Exercise pursuant to Section 2(f)(i), then
it must simultaneously take the same action with respect to the other Warrants. If the Company elects to cause an Forced
Exercise pursuant to Section 2(f)(i) (or similar provisions under the other Warrants) with respect to less than all of the Warrant
Shares underlying the Warrants then outstanding, then the Company shall require exercise of the Warrant Shares from each of the
holders of the Warrants equal to the product of (A) the aggregate number of Warrant Shares which the Company has elected to cause
to be exercised pursuant to Section 2(f)(i), multiplied by (B) a fraction, the numerator of which is the sum of the aggregate number
of Warrant Shares underlying the Warrants issued to such holder pursuant to the Securities Purchase Agreement and the denominator
of which is the sum of the aggregate number of Warrant Shares underlying the Warrants issued to all holders pursuant to the Securities
Purchase Agreement (such fraction with respect to each holder is referred to as its “Exercise Allocation Percentage,”
and such amount with respect to each holder is referred to as its “Pro Rata Exercise Amount”). In
the event that the initial holder of any SPA Warrants shall sell or otherwise transfer any of such holder’s Warrants, the
transferee shall be allocated a pro rata portion of such holder’s Exercise Allocation Percentage and Pro Rata Exercise Amount.
|
(iii) |
For the purposes of this Warrant, the following definitions shall apply: |
(1)
“Equity Conditions” means: (i) on each day during the period beginning ten (10) Trading Days prior to the applicable
date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring
Period”), the Common Stock shall have been listed or designated for quotation (as applicable) on the Trading Market and
shall not have been suspended from trading on a Trading Market (other than suspensions of not more than two (2) days and occurring
prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by
the Trading Market be pending in writing by a Trading Market; (ii) on each day during the Equity Conditions Measuring Period, the
applicable Forced Exercise Shares are registered for resale pursuant to an effective registration statement naming the Holder as
a selling stockholder thereunder (and the prospectus thereunder is available for use by the Holder as to all such Forced Exercise
Shares), as determined by counsel to the Company pursuant to a written opinion letter addressed and in form and substance reasonably
acceptable to the Holder (the “Registration Statement”), (iii) the Company shall have no knowledge of any fact that
would cause the Registration Statement not to be effective and available for the resale of all such Forced Exercise Shares by the
Holder in accordance with the terms thereof, (iv) on each day during the Equity Conditions Measuring Period, the Company shall
have delivered all Warrant Shares issuable upon the valid exercise of this Warrant on a timely basis pursuant to the applicable
provisions hereof; (v) such Forced Exercise Shares may be issued in full without violating Section 2(e) or the rules or regulations
of the Trading Market on which the Common Stock are then listed or designated for quotation (as applicable); (vi) on each day during
the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall
have occurred which has not been abandoned, terminated or consummated; (vii) the Holder shall not be in possession of any material,
non-public information provided to the Holder by the Company, any of its affiliates or any of their respective officers, employees,
directors, representatives, agents or the like; (viii) on each day during the Equity Conditions Measuring Period, the Company shall
not be in breach of any material term or condition of this Warrant, (ix) there is a sufficient number of authorized shares of Common
Stock for issuance of all Securities under the Transaction Documents and (x) on each day during the Equity Conditions Measuring
Period, there shall not be any Volume Failure.
(2)
“Equity Conditions Failure” means, with respect to a particular date of determination, that on any day during
the period commencing ten (10) Trading Days immediately prior to such date of determination, the Equity Conditions have not been
satisfied (or waived in writing by the Holder).
(3) “Volume
Failure” means, with respect to a particular date of determination, that the aggregate daily dollar trading volume (as
reported on Bloomberg) of the Common Stock on the Trading Market on any Trading Day during the ten (10) consecutive Trading Day
period ending on the Trading Day immediately preceding such date of determination is less than $125,000.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include (A) any shares of Common Stock issued by the Company
upon exercise of this Warrant or (B) PIK Shares), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or
(iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall
sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at a price per
share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances
collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at a price per share that is less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at
such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced
and only reduced in accordance with the following formula: [EP2 = EP1 * (A+B) / (A+C)], where:
EP2 = New Exercise
Price
EP1 = Exercise
Price in effect immediately prior to Dilutive Issuance
(A) = Number
of shares of Common Stock deemed to be outstanding immediately prior to the Dilutive Issuance (including all shares of outstanding
common stock, and all shares issuable hereunder)
(B) = Aggregate
consideration received by the Company with respect to the Dilutive Issuance divided by EP1
(C) = Number
of shares of Common Stock or common Stock Equivalents issued or subject to the Dilutive Issuance
Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments
shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder,
in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents
subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive
Issuance, the Holder is entitled to receive a reduction in the Exercise Price that will equal the New Exercise Price regardless
of whether the Holder accurately refers to the New Exercise Price in the Notice of Exercise. Notwithstanding any change to the
Exercise Price pursuant to this Section 3(b), there shall not be any change to the number of Warrant Shares by virtue of this Section
3(b). If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement,
the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise
price at which such securities may be converted or exercised. Notwithstanding the provisions in this Section, no adjustment shall
be made to the Exercise Price in the event the Company completes an offering whereby all Common Stock or all Common Stock Equivalents
are sold at or above $0.70 for a period of sixty (60) days from the Initial Exercise Date.
c) Subsequent
Rights Offerings. If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to
all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the VWAP then in effect, then the Exercise Price shall be multiplied by a fraction, of which the denominator
shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus
the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number
of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration
payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever
such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants.
d) Pro
Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security, then in each such case the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution
by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets
or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined
by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder
of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record
date mentioned above.
e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other
business combination) (each, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e)
on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting
the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall,
at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental
Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of
the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black
Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable
Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination
Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg
as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value
of any non-cash consideration, if any, being offered in such Fundamental Transaction, and (D) a remaining option time equal to
the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company
shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents
in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory
to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option
of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock,
such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein.
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts requiring such adjustment..
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer
of Warrant.
a) Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder
shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to
the Company assigning this Warrant full. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Original
Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.
d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 4.1 of the Purchase Agreement.
e) Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.
d) Authorized
Shares.
| i. | The Company covenants that, during the period the Warrant
is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). |
| ii. | Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction
thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant. |
| iii. | Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. |
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase Agreement.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
|
car charging group, inc. |
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By: |
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Name: |
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Title: |
NOTICE OF EXERCISE
| To: | car charging
group, inc. |
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2) Payment
shall take the form of (check applicable box):
¨
in lawful money of the United States; or
¨
if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to
the following DWAC Account Number:
(4)
Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under
the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: |
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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ASSIGNMENT
FORM
(To assign the
foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
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Address: |
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(Please Print) |
Dated: _______________ __, ______ |
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Holder’s Signature: ____________________ |
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Holder’s Address: ____________________ |
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Exhibit 10.1
EXECUTION COPY
SECURITIES
PURCHASE AGREEMENT
This Securities Purchase
Agreement (this “Agreement”) is dated as of December 23, 2014 between Car Charging Group, Inc., a Nevada corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506(b) promulgated thereunder (meaning, an offering of securities not involving
a general solicitation), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
“2013
Liquidated Damages” shall have the meaning ascribed to such term in Section 7.1.
“2013
Purchasers” shall have the meaning ascribed to such term in Section 7.1.
“2013
Registration Rights Agreements” shall have the meaning ascribed to such term in Section 7.1.
“2013
Transactions” shall have the meaning ascribed to such term in Section 7.1.
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
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“Certificate
of Designation” means the Certificate of Designation of the Series C Preferred Stock, par value $0.001 per share, in
the form attached hereto as Exhibit B.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Shares” includes the Shares of Common Stock issuable upon conversion of the Preferred Shares.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Counsel” means Szaferman Lakind Blumstein & Blader, PC, with offices located at 101 Grovers Mill Road, Second Floor,
Lawrenceville, New Jersey 08648.
“Covered
Executives” means the Company’s Chief Executive Officer and all members of the Board of Directors other than Andrew
Shapiro.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Effective
Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission,
(b) all of the Registrable Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement
for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale
restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of Registrable Securities is
not an Affiliate of the Company, all of the Registrable Securities may be sold pursuant to an exemption from registration under
Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders
a standing written unqualified opinion that resales may then be made by such holders of the Registrable Securities pursuant to
such exemption which opinion shall be in form and substance reasonably acceptable to such holders.
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“Escrow
Agent” means Signature Bank, 565 Fifth Avenue, 12th Floor, New York, New York 10017.
“Escrow
Account” means the account, at the Escrow Agent or another institution mutually agreed by the Purchasers and the Company,
to which the Purchasers shall deposit the Milestone Funds with the Escrow Agent to be applied to the transactions contemplated
as set forth in Article VI, hereunder.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange
Securities” shall have the meaning set forth in Section 7.2.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to consultants, employees, officers or directors
of the Company pursuant to any stock or option plan duly adopted for such purpose, by the Board of Directors, (b) securities upon
the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement and/or other securities exercisable,
exchangeable or issuable pursuant to contractual obligations outstanding on the date of this Agreement, provided that such securities
have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities.
“December
2013 Purchasers” shall have the meaning ascribed to such term in Section 7.1.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
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“First
Milestone Conditions” shall have the meaning ascribed to such term in Section 6.2.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Milestone(s)”
shall mean the First Milestone Conditions and Second Milestone Conditions, collectively.
“Milestone
Funds” shall mean the aggregate amount of the First Milestone Amount and the Second Milestone Amount.
“October
2013 Purchasers” shall have the meaning ascribed to such term in Section 7.1.
“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.10(a).
“Purchase
Price” equals $0.70, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations
and other similar transactions of the Common Stock that occur after the date of this Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.10(b).
“Preferred
Shares” means shares of Series C Preferred Stock, par value $0.001 per share, of Company provided for in the Certificate
of Designation, which form is attached hereto as Exhibit B, to be issued to Purchaser pursuant to this Agreement.
EXECUTION COPY
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).
“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.
“Registrable
Securities” shall have the meaning ascribed to it in the Registration Rights Agreement.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit A attached hereto.
“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Common Shares and the Warrant Shares.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Purchasers” means by approval of holders of sixty percent (60%) of the aggregate amount of Preferred Shares then outstanding.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Second
Milestone Conditions” shall have the meaning ascribed to such term in Section 6.4.
“Securities”
means the Preferred Shares, Common Shares, the Warrants, and the Warrant Shares.
EXECUTION COPY
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
A Agreement” shall have the meaning ascribed to such term in Section 4.13.
“Shares”
include the Preferred Shares, the Common Shares, and the Warrant Shares.
“Short
Sales” means all “short” sales as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Stated
Value” means $100 per share of Series C Preferred Stock, par value $0.001 per share.
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.
“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.10(a).
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Markets (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Certificate of Designation, the Warrants, the Registration Rights Agreement, the
Escrow Agreement and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Transfer
Agent” means Worldwide Stock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 433
Hackensack Avenue, Hackensack, New Jersey 07601 and a facsimile number of (201) 820-2010, and any successor transfer agent of the
Company.
EXECUTION COPY
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.21.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof in the form of Exhibit C attached hereto.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
(a) On the Closing
Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of
this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase
$6,000,000 of Preferred Shares and Warrants, with an aggregate Stated Value for each Purchaser
equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser.
(b) Each Purchaser
shall deliver to the Escrow Agent or the Company, as appropriate, via wire transfer or a certified check, immediately available
funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser,
and the Company shall deliver to each Purchaser its respective Preferred Shares and a Warrant, as determined pursuant to Section
2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at such location as the
parties shall mutually agree.
(c) The cash proceeds
from this transaction shall be placed into an Escrow Account or delivered directly to the Company upon the Closing, as set forth
on the signature page hereto. The proceeds shall be released to the Company from the Escrow Account in accordance to the Milestones
set forth in Article VI of this Agreement, unless waived or accelerated by the Required Purchasers, which waiver is in the
Required Purchasers’ sole discretion.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this
Agreement and the Escrow Agreement duly executed by the Company;
EXECUTION COPY
(ii) a Warrant
registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of the shares of Common
Stock that such Purchaser could convert its Preferred Shares into, with an exercise price equal to $1.00, subject to adjustment
therein (such Warrant certificate may be delivered within three Trading Days of the Closing Date);
(iii) a
certified copy of the Articles of Incorporation of the Company, as amended to date, dated within 10 days of the Closing Date;
(iv) a Certificate
of Good Standing of the Company, dated within 10 days of the Closing Date;
(v) a Certificate
of the Secretary of the Company, in customary form;
(vi) a Certificate
of the Chief Executive Officer (“CEO”) of the Company, in customary form;
(vii) a
letter on Company letterhead containing the wire instructions for the Company’s bank account to which the Subscription Amounts
should be delivered by the Escrow Agent;
(viii) the
Registration Rights Agreement duly executed by the Company;
(ix) certificates
of the Preferred Shares; and
(x) an agreement
with the Covered Executives providing for the compensation reduction and deferral described in this agreement, as necessary; and
(xi) an
agreement with the sole holder of Series A Preferred Stock providing for the suspension of voting and liquidation rights as described
in this Agreement which shall be filed as an amendment to the Series A Preferred Stock designation with the State of Nevada.
(b) On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company or the Escrow Agent, as applicable,
the following:
(i) this
Agreement and the Escrow Agreement duly executed by such Purchaser; and
(ii) the
Registration Rights Agreement duly executed by such Purchaser.
2.3 Closing Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
EXECUTION COPY
(i) the
accuracy in all respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as
of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being
met:
(i) the
accuracy in all respects when made and on the Closing Date of the representations and warranties of the Company contained herein
(unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) The
Company has obtained all Required Approvals;
(v) there
shall have been no Material Adverse Effect with respect to the Company since the date of its last quarterly report on Form 10-Q
filed with the Commission on August 22, 2014;
(vi) due
diligence review by the Purchasers shall have been completed with results satisfactory to the Purchasers and mutual agreement between
the Purchasers and the Company that satisfactory and appropriate cost cutting measures and sales incentives have been implemented
and are being enforced as well as a budget (including key performance indicators) to which the Company will be managed through
the 2015 calendar year (the “Budget”);
(vii) an agreement regarding
the milestones set forth in Article VI of this agreement and the Company shall have provided a Budget satisfactory to the
Purchasers;
(viii) the
Lock-Up Agreement(s) are duly executed and delivered by the Company in accordance with Section 4.12;
(ix) the
Series A Agreement is duly executed and delivered by the Company in accordance with Section 4.13;
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(x) the
Company shall have appointed a full time Chief Operating Officer (“COO”) and employed either a full time Chief
Financial Officer (“CFO”) or an interim CFO (with a commitment to hire a full-time permanent CFO within a specified
timeframe), all of which is satisfactory to the Company and the Purchasers; and
(xi) the
salaries of the Covered Executives will be reduced and deferred as set forth in Section 4.14 and evidence thereof shall
have been provided to Purchasers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
EXECUTION COPY
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission pursuant to the Registration
Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities
and the listing of the Common Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iv) the
filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).
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(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens other than restrictions on
transfer provided for in the Transaction Documents. The Warrant Shares and Common Shares, when issued in accordance with the terms
of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens other than restrictions
on transfer provided for in the Transaction Documents.
(g) Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company
has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock pursuant
to the Company’s incentive stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the Exchange Act. Except as otherwise set forth on
Schedule 3.1(g): (i) no Person has any right of first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents; (ii) except as a result of the purchase and sale of
the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents;
and (iii) the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities
to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for
the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders.
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(h) SEC
Reports; Financial Statements. Except as disclosed on Schedule 3.1(h), the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”).
As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or
omitted 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 under which they were made, not misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Except as disclosed in our SEC Reports, since the date of the latest
audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed
prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans, employment agreements or director’s agreements. The Company does
not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or
development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries
or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by
the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is made.
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(j) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign, including, without limitation,
FINRA or any predecessor regulator) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 3.1(j),
neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act
or the Securities Act.
(k) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company or its Subsidiaries, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no
executive officer of the Company or any Subsidiary is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract
or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer
does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(l) Compliance.
Except as set forth in Schedule 3.1(l), neither the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of
any judgment, decree, or order of any court, arbitrator or other governmental authority or (iii) is or has been in material violation
of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters.
(m) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(n) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.
(o) Intellectual
Property. The Company and the Subsidiaries own, or have legal rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective
businesses and which the failure to do so could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of,
the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement and which the failure to do so could have a Material Adverse Effect. Neither
the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon
the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of
any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(p) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.
(q) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $50,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
(r) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance 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 asset accountability, (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 the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company or its Subsidiaries.
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(s) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker,
financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.
(t) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.
(v) Registration
Rights. Other than each of the Purchasers and the 2013 Purchasers, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company or any Subsidiary.
(w) Listing
and Maintenance Requirements. The Company is required to file periodic reports pursuant to Section 15(d) of the Exchange Act,
and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.
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(x) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and
correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 3.2 hereof.
(z) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.
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(aa) Solvency.
Except as set forth on Schedule 3.1(aa), based on the consolidated financial condition of the Company as of the Closing Date, after
giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing
debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital
requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(aa) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(bb) Tax
Status. Except as set forth on Schedule 3.1(bb), the Company and its Subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any Subsidiary know of no basis for any such claim.
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(cc) No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(dd) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its
behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.
(ee) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules. To the knowledge and belief
of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2014.
(ff) No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
(gg) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(hh) Omitted.
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(ii) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.
(jj) Omitted.
(kk) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock
options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(ll) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(mm) U.S. Real Property
Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section
897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
(nn) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping 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 or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
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(oo) No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act ("Regulation D Securities"), none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of
20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each,
an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject to any of the
"Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification
Event"), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided
thereunder.
(pp) Other
Covered Persons. The Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid
(directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Regulation D Securities.
(qq) Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
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(b) Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.
(f) Opportunity
to Obtain Information. Such Purchaser acknowledges that representatives of the Company have made available to such Purchaser
the opportunity to review the books and records of the Company and its Subsidiaries and to ask questions of and receive answers
from such representatives concerning the business and affairs of the Company and its Subsidiaries.
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(g) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.
The Company acknowledges
and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to
rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained
in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this
Agreement and the Registration Rights Agreement.
(b) The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
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[NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged
or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement,
the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights
Agreement) thereunder.
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(c) Certificates
evidencing the Common Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b)
hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective
under the Securities Act, (ii) following any sale of such Common Shares or Warrant Shares pursuant to Rule 144, (iii) if such Securities
are eligible to be sold, assigned or transferred under Rule 144 (provided that a Purchaser provides the Company with reasonable
assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion
of Purchaser’s counsel), or (iv) if such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue
a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal
of the legend hereunder. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, or if such Common Shares or Warrant Shares may be sold under Rule 144 and the Company
is then in compliance with the current public information required under Rule 144, or if the Common Shares or Warrant Shares may
be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required
under Rule 144 as to such Common Shares or Warrant Shares or if such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Common
Shares and Warrant Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such
time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery
by a Purchaser to the Company or the Transfer Agent of a certificate representing Common Shares or Warrant Shares, as the case
may be, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause
to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The
Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer
set forth in this Section 4. Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System
as directed by such Purchaser.
(d) Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2 Furnishing
of Information; Public Information.
(a) If
the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause
the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 120th calendar day following the date
hereof. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants
to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
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(b) At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s other
available remedies, the Company shall pay to a Purchaser, in cash or in PIK Shares, as partial liquidated damages and not as a
penalty, whether to pay in cash or in PIK Shares is at the Company’s sole discretion, by reason of any such delay in or reduction
of its ability to sell the Securities, an amount in cash equal to one percent (1.0%) of the aggregate Subscription Amount of such
Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods
totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required for the Purchasers to transfer the Common Shares and Warrant Shares
pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to
herein as “Public Information Failure Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments
are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments
is cured. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure,
and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief.
4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly
disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or
any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make
any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without
the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection
with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction
Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
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4.5 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.7 Use of Proceeds.
The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes, subject to the covenants
in Section 6.4.
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4.8 Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Parties, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Parties may have with any such stockholder or any violations by such
Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not
be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.
4.9 Listing of
Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the
Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all
of the Common Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Common Shares and
Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will then include in such application all of the Common Shares and Warrant Shares, and will take such
other action as is necessary to cause all of the Common Shares and Warrant Shares to be listed or quoted on such other Trading
Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing or quotation
and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Trading Market.
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4.10 Right of Participation.
(a) In
addition, for a period commencing on the Closing Date and terminating on the twelve (12) month anniversary of the Closing Date,
the Company agrees not to participate in any offer or sale of equity or debt securities (a “Subsequent Financing”)
without offering to the Purchasers the opportunity to purchase up to a minimum of 35% of the securities offered in such Subsequent
Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent
Financing.
(b) At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser.
The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount
of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet or similar document relating thereto as an attachment.
(c) Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after such Purchaser’s receipt of the Pre-Notice, that such Purchaser
is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing and
warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to participate.
(d) If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, notifications
by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate)
cover, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion
of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(e) If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, the
Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities
purchased on the Closing Date by a Purchaser participating under this Section 4.10 and (y) the sum of the aggregate Subscription
Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.10 plus the aggregate
subscription amounts of investors that acquire Preferred Shares for Exchange Securities that are participating in such Subsequent
Financing pursuant to participation rights granted to such investors under such agreements that are substantially similar to this
Section 4.10.
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(f) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have
the right of participation set forth above in this Section 4.10, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30)
Trading Days after the date of the initial Subsequent Financing Notice.
(g) The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination
of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of
such Purchaser.
(h) Notwithstanding
anything to the contrary in this Section 4.10 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to
the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser,
such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.
(i)
Notwithstanding the foregoing, this Section 4.10 shall not apply in respect of an Exempt Issuance.
4.11 Equal Treatment
of Purchasers. Except pursuant to Article VI herein or otherwise agreed to in writing by the Company and the Purchasers, no
consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties
to this Agreement but excluding any reimbursement of actual out-of-pocket expenses. For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended
for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or
as a group with respect to the purchase, disposition or voting of Securities or otherwise.
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4.12 Lock-Up.
The Company shall cause its executive officers and directors or other related parties under control of the Company (the “Lock-Up
Agreement”), to refrain from selling Common Stock until the later of either: (i) 180 days following the Closing Date;
or (ii) 90 days following a registration statement covering all the common shares underlying the Securities offered having been
declared effective and remained effective for such 90-day period.
4.13 Supermajority
Voting Rights and Liquidation. The Supermajority voting rights and Liquidation Preferences of the Series A Preferred Shares
shall be suspended until the Preferred Shares are redeemed or converted (the “Series A Agreement”). During such
time of suspension, the Series A Preferred will be treated strictly on an as-converted basis, meaning the voting rights of the
Company of each Series A Preferred share will equate to 2.5 shares of Common Stock (the “As-Converted Basis”).
Upon redemption or conversion of all of the Preferred Shares, the Series A Preferred voting rights and liquidation preferences
shall no longer be suspended, but the terms of their reinstatement (and any consideration thereupon) shall be determined by the
Company’s Board of Directors.
4.14 Salaries.
The salaries and fees of the Covered Executives accruing from and after the Closing Date will be reduced and deferred until such
time as all the funds have been released from the Escrow Account. Until such time: (i) the salary of the CEO shall be reduced to
$20,000 per month, paid in cash, and the remaining amount deferred and paid in Preferred Shares or as otherwise determined by the
Board of Directors; and (ii) salaries of the Board of Directors shall either be deferred and accrue or be paid in Common Stock.
The value of the current accrued deferred salaries owed to the Covered Executives as of the Closing Date shall be paid to the respective
parties in Preferred Shares (at the same Purchase Price applicable to this Agreement) on the Closing Date. To the extent that the
salaries of the CEO and the Board of Directors are no longer deferred, such salaries may only be paid out to the extent the payment
would not put the Company in a negative operating cash flow position for any such pay period.
4.15 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company
pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding
the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing
other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
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4.16 Form D;
Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D
and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.
4.17 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Common Shares and Warrant Shares pursuant
to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other stockholders of the Company.
4.18 No
Short Sales. For so long as any Purchaser holds Securities, neither Purchaser nor any of its Affiliates nor any entity
managed or controlled by each such Purchaser will, directly or indirectly, or cause or assist any Person to (x) enter into or execute
any Short Sale or (y) trade in derivative securities to the same effect. For instance, no Purchaser shall engage in any Short Sale
which would prevent the Company from exercising its rights under Section 2(f) of the Warrant. Nothing
contained herein shall prevent the exercise of a warrant or securities lending in the ordinary course of business by a Purchaser.
4.19 Subsequent
Debt and Equity Sales.
(a) From the date
hereof until such time as no shares of Preferred Shares are outstanding, the Company shall not incur or enter into any agreement
to incur any additional debt, other than working capital financing, debt issued to replace existing debt or an inventory financing
transaction or transactions that have been previously approved by the Required Purchasers, without the prior written consent of
the Required Purchasers which shall not be unreasonably withheld.
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(b) From the date
hereof until such time as no shares of Preferred Stock are outstanding, the Company shall not issue or enter into any agreement
to issue, or announce the issuance or proposed issuance of any debt or equity securities that are senior, or pari passu
with, in right to the Preferred Shares without the prior written consent of the Required Purchasers.
4.20 Board
Nomination. The Board shall appoint one individual nominated by a majority in interest of the holders of Preferred Shares,
such nominee to be reasonably satisfactory to the Board, to serve as a member of the Board until the next annual meeting of stockholders
of the Company. The Company shall enter a customary indemnification agreement in favor of such director and shall maintain at all
times directors liability insurance in form and amount reasonably satisfactory to such director.
4.21 Prohibition
on Variable Rate Transactions. From the date hereof until such time as no Purchaser
holds any of the Warrants, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance
by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving
a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right
to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any
agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
ARTICLE V.
COVENANTS OF THE COMPANY
5.1 Related Party
Transactions. From the date hereof until such time as no shares of Preferred Stock are outstanding,
the Company shall not enter into any transactions of any kind with any officers, affiliates or related parties of the Company (except
as contemplated by Section 4.20).
5.2 Board Membership.
So long as there are Preferred Shares outstanding, the Company will appoint to the Board one representative that is nominated by
a majority of the holders of the Preferred Shares.
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5.3 Milestone
Covenants. So long as there are Preferred Shares outstanding: (i) the Company will take the necessary legal and further actions
to ensure that the condition in Section 2.3(b)(ix) above is satisfied; (ii) the Company will use its best efforts to meet the Milestones;
and (iii) the salaries and fees of the Board of Directors will (x) be deferred, unless paid in kind, until all the funds have been
released from the Escrow Account, (y) will only be paid if doing so would not put the Company in a negative operating cash flow
position for any such pay period, and (z) be determined by the compensation committee of the Board of Directors to be fair and
equitable.
5.4 Financial
Information. Until the earlier of June 30, 2015 or such time as the all of Milestones set forth in Article VI have been
achieved, the Company shall provide the Purchasers with monthly financial information and key performance indicators showing that
the expenses and key performance indicators of the Company are in line with or better than the Budget. Such monthly financial information
shall be provided to the Purchasers no later than 20 business days following the close of each month after having been certified
by the CEO and CFO of the Company. If in the Required Purchasers’ opinion the relevant financial statements are in conformity
with the Budget, the financial statements will be approved by the Purchasers, whose approval shall not be unreasonably withheld,
in order for the Milestones to be achieved by the Company and appropriate Escrowed funds to be released to the Company.
5.5 Reservation
of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance,
no less than 120% of the sum of the number of shares of Common Stock issuable (i) upon conversion of the Preferred Shares issued
at the Closing, (ii) upon conversion of the PIK Shares, and (iii) upon exercise of the Warrants issued at the Closing (without
taking into account any limitations on the conversion of the Preferred Shares or Warrants).
5.6 Restriction
on Redemption and Cash Dividends. So long as any Preferred Shares are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written consent of the
Required Purchasers.
5.7 Corporate
Existence. So long as Preferred Shares are outstanding, the Company shall not be party to any Fundamental Transaction (as defined
in the Certificate of Designation and Warrants, respectively) unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Certificate of Designation and the Warrants.
5.8 Budget.
The Company shall not modify the Budget in any material respect without the consent of the Required Purchasers (it being understood
that the Budget as it exists at Closing, with any changes approved by the Required Purchasers) will be used to assess the Company’s
compliance with its covenants relating to the Budget as set forth in this Agreement.
Notwithstanding the above,
any covenant in this Article V may be waived or otherwise amended by the Required Purchasers.
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ARTICLE VI.
DISBURSEMENT OF PURCHASE PRICE
6.1 Escrow Agreement.
On the Closing Date, the Escrow Agreement shall have been executed by the parties thereto and the Escrow Funds (as defined in the
Escrow Agreement) shall have been deposited into the escrow account pursuant to the terms of the Escrow Agreement. The distribution
of the Escrow Funds shall be based upon the performance milestones (the “Milestones”) discussed below and contained
in the Escrow Agreement.
6.2 Closing Disbursement.
Upon the confirmation by the signatories hereto that all the closing conditions have been met and the Closing has occurred, the
Purchasers shall be instructed to pay an aggregate of Two Million Dollars ($2,000,000) directly to the Company each representing
one-third of their respective Subscription Amount.
6.3 First Escrow
Disbursement. Subject to the terms and conditions of this Agreement, there shall be a disbursement of Escrow Funds from the
Escrow Account in the amount of Two Million Dollars ($2,000,000) (the “First Milestone Amount”) if the following
milestones (the “First Milestone Conditions”) are met or achieved on or before on or before March 31, 2015:
(a) Since December
1, 2014, the Company: (i) has obtained new account conversions representing 700 or more revenue generating public charging stations,
and (ii) has transitioned 100 public charging stations that were previously not-working units into working units;
(b) Beginning on December
1, 2014, the Company has obtained sales of at least 200 public charging stations with an average selling price of at least $1,500
per station, representing gross proceeds of not less than $300,000;
(c) the Company has
complied with the covenant set forth in Section 5.4 from the Closing Date through the achievement of this milestone; and
(d) the Company continues
to employ an interim Chief Financial Officer or has hired a permanent Chief Financial Officer.
6.4 Second Escrow Disbursement.
(a) Subject to the
terms and conditions of this Agreement, there shall be a disbursement of Escrow Funds from the Escrow Account in the amount of
Two Million Dollars ($2,000,000) (the “Second Milestone Amount”) if the following milestones (the “Second
Milestone Conditions”) are met or achieved on or before June 30, 2015:
(i) for the three
months ended March 31, 2015, the Company has: (i) generated revenue of greater than $2,250,000; (ii) earned gross profit of greater
than $1,000,000; and (iii) operating expenses of no more than $2,500,000, as evidenced in the Quarterly Report on Form 10-Q filed
with the SEC;
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(ii) the Company
has complied with the covenant set forth in Section 5.4 from the Closing Date through the achievement of this milestone;
(iii) the Company
has filed all quarterly and annual reports with the SEC;
(iv) the Company
has used its best efforts to satisfy the conditions necessary for an uplisting on either NASDAQ or the NYSE;
(v) the Company
has filed the Registration Statement with the SEC; and
(vi) the Company
has hired a permanent Chief Financial Officer.
(b) In the event that
the Company did not satisfy the First Milestone Conditions prior to March 31, 2015, but has subsequently satisfied the First Milestone
Conditions at the time that the Second Milestone Conditions are satisfied, the Company will be entitled to receive both the First
Milestone Amount and the Second Milestone Amount at the time the Second Milestone Conditions are satisfied.
(c) The Company agrees
that no less than eighty percent (80%) of the Second Milestone Amount shall be used for the sole purpose of funding the Company’s
build out and repair of its charging network as reflected in the Budget.
6.5 Milestones
Not Met. In the event that either the First Milestone Conditions or the Second Milestone Conditions are not met on or before
July 31, 2015, the amounts remaining in the Escrow Account shall be returned to the Purchasers, pro-rata based upon the relative
cash contributions, if any, of the Purchasers to the Escrow Account.
Notwithstanding the
above, the Milestones contained in this Article VI may be waived by mutual consent of the Required Purchasers and the Company.
ARTICLE VII.
CONCERNING THE 2013 TRANSACTIONS AND THE REGISTRATION RIGHTS PENALTIES
7.1 Background.
On October 11, 2013, the Company conducted a financing for offering of shares of Common Stock and warrants with certain purchasers
(the “October 2013 Purchasers”), and on December 9, 2013, the Company conducted a second financing for the offering
of shares of Common Stock and warrants with certain purchasers (the “December 2013 Purchasers, and, together with
the October 2013 Purchasers, the “2013 Purchasers”) (collectively, the “2013 Transactions”),
including registration rights agreements to register all shares of Common Stock and shares of Common Stock underlying the warrants
issued in the 2013 Transactions (the “2013 Registration Rights Agreements”). The 2013 Registration Rights Agreements
included a penalty for failure to register such shares (the “2013 Liquidated Damages”). The signatories hereunder
and the Company hereby agree in principal that the Company shall issue to each 2013 Purchaser executing this Agreement shares of
Preferred Stock, valued at $100 of Stated Value per share, equal to 120% of the cash amount of the 2013 Liquidated Damages owed
to each such 2013 Purchaser executing this Agreement, in the amount disclosed on the Schedule 7.1, on the Closing Date.
Such exchange of 2013 Liquidated Damages for shares of Preferred Shares shall be completed within a reasonable time following the
Closing.
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7.2 Exchange
of Common Stock and Warrants for Preferred Shares. It is contemplated that some 2013 Purchasers executing this Agreement may
wish to exchange the securities purchased in the 2013 Transactions with the securities offered hereby (the “Exchange Securities”).
Should such exchange and all the terms of such exchange be approved by such 2013 Purchaser and the Company, the Company and the
Purchaser shall use their best efforts to make this happen.
ARTICLE VIII.
MISCELLANEOUS
8.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before December 19, 2014; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).
8.2 Fees and
Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers. The Company shall reimburse the Purchasers up to $25,000
in Preferred Shares for all actual and reasonable legal fees, consulting expenses, and general expenses related to its due diligence
and the negotiation of the Transaction Documents.
8.3 Entire Agreement.
The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
8.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
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8.5 Amendments;
Waivers. Except with respect to Article VI, no provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the Company and the Required Purchasers or, in the case
of a waiver, by the party against whom enforcement of any such waived provision is sought. Article VI may be waived, modified,
supplemented or amended by the written consent of both the Company and Wolverine. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any
party to exercise any right hereunder in any manner impair the exercise of any such right.
8.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
8.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
8.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.8 and this Section 5.8.
8.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence
an action or proceeding to enforce any provisions of the Transaction Documents, then in addition to the obligations of the Company
under Section 4.8, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action
or proceeding.
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8.10 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
8.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
8.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
8.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid
to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
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8.14 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
8.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
8.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
8.17 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereof or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with
the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do
so by any of the Purchasers.
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8.18 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
8.19 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
8.20 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
8.21 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the
parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.
CAR CHARGING GROUP, INC. |
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Address for Notice: |
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By: |
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Fax: |
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Name: |
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Title: |
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With a copy to (which shall not constitute notice): |
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO CCGI SECURITIES
PURCHASE AGREEMENT]
IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above. As to Article VI, unless the undersigned is Wolverine, the undersigned is not a party to such
Article, but only acknowledges its existence.
Signature of Authorized Signatory of Purchaser: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Email Address of Authorized Signatory: |
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Facsimile Number of Authorized Signatory: |
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Address for Notice to Purchaser: |
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Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Subscription Amount: $_________________
Amount to be paid to Company, directly, at Closing:
$____________
Amount to be paid to Escrow Account: $______________
Preferred Shares: _________________
Warrant Shares: __________________
EIN Number: _______________________
[SIGNATURE PAGES CONTINUE]
Exhibit 10.2
EXECUTION COPY
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of December 23, 2014, between
Car Charging Group, Inc., a Nevada corporation (the “Company”), and each of the several purchasers signatory
hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser
(the “Purchase Agreement”).
The
Company and each Purchaser hereby agrees as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. In addition to the terms defined elsewhere in this Agreement or the Purchase Agreement, for all
purposes of this Agreement, the following terms have the meanings set forth in this Section 1:
“Advice”
shall have the meaning set forth in Section 6(d).
“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 180th
calendar day following the date hereof (or, in the event of a “full review” by the Commission, the 210th
calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the 180th calendar day following the date on which an additional Registration Statement
is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 210th calendar
day following the date such additional Registration Statement is required to be filed hereunder); provided, however,
that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be
reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall
be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required
above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall
be the next succeeding Trading Day.
“Filing
Date” means, with respect to the Initial Registration Statement required hereunder, the 120th calendar day
following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration
Statement related to the Registrable Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) all Common Shares, (b) all Warrant Shares then issued and issuable
upon exercise of the Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise limitations
therein), and (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease
to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration
Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable
Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed
of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously
sold in accordance with Rule 144, or (c) such Registrable Securities may be sold without volume or manner of sale restrictions
pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement
pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer
Agent and the affected Holders and specifically addressing the Company’s former status as a “shell” company
for purposes of Rule 144(i) (assuming that such securities and any securities issuable upon exercise, conversion or exchange of
which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the
Company, and all Warrants are exercised by “cashless exercise” as provided in Section 2(c) of each of the Warrants),
as reasonably determined by the Company, upon the advice of counsel to the Company.
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional
registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and
supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.
2.
Registration Statement.
(a) On
or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities that are not then registered on an effective Registration Statement on Form S-1, Form S-3,
or other appropriate form which the Company is eligible to use under SEC Guidance in accordance herewith, and shall contain (unless
otherwise directed by at least 60% in interest of the Holders) substantially the “Plan of Distribution” attached
hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration
Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall
use its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold
without volume or manner of sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance
with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written
opinion letter to such effect and specifically addressing the Company’s former status as a “shell” company for
purposes of Rule 144(i), addressed and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness
Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern
Time on a Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration
Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the
date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day
after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.
Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus
as foresaid shall be deemed an Event under Section 2(d).
(b)
Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on
a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of
Registrable Securities permitted to be registered by the Commission, on Form S-1, Form S-3 or such other form available to register
for resale the Registrable Securities as a secondary offering,; with respect to filing on Form S-1, Form S-3 or other appropriate
form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however,
that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for
the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance
and Disclosure Interpretation 612.09.
(c) Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission
or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by
a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows:
a. First,
the Company shall reduce or eliminate any securities to be included by any Person other than a Holder; and
b. Second,
the Company shall reduce Registrable Securities represented by Warrant Shares (applied, in the case that some Warrant Shares may
be registered, to the Holders on a pro rata basis based on the total number of unregistered Common Shares held by such Holders).
c. Third,
the Company shall reduce Registrable Securities represented by Common Shares (applied, in the case that some Common Shares may
be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders).
d. Fourth,
the Company shall reduce Registrable Securities represented by any securities issued or then issuable upon any stock split, dividend
or other distribution, recapitalization or similar event (applied, in the case that some securities may be registered, to the
Holders on a pro rata basis based on the total number of unregistered securities held by such Holders).
In
the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along
with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement
in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by
Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements
on Form S-1, Form S-3 or such other form available to register for resale those Registrable Securities that were not registered
for resale on the Initial Registration Statement, as amended.
(d) If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein,
the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request
for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities
Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission
that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to
the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing
to comments made by the Commission in respect of such Registration Statement within fifteen (15) calendar days after the receipt
of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective
by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar
days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as
an “Event”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose
of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which
such fifteen (15) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15)
calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any
other rights the Purchasers may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary
of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured,
the Company shall pay to each Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to the product
of 1.0% multiplied by the aggregate Subscription Amount paid by such Purchaser pursuant to the Purchase Agreement The parties
agree that the maximum aggregate liquidated damages payable to a Holder under this Agreement shall be 10% of the aggregate Subscription
Amount paid by such Holder pursuant to the Purchase Agreement. For the avoidance of any doubt, the Purchasers shall
only be entitled to liquidated damages on the Purchase Price paid as part of the Purchase Agreement and shall not be entitled
to additional liquidated damages on shares of Preferred Stock owned by virtue of the 2013 Transactions or the Exchange Securities.
If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable,
the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro
rata basis for any portion of a month prior to the cure of an Event.
The
partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior
to the cure of an Event. The Company shall have the option to pay a portion or all liquidated damages related to an Event through
the issuance of additional Preferred Shares (the “Preferred Share Payment”). If the Company fails to pay any
partial liquidated damages pursuant to this Section in full within 60 days after the date payable, the Company shall pay all liquidated
damages related to an Event only through the Preferred Share Payment. If the Company chooses the Preferred Share Payment, the
partial liquidated damages shall be equal to 125% of such liquidated damage amount.
3.
Registration Procedures.
In
connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not
less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject
to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct
a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated
to provide the Holders advance copies of any universal shelf registration statement registering securities in addition to those
required hereunder, or any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus
or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object
in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the
Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished
copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as Annex B (a “Selling Stockholder Questionnaire”)
on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading
Day following the date on which such Holder receives draft materials in accordance with this Section.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and,
as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments
received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably
possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement
(provided that, the Company shall excise any information contained therein which would constitute material non-public information
regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of
the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration
Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition
by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common
Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case
prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than
the number of such Registrable Securities.
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission
or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by
the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose,
(v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be,
it 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, in light of the circumstances under which they were made, not misleading, and (vi) of
the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be
material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability
of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information
which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e) Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject
to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h)
The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company
shall pay the filing fee required by such filing within two (2) Business Days of request therefor.
(i) Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall
not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company
to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in
any such jurisdiction.
(j) If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Holder may request.
(k) Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will 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 light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.
The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The
Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement
and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period
not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(l) Comply
with all applicable rules and regulations of the Commission.
(m) The
Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-1, Form S-3 (or any successor
form thereto) for the registration of the resale of Registrable Securities.
(n) The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive
control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration
of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s
request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise
occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
4.
Registration Expenses. All fees and expenses incident to the performance of or compliance
with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant
to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i)
all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be
made with any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities
or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel
for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not previously
paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made by any broker
through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred
in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees
and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the Holders.
5.
Indemnification.
(a) Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal
as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto,
in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements
or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly
for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration
Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A
hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by
such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice
the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders
in accordance with Section 6(h).
(b) Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or
(y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that
such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder
has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case
of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only to the extent, related to
the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice
the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling
Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal
or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or
(3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying Party (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 thereof and the reasonable fees and expenses of no more
than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.
No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution.
If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by
pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph.
Notwithstanding
the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate,
any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged omission.
The
indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6.
Miscellaneous.
(a) Remedies.
In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company
and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) No
Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Except as set forth on Schedule 6(b) attached
hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any
other registration statements until all Registrable Securities are registered pursuant to one or more Registration Statements
that are declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from: (i) filing
amendments to registration statements filed prior to the date of this Agreement; and (ii) filing a shelf registration statement
on Form S-3 for a primary offering by the Company, provided that the Company makes no offering of securities pursuant to such
shelf registration statement prior to the effective date of the Registration Statement required hereunder that includes all the
Registrable Securities.
(c) Compliance.
Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable
to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement.
(d) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees
and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section 2(d).
(e) Piggy-Back
Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection
with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written
notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall
so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities
such Holder requests to be registered; provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions
or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject
of a then effective Registration Statement.
(f) Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of 60% or more of the then outstanding Registrable Securities (for purposes of clarification,
this includes any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does
not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence,
then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each
Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders
may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the
provisions of the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties
to this Agreement.
(g) Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.
(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 8.7 of the Purchase Agreement.
(i) No
Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions
hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its Subsidiaries has previously entered into
any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied
in full.
(j) Execution
and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such facsimile or “.pdf” signature page were an original thereof.
(k) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.
(l) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(m) Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings.
The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
(o) Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations
of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association,
a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert
or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters,
and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such
claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as
an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company
contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.
(p) Holders
not Underwriters. Neither the Company nor any Subsidiary (as defined in the Securities Purchase Agreement) nor affiliate thereof
shall identify any Holder as an underwriter in any public disclosure or filing with the Commission or any Trading Market (as defined
in the Securities Purchase Agreement) without the prior written consent of such Holder. If the Company is required by law
to identify an Investor as an underwriter in any public disclosure or filing with the Commission or any Trading Market, it must
notify such Investor in writing in advance (the "Identification Notice") and such Investor shall have the option,
in its sole discretion, to consent to such identification as an underwriter or to elect to have the applicable Registrable Securities
to be removed from such Registration Statement and excluded from the definition of “Registrable Securities” for all
purposes hereunder. If the Investor does not make such election within five (5) Business Days of such Investor receipt of the
Identification Notice, such Investor shall be deemed to have elected to have its Registrable Securities excluded from the definition
of “Registrable Securities” for all purposes hereunder.
********************
(Signature
Pages Follow)
EXECUTION COPY
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
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car charging
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[SIGNATURE PAGE
OF HOLDERS FOLLOWS]
EXECUTION COPY
[SIGNATURE
PAGE OF HOLDERS TO CAR CHARGING GROUP, INC.
REGISTRATION
RIGHTS AGREEMENT]
Name of Holder: __________________________
Signature of Authorized Signatory
of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
EXECUTION COPY
Annex A
Plan of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market
or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales
may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| · | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block
trades in which the broker-dealer will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an
exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately
negotiated transactions; |
| · | settlement
of short sales; |
| · | in
transactions through broker-dealers that agree with the Selling Stockholders to sell
a specified number of such securities at a stipulated price per security; |
| · | through
the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise; |
| · | a
combination of any such methods of sale; or |
| · | any
other method permitted pursuant to applicable law. |
The
Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities,
from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a
principal transaction a markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions
with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of
hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close
out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one
or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered
by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities.
The
Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The
Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject
to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than
under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale securities by the Selling Stockholders.
We
agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling
Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without
the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act
or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under
the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed
brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered
hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not
simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of
this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus
to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
EXECUTION COPY
Annex
B
car
charging group, inc.
Selling
Stockholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Registrable Securities”) of Car Charging Group, Inc., a
Nevada corporation (the “Company”), understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”)
for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”),
of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include
the Registrable Securities owned by it in the Registration Statement.
The undersigned
hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name.
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Full Legal Name of Selling Stockholder |
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(b) |
Full Legal Name of Registered Holder (if not the
same as (a) above) through which Registrable Securities are held: |
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(c) |
Full Legal Name of Natural Control Person (which
means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered
by this Questionnaire): |
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2.
Address for Notices to Selling Stockholder:
Telephone: |
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Contact Person: |
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3. Broker-Dealer Status:
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Are you a broker-dealer? |
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Yes ¨ No ¨ |
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(b) |
If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company? |
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Yes ¨ No ¨ |
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Note: |
If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
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(c) |
Are you an affiliate of a broker-dealer? |
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Yes ¨ No ¨ |
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(d) |
If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
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Yes ¨ No ¨ |
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If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
4.
Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except
as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company
other than the securities issuable pursuant to the Purchase Agreement.
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Type and Amount of other securities beneficially owned by the Selling Stockholder: |
5. Relationships
with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the past three years.
State
any exceptions here:
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through
5 and the inclusion of such information in the Registration Statement and the related prospectus and
any amendments or supplements thereto. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus
and any amendments or supplements thereto.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.
Date: |
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PLEASE FAX
A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL,
TO:
Exhibit 10.3
ESCROW DEPOSIT AGREEMENT
This
ESCROW DEPOSIT AGREEMENT dated this 22nd day of December 2014, by and between CAR CHARGING GROUP, INC. (the “Company”),
a Nevada corporation, having an address at 1691, Michigan Ave., Ste. 601, Miami Beach, Florida 33139, HORTON CAPITAL PARTNERS FUND,
L.P., a Delaware limited partnership and EVENTIDE GILEAD FUND, a is a series of the Mutual Fund Series trust (together, the “Purchasers”
and, together with the Company, the “Parties”), and SIGNATURE BANK (the "Escrow Agent"), a
New York State chartered bank and having an office at 565 Fifth Avenue, 12th Floor, New York, New York 10017. Capitalized
terms used but not defined herein shall have the meanings set forth in the Purchase Agreement (as defined below).
WITNESSETH:
WHEREAS,
the Company intends to conduct an offering pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506(b) promulgated thereunder (meaning, an offering of securities not involving a general solicitation),
whereby the Company desires to issue and sell shares of Preferred Stock and Warrants to certain purchasers (each a “Purchaser”
and collectively, the “Purchasers”) (the “Financing Transaction”);
WHEREAS,
in connection with the Financing Transaction, the Company entered into a Securities Purchase Agreement, dated as of the date hereof
(the “Purchase Agreement”), by and among the Company and the Purchasers, and certain other agreements, documents,
instruments and certificates necessary to carry out the purposes thereof (collectively, the “Transaction Documents”);
WHEREAS, the Parties
have agreed that a certain sum of money shall be held in escrow upon certain terms and conditions;
WHEREAS, the Parties
appoint Escrow Agent as escrow agent of such escrow subject to the terms and conditions set forth in this Escrow Deposit Agreement
(“Escrow Agreement”); and
WHEREAS, Escrow Agent
accepts such appointment as escrow agent subject to the terms and conditions set forth in this Escrow Agreement.
NOW, THEREFORE, IT
IS AGREED as follows:
1. Delivery of Escrow
Funds. Seller and Buyer will deliver, or shall be caused to be delivered, to the Escrow Agent checks or wire transfer made
payable to “Signature Bank as Escrow Agent” to be held in an account at Signature bank entitled “Signature Bank
as Escrow Agent for Purchasers of Car Charging Inc. Series C Preferred Stock” (the “Escrow Account”)
having ABA No. 026013576, Account No. ________________. The Escrow Agent shall have no duty or responsibility to enforce the collection
or demand payment of these checks or any other funds delivered to Escrow Agent for deposit into the Escrow Account. If, for any
reason, these checks or any other funds deposited into the Escrow Account shall be returned unpaid to the Escrow Agent, the sole
duty of the Escrow Agent shall be to advise the Company and the Purchasers promptly thereof and return any such check in the manner
directed in writing by the Company and the Purchasers. The collected funds deposited into the Escrow Account are referred to as
the “Escrow Funds”. Unless and until the Escrow Funds are released to the Company as provided herein, the Escrow Funds
shall not constitute property of the Company.
2. Acceptance
by Escrow Agent. The Escrow Agent hereby accepts and agrees to perform its obligations hereunder, provided that:
(a) The names and true signatures
of each individual authorized to act singly on behalf of the Company and the Purchasers are stated in Schedule A. The Escrow Agent
may act in reliance upon any signature believed by it to be genuine, and may assume that any person who has been designated in
Schedule A to give any written instructions, notice or receipt, or make any statements in connection with the provisions hereof
has been duly authorized to do so. Escrow Agent shall have no duty to make inquiry as to the genuineness, accuracy or validity
of any statements or instructions or any signatures on statements or instructions. The names and true signatures of each individual
authorized to act singly on behalf of the Company and the Purchasers are stated in Schedule A, which is attached hereto and made
a part hereof.
(b) The Escrow Agent may act
relative hereto in reliance upon advice of counsel in reference to any matter connected herewith. The Escrow Agent shall not be
liable for any mistake of fact or error of judgment, or for any acts or omissions of any kind, unless caused by its willful misconduct
or gross negligence.
(c) In the event of any disagreement
between or among the Company and the Purchasers, or between any of them and any other person, resulting in adverse claims or demands
being made to Escrow Agent in connection with the Escrow Account, or in the event that the Escrow Agent, in good faith, is in doubt
as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on
it, or refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and in any such
event, the Escrow Agent shall not become liable in any way or to any person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue so to refrain from acting until (i) the rights of all parties shall have been fully and finally adjudicated
by a court of competent jurisdiction, or (ii) all differences shall have been adjusted and all doubt resolved by agreement among
all of the interested persons, and the Escrow Agent shall have been notified thereof in writing signed by all such persons. The
Escrow Agent shall have the option, after 30 days’ notice to Seller and Buyer of its intention to do so, to file an action
in interpleader requiring the parties to answer and litigate any claims and rights among themselves. The rights of the Escrow Agent
under this paragraph are cumulative of all other rights which it may have by law or otherwise.
(d) In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any
action other than to keep safely the Escrow Funds until it shall be directed otherwise by a court of competent jurisdiction, or
(ii) deliver the Escrow Funds to a court of competent jurisdiction.
(e) The Escrow Agent shall have
no duty, responsibility or obligation to interpret or enforce the terms of any agreement other than Escrow Agent's obligations
hereunder, and the Escrow Agent shall not be required to make a request that any monies be delivered to the Escrow Account, it
being agreed that the sole duties and responsibilities of the Escrow Agent to the extent not prohibited by applicable law shall
be (i) to accept checks or other instruments for the payment of money delivered to the Escrow Agent for the Escrow account and
deposit said checks or instruments into the Escrow Account, and (ii) disburse or refrain from disbursing the Escrow Funds as stated
herein, provided that the checks or instruments received by the Escrow Agent have been collected and are available for withdrawal.
3. Investment.
The Escrow Funds shall be held and invested in a non-interest bearing demand deposit at Signature Bank, unless otherwise instructed
in writing by both the Company and the Purchaser’s Representative and approved by Escrow Agent.
4. Escrow
Account Statements and Information. The Escrow Agent agrees to send to the Company and/or the Purchasers a copy of the
Escrow Account periodic statement, upon request in accordance with the Escrow Agent’s regular practices for providing account
statements to its non-escrow clients and to also provide the Company and/or the Purchasers, or their designee, upon request other
deposit account information, including Account balances, by telephone or by computer communication, to the extent practicable.
The Company and/or the Purchasers agree to complete and sign all forms or agreements required by the Escrow Agent for that purpose.
The Company and/or the Purchasers each consent to the Escrow Agent’s release of such Account information to any of the individuals
designated by the Company or the Purchasers, which designation has been signed in accordance with paragraph 2(a) by any of the
persons in Schedule A. Further, the Company and the Purchasers have an option to receive e-mail notification of incoming
and outgoing wire transfers. If this e-mail notification service is requested and subsequently approved by the Escrow Agent, the
Company and the Purchasers agree to provide a valid e-mail address and other information necessary to set-up this service and sign
all forms and agreements required for such service. The Company and the Purchasers each consent to the Escrow Agent’s release
of wire transfer information to the designated e-mail address(es). The Escrow Agent’s liability for failure to comply with
this section shall not exceed the cost of providing such information.
5. Performance
Milestone. The distribution of the Escrow Funds shall be based upon the following performance milestones (the “Milestones”)
discussed below:
(a) First Milestone
Conditions. The first milestone shall have been achieved if the following conditions (the “First Milestone Conditions”)
are met or achieved on or before on or before March 31, 2015 (the “First Milestone Deadline”):
(i) Since
December 1, 2014, the Company: (i) has obtained new account conversions representing 700 or more revenue generating public charging
stations, and (ii) has transitioned 100 public charging stations that were previously not-working units into working units;
(ii) Beginning
on December 1, 2014, the Company has obtained sales of at least 200 public charging stations with an average selling price of at
least $1,500 per station, representing gross proceeds of not less than $300,000;
(iii) the
Company has complied with the covenant set forth in Section 5.4 of the Purchase Agreement from the Closing Date through the achievement
of this second milestone; and
(iv) the
Company continues to employ an interim Chief Financial Officer or has hired a permanent Chief Financial Officer.
(b) Second Milestone
Conditions. The second milestone shall have been achieved if the following conditions (the “Second Milestone Conditions”)
are met or achieved on or before June 30, 2015 (the “Second Milestone Deadline”):
(i) for
the three months ended March 31, 2015, the Company has: (A) generated revenue of greater than $2,250,000; (B) earned gross profit
of greater than $1,000,000; and (C) operating expenses of no more than $2,500,000, as evidenced in the Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission;
(ii) the
Company has complied with the covenant set forth in Section 5.4 of the Purchase Agreement from the Closing Date through the achievement
of this second milestone;
(iii) the
Company has filed all quarterly and annual reports with the SEC;
(iv) the
Company has used its best efforts to satisfy the conditions necessary for an uplisting on either NASDAQ or the NYSE;
(v) the
Company has filed the Registration Statement with the Securities and Exchange Commission; and
(vi) the
Company has hired a permanent Chief Financial Officer.
Notwithstanding the
above, the Milestones contained in this Section 5 may be waived or accelerated by mutual consent of the holders of sixty percent
of the aggregate amount of Preferred Shares then outstanding, which waiver is in such Purchasers’ sole discretion.
6. Release
of Escrow Funds. The Parties hereby agree that the Escrow Funds shall be distributed to the Company as follows:
(a) In
the event the Company meets the First Milestone Conditions, on or before the First Milestone Deadline, the Company shall receive
Two Million Dollars ($2,000,000) of Escrow Funds (the “First Milestone Amount”).
(b) In
the event the Company meets the Second Milestone Conditions, on or before the Second Milestone Deadline, the Company shall receive
Two Million Dollars ($2,000,000) of Escrow Funds (the “Second Milestone Amount”). If the Company did not satisfy
the First Milestone Conditions prior to the First Milestone Deadline, but has subsequently satisfied the First Milestone Conditions
by the Second Milestone Deadline, the Company will be entitled to receive both the First Milestone Amount and the Second Milestone
Amount at the time the Second Milestone Conditions are satisfied.
(c) No
later than five (5) business days after each of the First Milestone Deadline and the Second Milestone Deadline, if the First Milestone
Conditions or the Second Milestone Conditions (or both) have been satisfied as described herein, the Company and the Purchasers
shall provide joint written instructions to the Escrow Agent (the “Disbursement Instructions”) instructing the
Escrow Agent to issue and deliver the applicable Escrow Funds or portion thereof (including any income earned thereon) to the Company.
Within five (5) business days after receipt of the Disbursement Instructions, the Escrow Agent shall pay such Escrow Funds in accordance
with such Disbursement Instructions, provided they are in form and substance reasonably satisfactory to the Escrow Agent, or in
absence of such instructions in accordance with the order of a court of competent jurisdiction. The Escrow Agent shall not be required
to pay any uncollected funds or any funds that are not available for withdrawal. The Escrow Agent may act in reliance upon any
instructions, court orders, notices, certifications, demands, consents, authorizations, receipts, powers of attorney or other writings
delivered to it without being required to determine the authenticity or validity thereof or the correctness of any fact stated
therein, the propriety or validity of the service thereof, or the jurisdiction of the court issuing any judgment or order. The
Escrow Agent may act in reliance upon any signature believed by it to be genuine, and may assume that such person has been properly
authorized to do so.
(d) If
Disbursement Instructions with respect to all of the Escrow Funds have not been delivered to the Escrow Agent prior to July 31,
2015, then the Company and the Purchasers shall provide joint written instructions to the Escrow Agent (the “Reimbursement
Instructions”) instructing the Escrow Agent to pay, within five (5) business days, any Escrow Funds remaining in the
Escrow Account (including any income earned thereon) to the Purchasers based upon the relative cash contributions, if any, of the
Purchasers to the Escrow Account (as will be described in the Reimbursement Instructions. Within five (5) business days after receiving
the Reimbursement Instructions, the Escrow Agent will pay the Escrow Funds in accordance with the Reimbursement Instructions. The
Escrow Agent may act in reliance upon any instructions, court orders, notices, certifications, demands, consents, authorizations,
receipts, powers of attorney or other writings delivered to it without being required to determine the authenticity or validity
thereof or the correctness of any fact stated therein, the propriety or validity of the service thereof, or the jurisdiction of
the court issuing any judgment or order. The Escrow Agent may act in reliance upon any signature believed by it to be genuine,
and may assume that such person has been properly authorized to do so.
7. Resignation
and Termination of the Escrow Agent. The Escrow Agent may resign at any time by giving 30 days' notice of such resignation
to the Company and the Purchasers. Upon providing such notice, the Escrow Agent shall have no further obligation hereunder except
to hold the Escrow Funds that it has received as of the date on which it provided the notice of resignation as depositary. In such
event, the Escrow Agent shall not take any action until the Company and the Purchasers jointly designate a banking corporation,
trust company, attorney or other person as successor escrow agent. Upon receipt of such written instructions signed by the Company
and the Purchasers, the Escrow Agent shall promptly deliver the Escrow Funds, net of any outstanding expenses of the Escrow Agent,
to such successor escrow agent and shall thereafter have no further obligations hereunder. If such instructions are not received
within 30 days following the effective date of such resignation, then the Escrow Agent may deposit the Escrow Funds and any other
amounts held by it pursuant to this Escrow Agreement with a clerk of a court of competent jurisdiction pending the appointment
of a successor escrow agent. In either case provided for in this paragraph, the Escrow Agent shall be relieved of all further obligations
and released from all liability thereafter arising with respect to the Escrow Funds.
8. Termination.
The Company and the Purchasers may terminate the appointment of the Escrow Agent hereunder upon a joint written notice to Escrow
Agent specifying the date upon which such termination shall take effect. In the event of such termination, the Company and the
Purchasers shall, within 30 days of such notice, jointly appoint a successor escrow agent and the Escrow Agent shall, upon receipt
of written instructions signed by both the Company and the Purchasers, turn over to such successor escrow agent all of the Escrow
Funds; provided, however, that if the Company and/or the Purchasers fail to appoint a successor escrow agent within such 30-day
period, such termination notice shall be null and void and the Escrow Agent shall continue to be bound by all of the provisions
hereof. Upon receipt of the Escrow Funds, the successor escrow agent shall become the Escrow Agent hereunder and shall be bound
by all of the provisions hereof and the Escrow Agent shall be relieved of all further obligations and released from all liability
thereafter arising with respect to the Escrow Funds.
9. Costs,
Expenses and Fees. Escrow Agent shall be entitled, for the duties to be performed by it hereunder, to a one-time fee of $4,000.00,
which fee shall be paid by the Company upon the signing of this Escrow Agreement. In addition, the Company shall be obligated to
reimburse Escrow Agent for all out-of-pocket fees, costs and expenses incurred or that becomes due in connection with this Escrow
Agreement or the Escrow Account, including reasonable attorney’s fees. Neither the modification, cancellation, termination
or rescission of this Escrow Agreement nor the resignation or termination of the Escrow Agent shall affect the right of Escrow
Agent to retain the amount of any fee which has been paid, or to be reimbursed or paid any amount which has been incurred or becomes
due, prior to the effective date of any such modification, cancellation, termination, resignation or rescission. If said amounts
are not paid within 30 days from the date they are due or by the date this Escrow Agreement terminates, if earlier, then the Escrow
Agent may use funds in the Escrow Account to pay said amounts.
10. Notices.
All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given if sent by hand-delivery, by facsimile followed by first-class mail, by nationally recognized
overnight courier service or by prepaid registered or certified mail, return receipt requested, to the addresses set forth below.
If to the Company:
Car Charging
Group, Inc.
1691
Michigan Ave., Ste 601
Miami
Beach, Florida 33139
Attention:
Chief Executive Officer
Tel.
No.: (305) 521-0200
Fax No.: (305)
521-0201
With a copy to
(which shall not constitute notice):
Szaferman
Lakind Blumstein & Blader, PC
101 Grovers
Mill Road, Second Floor
Lawrenceville,
New Jersey 08648.
Attn.:
Gregg Jaclin, Esq.
Tel.
No.: (609) 557-0951
Fax No.:
(609) 275-4511
If to the Purchasers:
Eventide Gilead Fund
Huntington Bank - Institutional Trust Custody
7 Easton Oval
EA4E62
Columbus, OH 43219
Attention: Abass Jalloh
and to:
Eventide Asset Management
60 State Street, Suite 700
Boston, MA 02109
Attention : David Barksdale
Fax No. (503) 477-5545
Horton Capital Partners Fund, L.P.
1717 Arch Street, Ste. 3920
Philadelphia, PA 19103
Attention: Joseph M. Manko, Jr.
Fax No.: (215) 399-5415
If to Escrow Agent:
Signature Bank
565 Fifth Avenue, FL 12
New York, NY 10017
Attention: Timothy Collins, Associate Group Director
- VP
Fax No.: (646) 758 8372
11. Indemnification:
The Company and the Purchasers (who shall be entitled to contribution from all other Purchasers), jointly and severally, agree
to indemnify and hold the Escrow Agent harmless from and against any and all claims, losses, costs, liabilities, damages, suits,
demands, judgments or expenses, including, but not limited to, attorney's fees, costs and disbursements, (collectively “Claims”)
claimed against or incurred by Escrow Agent arising out of or related, directly or indirectly, to the Escrow Agreement and the
Escrow Agent’s performance hereunder or in connection herewith, except to the extent such Claims arise from Escrow Agent’s
willful misconduct or gross negligence as adjudicated by a court of competent jurisdiction.
12. General.
(a) This Escrow Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be entirely
performed within such State without regard to choice of law principles. The parties hereto irrevocably and unconditionally submit
to the jurisdiction of a federal or state court located in the Borough of Manhattan, City, County and State of New York, in connection
with any proceedings commenced regarding this Escrow Agreement, including but not limited to, any interpleader proceeding or proceeding
for the appointment of a successor escrow agent the Escrow Agent may commence pursuant to this Escrow Agreement, and all parties
irrevocably submit to the jurisdiction of such courts for the determination of all issues in such proceedings, without regard to
any principles of conflicts of laws, and irrevocably waive any objection to venue or inconvenient forum, consents to service of
process by mail or in any manner permitted by applicable law and waives all rights to trial by jury in any action, proceeding or
counterclaim arising out of the transactions contemplated by this Escrow Agreement.
(b) This Escrow Agreement sets forth the
entire agreement and understanding of the parties in respect to the matters contained herein and supersedes all prior agreements,
arrangements and understandings relating thereto.
(c) All of the terms and conditions of
this Escrow Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties hereto.
(d) This Escrow Agreement may be amended,
modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a written instrument executed
by each party hereto or, in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver
of any party of any condition, or of the breach of any term contained in this Escrow Agreement, whether by conduct or otherwise,
in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or breach
or a waiver of any other condition or of the breach of any other term of this Escrow Agreement. No party may assign any rights,
duties or obligations hereunder unless all other parties have given their prior written consent.
(e) If any provision included in this Escrow
Agreement proves to be invalid or unenforceable, it shall not affect the validity of the remaining provisions.
(f) This Escrow Agreement and any modification
or amendment of this Escrow Agreement may be executed in several counterparts or by separate instruments and all of such counterparts
and instruments shall constitute one agreement, binding on all of the parties hereto.
13. Form
of Signature. The parties hereto agree to accept a facsimile transmission copy of their respective actual signatures as evidence
of their actual signatures to this Escrow Agreement and any modification or amendment of this Escrow Agreement; provided however,
that each party who produces a facsimile signature agrees, by the express terms hereof, to place, promptly after transmission of
his or her signature by fax, a true and correct original copy of his or her signature in overnight mail to the address of the other
party.
14. Third-Party
Beneficiary. This Escrow Agreement is solely for the benefit of the parties and their respective successors and
permitted assigns, and no other person has any right, benefit, priority or interest under or because of the existence of this Escrow
Agreement.
****************
IN WITNESS WHEREOF,
the parties have duly executed this Escrow Agreement as of the date first set forth above.
COMPANY: CAR CHARGING GROUP, INC. |
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By: |
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Name: |
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Title: |
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PURCHASERS: |
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HORTON CAPITAL PARTNERS FUND, L.P. |
By: Horton Capital Partners, LLC, its general partner |
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By: |
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Name: |
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Title: |
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EVENTIDE GILDEAD FUND |
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By: |
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Name: |
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Title: |
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ESCROW AGENT: SIGNATURE BANK |
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By: |
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Name: |
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Title: |
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By: |
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Name: |
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Title: |
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{Signature Page to Escrow Deposit
Agreement}
Schedule A
The Escrow Agent is authorized to accept
instructions signed or believed by the Escrow Agent to be signed by any one of the following on behalf of Car Charging Group, Inc.
(the “Company”) and the Purchasers.
CAR CHARGING GROUP, INC.
Name |
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True Signature |
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PURCHASERS |
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Name |
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True Signature |
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For Eventide |
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For Horton |
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Exhibit 10.4
FIRST AMENDMENT
TO EXECUTIVE EMPLOYMENT AGREEMENT
This First Amendment (this “Amendment”)
to the Executive Employment Agreement dated as of October 29, 2010 (the “Agreement”) between Michael D. Farkas, an
individual (“Executive”) and Car Charging Group, Inc., a Nevada Corporation (the “Company”) is hereby made
and entered effective between Executive and the Company as of the latest date below.
WHEREAS, as a condition
and as an inducement to the Purchasers to enter into that certain Securities Purchase Agreement (“SPA”) entered into
between the Company and the Purchasers entered into on even date herewith, Executive understands that the Purchasers have required,
and the Company has agreed to obtain certain amendments to the Agreement.
NOW, THEREFORE, in
consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree and confirm as follows:
1. At
a Special Meeting of the Company’s Board of Directors held on April 17, 2014, Executive’s Base Salary was increased
from thirty thousand dollars ($30,000) per month to forty thousand dollars ($40,000.00) per month. Further, upon the Company’s
successful uplisting to NYSE or NASDAQ, a further increase to fifty thousand dollars ($50,000) per month was approved.
2. Until
all the funds have been released from the Escrow Account in accordance with the SPA, the Salary of Executive shall be reduced to
twenty thousand dollars ($20,000) per month in cash and the remaining amount payable (i) shall be deferred (unless paid in kind)
and (ii) must be determined by the compensation committee of the Company’s Board of Directors to be fair and equitable. Until
the Series C Preferred Shares are no longer outstanding, salary shall only be paid in cash if doing so would not put the Company
in a negative operating cash flow position for any such pay period,.
3. After
the Second Milestone has been met, Executive’s Salary shall be determined by the compensation committee of the Company’s
Board of Directors.
4. Upon
closing of the transaction contemplated by the SPA, the Company shall pay to Executive, and Executive shall accept, an amount of
Preferred Shares (as defined in the SPA) equal to the total amount of accrued and unpaid Salary currently due to Executive based
on the Purchase Price (as defined in the SPA) in full and complete satisfaction of all amounts currently owed to Executive under
the Agreement.
5. General
References. Upon and after the effective date, each reference to the Agreement in the Agreement shall mean and be a reference
to the Agreement as amended by this Amendment.
6. Continued
Effectiveness. To the extent that the provisions of this Amendment are inconsistent with the terms and conditions of the Agreement,
the terms and conditions hereof shall control. Except at modified hereby, all remaining terms and conditions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties
have executed this Amendment as of December 23, 2014.
CAR CHARGING GROUP, INC. |
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EXECUTIVE |
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Andy Kinard, President |
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Michael D. Farkas |
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EXHIBIT 99.1
Car Charging Group Completes $6 Million
Capital Raise
Concurrently Enacts Restructuring Actions
to Reduce Cash Burn
December 29, 2014 - MIAMI BEACH, FL – Car Charging
Group, Inc. (OTCQB: CCGI) (“CarCharging” or the “Company”), the largest owner, operator, and provider of
electric vehicle (EV) charging services, today announced that it has closed an offering (the “Offering”) and raised
net proceeds of up to $6 million with current institutional shareholders. The Offering consisted of convertible preferred securities
with a conversion price of $0.70 and warrants exercisable at $1.00.
Proceeds will be used to:
| · | Strengthen CarCharging’s balance sheet; |
| · | Build on the past year’s progress; and |
| · | Provide growth capital for expanding the Company’s network. |
Two million of the funds were disbursed at closing, with the
remainder of the funds to be disbursed based upon successful achievement of operating milestones over the next two quarters.
The Company also announced that it has undertaken specific restructuring
actions to improve monthly cash flow, including initiatives that are expected to reduce general and administrative expenses by
more than 40%. CarCharging has also hired a seasoned interim Chief Financial Officer to help lead the Company through its strategic
plan towards profitability.
“This capital raise occurs as CarCharging prepares for
further expansion in 2015,” said Michael D. Farkas, CEO of CarCharging. “As we pursue both top line growth and a path
to profitability, we intend to maintain a strict focus on managing cash while investing in technology and business development
initiatives to address the increasing need for quick, convenient, and cost-effective EV charging services. We believe that this
transaction will help ensure our ability to capitalize on numerous opportunities to grow and further improve the Company’s
operations, including unlocking the value of our significant equipment inventory. I personally want to thank our shareholders for
their passion and patience. The fact that the current shareholders were willing to purchase securities with stock priced at a substantial
premium to the current market is both encouraging and supportive of the management team's positive outlook for the business."
This press release does not constitute an offer to sell or a
solicitation of an offer to buy.
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