SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made on August 28,
2018, by and between MagneGas Corporation, a Delaware corporation (“Company”)
and First Choice International Company, Inc., a Delaware corporation (“Buyer”).

 

RECITALS

 

WHEREAS, the Company and the Buyer desire to enter into this transaction for the
Company to sell and the Buyer to purchase shares of Common Stock (as defined
below) pursuant to a currently effective shelf registration statement on Form
S-3, which includes the Common Stock registered thereunder (Registration Number
333-207928) (the “Registration Statement”), which Registration Statement has
been declared effective in accordance with the Securities Act of 1933, as
amended (the “1933 Act”), by the United States Securities and Exchange
Commission (the “SEC”).

 

WHEREAS, in conjunction with the purchase and sale of the Common Stock, the
Company will grant the Buyer certain Warrants to purchase shares of Common
Shares (as defined below), pursuant to Regulation D, Rule 506(b), as promulgated
under the 1933 Act, as amended. The number of Warrants granted at each closing
shall be in an amount equal to the number of shares of Common Stock purchased in
each closing.

 

WHEREAS, the Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, an aggregate amount of up to
25,000,000 shares of Common Stock (referred to herein as the “Common Shares”);
and (ii) a warrant to acquire up to 25,000,000 shares of Common Stock,
substantially in the form attached hereto as Exhibit B (the “Warrants”) (as
exercised, collectively, the “Warrant Common Shares”). The Common Shares and
Warrant Common Shares are collectively referred to herein as the “Purchased
Securities.”

 

WHEREAS, this Agreement, the form of Subscription Agreement, form of Warrant
Agreement, and form of Registration Rights Agreement and all ancillary
transaction documents are collectively referred to herein as the “Transaction
Documents.”

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

 

Section 1. Purchase and Sale of Common Shares and Grant of Warrants.

 

(a) Purchase of Common Shares and Grant of Warrants. Subject to the satisfaction
(or waiver) of the conditions set forth in Section 6 below, the Company shall
issue and sell to the Buyer, and the Buyer agrees to purchase from the Company
on each closing date (i) such aggregate number of Common Shares set forth
opposite such Buyer’s name in the Subscription Agreement, substantially in the
form attached hereto as Exhibit A, up to a total of 25,000,000 shares of Common
Stock; and (ii) upon receipt of the consideration for such shares of Common
Stock, the Buyer shall receive that number of Warrants equal to the number of
shares of Common Stock purchased. The Warrants shall be substantially in the
form attached hereto as Exhibit B. The Buyer has agreed to purchase a minimum of
500,000 shares of Common Stock at the Initial Closing (defined below).

 

 

 

 

(b) Closing. Each closing of the purchase of the Common Shares and exercise of
the Warrants and purchase of the underlying Warrant Common Shares by the Buyers
shall occur remotely through the electronic exchange of documents. The date and
time of the initial closing shall be 1:00 p.m., New York time, on August 28,
2018 (the “Initial Closing Date”), and each other date that the Buyer provides
notice of the date on which it intends to purchase additional shares of Common
Stock or exercise Warrants (“Subsequent Closing Date, each a “Subsequent
Closing”).

 

(c) Purchase Prices. The purchase price for (1) the Common Shares to be
purchased by the Buyer is $0.15 per share and (2) the purchase price for the
Warrant Common Shares to be purchased by the Buyer upon exercise of the Warrants
is $0.30 per share. The purchase prices paid for the Common Shares and the
Warrant Common Shares upon exercise of the Warrants are individually and
collectively referred to herein as the “Purchase Price,” as applicable.

 

(d) Form of Payment – Common Stock. On the Initial Closing Date and each
Subsequent Closing Date, (1) the Buyer shall pay the Purchase Price for the
Common Stock by wire transfer of immediately available funds in accordance with
the payment instructions provided to the Buyer by the Company (with the
understanding that the portion of the Purchase Price for the Warrant Common
Shares shall only be paid at the time that the Buyer exercises that portion of
the Warrants) (2) the Company shall (A) cause Corporate Stock Transfer (together
with any subsequent transfer agent, the “Transfer Agent”) through the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program, to credit such
aggregate number of Common Shares that the Buyer is purchasing as is set forth
in each Subscription Agreement transmitted to the Company by the Buyer to the
Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system.

 

(e) Warrant Delivery. On each closing date, the Company will deliver to the
Buyer a Warrant, pursuant to which the Buyer shall have the right to acquire up
to that number of Warrant Common Shares equivalent to the number of shares of
Common Stock purchased on a one-for-one basis at each closing, duly executed on
behalf of the Company and registered in the name of the Buyer or its designee.
The Warrant Common Shares shall be subject to a Registration Rights Agreement,
substantially in the form set forth on Appendix A to the Warrant agreement (the
“Registration Rights”). Subject to registration of the Warrant Common Shares
underlying the Warrants and the Buyer’s exercise of the respective portion of
the Warrants, the procedures set forth in Section 1(d) shall be followed.

 

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(f) Principal Market Regulation. The Company shall not issue any shares of
Common Stock pursuant to the terms of this Agreement if the issuance of such
shares of Common Stock would exceed the aggregate number of shares of Common
Stock which the Company may issue pursuant to this Agreement or upon exercise of
the Warrants without breaching the Company’s obligations under the rules or
regulations of the Nasdaq Capital Market (“Principal Market”) (the number of
shares which may be issued without violating such rules and regulations, the
“Exchange Cap”), except that such limitation shall not apply in the event that
the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of shares of Common Stock
in excess of such amount or (B) obtains a written opinion from outside counsel
to the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Holder. Until such approval or such written
opinion is obtained, the Holder shall be issued in the aggregate shares of
Common Stock (including upon the exercise of Warrants) in an amount greater than
the product of (i) the Exchange Cap as of the issuance date multiplied by (ii)
the quotient of (1) the aggregate number of Common Stock issued to such Holder
pursuant to this Agreement on the Closing Date divided by (2) the aggregate
number of shares of Common Stock issued to the Holder pursuant to the this
Agreement on the Closing Date (the “Exchange Cap Allocation”). In the event that
any Holder shall sell or otherwise transfer any of such Holder’s Common Stock or
Warrants, the transferee shall be allocated a pro rata portion of such Holder’s
Exchange Cap Allocation with respect to such portion of such Common Stock or
Warrants so transferred, and the restrictions of the prior sentence shall apply
to such transferee with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee.

 

Section 2. Company Representations and Warranties. Company hereby represents,
warrants and covenants to Buyer as follows as of the date hereof:

 

(a) Organization and Qualification. The Company is duly organized and validly
existing and in good standing under the laws of the jurisdiction in which it is
formed, and has the requisite power and authority to own its properties and to
carry on its business as now being conducted and as presently proposed to be
conducted. The Company is duly qualified as a foreign entity to do business and
is in good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification necessary.

 

(b) Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Common Stock, Warrants and the
Warrant Common Shares underlying the Warrants in accordance with the terms
hereof and thereof. The execution and delivery of this Agreement and the other
Transaction Documents by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Common Shares, the issuance of the Warrants and the reservation
for issuance and issuance of the Warrant Common Shares issuable upon exercise of
the Warrants have been duly authorized by the Company’s board of directors or
other governing body, as applicable, and (other than (x) the filing with the SEC
of the prospectus supplement related to the Common Stock required by Rule 424(b)
under the 1933 Act (the “Prospectus Supplement”) supplementing the base
prospectus forming part of the Registration Statement (such base prospectus as
so supplemented, the “Prospectus”) and (y) a Form D with the SEC and any other
filings as may be required by any state securities agencies (collectively, the
“Required Filings”)) no further filing, consent or authorization is required by
the Company, its Subsidiaries, their respective boards of directors or their
stockholders or other governing body. This Agreement has been, and the other
Transaction Documents to which it is a party will be prior to the Closing, duly
executed and delivered by the Company, and each constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities law.

 

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(c) Issuance of Securities. The issuances of the Common Shares, the Warrants and
the Warrant Common Shares are duly authorized and upon issuance in accordance
with the terms of the Transaction Documents shall be validly issued, fully paid
and non-assessable and free from all preemptive or similar rights, mortgages,
defects, claims, liens, pledges, charges, taxes, rights of first refusal,
encumbrances, security interests and other encumbrances (collectively “Liens”)
with respect to the issuance thereof.

 

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Common Shares, the issuance of the Warrants and the reservation for issuance
and issuance of the Warrant Common Shares issuable upon exercise of the will not
(i) result in a violation of the organizational documents of the Company, or any
capital stock or other securities of the Company, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations
and the rules and regulations of the Principal Market and including all
applicable foreign, federal and state laws, rules and regulations) applicable to
the Company or by which any property or asset of the Company is bound or
affected.

 

(e) Consents. The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with (other than
the Required Filings), any Governmental Entity (as defined below) or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its respective obligations under or
contemplated by the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. “Governmental Entity” means any nation, state, county,
city, town, village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal),
multi-national organization or body; or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any
of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.

 

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(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that the Buyer is not (i) an
officer or director of the Company or any of its Subsidiaries, (ii) an
“affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or successor
rule thereto) (collectively, “Rule 144”)) of the Company or any of its
Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of
the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company
further acknowledges that the Buyer is not acting as a financial advisor or
fiduciary of the Company or any of its subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities.

 

(g) Fees. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold the Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim.

 

Section 3. Buyer Representations and Warranties. The Buyer represents and
warrants to the Company that, as of the date hereof and as of the Initial
Closing Date and each Subsequent Closing Date:

 

(a) Organization; Authority. The Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents to which
it is a party and otherwise to carry out its obligations hereunder and
thereunder.

 

(b) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and shall constitute the legal,
valid and binding obligation of the Buyer enforceable against the Buyer in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(c) No Conflicts. The execution, delivery and performance by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of the Buyer, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
the Buyer.

 

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(d) Miscellaneous.

 

(i) Buyer understands that the Warrants and underlying Warrant Common Shares
have not been and are not being registered under the Securities Act or any other
applicable securities laws, and may not be offered for sale, sold, assigned or
transferred unless subsequently registered thereunder or an exemption from such
registration is available.

 

(ii) Buyer (a) is a sophisticated person with respect to the purchase of the
Purchased Securities; (b) has adequate information concerning the business and
financial condition of the Company to make an informed decision regarding the
purchase of the Purchased Securities; and (c) has independently and without
reliance upon Company or any of Company’s affiliates, employees or agents, and
based on such information as Buyer has deemed appropriate, made its own analysis
and decision to enter into this Agreement and the Transaction Documents, except
that Buyer has relied upon Company’s express representations, warranties and
covenants in this Agreement. Buyer acknowledges that neither Company nor any of
Company’s affiliates, employees or agents have given Buyer any investment
advice, credit information or opinion on whether the purchase of the Purchased
Securities is prudent and neither Company nor any of Company’s affiliates,
employees or agents is acting as a fiduciary for or an advisor to Buyer in
respect of this Agreement.

 

(iii) Buyer is (i) acquiring the Common Stock and (ii) upon exercise of the
Warrants will acquire the Warrant Common Shares, in each case, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted under the Securities Act and any other applicable securities laws;
provided, however, that by making the representations herein, the Buyer does not
agree to hold any of such securities for any minimum or other specific term and
reserves the right to dispose of such securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities Act
and any other applicable securities laws.

 

(iv) Buyer is an “accredited investor” (as defined in Regulation D Rule 501(a)
under the 1933 Act) and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
transaction contemplated herein, and it is able to bear the economic risk of
such purchase.

 

(v) Buyer understands that Warrants and underlying Warrant Common Share are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
any other applicable securities laws.

 

(vi) Buyer is not purchasing the Purchased Securities “on the basis of” (as
defined in Rule 10b5-1 of the Exchange Act) any material, non-public information
about the Purchased Securities or the Company.

 

Section 4. Conditions to the Company’s Obligation to Sell and the Buyer’s
Obligation to Buy.

 

(a) The obligation of the Company hereunder to issue and sell the Common Stock,
Warrants and Warrant Common Shares to the Buyer at the Initial Closing and each
Subsequent Closing, and the obligation of the Buyer hereunder to purchase the
respective portion of the Purchased Securities at the Initial Closing and each
Subsequent Closing, is subject to the satisfaction, at or before each such
closing date, of each of the following conditions:

 

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(i) The Buyer and the Company shall have executed each of the other Transaction
Documents to which it is a party and delivered the same to each other.

 

(ii) The Buyer shall have delivered to the Company the Purchase Price for the
Common Shares (with the understanding that the portion of the Purchase Price for
the Warrant Common Shares shall only be paid at the time that the Buyer
exercises that portion of the Warrants), as applicable, being purchased by the
Buyer at the Initial Closing and each Subsequent Closing by wire transfer of
immediately available funds.

 

(iii) The representations and warranties of the Buyer and the Company shall be
true and correct in all material respects as of the date when made and as of the
each applicable closing date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date, and except for representations and
warranties that are qualified by materiality, in which case such representations
and warranties shall be true and correct in all respects), and the Buyer and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by the Buyer
and the Company at or prior to the respective closing date.

 

Section 5. Payment of Expenses. Except as set forth in Section 2(g), each party
hereto shall be liable for its own costs and expenses in connection with the
transactions contemplated hereby.

 

Section 6. Termination. In the event that the Initial Closing shall not have
occurred within five (5) calendar days of the date hereof or all Subsequent
Closings have not been completed on or before August 31, 2019, then the parties
shall have the right to terminate their remaining obligations under this
Agreement with respect to themselves at any time on or after the close of
business on such date without liability of such party to any other party;
provided, however, (i) the right to terminate this Agreement under this Section
6 shall not be available to the Buyer if the failure of the transactions
contemplated by this Agreement to have been consummated by such date is the
result of the Buyer’s breach of this Agreement and (ii) the abandonment of the
sale and purchase of the Warrants, Warrant Common Shares and the Common Shares
shall be applicable only to the Buyer providing such written notice, provided
further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse the Buyer for the expenses described in
Section 2(g) above. Nothing contained in this Section 6 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. The parties
may also terminate this agreement upon mutual written consent to do so.

 

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Section 7. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or emailed and confirmed to the parties hereto as
follows:

 

If to Buyer:

 

c/o First Choice International Company, Inc.
330 Clematis Street, Ste. 217

West Palm Beach, FL 33401
Facsimile: 800-805-1622
Telephone: 305-587-9897
E-mail: mhp@123bgp.com
Attention: Mark Peikin, CEO

 

If to Company:

 

c/o MagneGas Corporation
11885 44th Street North

Clearwater, FL 33762
Telephone: 727-934-3448
Facsimile: 727-290-4941

Email: scottmahoney@magnegas.com

Attention: Scott Mahoney, CFO

 

Any party hereto may change the address for receipt of communications by giving
written notice to the others.

 

Section 8. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY AGREES THAT ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE
BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN
THE COUNTY, CITY, AND STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH COURT AND HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM OR A
LACK OF PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND
ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR
DOMICILE OF ANY PARTY HERETO. EACH PARTY 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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

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Section 9. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements among Buyer, Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein, inclusive of the
Transaction Documents, contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither Company nor Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.

 

Section 10. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

Section 11. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto, the Company, and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.

 

Section 12. Further Assurances. Each party shall use its commercially reasonable
efforts to do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

 

Section 13. Confidentiality. The Buyer and the Company each hereby agrees,
without the prior written consent of the other, to not disclose, and to
otherwise keep confidential, this Agreement and the sale of the Purchased
Securities contemplated hereby, except to the extent that disclosure thereof is
required by law, rule or regulation or as required or requested by any competent
governmental, regulatory or supervisory authority or has become publicly known
through no fault of such party; provided, however, that the Buyer and the
Company may disclose information regarding such sale to their respective
accountants, attorneys, limited partners, shareholders and other interest
holders. Notwithstanding the foregoing, the Company shall have the right to
issue a press release disclosing the transaction, which press release may be
reviewed and commented on by Buyer prior to public dissemination.

 

Section 14. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of the Purchased Securities.

 

[Signature Page Follows]

 

[The Remainder of This Page is Intentionally Blank]

 

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IN WITNESS WHEREOF, Buyer and Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date
first written above.

 

  MAGNEGAS CORPORATION         By: /s/ Ermanno Santilli   Name: Ermanno Santilli
  Title: Chief Executive Officer

 

 

 

 

IN WITNESS WHEREOF, Buyer and Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date
first written above.

 

  FIRST CHOICE INTERNATIONAL COMPANY, INC.         By: /s/ Mark
Peikin                Name: Mark Peikin   Title: CEO

 

 

 

 

Exhibit A

“Form of” Subscription Agreement

 

—-

 

SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (this “Agreement”) is dated as of [ ], 2018 between
MagneGas Corporation with an office and place of business at 11885 44th Street
N., Clearwater, Florida 33762 (“MNGA” or the “Company”), and First Choice
International Company, Inc., with an office and place of business located at
3300 N.E. 188th Street, LPH 17, Aventura, FL 33180 (“Buyer”).

 

RECITALS

 

A. The Company is offering (the “Offering”), pursuant to an effective S-3 shelf
registration statement, and subject to the other terms and conditions contained
in this Agreement, up to 25,000,000 shares of Common Stock (as defined in the
Securities Purchase Agreement). The purchase price of the Common Stock is $0.15
per share (“Purchase Price”). Shares of Common Stock are hereinafter sometimes
collectively referred to as the “Securities.”

 

B. The Offering will commence August 28, 2018, and terminate on the close of
business on November 30, 2018 (the “Offering Period”). The Company may hold
closings at any time during the Offering Period (the “Closings”) from
time-to-time until the termination or expiration of the Offering Period. There
is no requirement that a minimum number of shares of Common Stock be purchased
before the Company may accept subscription proceeds from the sale of the Common
Stock and there is no requirement that the Buyer purchase any or all of the
Common Stock, beyond that purchased in the Initial Closing (as defined in the
Securities Purchase Agreement).

 

C. Buyer desires to purchase, and the Company is willing to sell to the Buyer,
upon the terms and conditions stated in this Agreement, the number of shares of
Common Stock set forth on the signature page hereof (the “Purchased Shares”) at
the aggregate Purchase Price for that number of shares being purchased.
Subsequent purchase may be made by the Buyer utilizing this same form of
Agreement.

 

D. All references herein to “Securities Purchase Agreement” shall mean that
certain Securities Purchase Agreement entered into by and between the Company
and Buyer on August 28, 2018, as amended.

 

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 is hereby acknowledged, the Company and Buyer agree as
follows:

 

 

 

 

1. Subscription and Offering. The Buyer hereby subscribes for and agrees to
purchase that number of shares of Common Stock as set forth on the signature
page hereto in cash (equal to the product of the number of Securities of the
Company subscribed for multiplied by $0.15), receipt of which is hereby
acknowledged by the Company’s acceptance of this Subscription, below.

 

2. Deliveries. The Buyer and Company will comply with the purchase and delivery
requirements set for in Section 1(d) of the Securities Purchase Agreement and as
provided in this Agreement.

 

3. Company Representation and Warranties. Company hereby represents, warrants
and covenants to Buyer as follows as of the date hereof:

 

a. Organization and Qualification. The Company is duly organized and validly
existing and in good standing under the laws of the jurisdiction in which it is
formed, and has the requisite power and authority to own its properties and to
carry on its business as now being conducted and as presently proposed to be
conducted. The Company is duly qualified as a foreign entity to do business and
is in good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification necessary.

 

b. Authorization; Enforcement; Validity. The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement and the
other and to issue the Common Stock accordance with the terms hereof. The
execution and delivery of this Agreement by the Company, and the consummation by
the Company of the transactions contemplated hereby (including the issuance of
the Common Shares) have been duly authorized by the Company’s board of directors
or other governing body, as applicable, and no further filing, consent or
authorization is required by the Company, its Subsidiaries, their respective
boards of directors or their stockholders or other governing body. This
Agreement duly executed and delivered by the Company, and each constitutes the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities law.

 

c. Issuance of Securities. The issuances of the Common Shares are duly
authorized and upon each such issuance in accordance with the terms of this
Agreement shall be validly issued, fully paid and non-assessable and free from
all preemptive or similar rights, mortgages, defects, claims, liens, pledges,
charges, taxes, rights of first refusal, encumbrances, security interests and
other encumbrances with respect to the issuance thereof.

 

 

 

 

d. No Conflicts. The execution and delivery of the Common Stock contemplated
hereby will not (i) result in a violation of the organizational documents of the
Company, or any capital stock or other securities of the Company, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) in any respect under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations
and the rules and regulations of the Nasdaq Capital Market (the “Principal
Market”) and including all applicable foreign, federal and state laws, rules and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected.

 

e. Consents. The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with any
Governmental Entity (as defined below) or any regulatory or self-regulatory
agency or any other person in order for it to execute, deliver or perform any of
its respective obligations under this Agreement. “Governmental Entity” means any
nation, state, county, city, town, village, district, or other political
jurisdiction of any nature, federal, state, local, municipal, foreign, or other
government, governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

 

f. Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the purchase of the Common Stock that the
Buyer is not (i) an officer or director of the Company or any of its
subsidiaries, (ii) an “affiliate” (as defined in Rule 144 promulgated under the
1933 Act (or successor rule thereto) (collectively, “Rule 144”)) of the Company
or any of its subsidiaries or (iii) to its knowledge, a “beneficial owner” of
more than 10% of the shares of Common Stock (as defined for purposes of Rule
13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)).

 

g. Fees. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold the Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim.

 

4. SEC Filings; Financial Statements.

 

a. As of the date hereof current public information for the Company is available
(the “Company SEC Reports”), which are all the forms, reports and documents
filed by Company with the U.S. Securities and Exchange Commission (“SEC”) from
January 1, 2017 to the date of this Agreement. As of their respective dates, the
Company’s SEC Reports (i) were prepared in accordance and complied in all
material respects with the requirements of the 1933 Act (defined below) or the
1934 Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports; and (ii) did not at the time
they were filed (and if amended or superseded by a filing prior to the date of
this Agreement then on the date of such filing and as so amended or superseded)
contain any intentional 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,
not misleading.

 

 

 

 

b. Each set of financial statements (including, in each case, any related notes
thereto) contained in the Company SEC Reports comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with U.S. GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, do not contain footnotes as
permitted by Form 10-Q promulgated under the 1934 Act) and each fairly presents
in all material respects the financial position of Company at the respective
dates thereof and the results of its operations and cash flows for the periods
indicated.

 

c. Information. The information concerning the Company set forth in this
Agreement and the Company SEC Reports is complete and accurate in all material
respects and does not contain any intentional untrue statements of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.

 

5. Buyer Representations and Warranties. Buyer hereby represents and warrants to
the Company as follows:

 

a. Organization; Authority. The Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents to which
it is a party and otherwise to carry out its obligations hereunder and
thereunder.

 

b. Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and shall constitute the legal,
valid and binding obligation of the Buyer enforceable against the Buyer in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

c. No Conflicts. The execution, delivery and performance by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated
hereby will not (i) result in a violation of the organizational documents of the
Buyer, or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to the Buyer.

 

 

 

 

d. Miscellaneous.

 

i. Buyer (a) is a sophisticated person with respect to the purchase of the
Common Stock; (b) has adequate information concerning the business and financial
condition of the Company to make an informed decision regarding the purchase of
the Common Stock; and (c) has independently and without reliance upon Company or
any of Company’s affiliates, employees or agents, and based on such information
as Buyer has deemed appropriate, made its own analysis and decision to enter
into this Agreement, except that Buyer has relied upon Company’s express
representations, warranties and covenants in this Agreement. Buyer acknowledges
that neither Company nor any of Company’s affiliates, employees or agents have
given Buyer any investment advice, credit information or opinion on whether the
purchase of the Common Stock is prudent and neither Company nor any of Company’s
affiliates, employees or agents is acting as a fiduciary for or an advisor to
Buyer in respect of this Agreement.

 

ii. Buyer is acquiring the Common Stock for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act and any other applicable securities laws; provided, however, that by making
the representations herein, the Buyer does not agree to hold any of such
securities for any minimum or other specific term and reserves the right to
dispose of such securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act and any other
applicable securities laws. Buyer is acquiring the Securities hereunder in the
ordinary course of its business.

 

iii. Buyer is an “accredited investor” (as defined in Regulation D Rule 501(a)
under the 1933 Act) and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
transaction contemplated herein, and it is able to bear the economic risk of
such purchase.

 

iv. Buyer is not purchasing the Purchased Securities “on the basis of” (as
defined in Rule 10b5 1 of the Exchange Act) any material, non-public information
about the Purchased Securities or the Company.

 

v. Buyer is not purchasing the Common Stock as a result of any advertisement,
article, notice or other communication regarding the Common Stock 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.

 

vi. Buyer acknowledges that it has had the opportunity to review this Agreement
and the SEC Reports and has make its decision to purchase the Common Stock on
the basis of its independent evaluation thereof.

 

6. Use of Proceeds. The Company shall use the net proceeds from the sale of the
Common Stock hereunder for working capital purposes.

 

 

 

 

7. Effective Registration Statement. The Company covenants that the sale of the
Common Stock is being made pursuant to a currently effective shelf registration
statement on Form S-3, which includes the Common Stock registered thereunder
(Registration Number 333-207928) (the “Registration Statement”), which
Registration Statement has been declared effective in accordance with the
Securities Act of 1933, as amended (the “1933 Act”), by the United States
Securities and Exchange Commission (the “SEC”). The Company shall file within
two (2) trading days of the date hereof a prospectus supplement to the
Registration Statement covering the sale of the Securities (the “Prospectus
Supplement”) in accordance with the terms of the Agreement. The Company shall
keep the Registration Statement effective pursuant to Rule 415 promulgated under
the 1933 Act and available for sales of all Purchased Shares to the Buyer until
such time as (i) it no longer qualifies to make sales under the Registration
Statement (which shall be understood to include the inability of the Company to
immediately register sales of Securities to the Buyer under the Registration
Statement or any new registration statement pursuant to General Instruction
I.B.6 of Form S-3), or (ii) the date on which all the Securities have been sold
under this Agreement.

 

8. Indemnification. The parties hereto recognize that the sale and purchase of
the Common Stock will be based upon their representations and warranties set
forth herein, and the Buyer and Company hereby agree to indemnify and defend
each other and to hold each of their respective officers, directors, employees,
affiliates, attorneys or agents thereof, harmless from and against any and all
loss, damage, liability or expense, including costs and reasonable attorneys’
fees, to which they may be put or which they may incur by reason of, or in
connection with, any misrepresentation made by a party to this Agreement, any
breach by such party of its warranties and/or a failure to fulfill any of the
covenants or agreements set forth herein or elsewhere or arising out of the sale
or distribution of the Common Stock or components thereof in violation of the
1933 Act, as amended, and any other applicable state securities laws.

 

9. Acceptance or Rejection. The Buyer understands that the Company, in its sole
discretion and for any reason, may accept or reject its subscription, in whole
or in part and such rejection shall not constitute a default under this
Agreement or any other Transaction Documents (as defined in the Securities
Purchase Agreement).

 

10. Waiver. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or in any other documents. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.

 

11. Binding Effect; Benefits. This Agreement shall inure to the benefit of the
parties hereto and shall be binding upon them and their respective their heirs,
executors, administrators, successors, legal representatives and assigns. Except
as otherwise set forth herein, nothing in this Agreement, expressed or implied,
is intended to confer upon any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.

 

 

 

 

12. Assignment; Delegation. No party to this Agreement may assign its rights or
delegate its obligations hereunder without the prior written consent of all of
the other parties. Any assignment or delegation in violation of this Section 12
shall be null and void.

 

13. Entire Agreement. This Agreement in conjunction with the agreements
referenced herein constitutes the entire agreement and supersedes all prior
agreements, statements, representations or promises, oral and written, among the
parties hereto with respect to the subject matter hereof. No party hereto shall
be bound by or charged with any written or oral arguments, representations,
warranties, statements, promises or understandings not specifically set forth in
this Agreement.

 

14. Notices. Any notice, demand or other communication which any party hereto
may be required, or may elect, to give to anyone interested hereunder shall be
made in accordance with Securities Purchase Agreement.

 

15. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES. EACH PARTY AGREES THAT ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT IN A
U.S. FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY,
CITY, AND STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE JURISDICTION OF SUCH COURT AND HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM OR A LACK OF
PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY
RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE
OF ANY PARTY HERETO. EACH PARTY 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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

16. Severability. If any term or provision of this Agreement shall to any extent
be finally determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of the agreement shall be valid and enforced to the
fullest extent permitted by law, provided that as so enforced, each of the
parties receives substantially all of the benefits contemplated hereby.

 

17. Counterparts. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts and by facsimile, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all parties, notwithstanding that all parties are not signatories to the same
counterpart. Signatures may be facsimiles.

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year this subscription has been accepted by the Company as set forth
below.

 

Name of Buyer: ____________________________________________________________

 

Name of Buyer, if Joint: _____________________________________________________

 

Signature of Individual or Authorized Signatory:
_____________________________________

 

Signature of Buyer, if Joint Individuals:
________________________________________

 

Name of Authorized Signatory, if Entity:
___________________________________________

 

Title of Authorized Signatory, if Entity:
____________________________________________

 

Email Address of Authorized Signatory:
____________________________________________

 

Facsimile Number of Authorized Signatory:
_________________________________________

 

Address for Notices to Buyer:

 

           

 

Address for Delivery of Securities to Buyer (if not same as address for notice):

 

           

 

EIN Number: _______________________

 

Number of Units Purchased: __________

 

Purchase Price: $____________

 

ACCEPTANCE OF SUBSCRIPTION       MAGNEGAS CORPORATION         By:   Name: Scott
Mahoney   Title: Chief Financial Officer  

 

 

 

 

Exhibit B

 

“Form of” Warrant

 

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. 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

 

Magnegas corporation

 

Warrant Shares: [             ] Initial Exercise Date: _____ __, 2018

 

This COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, [__________]or assigns (the “Holder”) is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on August 31, 2019 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from MagneGas Corporation, a
Delaware corporation (the “Company”), up to [          ] shares (as subject to
adjustment hereunder, the “Warrant Shares”) of the Company’s common stock, par
value $0.0001 per share (the “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 1(b).

 

The Company hereby confirms that the Company will cause to be filed and will
make best efforts to cause to be declared effective one or more resale
registration statements on Form S-3 with respect to any Warrants Shares within
thirty (30) days of the Holder’s striking of any Warrants and the payment of the
Exercise Price giving rise to such Warrant Shares and any other securities
issued upon conversion or exchange or otherwise in respect thereof, including
without limitation pursuant to any stock dividend, stock split, merger,
consolidation or other recapitalization transaction (collectively, the
“Registrable Securities”), in accordance with Appendix A annexed hereto.

 

 

 

 

Section 1. Exercise.

 

a) 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 (each, a “Subsequent Exercise 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
(or e-mail attachment) of the Notice of Exercise in the form annexed hereto and,
within one (1) Trading Day of the date said Notice of Exercise is delivered to
the Company, payment the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank. 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 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 Common Stock under this
Warrant shall be US$0.30 subject to adjustment hereunder (the “Exercise Price”).

 

c) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant
Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account 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 there is
an effective registration statement or applicable exemption permitting the
issuance of the Warrant Shares to or resale of the Warrant Shares by Holder and
otherwise by physical delivery of a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of
Warrant Shares to which the Holder is entitled pursuant to such exercise to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Trading Days after the delivery to the Company of the Notice of
Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the
Notice of Exercise the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date of delivery of the Warrant
Shares; provided payment of the aggregate Exercise Price is received within one
(1) Trading Day of delivery of the Notice of Exercise. The Company agrees to
maintain a transfer agent that is a participant in the FAST program so long as
this Warrant remains outstanding and exercisable.

 

 

 

 

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 1(c)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise by delivering written notice to the Company at any time prior to the
Company delivering such Warrant Shares.

 

iv. 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.

 

v. 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 such 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 and all fees to the Depository
Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares.

 

vi. 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.

 

 

 

 

d) Holder’s Exercise Limitations. The Company shall not cause any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 1 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 (such Persons, “Attribution Parties”)), 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 and Attribution Parties 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, non-exercised portion of this Warrant beneficially owned by the
Holder or any of its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or non-converted 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 or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 1(d), 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 1(d) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and Attribution
Parties) 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 Attribution Parties) 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 1(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
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 (2) 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 or Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 4.99% 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 Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 1(d), provided that the Beneficial Ownership Limitation in no
event exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section
1(d) shall continue to apply. Any increase in the Beneficial Ownership
Limitation 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 1(d) 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.

 

 

 

 

e) Principal Market Regulation. The Company shall not issue any shares of Common
Stock pursuant to the terms of this Warrant if the issuance of such shares of
Common Stock would exceed the aggregate number of shares of Common Stock that
the Company may issue upon exercise of the Warrants in compliance with the
Company’s obligations under the rules or regulations of the Nasdaq Capital
Market (“Principal Market”) (the number of shares which may be issued without
violating such rules and regulations, the “Exchange Cap”), except that such
limitation shall not apply in the event that the Company (A) obtains the
approval of its stockholders as required by the applicable rules of the
Principal Market for issuances of shares of Common Stock in excess of such
amount or (B) obtains a written opinion from outside counsel to the Company that
such approval is not required, which opinion shall be reasonably satisfactory to
the Holder. Until such approval or such written opinion is obtained, the Holder
shall not be issued in the aggregate shares of Common Stock upon the exercise of
Warrants in an amount greater than the product of (i) the Exchange Cap as of the
issuance date multiplied by (ii) the quotient of (1) the aggregate number of
shares of Common Stock issued to such Holder pursuant to this Warrant on the
Initial Exercise Date or any Subsequent Exercise Date divided by (2) the
aggregate number of shares of Common Stock issued to the Holder pursuant to this
Warrant on the Initial Exercise Date or any Subsequent Exercise Date (the
“Exchange Cap Allocation”). In the event that any Holder shall sell or otherwise
transfer any of such Holder’s Warrants (or Common Stock), the transferee shall
be allocated a pro rata portion of such Holder’s Exchange Cap Allocation with
respect to such portion of such Warrants (or Common Stock) so transferred, and
the restrictions of the prior sentence shall apply to such transferee with
respect to the portion of the Exchange Cap Allocation so allocated to such
transferee.

 

Section 2. 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 any shares of Common Stock issued by the Company upon
exercise of this Warrant), (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 adjust proportionately.
Any adjustment made pursuant to this Section 2(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) 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
(except in the case of a merger for the purposes of changing the Company’s
domicile), (ii) the Company, directly or indirectly, effects any irrevocable
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 or group of Persons whereby such other Person
or group is not affiliated with the Company and 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 1(d) 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 1(d) 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. 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).

 

 

 

 

c) Calculations. All calculations under this Section 2 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 2, 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.

 

d) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 2, the Company shall promptly deliver
to the Holder by facsimile or email 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 (except in the case of a merger for purposes of changing the
Company’s domicile), 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
delivered by facsimile or email to the Holder at its last facsimile number or
email address as it shall appear upon the Warrant Register of the Company, at
least ten (10) 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. 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 3. Transfer of Warrant.

 

a) Transferability. 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 3(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 issuance 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.

 

 

 

 

Section 4. 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 1(c)(i), except as
expressly set forth in Section 2.

 

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.

 

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 executing stock certificates to execute and issue 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 non-assessable 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).

 

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 non-assessable
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.

 

 

 

 

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 Securities Purchase Agreement.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, will have restrictions upon
resale imposed by state and federal securities laws.

 

g) Non-waiver 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.
Without limiting any other provision of this Warrant, 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 reasonable 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 Securities 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. This Warrant may be assigned by the Holder, subject
to the prior written consent of the Company and in accordance with 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]

 

[The Remainder of This Page is Intentionally Blank]

 

 

 

 

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.

 

MAGNEGAS CORPORATION        By:     Name: Ermanno Santilli   Title: Chief
Executive Officer  

 

 

 

 

NOTICE OF EXERCISE

 

TO: Magnegas Corporation

 

(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) 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:

 

     

 

     

 

     

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:      

Signature of Authorized Signatory of Investing Entity:      

Name of Authorized Signatory:      

Title of Authorized Signatory:      

Date:  

 

 

 

 

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:         (Please Print)       Address:         (Please Print)       Phone
Number:           Email Address:           Dated: _______________ __, ______    

 

Holder’s Signature:          

 

Holder’s Address: ________________________________    

 

 

 

 

APPENDIX A

REGISTRATION RIGHTS

 

(a) As used in this Appendix A the following capitalized terms used without
definition shall have the meanings assigned to them below:

 

  1. “Damages” means any loss, damage, or liability (joint or several) to which
a party hereto may become subject under the Securities Act, the Exchange Act, or
other federal or state law, insofar as such loss, damage, or liability (or any
action in respect thereof) arises out of or is based upon (i) any intentional
untrue statement or alleged untrue statement of a material fact contained in any
registration statement of the Company filed pursuant hereto, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto; (ii) an omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by the
indemnifying party (or any of its agents or affiliates) of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation
promulgated under the Securities Act, the Exchange Act, or any state securities
law based upon, or arising out of, any of such party’s obligations arising
hereunder.         2. “Exchange Act” means the Securities Exchange Act of 1934,
as amended from time-to-time, and the rules and regulations promulgated
thereunder.         3. “Person” means any individual, corporation, partnership,
trust, limited liability company, association or other entity.         4.
“Registrable Securities” means the shares of Common Stock issuable upon exercise
of the Warrants, or other securities issued upon conversion or exchange or
otherwise in respect thereof, including without limitation pursuant to any stock
dividend, stock split, merger, consolidation or other recapitalization
transaction.         5. “SEC” means the U.S. Securities and Exchange Commission.
        6. “SEC Rule 144” means Rule 144 promulgated by the SEC under the
Securities Act, as in effect from time-to-time.         7. “Securities Act”
means the Securities Act of 1933, as amended from time-to-time, and the rules
and regulations promulgated thereunder.         8. “Selling Expenses” means all
underwriting discounts, selling commissions, and stock transfer taxes applicable
to the sale of Registrable Securities, and the fees and expenses of counsel to
the Buyer.

 

 

 

 

(b) Not later than thirty (30) days after the date of the initial exercise of
the Warrants, the Company will file a registration statement under the
Securities Act for the resale of the Registrable Securities by the Buyer on Form
S-3, or if the Company does not then qualify to use Form S-3, Form S-1 or such
other form as it is then eligible to use for the resale of the Registrable
Securities (the “Registration Statement”) and shall use its reasonable
commercial efforts to have the Registration Statement declared effective by the
SEC and maintain the effectiveness of the Registration Statement until all of
the Registrable Securities have been sold or are eligible for sale pursuant to
Rule 144 without restriction. The Company shall furnish the Buyer with a copy of
the prospectus included in the Registration Statement at the time it is declared
effective and any amendments or supplements thereto. The Company shall notify
Buyer of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of the Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading.

 

As a condition to the registration of the Registrable Securities, the Buyer
shall furnish the Company and its counsel with such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such Registrable Securities as is reasonably required to file the
Registration Statement and cause the timely registration of the Registrable
Securities.

 

The Company shall pay all expenses (other than Selling Expenses), and stock
transfer taxes applicable to the sale of the Registrable Securities incurred in
connection with the registration of the Registrable Securities, including all
registration, filing and accounting fees, and fees and disbursements of counsel
for the Company.

 

(c)(1) To the extent permitted by law, the Company will indemnify and hold
harmless the Buyer, and the partners, members, officers, directors, and
shareholders of the Buyer, and each Person, if any, who controls the Buyer,
against any Damages, and the Company will pay to the Buyer, controlling Person,
or other aforementioned Person any legal fees and other expenses reasonably
incurred thereby in connection with investigating or defending any claim or
proceeding from which Damages may result, as such expenses are incurred;
provided, however, that such indemnity shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable for any Damages to the extent that
they arise out of or are based upon actions or omissions made in reliance upon
and in conformity with written information furnished by or on behalf of the
Buyer, controlling Person, or other aforementioned Person expressly for use in
connection with such registration.

 

 

 

 

(c)(2) To the extent permitted by law, the Buyer will indemnify and hold
harmless the Company, and each of its directors, each of its officers who has
signed the Registration Statement, each Person (if any), who controls the
Company within the meaning of the Securities Act, legal counsel for the Company,
against any Damages, in each case only to the extent that such Damages arise out
of or are based upon actions or omissions made in reliance upon and in
conformity with written information furnished by or on behalf of the Buyer
expressly for use in connection with such registration; and the Buyer will pay
to the Company and each other aforementioned Person any legal fees and other
expenses reasonably incurred thereby in connection with investigating or
defending any claim or proceeding from which Damages may result, as such
expenses are incurred; provided, however, that such indemnity shall not apply to
amounts paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Buyer, which consent shall not be
unreasonably withheld; and provided further that in no event shall the aggregate
amounts payable by the Buyer by way of such indemnity exceed the Purchase Price.

 

(c)(3) Promptly after receipt by an indemnified party of notice of the
commencement of any action (including any governmental action) for which a party
may be entitled to indemnification hereunder, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, give the
indemnifying party notice of the commencement thereof. The indemnifying party
shall have the right to participate in such action and, to the extent the
indemnifying party so desires, participate jointly with any other indemnifying
party to which notice has been given, and to assume the defense thereof with
counsel reasonably mutually satisfactory to the parties; provided, however, that
an indemnified party (together with all other indemnified parties that may be
represented without conflict by one (1) counsel) shall have the right to retain
one (1) separate counsel, with the reasonable fees and expenses to be paid by
the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such action. The failure to give notice to
the indemnifying party within a reasonable time of the commencement of any such
action will not relieve such indemnifying party of any liability to the
indemnified party, except to the extent, and only to the extent, that such
failure actually and materially prejudices the indemnifying party’s ability to
defend such action. The failure to give notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than as provided herein.

 

(c)(4) To provide for just and equitable contribution to joint liability under
the Securities Act in any case in which either (i) any party otherwise entitled
to indemnification hereunder makes a claim for indemnification pursuant to this
Appendix A but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Appendix A provides
for indemnification in such case; or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is
provided under this Appendix A, then, and in each such case, such parties will
contribute to the aggregate losses, claims, damages, liabilities, or expenses to
which they may be subject (after contribution from others) in such proportion as
is appropriate to reflect the relative fault of each of the indemnifying party
and the indemnified party in connection with the statements, omissions, or other
actions that resulted in such loss, claim, damage, liability, or expense, as
well as to reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact, or the omission or alleged omission of a material
fact, relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that, in any such case, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation; and provided further that in no event shall the
aggregate amounts payable by the Buyer by way of indemnity or contribution
exceed the Purchase Price.

 

(d) The obligations of the Company and the Purchaser under this Appendix A shall
survive the completion of any offering of the Registrable Securities in a
registration under this Appendix A, and otherwise shall survive the termination
of this Agreement for the maximum time period allowable under applicable law.