Note 11 – Commitments and Contingencies

Operating Leases

The Company leases facilities under leases with third parties classified as operating leases.  The aggregate monthly rental payment on these operating leases is approximately $98,582.  Some leases are month to month, which requires no future obligation; however, all termed leases expire through December 2015. Future minimum annual lease payments for non-cancelable operating leases in effect at March 31, 2012 are as follows (in thousands):

On January 5, 2012, the Company signed a lease with Wells Fargo Bank, N.A. for space in San Francisco to house the Company’s corporate offices. This lease calls for monthly payments of $8,983 for the first 12 months and $9,392 for the duration. The lease expires on December 17, 2013.

The total rental expense included in the consolidated statements of operations for the three months ended March 31, 2012 and 2011 was $0.3 million and $0.2 million respectively. As of March 31, 2012, the Company had twenty-two leases in effect for operating space.

License Agreement

In May 2006, CalTech filed a provisional patent application on hydrogen technology being developed between Ecotality and the Jet Propulsion Laboratory (“JPL”). CalTech is the assignee of JPL’s patent and technology rights. On May 7, 2007, a non-provisional patent application was filed with CalTech as assignee and Ecotality, Inc. as exclusive licensee of the technology for a Method and System for Storing and Generating Hydrogen. The patent was issued on May 31, 2011. On June 12, 2006, Ecotality entered into a License Agreement with CalTech which related to electric power cell technology developed at JPL. In addition to consideration already made, the License Agreement contemplated certain additional consideration involving fee payments. To date, no additional fees have been paid in connection with the License Agreement. The accrued liability associated with the unpaid license fees was $0.1 million and $0.1 million at March 31, 2012 and December 31, 2011, respectively.

Contingencies

We and our Ecotality North America subsidiary, as well as certain individuals, have received subpoenas from the SEC pursuant to a formal Private Order of Investigation in connection with a fact-finding inquiry as to trading in shares of our common stock from the period between August 1, 2008 and August 31, 2009. The SEC has informed us, and the terms of the subpoenas confirm, that the fact-finding inquiry should not be construed as a determination that violations of law have occurred.  Our Board of Directors, through its Audit Committee, continues to monitor the ongoing inquiry.   We continue to cooperate fully with the SEC.

On April 15, 2011, the Company received a letter from Coulomb Technologies Inc. (“Coulomb”) alleging that the Company promised to make Coulomb the exclusive supplier for all the Company’s public charging stations and asserting that the Company infringed Coulomb’s trademarks by including references to Coulomb in one of the Company’s websites. On May 3, 2011, the Company responded to Coulomb by denying its allegations and requesting that it retract these claims. Coulomb has since reasserted its claims and threatened to initiate litigation if the dispute is not resolved. Ecotality believes all of Coulomb’s allegations to be unfounded and intends to defend its position vigorously, if necessary. On October 7, 2011, the Company entered into a Tolling Agreement with Coulomb that temporarily suspends the operation of any statute of limitations that would bar Coulomb from pursuing the claim (except for any statute of limitations that had already expired prior to the date of the Tolling Agreement). The Tolling Agreement is set to expire on June 30, 2012; provided that either party may, at any time, terminate the Tolling Agreement (and thus terminate the tolling of the statutes of limitations) by giving 30 days’ notice to the other party.

On February 13, 2012, Synapse Sustainability Trust, Inc. filed a suit against Ecotality, Ecotality North America and one other unrelated defendant in the Supreme Court of the State of New York, County of Onondaga. Among other things, Synapse alleges that it detrimentally relied on representations and statements of Ecotality in acquiring non-conforming electric vehicle charging units totaling approximately $160,000 that did not satisfy Synapse’s requirements Synapse seeks monetary damages in the amount of $6 million. Ecotality believes all of Synapse’s allegations to be unfounded and intends to defend its position vigorously.

The Company received a letter, dated March 19, 2012, from a law firm representing Ardour Investments, LLC claiming that the Company breached its obligations to Ardour for failure to pay Ardour certain fees in connection with investment banking services it alleges were provided by Ardour to the Company under an Engagement Letter between the Company and Ardour, dated November 1, 2007, as amended March 9, 2009. Ardour is claiming damages in the amount of $335,000. Along with the demand letter they have also delivered a draft complaint stating the claims they intend to file in the Supreme Court of the State of New York if the Company fails to make payment on their demand. We are currently evaluating the merits of Ardour’s case and have retained outside legal counsel in connection with the matter.