Blue Sphere Corporation 8-K

Exhibit 10.1

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “ Agreement ”), dated as of December 23, 2015, by and between Blue Sphere Corporation, a Nevada corporation (the “ Company ”), and the undersigned subscriber (the “ Subscriber ”).

WHEREAS , the Company and Subscriber are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2) and/or Regulation D (“ Regulation D ”) promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ Securities Act ”);

WHEREAS , this Agreement has been provided to the Subscriber in connection with an “ Offering Summary ” dated November 2015, whereby the Company is offering (the “ Offering ”) up to Three Million U.S. Dollars (US $3,000,000) of its Senior Debentures (with respect to the Subscriber, the “ Debenture ” and collectively, the “ Debentures ”) and Warrants (the “ Warrants ”) to purchase up to Eight Million (8,000,000) shares of common stock of the Company (“ Common Stock ”) in proportion pro rata to each Subscriber’s subscription amount relative to the total Offering amount (such shares issuable pursuant to the Warrants, the “ Warrant Shares ”), with fifty percent (50%) of the Warrant Shares exercisable at a price per share of $0.05 and the other fifty percent (50%) of the Warrant Shares exercisable at price per share of $0.075; and

WHEREAS , the parties hereto desire that, upon the terms and subject to the conditions contained herein, the Company shall issue to, or enter into with, one or more subscribers in the Offering, including the Subscriber, a Debenture, in the form attached to the Offering Summary as Exhibit C , Warrants, in the form attached to the Offering Summary as Exhibit D , and a Pledge Agreement, in the form attached to the Offering Summary as Exhibit E (the “ Pledge Agreement ”). The Debenture, Warrants, and the Warrant Shares shall be referred to herein as the “ Securities ”. The Debentures, Warrants, Pledge Agreement and this Agreement shall be collectively referred to herein as the “ Transaction Documents .”

NOW, THEREFORE , in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and Subscriber hereby agree as follows:

1.            Purchase and Sale . Upon the terms and subject to the conditions set forth in this Agreement and in consideration of the principal amount delivered by the Subscriber to the Company as set forth on the signature page hereof (the “ Principal Amount ”), the Company hereby agrees to issue and deliver the Debenture and the Warrants to the Subscriber free of all liens, pledges, mortgages, security interests, charges, restrictions, adverse claims or other encumbrances of any kind or nature whatsoever (“ Encumbrances ”), and Subscriber hereby agrees to accept the Securities free of all Encumbrances. This Agreement may be one of several to be executed in the Offering.

2.            Closing . The Offering may consist of one or more closings, with the final closing in connection with the Offering to occur on or before December 31, 2015 (each a “ Closing ” and each date upon which a Closing occurs, a “ Closing Date ”), unless otherwise extended or modified by the Company in its sole discretion.

A Closing under this Agreement will occur provided that (i) the Subscriber has satisfied all conditions set forth herein, (ii) the Company has accepted and executed this Agreement, and (iii) the Principal Amount has been received from Subscriber into an escrow account held on account of the Company. Upon such Closing, the Principal Amount held in escrow, less expenses paid from escrow, will be delivered to the Company. The Debenture and Warrants purchased by the Subscriber hereto will be delivered to the Subscriber by the Company promptly following the Closing Date. In the event that a Closing does not occur, Subscriber’s funds will be returned by the Company to the Subscriber, without interest within three (3) business days via wire transfer.

3.            Subscriber Representations and Warranties . Subscriber hereby represents and warrants to and agrees with the Company that:

(a)            Standing of Subscriber . Subscriber has the legal capacity and power to enter into this Agreement.

(b)             Authorization and Power . Subscriber has the requisite power and authority to enter into and perform this Agreement and to advance the Principal Amount and accept the Debenture and Warrants. The execution, delivery and performance of this Agreement by the Subscriber, and the consummation by the Subscriber of the transactions contemplated hereby, have been duly authorized by all necessary action, and no further consent or authorization of Subscriber is required. This Agreement has been duly authorized, executed and delivered by the Subscriber and constitutes, or shall constitute, when executed and delivered, a valid and binding obligation of the Subscriber, enforceable against Subscriber in accordance with the terms hereof.

(c)            Information on Subscriber . Subscriber is, and reasonably believes he will be at the time of exercise of the Warrants, an “accredited investor,” as such term is defined in Regulation D promulgated by the SEC under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Subscriber to utilize the information made available by the Company to evaluate the merits and risks of, and to make an informed investment decision with respect to, the proposed purchase, which the Subscriber hereby agrees represents a speculative investment. The Subscriber has the authority and is duly and legally qualified to purchase and own the Securities. The Subscriber acknowledges that an investment in the Company’s Securities is highly speculate and the Subscriber is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.

(d)            Purchase of Securities . The Subscriber will purchase the Securities for its own account for investment and not with a view toward, or for resale in connection with, the public sale or any distribution thereof in violation of the Securities Act or any applicable state securities law, and has no direct or indirect arrangement or understandings with any other person or entity to distribute or regarding the distribution of the Warrant Shares.

(e)            Compliance with Securities Act . The Subscriber understands and agrees that the Securities have not been registered under the 1933 Act or any applicable state securities laws by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of Subscriber contained herein), and that such Securities must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration.

(f)             Share Legend . The Securities shall bear the following or similar legend:

THE SECURITIES WHICH ARE REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.

(g)             Communication of Offer . At no time was Subscriber presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

(h)             No Governmental Endorsement . Subscriber understands that no United States federal or state agency or any other governmental or state agency has passed on or made recommendations or endorsement of the Securities, or the suitability of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

(i)             Receipt of Information . Subscriber believes it has received all the information it considers necessary or appropriate for deciding whether to invest the Principal Amount in the Company and to accept the Securities. Subscriber further represents that through its representatives it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business, properties and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access.

(j)             No Market Manipulation . Subscriber has not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock, to facilitate the sale or resale of the Shares or affect the price at which the Shares may be issued or resold.

(k)             Risk of Loss . The Subscriber acknowledges that there may be no market for the Securities and that the Subscriber may not be able to sell or dispose of the Securities; the Subscriber has liquid assets sufficient to assure that the Principal Amount of the Securities will cause no undue financial difficulties and that, after purchasing the Securities the Subscriber will be able to provide for any foreseeable current needs and possible personal contingencies. The Subscriber is financially able to bear the economic risk of this investment, including the ability to hold the Securities indefinitely or to afford a complete loss of the Subscriber’s investment in the Securities.

(l)             If the Subscriber is a partnership, corporation, trust, or other entity, (i) the Subscriber has enclosed with this Agreement appropriate evidence of the authority of the individual executing this Agreement to act on its behalf (e.g., if a trust, a certified copy of the trust agreement; if a corporation, a certified corporate resolution authorizing the signature and a certified copy of the certificate of incorporation; or if a partnership, a certified copy of the partnership agreement), (ii) the Subscriber represents and warrants that it was not organized or reorganized for the specific purpose of acquiring the Securities, (iii) the Subscriber has the full power and authority to execute this Agreement on behalf of such entity and to make the representations and warranties made herein on its behalf, and (iv) this investment in the Company has been affirmatively authorized, if required, by the governing board of such entity and is not prohibited by the governing documents of the entity.

4.             Company Representations and Warranties . The Company represents and warrants to, and agrees with, Subscriber that:

(a)           Due Incorporation . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada.

(b)           Authority; Enforceability . The Transaction Documents have been or will be duly authorized, executed and delivered by the Company and are the valid and binding agreements of the Company, enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, or principles of equity. The Company has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder.

(c)           Capitalization and Voting Rights . Information concerning the Company’s capitalization and securities is contained in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 14, 2015 and attached as Schedule 3 to the Offering Summary, and in the Company’s Annual Report on Form 10-K, filed with the SEC on January 13, 2015 and attached as Schedule 2 to the Offering Summary. As of December 3, 2015, there were 181,317,675 shares of Common Stock issued and outstanding. All outstanding shares of the Company’s capital stock have been, or upon issuance will be, validly issued, fully paid and non-assessable.

(d)           Consents . No consent, approval, authorization or order of any court, governmental agency or body having jurisdiction over the Company or of any other person is required for the execution by the Company of the Transaction Documents and compliance and performance by the Company of its obligations hereunder and thereunder, including, without limitation, the issuance of the Securities.

(e)           No Violation or Conflict . Neither the issuance of the Securities nor the performance of the Company’s obligations under the Transaction Documents will:

(i)             violate, conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) under (a) the charter or bylaws of the Company or (b) any decree, judgment, order or determination applicable to the Company of any court, governmental agency or body having jurisdiction over the Company or over the properties or assets of the Company; or

(ii)             result in the creation or imposition of any lien, charge or Encumbrance upon the Shares except in favor of Subscriber as described herein;

(f)           The Warrant Shares . Upon issuance, the Warrant Shares:

(i)             shall be free and clear of any security interests, liens, claims or other Encumbrances, subject only to restrictions upon transfer under the Securities Act and any applicable state securities laws;

(ii)            shall have been duly and validly issued, fully paid and non-assessable; and

(iii)           will not subject the holders thereof to personal liability by reason of being such holders.

(g)             No General Solicitation . Neither the Company, nor any of its affiliates, nor any person or entity acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Securities.

(h)           Investment Company . The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

5.           Board Member/Observer . After the final Closing Date of the Offering and during such time as any Debentures remain outstanding, the subscribers in the Offering, collectively, shall have the right to designate one (1) individual as either (a) a non-voting observer (a “ Board Observer ”) to the Company’s Board of Directors (the “ Board ”) or (b) one (1) individual as a member of the Board. The designation described in this Section 5 shall be made pursuant to a vote of a majority of the Subscribers in the Offering, whereby the vote of each Subscriber shall be on a pro rata basis in accordance with the Subscriber’s investment in the Debenture relative to the total investment by all subscribers in the Offering. Subscriber hereby agrees to use its best efforts to agree upon, in good faith, a designee for such position.

Any Board Observer shall be entitled to attend meetings of the Board, and to receive all information provided to the members of the Board during the period in which such person is a Board Observer; provided, that (a) the Board Observer shall not be entitled to vote on any matter submitted to the Board or any of its committees nor to offer any motions or resolutions to the Board or such committees; (b) the Company may withhold information or materials from the Board Observer and exclude such Board Observer from any meeting or portion thereof if (as determined by the Board in good faith) access to such information or materials or attendance at such meeting would (i) adversely affect the attorney-client or work product privilege between the Company and its counsel or (ii) result in a conflict of interest or is otherwise required to avoid any disclosure that is restricted by any agreement with another person or entity; and (c) the Board Observer shall be subject to the same obligations as directors of the Board with respect to confidentiality, conflicts of interest and misappropriation of corporate opportunities (and shall provide, prior to attending any meetings or receiving any information or materials, such agreements, undertakings or assurances to such effect as may be requested by the Company).

6.           Access to Financials . After the final Closing Date of the Offering and during such time as any Debentures remain outstanding, Subscriber shall have the right to request from the Company no more frequently than every thirty (30) days, and the Company shall provide within ten (10) business days of such request, access to the Company’s monthly or quarterly, as the case may be, unaudited profit and loss statement for the period immediately preceding the date that the request is made.

7.           Non-Public Information . Subscriber’s receipt and possession of records or information obtained pursuant to Section 5 or Section 6 hereof shall at all times be subject to the strictest confidence, and Subscriber shall not disclose any such records or information obtained to any other person, entity, government authority or other third-party. Subscriber hereby agrees and acknowledges that records or information obtained by Subscriber pursuant to Section 5 or Section 6 hereof may constitute material non-public or inside information, and therefore disclosure of such records or information may violate applicable securities laws and Subscriber may be prohibited from trading in the securities in the Company as a consequence. Subscriber agrees that any improper use or disclosure by Subscriber of such material non-public or inside records or information obtained pursuant to Section 5 or Section 6 hereof will constitute a breach of this Agreement.

8.           Broker’s Commission/Finder’s Fee . Each party hereto represents to the other that there are no parties entitled to receive fees, commissions, finder’s fees, due diligence fees or similar payments in connection with the consummation of the transactions contemplated hereby, other than those fees payable by the Company pursuant to a Letter of Engagement between the Company and Maxim Group, LLC, as placement agent, dated October 14, 2015, the terms of which are summarized in the Offering Summary.

9.           Covenants Regarding Indemnification . Each party hereto agrees to indemnify, hold harmless, reimburse and defend the other party and the other party’s officers, directors, agents, counsel, affiliates, members, managers, control persons, and principal shareholders, as applicable, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the indemnified party or any such person which results, arises out of or is based upon (i) any breach of any representation or warranty by the indemnifying party in this Agreement or (ii) any breach or default in performance by the indemnifying party of this Agreement or any covenant or undertaking to be performed by the indemnifying party hereto.

10.           Miscellaneous .

(a)           Notices . All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be delivered by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile transmission if such transmission is confirmed by delivery by certified or registered mail (first class postage pre-paid) or guaranteed overnight delivery, to the following addresses (or to such other addresses which such party shall subsequently designate in writing to the other party): 

     (i)           if to the Company: 

________________________

________________________

________________________

(ii)            If to Subscriber, to the address set forth next to its name on the signature page hereto.

(b)           Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by both parties hereto. Neither the Company nor Subscriber has relied on any representations not contained or referred to in this Agreement and the Offering Summary delivered herewith.

(c)           Counterparts/Execution . This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

(d)           Law Governing this Agreement and Disputes . This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

The parties to this Agreement shall submit all disputes arising under this Debenture to arbitration in New York, New York before a single arbitrator of the American Arbitration Association (the “ AAA ”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of New York. No party hereto will challenge the jurisdiction or venue provisions as provided in this section. Nothing in this section shall limit the Subscriber’s right to obtain an injunction for a breach of this Agreement from a court of law. Any injunction obtained shall remain in full force and effect until the arbitrator fully adjudicates the dispute.

(e)           Severability . In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.

(f)           Counsel; Ambiguities . Each party and its counsel have participated, or have had the opportunity to participate, fully in the review of this Agreement and the other Transaction Documents. The parties understand and agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting the Transaction Documents.

(g)           Expenses . The Company and the Subscriber will each bear their own legal and other expenses with respect to this Offering.

(h)           Headings . The headings of the various sections and paragraphs of this Agreement have been inserted only for the purposes of convenience; such captions are not a part of this Agreement and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions of this Agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties has caused this Agreement to be executed on and as of the date set forth above.

THE COMPANY:  

SUBSCRIBER:

The undersigned signatory hereby certifies that he/she has read and understands the Transaction Documents, including the Subscription Agreement and Offering Summary, and the representations made by the undersigned in said documents are true and accurate.

[Signature Page to Subscription Agreement]

8

Blue Sphere Corporation 8-K

FOR VALUE RECEIVED, BLUE SPHERE CORPORATION, a Nevada corporation (the “ Company ”), as of December 23, 2015 (the “ Issuance Date ”), hereby unconditionally promises to pay subject to the provisions stated herein to the order of _________________________ (“ Holder ”), in lawful money of and within the United States of America and in immediately available funds, up to US$________________ (the “ Principal Amount ”), together with accrued and unpaid interest (“ Interest ”) thereon, at December 22, 2017 (the “ Maturity Date ”).

This Senior Debenture (this “ Debenture ”) and all other identical Senior Debentures in the aggregate principal amount of up to $3,000,000 (collectively, the “ Debentures ”) are issued in connection with a private placement by the Company of its of Debentures and Warrants, pursuant and in accordance with a Subscription Agreement dated the date hereof by and among the Company, the Holder and all other purchasers of Debentures (the “ Subscription Agreement ”), a copy of which agreement is available for inspection at the Company’s principal office. Notwithstanding any provision to the contrary contained herein, this Debenture is subject and entitled to certain terms, conditions, covenants and agreements contained in the Subscription Agreement. Any transferee of this Debenture, by its acceptance hereof, assumes the obligations of the Holder in the Subscription Agreement with respect to the conditions and procedures for transfer of this Debenture. Reference to the Subscription Agreement shall in no way impair the absolute and unconditional obligation of the Company to pay both Principal Amount and Interest.

1.           Principal Repayment; Interest Repayment.

(a)             Repayment of the Principal Amount by the Company to the Holder shall be made in full no later than the Maturity Date.

(b)             Interest shall accrue on the outstanding principal balance of this Debenture for the period beginning on the Issuance Date of this Debenture through and including the Maturity Date, unless redeemed pursuant to the terms hereof, at a rate of eleven percent (11%) per annum. All Interest payable under this Debenture shall be paid quarterly in arrears on or before the fifteenth (15th) day of each month following the end of the calendar quarter throughout the term of this Debenture Agreement with the first interest payment due one quarter after closing and each quarter thereafter.

(c)             The Company may at any time repurchase any or all amounts outstanding under the Debentures in cash for one hundred and five percent (105%) of the Principal Amount of the Debentures plus all accrued but unpaid Interest on ten (10) business days’ notice. Redemptions pursuant to this Section 1(c) for less than all amounts outstanding under the Debentures shall be on a pro rata basis in accordance with the Holder’s investment relative to the total Principal Amount of all of the Debentures.

(d)             This Debenture is, for so long as it is outstanding, subject to the terms and conditions set forth in the Pledge Agreement between the Company and Subscriber dated as of the date hereof (the “ Pledge Agreement ”).

2.           Place of Payment; Application of Payments . All Principal Amount and Interest due hereunder shall be payable to Holder in United States Dollars to such bank account as shall be designated by Holder in immediately available funds or as otherwise specified to the Company in writing. Payment on this Debenture shall be applied first to any expenses of collection, then to accrued interest, and thereafter to the outstanding principal balance hereof.

3.           Default . The occurrence of any of the following events of default shall each constitute and be an “ Event of Default ” under this Debenture:

(a)             Bankruptcy or insolvency of the Company;

(b)             The Company’s failure to pay any of the Principal Amount due under this Debenture on the date the same becomes due and payable, or any accrued Interest or other amounts due under this Debenture after the same becomes due and payable;

(c)             Breach of any material covenant or agreement contained in this Debenture and such breach remains uncured for a period of fifteen (15) days after written notice thereof is received by the Company from Holder;

(d)            The dissolution of the Company or any vote in favor thereof by the board of directors (or similar governing body) and/stockholders of the Company; and

(e)            The Company makes an assignment for the benefit of creditors, or files an application for the appointment of a receiver or similar official with respect to it or any substantial part of its assets.

Upon the occurrence of an Event of Default, the unpaid Principal Amount, all unpaid accrued Interest thereon and all other amounts owing hereunder may, at the option of Holder, become immediately due and payable to Holder, provided, however, that upon the occurrence of an Event of Default described in Section 3(a), all indebtedness of the Company to Holder shall become immediately due and payable without any action of Holder.

4 .           Covenants .

(a)             Use of Proceeds . The Company shall use the net cash proceeds loaned to the Company pursuant to this Debenture for working capital and general corporate purposes, provided however, the Company shall have broad discretion in the application of the net proceeds allocated to working capital and general corporate purposes.

(b)             Compliance with Agreements . The Company shall perform and observe, or cause to be performed or observed, as the case may be, all of the provisions in its certificate of incorporation, its by-laws, and the obligations pursuant to the terms, agreements, and covenants of this Debenture and all documents and agreements executed or delivered in connection with this Debenture. The Company expressly represents that the Company has the full power and authority to deliver this Debenture that this Debenture has been duly authorized, executed, and delivered by the Company, and that the Company’s obligations under this Debenture are legal, valid, binding, and enforceable, absolute, and unconditional.

(c)             Preservation of Corporate Existence and Business . The Company shall use its best efforts to preserve intact its present business organization, rights, and privileges and present goodwill and, to the best of its ability, its relationships existing with other parties and shall at all times cause to be done all things necessary to maintain, preserve, and renew its corporate existence in the State of Nevada, and shall observe and conform with all valid requirements of such governmental authorities relating to the conduct of the business of the Company, the failure of which would have a material adverse effect upon the Company’s business or financial condition. The Company shall maintain and keep in force all material licenses, permits and agreements necessary to the conduct of its businesses.

(d)             Maintenance of Properties . The Company shall maintain and keep its properties, real and personal, in good repair, working order, and condition, and from time to time make all necessary or desirable repairs, renewals, and replacements, so that its business may be properly and advantageously conducted at all times.

(e)             Compliance with Obligations, Laws, etc . The Company shall comply with all of the obligations which it has incurred or to which it becomes subject pursuant to any contract or agreement, whether oral or written, express or implied, the breach of which might have a material adverse effect upon its business or financial condition, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and adequate reserves have been set aside on its books with respect thereto. The Company shall comply with all applicable laws, rules, and regulations of all governmental authorities.

(f)             Books of Account . The Company will, and will cause each of its subsidiaries to, at all times maintain books of account in which its financial transactions are duly recorded in conformance with generally accepted accounting principles.

(g)             Unconditional Obligation; No Waiver . The obligations to make payments provided for in this Debenture are absolute and unconditional and are not subject to any defense, set-off counterclaim, rescission, recoupement, or adjustment whatsoever. No forbearance, indulgence, delay, or failure to exercise any right or remedy with respect to this Debenture shall operate as a waiver or as an acquiescence in any default, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or exercise of any other right or remedy.

5.             Waiver and Arbitration . TO THE FULLEST EXTENT PERMITTED BY LAW, HOLDER AND THE COMPANY AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (i) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS DEBENTURE, ANY RELATED AGREEMENTS OR INSTRUMENTS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THEM, (ii) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED, OR (iii) MAKE ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY HOLDER AND THE COMPANY, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER HOLDER NOR THE COMPANY HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. THE COMPANY WAIVES PRESENTMENT AND WRITTEN DEMAND FOR PAYMENT, NOTICE OF DISHONOR, PROTEST, AND NOTICE OF PROTEST OF THIS DEBENTURE.

All disputes arising under this Debenture shall be governed by and interpreted in accordance with the laws of the State of Nevada, without regard to principles of conflict of laws. The parties to this Debenture shall submit all disputes arising under this Debenture to arbitration in New York, New York before a single arbitrator of the American Arbitration Association (the “ AAA ”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of New York. No party hereto will challenge the jurisdiction or venue provisions as provided in this section. Nothing in this section shall limit the Holder’s right to obtain an injunction for a breach of this Debenture from a court of law. Any injunction obtained shall remain in full force and effect until the arbitrator fully adjudicates the dispute.

6.           Attorney’s Fees; Collection Costs . If there has been an Event of Default by the Company hereunder, Holder shall be entitled to receive and the Company agrees to pay all costs of enforcement and collection incurred by Holder, including, without limitation, reasonable attorney’s fees relating thereto.

7.           Notices . Unless otherwise specified herein, all notices hereunder shall be in writing and shall be deemed to have been given when delivered by hand, or on the third business day after properly deposited with the United States Postal Service, as certified mail, return receipt requested, postage prepaid, or on the first business day after properly deposited with an overnight courier of national standing, addressed to the address indicated below:

If to the Company, at:  

    ________________________

    ________________________

    ________________________

If to the Holder, to the address set forth for notice in the Subscription Agreement.

8.             No Waivers of Holder’s Rights . No failure or delay by Holder in exercising any right, power, or privilege hereunder or under any other documents or agreements executed in connection herewith shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies in this Debenture provided are cumulative and not exclusive of any rights or remedies otherwise provided by agreement or law.

9.             Record Ownership . The Company or its attorney shall maintain a register of the Holder of the Debentures (the “ Register ”) showing their names and addresses and the serial numbers and principal amounts of Debentures issued to them. The Register may be maintained in electronic, magnetic or other computerized form. The Company may treat the person named as the Holder of this Debenture in the Register as the sole owner of this Debenture. The Holder of this Debenture is exclusively entitled to receive payments on this Debenture, receive notifications with respect to this Debenture and otherwise exercise all of the rights and powers as the absolute owner hereof.

10.            Worn or Lost Debentures . If this Debenture becomes worn, defaced or mutilated but is still substantially intact and recognizable, the Company or its agent may issue a new Debenture in lieu hereof upon its surrender. Where the Holder of this Debenture claims that the Debenture has been lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in place of the Debenture if the Holder so requests by written notice to the Company.

11.            Amendments . Neither this Debenture nor any provision hereof may be amended, waived, discharged or terminated except by a written instrument signed by the Holder and, in the case of amendments, by the Company.

12.            Transferability . This Debenture has been issued by the Company for the sole benefit of Holder and may not be sold, transferred or otherwise assigned without the prior written consent of the Company, and the Holder agrees not to take any actions which would cause any third party to have such an interest in this Debenture.

13.            Assignment . The rights and obligations of the Company and Holder shall be binding upon any entity which becomes the successor of the Company such as the Public Company Successor or which otherwise assumes the Company’s obligations hereunder.

14.            Partial Invalidity . The invalidity or unenforceability of any one or more phrases, clauses or sections of this Debenture shall not affect the validity or enforceability of the remaining portions of it.

15.            Captions . The captions and headings of the various sections and subsections of this Debenture are provided for’ convenience only and shall not be construed to modify the meaning of such sections or’ subsections.

16.            Entire Agreement . This Debenture and the documents and any agreements executed in connection herewith constitute the ‘final agreement of the parties hereto and supersede any prior agreement or understanding, written or oral, with respect to the matters contained herein and therein.

THIS DEBENTURE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA. THIS DEBENTURE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA, EXCLUDING CONFLICT OF LAWS PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY OTHER JURISDICTION.

6

Blue Sphere Corporation 8-K

Exhibit 10.3  

BLUE SPHERE CORPORATION

WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT’ ), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND MAY ONLY BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR SUCH SECURITIES UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE LAW WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “ SEC ”).

FOR VALUE RECEIVED , BLUE SPHERE CORPORATION, as of December 23, 2015 (the “ Issuance Date ”) a Nevada corporation (the “ Company ”), hereby certifies that ____________, or its registered assigns (the “ Warrant Holder ”), is entitled, subject to the terms set forth below, to purchase from the Company ___________ shares (the “ Warrant Shares ”) of the Company’s common stock, $0.001 par value per share (the “ Common Stock ”), exercisable at price per share of [$0.05/$0.075] per share (the “ Exercise Price ”). This Warrant may be exercised any time after issuance through and including the fifth (5th) anniversary of the Issuance Date (the “ Expiration Date ”), subject to the following terms and conditions set out in this Warrant.

1.              Registration of Warrant . 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 Warrant Holder hereof from time to time. The Company may deem and treat the registered Warrant Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Warrant Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2.              Investment Representation . The Warrant Holder by accepting this Warrant represents that the Warrant Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Warrant Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws. The Warrant Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the Act and may not be sold by the Warrant Holder except pursuant to an effective registration statement or pursuant to an exemption from registration requirements of the Act and in accordance with federal and state securities laws. If this Warrant was acquired by the Warrant Holder pursuant to the exemption from the registration requirements of the Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and covenants that this Warrant may not be exercised by or on behalf of a Person during the one year distribution compliance period (as defined in Regulation S) following the date hereof. “ Person ” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

3.             Validity of Warrant and Issue of Shares . The Company represents and warrants that this Warrant has been duly authorized and validly issued and warrants and agrees that all of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, when issued upon such exercise, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. The Company further warrants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of Common Stock to provide for the exercise of the rights represented by this Warrant.

4.             Registration of Transfers and Exchange of Warrants .

(a)             Subject to compliance with the legend set forth on the face of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 10. Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “ New Warrant ”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Warrant Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights and obligations of a Warrant Holder of a Warrant.

(b)             This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the office of the Company specified in or pursuant to Section 10 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder. Any such New Warrant will be dated the date of such exchange.

5.             Exercise of Warrants .

(a)             This Warrant shall be exercisable at any time and from time to time from and after the Issuance Date and through and including the Expiration Date, for such number of Warrant Shares as is indicated in the form of Election to Purchase, which is attached hereto and incorporated herein as Exhibit A . If less than all of the Warrant Shares which may be purchased under this Warrant are exercised at any time, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant. At 5:00 P.M., New York time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

(b)             Exercise of this Warrant shall be made upon surrender of this Warrant with an Election to Purchase in the form attached hereto (or attached to such New Warrant), duly completed and signed to the Company, at its address set forth in Section 10.

(c)             A “ Date of Exercise ” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with an Election to Purchase in the form attached hereto (or attached to such New Warrant), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Warrant Holder to be purchased, as set forth herein.

(d)             Payment upon exercise may be made at the written option of the Warrant Holder either by cashless exercise, as set forth in Section 6, or in cash, wire transfer or by certified or official bank check payable to the order of the Company equal to the applicable aggregate purchase price, for the number of Warrant Shares specified in the Election to Purchase (as such exercise number shall be adjusted to reflect any adjustment in the total number of Warrant Shares issuable to the Warrant Holder per the terms of this Warrant) and the Warrant Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable Warrant Shares determined as provided herein.

(e)             The Company shall promptly, but in no event later than ten (10) business days after the Date of Exercise as defined herein, issue or cause to be issued and cause to be delivered to or upon the written order of the Warrant Holder and in such name or names as the Warrant Holder may designate (subject to the restrictions on transfer described in the legend set forth on the face of this Warrant), a certificate for the Warrant Shares issuable upon such exercise, with such restrictive legend as required by the Act, as applicable. Any person so designated by the Warrant Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

6.             Cashless Exercise .

(a)             If at any time prior to the Expiration Date there is not an effective registration statement on file with the SEC covering the resale of the Warrant Shares by the Warrant Holder, then at such time this Warrant may also be exercised by means of a cashless exercise. In such event, the Holder shall surrender this Warrant to the Company, together with a notice of cashless exercise, and the Company shall issue to the Holder the number of Warrant Shares determined as follows:

(b)            For purposes of Rule 144 of the Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Warrant Holder, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the issue date. Notwithstanding anything in this Warrant to the contrary, the Warrant Holder is limited in the amount of this Warrant it may exercise.

7.             Fractional Shares . The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. The number of full Warrant Shares that shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrants Shares purchasable on exercise of this Warrant so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 7, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Exercise Price multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

8.             Exercise Price Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 8. If, at any time while this Warrant is outstanding, the Company shall issue or cause to be issued rights or warrants to acquire or otherwise sell or distribute shares of Common Stock for a consideration per share less than the Exercise Price then, forthwith upon such issue or sale, the Exercise Price shall be reduced to the price (calculated to the nearest one hundredth of a cent) determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of (i) the number of shares of Common Stock outstanding immediately prior to such issuance, and (ii) the number of shares of Common Stock which the aggregate consideration received (or to be received, assuming exercise or conversion in full of such rights, warrants and convertible securities) for the issuance of such additional shares of Common Stock would purchase at such Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately after the issuance of such additional shares.

9.             No Registration; Compliance with Reporting Requirements . The Company shall take all actions, including timely filing all reports and other documents with the SEC, necessary for the Warrant Holder to, and will refrain from taking any actions which would prevent the Warrant Holder from being able to, sell or transfer the Warrant Shares (a) obtained by means of a cashless exercise pursuant to Section 6 within six (6) months following the Issuance Date or (b) otherwise obtained by exercise of this Warrant within six (6) months following the Date of Exercise.

10.           Notice . All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be delivered by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile transmission if such transmission is confirmed by delivery by certified or registered mail (first class postage pre-paid) or guaranteed overnight delivery, to the following addresses (or to such other addresses which such party shall subsequently designate in writing to the other party):

      (a)             If to the Company:

________________________

________________________

________________________

(b)            If to the Warrant Holder, to the address set forth for notice in the Subscription Agreement, dated as of the date hereof, between the Warrant Holder and the Company.

11.           Miscellaneous .

(a)             This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Warrant may be amended only in writing and signed by the Company and the Warrant Holder.

(b)             Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Warrant Holder any legal or equitable right, remedy or cause of action under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Warrant Holder.

(c)             This Warrant shall not be transferable by the Warrant Holder and shall be exercisable only by the Warrant Holder. Without the prior written consent of the Company, the Warrant shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Warrant or of any rights granted hereunder contrary to the provisions of this section, or the levy of any attachment or similar process upon the Warrant or such rights, shall be null and void.

(d)             The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(e)             In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonably substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

(f)             The Warrant Holder shall not, by virtue hereof, be entitled to any voting or other rights of a shareholder of the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in this Warrant.

(g)             This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws.

(h)             The Company and the Warrant Holder shall submit all disputes arising under this Warrant to arbitration in New York, New York before a single arbitrator of the American Arbitration Association (the “ AAA ”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of New York. No party hereto will challenge the jurisdiction or venue provisions as provided in this section. Nothing in this section shall limit the Warrant Holder’s right to obtain an injunction for a breach of this Agreement from a court of law. Any injunction obtained shall remain in full force and effect until the arbitrator fully adjudicates the dispute.

[Signature Page Follows]

IN WITNESS WHEREOF, the Company and Holder have caused this Warrant to be duly executed by the authorized officer as of the date first above stated.

[Signature Page to Warrant]

FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to

purchase shares of Common Stock under the foregoing Warrant)

Blue Sphere Corporation

Re: Election to Purchase Shares of Common Stock Under the Warrant

Gentlemen:

In accordance with the Warrant enclosed with this Election to Purchase, the undersigned hereby irrevocably elects to purchase _____________ shares of Common Stock of Blue Sphere Corporation at an Exercise Price of [$0.05/$0.075], and encloses herewith $____________ in cash, certified or official bank check(s), which sum represents the aggregate price for the number of shares of Common Stock to which this Election to Purchase relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant. Any capitalized terms used but not defined in this Election to Purchase shall have the meaning ascribed to them in the accompanying Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption from registration under the Securities Act.

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

Blue Sphere Corporation 8-K

Exhibit 10.4

PLEDGE AGREEMENT

This PLEDGE AGREEMENT (this “Agreement”) is dated as of December 23, 2015, by and between Blue Sphere Corporation, a Nevada corporation (the “Company” or “Pledgor”), and the undersigned investor (the “Pledgee”).

WHEREAS , the Company and Pledgee are executing and delivering this Agreement in connection with a Subscription Agreement, dated as of the date hereof (as such may be amended, restated or otherwise modified from time to time, the “SPA”), pursuant to which the Company shall issue to the Secured Party a certain Senior Debenture and (the “Debenture”) and a Warrants to purchase shares of the Company’s common stock (“Warrants”, together with the Debenture and the SPA, the “Transaction Documents”) as part of the Company’s Three Million Dollar ($3,000,000.00) offering (the “Offering”);

WHEREAS , the Pledgor owns 100 ordinary shares of Eastern Sphere Ltd., a company formed and existing under the laws of Israel (“Eastern Sphere”), representing 100% of the issued and outstanding shares of Eastern Sphere; and

WHEREAS, it is a condition precedent to the closing of the Offering, or a portion thereof, that the parties enter into this Agreement.

NOW, THEREFORE , in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and Subscriber hereby agree as follows:

1.             Defined Terms .

(a)          Capitalized terms defined in the Transaction Documents and not otherwise defined herein shall have the meanings given to them in the Transaction Documents.

“ Event of Default ” has the meaning given to such term in Section 12 hereof.

“ Obligations ” means the payment and performance of (a) the outstanding principal amount under the Debenture, (b) all accrued and unpaid interest on the Debenture, and (c) all other debts, obligations, liabilities, agreements or covenants of the Grantor under or in connection with the Debenture.

“ Pledged Shares ” means 49 ordinary shares of Eastern Sphere, representing forty-nine percent (49%) of its issued and outstanding shares, owned by the Company, including all rights attached thereto.

“ Security Interest ” has the meaning given to such term in Section 2 of this Agreement.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of Nevada, or in any other state whose laws are held to govern this Agreement or any portion hereof.

(c)            Terms Defined in Uniform Commercial Code . All other terms used in this Agreement that are not specifically defined in this Agreement or the Transaction Documents shall have the meaning assigned to such terms in the UCC to the extent such other terms are defined therein.

(d)            Singular/Plural, Etc . Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, references to the singular include the plural and “or” has the inclusive meaning represented by the phrase “and/or.” The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. References to Sections are references to Sections in this Agreement unless otherwise provided.

2.           Pledge . As security for the payment and performance of all of the Obligations, the Pledgor hereby grants, pledges, hypothecates, assigns and transfers to the Pledgee a security interest (the “Security Interest”) in all of the Pledgor’s right, title and interest in and to the Pledged Shares.

3.             Registrar . The Pledgor will file the Pledge with the Registrar of Chattel Mortgages in Jerusalem concurrently with the execution hereof and deliver to Pledgee copies of the Register showing that the pledge has been duly recorded.

4.             Warranties and Covenants . The Pledgor makes the following warranties and covenants:

(a)           The Pledgor has title to the Pledged Shares, free of all Liens except the Security Interest.

(b)          The Pledgor has full power and authority to execute this Agreement, to perform the Pledgor’s obligations hereunder and to subject the Pledged Shares to the Security Interest created hereby.

(c)           No financing statement covering all or any part of the Pledged Shares is on file in any public office (except for any financing statements filed by the Pledgee).

(d)          The Pledged Shares have been duly authorized and validly issued by Eastern Sphere, Ltd. thereof and are fully paid and non-assessable. The Pledged Shares are not subject to any offset or similar right or claim of the issuer thereof.

(e)           The Pledgor has the legal capacity, power and authority and the legal right to execute and deliver, and to perform its obligations under this Agreement and has taken all necessary corporate action to authorize such execution, delivery and performance.

(f)            This Agreement constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

(g)           The execution, delivery and performance of this Agreement will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to the Pledgor, or (ii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which the Pledgor is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder (other than in favor of the Pledgee). The Pledgor is not in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could have a material adverse effect on the properties, assets or condition (financial or otherwise) of the Pledgor.

(h)           Except for filings, recordings and registrations to perfect the Security Interest, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of the Pledgor to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Agreement.

(i)            Except as disclosed in writing to the Pledgee, there are no actions, suits or proceedings pending or, to the knowledge of the Pledgor, threatened against or affecting the Pledgor or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to the Pledgor could reasonably be expected to have a material adverse effect on the business, operations, property or condition (financial or otherwise) of the Pledgor or on the ability of the Pledgor to perform its obligations hereunder.

(j)            The Pledgee will have a first ranking security interest in and to the Pledged Shares.

(k)           The Obligations, for so long as outstanding under the Debenture, shall rank senior to all other indebtedness and liabilities of the Pledgor but subordinate to all indebtedness and liabilities of the Pledgor’s subsidiaries and project level operating entities in which the Pledgor holds an equity interest.

5.             Further Assurances . The Pledgor agrees that at any time and from time to time, at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or that the Pledgee may reasonably request, in order to perfect and protect the Security Interest or to enable the Pledgee to exercise and enforce its rights and remedies hereunder with respect to the Pledged Shares (but any failure to request or assure that the Pledgor execute and deliver such instruments or documents or to take such action shall not affect or impair the validity, sufficiency or enforceability of this Agreement and the Security Interest, regardless of whether any such item was or was not executed and delivered or action taken in a similar context or on a prior occasion). The Pledgor hereby authorizes the Pledgee to file one or more financing statements or continuation statements in respect thereof, and amendments thereto, relating to all or any part of the Pledged Shares.

6.             Voting Power, Dividends, and Default . Unless and until an Event of Default has occurred, Pledgor shall have the right to exercise all voting, consensual, and other powers of ownership pertaining to the Pledged Shares and Pledgor shall receive any dividends or distributions on the Pledged Shares, except as provided in the Debenture. If any Event of Default shall occur, then the Pledgee may take whatever action Pledgee determines in accordance with the Law in Israel in order to collect the outstanding Obligations.

8.             Taxes and Claims . The Pledgor will promptly pay all taxes and other governmental charges levied or assessed upon or against any Pledged Shares or upon or against the creation, perfection or continuance of the Security Interest, as well as all other claims of any kind against or with respect to the Collateral, except to the extent (a) such taxes, charges or claims are being contested in good faith by appropriate proceedings, (b) such proceedings do not involve any material danger of the sale, forfeiture or loss of any of the Pledged Shares or any interest therein and (c) such taxes, charges or claims are adequately reserved against on the Pledgor’s books in accordance with generally accepted accounting principles.

10.           Pledgee May Perform . If the Pledgor fails to perform any agreement contained herein, the Pledgee may itself perform, or cause performance of, such agreement, and the reasonable expenses of the Pledgee incurred in connection therewith shall be payable by the Pledgor.

11.           The Pledgee’s Duties . The powers conferred on the Pledgee hereunder are solely to protect its interest in the Pledged Shares and shall not impose any duty upon it to exercise any such powers.

12.           Remedies upon Default The Pledgee’s recourse in an Event of Default shall be the foreclosure of such a number of Pledged Shares representing at the time of their foreclosure value equal to the outstanding Obligations at that time by the exercise of this Pledge in accordance with the Laws of Israel. In addition, Pledgee may exercise any other right or remedy the Pledgee may have pursuant to the Transaction Documents, but in no event may Pledgee collect in total more than the outstanding Obligation owed to Pledgee at that time. Pledgee shall submit written notice of its intention to exercise the Pledge as aforementioned to the Pledgor and Pledgor shall have the right to cure any Event of Default by payment in full of any sums then due, whether by acceleration or otherwise, within ten (10) days of receipt of such notice. In the event that Pledgor does not cure such Event of Default within the aforementioned period, the Pledgee may take whatever action it deems fit in accordance with the terms of this Agreement.

13.           Costs and Expenses; Indemnity . The Pledgor will pay or reimburse the Pledgee on demand for all out-of-pocket expenses (including in each case all filing and recording fees and taxes and all reasonable fees and expenses of counsel and of any experts and agents) incurred by the Pledgee in connection with the creation, perfection, protection, satisfaction, foreclosure or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement, and all such costs and expenses shall be part of the Obligations secured by the Security Interest. The Pledgor shall indemnify and hold the Pledgee harmless from and against any and all claims, losses and liabilities (including reasonable attorneys’ fees) growing out of or resulting from this Agreement (including enforcement of this Agreement) or the Pledgee’s actions pursuant hereto, except that no Person shall be indemnified with respect to claims, losses or liabilities resulting from the Pledgee’s gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Any liability of the Pledgor to indemnify and hold the Pledgee harmless pursuant to the preceding sentence shall be part of the Obligations secured by the Security Interest. The obligations of the Pledgor under this Section 17 shall survive any termination of this Agreement. Furthermore, if and to the extent that any of the foregoing agreements described in this Section 17 may be unenforceable for any reason, the Pledgor agrees to make the maximum contribution to the payment and satisfaction of such liabilities that is permissible under applicable law.

14.          Waivers; Remedies; Marshaling . This Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly in a writing signed by the Pledgee and/or the party sought to be charged with any such amendment or modification. A waiver so signed shall be effective only in the specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any rights and remedies available to the Pledgee. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly in any order or sequence, or concurrently, at the Pledgee’s option, and the exercise or enforcement of any such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. The Pledgor hereby waives all requirements of law, if any, relating to the marshaling of assets which would be applicable in connection with the enforcement by the Pledgee of its remedies hereunder, absent this waiver.

15.           Notices . Any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, telegram, telex, facsimile transmission (with machine or oral confirmation of delivery), overnight courier or United States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing delivered as required as required under this Section 19. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by telegram, telex or facsimile transmission (with machine or oral confirmation of delivery), from the first business day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed.

16.          Pledgor Acknowledgments . The Pledgor hereby acknowledges that (a) the Pledgor has been advised by counsel in the negotiation, execution and delivery of this Agreement, (b) the Pledgee does not have a fiduciary relationship to the Pledgor, the relationship being solely that of debtor and creditor, and (c) no joint venture exists between the Pledgor and the Pledgee.

17.          Continuing Security Interest; Assignments under Loan Agreement . This Agreement shall (a) create a continuing security interest in the Pledged Shares and shall remain in full force and effect until payment in full of the Obligations and the expiration or termination of the obligations, if any, of the Pledgee to extend credit accommodations to the Borrower, (b) be binding upon the Pledgor, its successors and assigns, and (c) be enforceable by the Pledgee and shall inure to the benefit of the Pledgee’s successors, transferees, and assigns. Without limiting the generality of the foregoing clause (c), the Pledgee may assign or otherwise transfer all or any portion of its rights and obligations under the Loan Agreement to any other Persons to the extent and in the manner provided in the Loan Agreement and may similarly transfer all or any portion of its rights under this Agreement to such Persons.

18.           Termination of Security Interest . Upon payment in full of the Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Shares shall revert to the Pledgor.

19.          Law Governing this Agreement and Disputes . This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws; provided, however, that any matter relating to the registration of the Pledge, as provided herein, or the enforcement of the Pledge in Israel, shall be governed by and construed in accordance with the laws of Israel. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

The parties to this Agreement shall submit all disputes arising under this Debenture to arbitration in New York, New York before a single arbitrator of the American Arbitration Association (the “ AAA ”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of New York. No party hereto will challenge the jurisdiction or venue provisions as provided in this section. Nothing in this section shall limit the Subscriber’s right to obtain an injunction for a breach of this Agreement from a court of law. Any injunction obtained shall remain in full force and effect until the arbitrator fully adjudicates the dispute.

20.           Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

21.          General . All representations and warranties contained in this Agreement, any other Loan Document to which the Pledgor is a party or in any other agreement between the Pledgor and the Pledgee shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations. The Pledgor waives notice of the acceptance of this Agreement by the Pledgee. Captions in this Agreement are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Agreement.

IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.