Document:

BinoSphere Project Financing

 

SUMMARY OF BINDING TERMS

 

December 27, 2012

 

This Summary of Terms
(“Term Sheet”) summarizes the principal terms and conditions subject to which Financer (“Financer”)
is offering BinoSphere (“BinoSphere” or the “Developer”) a financing facility (the “Facility”)
for the purpose of funding the development, installation, operation and maintenance of waste to energy projects to be developed
by BinoSphere (the “BinoSphere Project”) in conjunction with certain third party providers. The Facility will
be made directly by the Financer and/or through certain entity or entities introduced by the Financer (each the Financer and any
such entity will be regarded as a Financer for the purposes herein) to a special purpose vehicle to be set up by BinoSphere (the
“SPV”). The SPV will be the focal point for contracts and payments between the entities.

 

The actual Facility
formation structure will be determined subject to tax and legal considerations and shall be set out in a definitive agreement and
ancillary documents (together, the “Definitive Agreement”) to be entered into between the parties.

 

Subject to the terms
and conditions herein and to the following sentence, this Term Sheet is binding. However, if there is a material change in the
commercial terms of either project, or if a Satisfactory Level (defined below) is not achieved, either party may, at any time prior
to execution of the Definitive Agreement, propose different terms from those summarized herein or unilaterally terminate all negotiations
pursuant to this Term Sheet without any liability whatsoever to the other party.

 

Satisfactory Level
shall be defined as achieving agreements with satisfactory terms and conditions, per each project, with respect to:

 

		·	Feedstock Supply agreements or letters of intent

 

		·	ITC purchase or partnership agreement or term sheet

 

		·	Power Purchase Agreements

 

		·	Debt financing agreements

 

		·	EPC agreements

 

		·	Site control

 

Notwithstanding anything
to the contrary herein, the parties agree that the provisions set forth in Section III “Confidentiality”, “Publicity”,
“Exclusivity”, “Termination Fee” paragraphs shall be binding upon the parties hereto as from the date of
this Term Sheet, and shall survive this agreement.

 

Section I: The project

 

	Purpose	
        Funding two waste to energy projects to be developed, installed,
        operated and maintained by BinoSphere and certain third party providers under agreement with BinoSphere.

         

        The current Projects being contemplated are waste to
energy plants to be developed at the Johnston, RI and Concord, NC sites. 

	 	 
	Draw Down and Acceptance	
        Draw Down will be agreed on in advance based on a detailed
project plan to be presented by the Developer, which will, for the avoidance of doubt, require that funds from the Financier be
used before any funds from the debt provider or investment tax credit purchaser/partner become available. 

 

    	 

    	 

    

 

	 	Acceptance criteria required for the funding will include executed feedstock supply agreements/LOIs, debt financing agreement, EPC construction agreement with minimal performance insurance, power purchase agreement and ITC tax equity buyer or partner, and any other key criteria which may be identified during the course of diligence as having material impact on the project performance or economics.
	 	 
	Project Structure	
        The SPV will be a co-owner of dedicated LLCs set up per project
        that, in turn, will own 100% of the project rights and agreements in respect of each site (actual structure will be determined
        and mutually agreed upon to optimize tax and legal aspects for the parties). The Developer will manage and administer the affairs
        of the SPV.

         

        ·      The
        SPV will pay the development and installation costs based on the approved budget in accordance with the Draw Down schedule.

         

        ·     Developer
and Financer will have the right to request a budget adjustment starting in year four, should there be a material and valid differences
between the current projections and the actual expenses.

         

        ·     In
        case the Developer Cash Distributions (as defined below) fall below $300K in a given year starting from the third year, the Budget
        shall increase from $225k in the given year, by the amount of shortfall below $300K, and up to a maximum $525k total budget. For
        example, if the Developer Cash Distributions in year 3 are $100k, the budget for that year shall increase by $200k ($300k-$100k).
        Any increase shall accrue and be paid back into the SPV from future cash distributions made to the Developer at nominal interest
        rate (e.g. LIBOR).

         

        ·     The
        Developer will manage the SPV agreement for third party services at a predetermined cost

         

        Project Agreements

         

        Each LLC to be owned by the SPV will enter, amongst others,
        into the following contracts:

         

        ·     15
        year PPA from the local utility to buy all the generated power.

        ·
            Debt         financing agreement for a minimum of 70% financing.

        ·     Tax
        credit purchase/partnership agreement.

        ·     Feedstock
        agreement/LOI

        ·     EPC
contractor agreement with construction and performance guarantees backed by insurer policy. 

	 	 
	Net Cash Distributions	
        The net cash remaining in the LLC (after LLC expenses and servicing
        of debt and allocation for tax payment) will be distributed to the SPV and then to FINANCER and Binosphere as follows:

         

        ·     Until
        such time that Financer receives its Minimal Return: 90% to Financer and 10% to the Developer. 

         

        ·     Once
        Financer receives its Minimal Return the revenue split will adjust to:

         

        o     50%
        to BinoSphere and 50% to FINANCER.

         

        o      FINANCER
        will have a preference on the first 50k of monthly distribution (i.e. $600k of the annual distributions from each project).

         

        ·     FINANCER’s
        Minimal Return shall be defined as a 20% IRR, after US tax considerations.  

         

        ·     The
ITC cash, if available, will be allocated 100% up to the amount invested by FINANCER in each project site to FINANCER and accounted
for in the minimal return calculation.  

 

    	 

    	 

    

 

	Cash Distributions Adjustments	
        Certain adjustments shall be applied to the Net Cash Distributions
        in the following cases:

         

        ·     If
        the total cost of the project decreases versus the approved budget, BinoSphere will receive 50% of the total reduction in equity
        investment required, with pay-out being made to BinoSphere out of the project cash distributions, commencing from the time at which
        FINANCER receives its Minimal Return.

         

        ·     If
the interest rate of the debt is reduced below the currently agreed 6.6%, BinoSphere will receive 50% of the net cash increase
generated from the reduction, with pay-out to BinoSphere being made annually based on the cash increase generated in the given
pay-out year, and commencing from the time at which FINANCER receives its Minimal Return. 

 

Section II: Future Projects

	Funding Facility	Up to 10 million USD in aggregate (the “Facility Amount”). For avoidance of doubt, this $10m facility is allocated for future projects beyond the Johnston, RI and Concord, NC sites.
	 	 
	Future  PPA Projects	
        The Financer shall have the right to fund the first USD 10 million
        in all PPA Projects of the Developer under the terms of this Term Sheet with adjustments as detailed below (Net Cash Distributions
        for Future Projects).

         

        Following full draw-down of the entire Funding Facility,
the Financer shall have a right of first refusal for the funding of any future PPA Projects entered into by BinoSphere up to an
additional 5 million USD. 

	 	 
	Net Cash Distributions for Future Projects	
        The Net Cash Distributions for the Future Projects will alter
        such that:

         

        ·     Once
        FINANCER receives its Minimal Return the revenue split flips to 70% to BinoSphere and 30% to FINANCER.

         

        Other considerations will remain the same as defined
in the Net Cash Distributions. 

	 	 
	Future Funding process	
        Each Project will require pre-approval by the Financer.

         

        BinoSphere will identify specific sites that may be applicable
        for a waste to energy project. BinoSphere will then submit a request for financing with regards to the Project to be undertaken
        in such location.

         

        The Financer will review the proposed Project and the
request for funding, and within 21 days provide a response as to its interest to finance the proposed project. 

 

Section III: General Conditions

	Conditions to Close	
        The completion of the transaction contemplated by this
Term Sheet and the provision of the facility, will be subject to, among other things, satisfactory completion of financial, technology,
tax and legal due diligence, review of commercial agreements and the signature of the Definitive Agreement in a form acceptable
to each of BinoSphere and the Financer. 

 

    	 

    	 

    

 

	 	The Definitive Agreement will include customary project finance provisions, including, among other things, a customary project-finance security package over the SPV’s shares, right and assets, which will be subject to any security or other rights of the party providing the debt finance; step-in rights; cooperation rights; information rights; events of default and cross-default; etc.
	 	 
	Confidentiality	The terms contained herein and any information exchanged between the parties in connection with this Term Sheet shall be considered confidential information. The parties shall not use or disclose such information for any other purpose other than in furtherance of the evaluation outlined in this Term Sheet. FINANCER reserves the right to share the information with its investors or prospective investors in the Projects.
	 	 
	Publicity	Except as required by law, no party shall discuss the terms of this Term Sheet with any person other than its key officers, directors, accountants or solicitors without the written consent of the other party.  In addition, neither party shall use the other party’s name (or that of any affiliate or related-party of such party) in any manner, context or format (including reference on or links to websites, press releases, etc.) without the prior approval of the other party.
	 	 
	Exclusivity	
        For a period of six (6) weeks following the signing of this
        Term Sheet, BinoSphere shall not enter into or take any part in any conversations or negotiations with any third party with regard
        to the provision of project financing for the Project without the prior approval of FINANCER (unless FINANCER has first informed
        it in writing of the termination of negotiations pursuant to this Term Sheet, otherwise than due to any breach of the terms herein
        by BinoSphere). (“Preliminary Exclusivity Period”)

         

        Following the Preliminary Exclusivity Period, the parties
will mutually agree on an extension to the exclusivity period during which time the parties will cooperate to reach full completion
of the investment. (“Completion Exclusivity Period”) 

	 	 
	Termination Fee	If BinoSphere decides not to proceed with the Funding (unless the terms offered to Binosphere in the definitive agreement by FINANCER are materially worse than those contained in this Term Sheet), or if material misrepresentations are discovered regarding the information provided to Lender, then BinoSphere shall pay Lender a $10,000 termination fee.
	 	 
	Expiration	If not accepted by BinoSphere, the offer contained in this Summary of Terms will expire on Friday December 21 at 5pm PST.

 

 

	BinoSphere	 	FINANCER
	 	 	 	 	 
	By:	 	 	By:	 
	 	 	 	 	 
	Name:	 	 	Name:	 
	 	 	 	 	 
	Date:	 	 	Date:BLUESPHERE
SHARE SUBSCRIPTION AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT
(this “Agreement”) is made as of November 5, 2012 by and among Bluesphere Corporation, a company organized and existing
under the laws of the State of Nevada (“BSC”), and Purchaser (the “Purchaser”).

 

Whereas, BSC
has agreed to sell and the Purchaser has agreed to purchase shares of common stock of BSC (the “Shares”) subject
to the terms and on the conditions set forth below.

 

Now, therefore,
in consideration of the mutual premises and covenants contained herein, and intending to be legally bound, the parties hereto agree
as follows:

 

		1.	Sale and Purchase of Shares.

 

1.1          Sale
of Shares.  (a) Subject to the terms and conditions hereof, BSC hereby agrees to issue and sell to the Purchaser,
and the Purchaser hereby agrees to purchase from BSC, on December 25, 2012 (or the first business day thereafter on which banks
are open for business in the United States), 30,000,000 Shares.

 

(b)           BSC
will issue and deliver to the Purchaser the 30,000,000 Shares referred to in Section 1.1(a) above against receipt in its bank account
of the Purchase Price in cash.

 

1.2          Purchase
Price. The aggregate purchase price for the Shares is U.S. $70,000 (the “Purchase Price”), which shall be
delivered in immediately available funds in accordance with Section 1.1(b) to BSC in accordance with instructions to be provided
separately. 

 

1.3          Securities
Laws. The Purchasers acknowledge and understand that the offer and sale of the Shares were done in reliance on one or more
exemption from registration under the Securities Exchange Act of 1933, as amended (the “Act”) and, as such, the Shares
are, until registered, subject to restrictions on resale. The Purchasers agree to acquaint themselves with such restrictions and
abide by them and any other applicable law or regulation. The Purchasers further agree and acknowledge that, until registration,
the certificates representing the Securities shall contain a legend that states the restrictions applicable to resale of such shares.

 

		2.	Acknowledgements and Agreements of the Purchasers.

 

Each Purchaser acknowledges and agrees
that:

 

		(a)	none of the Securities have been registered under the Act, or under
any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered
or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933
Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration
statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the 1933 Act and in each case only in accordance with applicable state and provincial securities laws; 

 

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		(b)	the decision to execute this Subscription Agreement and acquire the
Shares agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made
by or on behalf of BSC and such decision is based entirely upon a review of any public information which has been filed by BSC
with the Securities and Exchange Commission (the “SEC”) in compliance, or intended compliance, with applicable securities
legislation;

 

		(c)	the Purchaser and the Purchaser’s advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from BSC in connection with the distribution of the Securities hereunder, and
to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify
the accuracy of the information about BSC;

 

		(d)	the books and records of BSC were available upon reasonable notice
for inspection, subject to certain confidentiality restrictions, by the Purchaser during reasonable business hours at its principal
place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been
made available for inspection by the Purchaser, the Purchaser’s lawyer and/or advisor(s);

 

		(e)	BSC is entitled to rely on the representations and warranties of
the Purchaser contained in this Subscription Agreement and the Purchaser will hold harmless BSC from any loss or damage it or they
may suffer as a result of any inaccuracy therein;

 

		(f)	the Purchaser will indemnify and hold harmless BSC and, where applicable,
its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage
and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened)
arising out of or based upon any representation or warranty of the Purchaser contained in this Subscription Agreement or in any
document furnished by the Purchaser to BSC in connection herewith being untrue in any material respect or any breach or failure
by the Purchaser to comply with any covenant or agreement made by the Purchasers to BSC in connection therewith;

 

		(g)	although the Securities are listed on the OTC BB, no representation
has been made to the Purchaser that any of the Securities will become listed on any other stock exchange or automated dealer quotation
system;

 

		(h)	BSC will refuse to register any transfer of the Securities not made
in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant
to an available exemption from the registration requirements of the 1933 Act and in accordance with any other applicable securities
laws, in each case, to be accompanied by an opinion of counsel acceptable to BSC;

 

		(i)	the Purchaser has been advised to consult its own legal, tax and
other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions,
and it is solely responsible (and BSC is not in any way responsible) for compliance with:

 

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		(i)	any applicable laws of the jurisdiction in which the Purchaser is
resident in connection with the distribution of the Securities hereunder, and

 

		(ii)	applicable resale restrictions; 

 

		(j)	neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Securities;

 

		(k)	no documents in connection with the sale of the Securities hereunder
have been reviewed by the SEC or any state securities administrators; and

 

		(l)	there is no government or other insurance covering any of the Securities.

 

		3.	Representations, Warranties and Covenants of the Purchasers.

 

3.1          Each
Purchaser hereby represents and warrants to and covenants with BSC (which representations, warranties and covenants shall survive
the Closing) that:

 

		(a)	the Purchaser has received and carefully read this Subscription
Agreement;

 

		(b)	the Purchaser is purchasing the Securities as principal for investment only and not with a view
to, or for, resale, distribution or fractionalization thereof, in whole or in part, and, in particular, it has no intention to
distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons;

 

		(c)	the Purchaser is aware that an investment in BSC is speculative and involves certain risks, including
the possible loss of the entire investment;

 

		(d)	the Purchaser has made an independent examination and investigation of an investment in the Securities
and BSC and has depended on the advice of its legal and financial advisors and agrees that BSC will not be responsible in any way
whatsoever for the Purchaser’s decision to invest in the Securities and BSC; and

 

		(e)	no person has made to the Purchaser any written or oral
representations:

 

		(i)	that any person will resell or repurchase any of the Securities;

 

		(ii)	that any person will refund the purchase price of any of the Securities;

 

		(iii)	as to the future price or value of any of the Securities; or

 

		(iv)	that any of the Securities will be listed and posted for trading
on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities
of BSC on any stock exchange or automated dealer quotation system.

 

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3.2          Representations
and Warranties will be Relied Upon by BSC. The Purchasers acknowledge that the representations and warranties contained herein,
if applicable, are made by them with the intention that such representations and warranties may be relied upon by BSC and its legal
counsel in determining the Purchasers’ eligibility to purchase the Securities under applicable securities legislation, or
(if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Securities under applicable
securities legislation. The Purchasers further agree that by accepting delivery of the certificates representing the Securities
on the closing date, it will be representing and warranting that the representations and warranties contained herein, if applicable,
are true and correct as at the closing date with the same force and effect as if they had been made by the Purchasers on the closing
date and that they will survive the purchase by the Purchasers of the Securities and will continue in full force and effect notwithstanding
any subsequent disposition by the Purchasers of such Securities.

 

4.          Further
Assurances. Each party hereto agrees to execute, on request, all other documents and instruments as the other party shall reasonably
request, and to take any actions, which are reasonably required or desirable to carry out obligations imposed under, and affect
the purposes of, this Agreement.

 

5          Governing
Law and Jurisdiction. This Agreement shall be governed by the
substantive law of Israel, without application of any conflict of laws principle that would require the application of the law
of any other jurisdiction.

 

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IN WITNESS WHEREOF,
the parties have executed this Agreement as of the day and year first above written.

 

	Blue Sphere Corporation
	 
	 	 
	By:  Shlomi Palas
	Title:  CEO
	 
	 	 
	By:  Purchaser

 

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