Document:

EX-10.62

 EXHIBIT 10.62
 
 

 

 EQUITY EXCHANGE AGREEMENT
 

 by and among
 

 BLUE EARTH, INC.,
 a Nevada corporation,
 

 (the “Buyer”),
 

 

 KENMONT SOLUTIONS CAPITAL GP, LLC,
 a Delaware limited liability company, 
 

 (“Kenmont”)
 

 

 and
 

 DONALD R. KENDALL, JR.
 

 (the “Seller”)
 

 

 

 Dated: January 31, 2014
 

 

 

 

 

 

 

 
 EQUITY EXCHANGE AGREEMENT
 This EQUITY EXCHANGE AGREEMENT (the “Agreement”), dated as of January 31, 2014, by and among Blue Earth, Inc., a Nevada corporation (the “Buyer”), Kenmont Solutions Capital GP, LLC, a Delaware limited liability company (“Kenmont”), and Donald R. Kendall, Jr., an individual with an address at 711 Louisiana, Suite 1750, Pennzoil Building, South Tower, Houston, Texas 77002 (the “Seller”, and collectively with Buyer and Kenmont, the “Parties”).
 WHEREAS, Seller owns 100% of the equity interests in Kenmont (the “Membership Interests”);
 WHEREAS, Seller desires to transfer to the Buyer and the Buyer desires to acquire from Seller all of the Membership Interests as of the Closing Date (as defined herein), upon the terms and conditions set forth in this Agreement; and
 WHEREAS, in exchange for the Membership Interests, Buyer has agreed to issue to the Seller, as of the Closing Date, 25,000 shares of restricted common stock, par value $0.001 per share, of the Buyer (the “Common Stock”) and to enter into an employment agreement with Seller for Seller to serve as the chief executive officer and president of Kenmont (to be renamed Blue Earth Capital, or such other name agreed to by the parties), upon the terms and conditions set forth in this Agreement.
 NOW, THEREFORE, in consideration of the foregoing and of the mutual premises, covenants, representations and warranties herein contained, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:
 ARTICLE I
DEFINITIONS
 Definitions for purposes of this Agreement, the following terms shall have the following meanings:
 1.1.
 “Assets” means all the assets, properties, goodwill and business of every kind and description and wherever located, whether tangible or intangible, real, personal or mixed, directly or indirectly owned by Kenmont or to which it is directly or indirectly entitled and, in any case, belonging to or used or intended to be used in the Business.
 1.2.
 “Business” means the business and operations of Kenmont.
 1.3.
  “Encumbrance” means any security interest, pledge, mortgage, lien (including, without limitation, environmental and tax liens), charge, encumbrance, adverse claim, preferential arrangement or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.
 

 
 
 1.4.
 “Governmental Authority” means any United States federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
 1.5.
 “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
 1.6.
  “Law” means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, requirement or rule of common law.
 1.7.
  “Operating Agreement” means the operating agreement of Seller, including any amendments thereto, through the Closing Date. 
 1.8.
 “Permits” means all permits, licenses, orders, approvals and authorizations of or from any Governmental Authority necessary to conduct the Business as presently conducted and as proposed to be conducted after consummation of the transactions contemplated by this Agreement.
 1.9.
 “Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity.
 1.10.
 “Tax” or “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs, and similar charges.
 ARTICLE II
EXCHANGE OF EQUITY
 2.1.
 Sale of Kenmont. At the Closing (as defined below), subject to the terms set forth in Article VII, Seller shall sell and transfer, and Buyer shall purchase and acquire, the Membership Interests and all rights, title and privileges of Seller relating thereto. After the Closing, Seller will have no right, title or interest in Kenmont or any of the Assets.  In connection with the sale of the Membership Interests, Buyer and Seller shall execute the assignment and assumption of the Membership Interests in the form of attached hereto as Exhibit A (the “Assignment”).  In addition, Seller shall amend the Operating Agreement at Closing in order to reflect Buyer as the owner of 100% of the Membership Interests and sole member of Kenmont, in a form reasonably acceptable to Buyer (the “Amended Operating Agreement”). 
 2.2.
 Exchange of Equity Interests; Consideration. In consideration for Buyer’s right to acquire the Membership Interests, and upon the terms and subject to the conditions of this Agreement, at the Closing, subject to the terms set forth in Article VII:
 

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 (a)
 Buyer shall issue to Seller 25,000 shares of restricted Common Stock (the “Consideration Shares”), issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) and subject to the holding period and legending requirements of Rule 144 of Regulation D promulgated under the Act and any applicable state securities laws. In addition, the Consideration Shares will be subject to the Lock-Up/Leak-Out Agreement, as of the Closing Date, the form set forth in Exhibit B (the “Lock-Up Agreement”) and subject to the terms contained therein.
 (b)
 Buyer shall enter into the employment agreement with Seller, in the form presented to the parties on this date (the “Employment Agreement”), for Seller to serve as the president and chief executive officer of Kenmont (or such other name as agreed to by the parties), subject to the terms contained therein.
 (c)
 Buyer shall issue to David W. Unsworth, Richard Goldstein and National Securities (collectively, the “Finder”) 50,000 shares of restricted Blue Earth Common Stock (the “Finder Shares”), issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) and subject to the holding period and legending requirements of Rule 144 of Regulation D promulgated under the Act and any applicable state securities laws.  In connection with the issuance of the Finder Shares, Buyer may require that the Finder provide reasonable representations and warranties to the Buyer to ensure that the issuance of the Finder Shares complies with the Law. 
 2.3.
 After the Closing, Buyer shall control 100% of the Membership Interests previously held by Seller in Kenmont.
 2.4.
 The officers of Kenmont from before the Closing shall remain in their respective positions in Kenmont, until such time that they are replaced by Buyer, and subject to the terms of the Operating Agreement. Except as set forth in this Agreement, including the exhibits and schedules thereto, the Business of Kenmont shall not change after the Closing.
 ARTICLE III
CLOSING
 Upon the terms and subject to the satisfaction of the conditions contained in this Agreement, the closing of the acquisition contemplated by this Agreement (the “Closing”) is anticipated to take place, on or before January 31, 2014, at the offices of Buyer’s attorneys, Davidoff Hutcher and Citron LLP, 305 Third Avenue, 34th Floor, New York, NY 10158, or such other time and place as the Parties may agree upon via written correspondence which includes email communication. The date and time at which the Closing actually occurs is herein referred to as the “Closing Date”.
 ARTICLE IV
REPRESENTATIONS OF SELLER AND KENMONT
 As an inducement to and to obtain the reliance of Buyer to this Agreement, Seller and Kenmont jointly and severally represent and warrant to Buyer as follows: 
 

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 4.1.
 Organization.  Kenmont is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign entity in the country or states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification.  
 4.2.
 Capitalization.  The authorized capital stock of Kenmont consists of only the Membership Interests, of which the holder of record is Seller, and which constitutes 100% of the issued and outstanding equity securities of Kenmont as of the Closing Date.  The Seller is the sole member and officer of Kenmont. All Membership Interests are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Formation or Operating Agreement, copies of which have been delivered to Buyer (other than amendment thereto to take place at Closing), or any agreement or document to which Kenmont is a party or by which it is bound. There are no options, warrants, equity securities of any class of Kenmont, calls, rights, registration rights, voting trusts, proxies or other agreements or understandings, commitments or agreements of any character with respect to which the Membership Interests are bound or Kenmont is a party or by which it is bound, or any securities exchangeable or convertible into or exercisable for such equity securities, issued, reserved for issuance or outstanding, obligating Kenmont to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition, of any of the Membership Interests.
 4.3.
 Authority.  Seller has the full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. All company proceedings on the part of Seller necessary to authorize this Agreement and the transactions contemplated hereby, including authorization by Seller as its sole member, have been or by the Closing will be duly and validly taken. This Agreement has been duly and validly executed and delivered by Seller and constitutes the legal, valid and binding agreement and obligation of Seller, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally or by the principles governing the availability of equitable remedies.
 4.4.
 No Conflict.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Certificate of Formation or Operating Agreement of Seller; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any agency or other third party; (iii) result in a breach of the provisions or a termination of any agreement which is a part of this acquisition; (iv) conflict with or result in a violation of any provision of (A) any statute, rule, regulation or ordinance; or (B) any material order, writ, injunction, judgment, award or license applicable to Seller or to this acquisition; or (v) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any lien or encumbrance on any of the assets or properties of Seller 
 

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 or Kenmont pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Seller or Kenmont are individually or collectively party or by which any of such assets or properties is bound.
 4.5.
 Consents and Approvals. No consent, waiver, approval or authorization of, or declaration to or filing with, any Governmental Authority or any other person, is required for the valid authorization, execution and delivery by Seller and Kenmont the documents contemplated herein to which he or they are party or for the consummation of the transactions contemplated thereby. Each of Seller and Kenmont has received all consents, approvals, notices and waivers contemplated or required by the documents contemplated herein, including but not limited to, under the Material Contracts (hereafter defined) and Permits, and copies of such consents have been delivered to Buyer.
 4.6.
 Litigation. There is no dispute, claim, legal action, suit, arbitration, governmental investigation or other legal or administrative proceeding, nor any order, decree or judgment in progress, pending or in effect, or, to the knowledge of the Seller’s management, threatened, against or relating to or against or relating to this Agreement or the transactions contemplated by this Agreement.
 4.7.
 Exempt Offering; Sophistication; Restricted Securities. 
 (a)
 Seller understands that Consideration Shares have not been registered under the Act or any other applicable securities laws and that the Consideration Shares are being offered and sold pursuant to Section 4(a)(2) of the Act, and that the Buyer’s reliance upon such exemption depends, in part, upon the representations made by Seller in this Agreement. Seller understands that Buyer is relying upon the representations and agreements of Seller contained in this Agreement for the purpose of determining whether this transaction meets the requirements for such exemption.
 (b)
 Seller has such knowledge, skill and experience in business, financial and investment matters so that Seller is capable of evaluating the merits and risks of an investment in the Consideration Shares. To the extent that Seller has deemed it appropriate to do so, Seller has retained, and relied upon, appropriate professional advice regarding the tax, legal and financial merits and consequences of the investment in the Consideration Shares.
 (c)
 Seller has made, either alone or together with advisors (if any), such independent investigation of the Buyer, its management, and related matters as Seller deems to be, or such advisors (if any) have advised to be, necessary or advisable in connection with an investment in the Consideration Shares; and Seller and its advisors (if any) have received all information and data which Seller and such advisors (if any) believe to be necessary in order to reach an informed decision as to the advisability of an investment in the Consideration Shares.
 (d)
 Seller is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Act, and has provided or will provide Buyer with a completed questionnaire regarding his accredited investor status (the “Investor Questionnaire”) at or before Closing.
 

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 (e)
 Seller agrees to furnish any additional information requested by Buyer to assure compliance of this transaction with applicable federal and state securities laws in connection with the purchase and sale of the Consideration Shares.
 (f)
 Seller understands that the Consideration Shares are “restricted securities” under applicable securities laws and that the Act and the rules of the SEC provide that other than the transfer to the Buyer, Seller may dispose of the Consideration Shares only pursuant to an effective registration statement under the Act or an exemption from such registration, if available. Furthermore, the Consideration Shares are subject to additional restrictions as set forth in the Lock-Up Agreement. Seller understands that the Buyer has no obligation or intention to cause to be registered on anyone’s behalf or to take action so as to permit sales pursuant to the Act of the Consideration Shares. Accordingly, Seller, absent some other arrangement with the Buyer and, where applicable, other parties constituting Seller may dispose of the Consideration Shares only in certain transactions that are exempt from registration under the Act, such as “private transactions,” in which event the transferee will acquire a “restricted security” subject to the same limitations as in the hands of Seller. As a consequence, Seller understands that he must bear the economic risks of the investment in the Consideration Shares for an indefinite period of time.
 (g)
 Seller hereby confirms that he is acquiring the Consideration Shares for investment only and not with a view to or in connection with any resale or distribution of the Consideration Shares. Seller hereby further affirms that the he has no present intention of making any sale, assignment, pledge, gift, transfer or other disposition of the Consideration Shares or any interest therein. 
 (h)
 Seller, to the best of Seller’s knowledge, represents that (i) neither the Buyer nor any person acting on their behalf, has offered or sold the Consideration Shares to Seller by any form of general solicitation, general or public media advertising or mass mailing, (ii) Seller has not utilized the services of any broker, finder or other intermediary with respect to this Agreement, the Transaction Documents or the transactions contemplated hereby, and (iii) no person or entity is entitled to any commission or fee in connection herewith.
 4.8.
 Books and Records. The organizational documents of Kenmont contain accurate records of all meetings and accurately reflect in all material respects all other actions taken by Kenmont and Seller during such period. Complete and accurate copies of all such documents and records have been provided by Kenmont to Buyer.
 4.9.
 Compliance with Laws; Permits. 
 (a)
 Kenmont and Seller are in compliance with all applicable foreign or domestic laws, rules, regulations, ordinances, codes, judgments, orders, injunctions, writs or decrees of any federal, state, local or foreign court or governmental body or agency thereof.
 (b)
 Seller has all Permits from Governmental Authorities which are material to the Business, and Seller is in compliance with the terms of the Permits.
 

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 4.10.
 Material Contracts. Seller has provided the Buyer with true and complete copies of all written or oral contracts, agreements, understandings, licenses, commitments and other instruments (including all amendments, modifications or extensions relating thereto) that are material to Kenmont, the Assets, or the Business (including any contract, which individually or in the aggregate for any one party, involve any expenditure by the Company of more than $10,000) (the “Material Contracts”)
 4.11.
 Assets; Title to Assets. 
 (a)
 Seller has good and marketable title to all of Kenmont’s property and Assets which it owns free and clear of any Encumbrances.
 (b)
 Seller owns, leases or has the legal right to use all the Assets of Kenmont used or intended to be used in the conduct of Kenmont’s Business and, with respect to contract rights, is a party to and enjoys the right to the benefits of all contracts, agreements and other arrangements used or intended to be used by Seller in or relating to the conduct of the business, all of which properties, assets and rights constitute assets. 
 (c)
 The assets constitute all the properties, assets and rights forming a part of, used, held or intended to be used in, and all such properties, assets and rights as are necessary in the conduct by Kenmont of its Business.
 4.12.
 Employees. As of the date of this Agreement, Kenmont does not have any officers or employees other than the Seller.  As of the Closing Date, Kenmont does not have and has never had any employee benefit plans in place.
 4.13.
 Labor Matters. Kenmont is in compliance with all applicable Laws relating to the employment of labor, including those related to wages, hours, collective bargaining and the payment and withholding of taxes and other sums as required by the appropriate Governmental Authority and has withheld and paid to the appropriate Governmental Authority or is holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of Kenmont engaged all or in part in the Business and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing. Kenmont has paid in full to all its employees engaged all or in part in the Business all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees. There is no charge or proceeding with respect to a violation of any occupational safety or health standards that has been asserted or is now pending or threatened with respect to Kenmont’s Business or any of the Assets. There is no charge of discrimination in employment or employment practices, for any reason, including, without limitation, age, gender, race, religion or other legally protected category, which has been asserted or is now pending or threatened before the United States Equal Employment Opportunity Commission, or any other Governmental Authority in any jurisdiction in which Kenmont has employed or currently employs any person all or in part with respect to the business.
 

 

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 4.14.
 Tax Returns and Payments.
 (a)
 Kenmont has timely filed all tax returns (federal, state and local) required to be filed by it relating to Kenmont or the Business and all such returns and reports are true, complete and correct in all material respects. All Taxes (as defined below), assessments, fees and other governmental charges imposed on or with respect to Kenmont’s business which have become due and payable on or before the Closing Date have either been paid or reserved for payment in the financial statements of Kenmont which have been disclosed to Buyer. To the knowledge of Kenmont, there are no actions or proceedings currently pending or threatened against Kenmont by any governmental authority for the assessment or collection of Taxes, no claim for the assessment or collection of Taxes has been asserted or threatened against Kenmont, and there are no matters under discussion by Kenmont with any governmental authority regarding claims for the assessment or collection of Taxes against Kenmont. 
 (b)
 There are no agreements, waivers or applications by Seller for an extension of time for the assessment or payment of any Taxes. There are no Tax liens on any of the assets of Kenmont (other than any lien for current Taxes not yet due and payable). No claim has ever been made by an authority in a jurisdiction where Kenmont does not file Tax returns or reports that it is or may be subject to taxation by that jurisdiction.
 4.15.
 Brokers or Finder’s Fee. Except for the issuance of the Finder Shares to the Finder by Buyer, neither Seller nor Kenmont has entered into any agreement, arrangement or understanding with any party as to which Buyer may have any liability for a finder’s fee, brokerage commission, advisory fee or other similar payment.
 ARTICLE V
REPRESENTATIONS OF BUYER 
 As an inducement to and to obtain the reliance of Seller and Kenmont to this Agreement, Buyer represents and warrants to Seller and Kenmont as follows:
 5.1.
 Organization.  Buyer, a publicly owned company, is a corporation duly organized, validly existing and in good standing under the laws of Nevada and has full corporate power and authority to own, lease and operate its assets and properties and to carry on its business as now being conducted, as and in the places where its assets and properties are now owned, leased or operated and where such business is now being conducted.
 5.2.
 Authority.  Buyer has the full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. All corporate proceedings on the part of Buyer necessary to authorize this Agreement and the transactions contemplated hereby, including authorization by its Board of Directors, have been or by the Closing will be duly and validly taken. This Agreement has been duly and validly executed and delivered by Buyer and constitutes the legal, valid and binding agreement and obligation of Buyer, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally or by the principles governing the availability of equitable remedies.
 

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 5.3.
 No Conflict.  The execution, delivery and performance of this Agreement and the transaction documents by the do not and will not violate, conflict with or result in the breach of any provision of the Certificate of Incorporation or By-laws of the Buyer (the “Corporate Documents”) and the execution, delivery performance thereof by the Buyer does not and will not (a) conflict with or violate any Law or Governmental Order applicable to Buyer or its assets, properties or businesses, or (b) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of the Buyer pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Buyer or by which any of its assets or properties is bound.
 5.4.
 Consents and Approvals. No consent, waiver, approval or authorization of, or declaration to or filing with, any Governmental Authority or any other authority, is required for the valid authorization, execution and delivery by the Buyer of the documents contemplated herein to which the Buyer is a party or for the consummation of the transactions contemplated thereby. The Buyer has received all consents, approvals, notices and waivers contemplated or required by the Transaction Documents contemplated herein.
 5.5.
 Capital Stock of the Buyer. The authorized capital stock of the Buyer consists of 100,000,000 shares of Common Stock, of which there are 56,254,745 shares issued and outstanding as of December 2, 2013.  Buyer has a sufficient number of shares of Common Stock authorized under its Corporate Documents to issue to the Consideration Shares.
 5.6.
 Financial Statements and Records. The audited financial statements for the fiscal year ended December 31, 2012, and the unaudited balance sheets as of the September 30, 2013, which include the related statements of income, retained earnings, shareholders’ or members’ equity and statements of cash flows, together with all related notes and schedules thereto (collectively, the “Financial Statements of Buyer”) are presented in the Buyer’s most recent Annual Report on Form 10-K and Quarterly Report on 10-Q as filed with the Securities and Exchange Commission. The Financial Statements of Buyer were prepared in accordance with the books of account and other financial records of Buyer and (i) present fairly the financial condition and results of operations of Buyer as of the dates thereof or for the periods covered thereby and, (ii) have been prepared in accordance with GAAP applied on a basis consistent with the past practices of Buyer and throughout the periods involved, except as set forth therein. 
 5.7.
 Compliance with Laws; Permits. 
 (a)
 Buyer is in compliance with all applicable foreign or domestic laws, rules, regulations, ordinances, codes, judgments, orders, injunctions, writs or decrees of any federal, state, local or foreign court or governmental body or agency thereof.
 (b)
 Buyer has all Permits which are material to the operation of the Buyer’s business, and Buyer is in compliance with the terms of the Permits.
 

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 5.8.
 Tax Returns and Payments.
 (a)
 Buyer has timely filed all tax returns (federal, state and local) required to be filed by it relating to Buyer’s business and all such returns and reports are true, complete and correct in all material respects. All Taxes (as defined below), assessments, fees and other governmental charges imposed on or with respect to Buyer’s business which have become due and payable on or before the Closing Date have either been paid or reserved for payment in the Financial Statements of Buyer. To the knowledge of Buyer, there are no actions or proceedings currently pending or threatened against Buyer by any governmental authority for the assessment or collection of Taxes, and there are no matters under discussion by Buyer with any governmental authority regarding claims for the assessment or collection of Taxes against Buyer. 
 (b)
 There are no agreements, waivers or applications by Buyer for an extension of time for the assessment or payment of any Taxes. There are no Tax liens on any of the assets of Buyer (other than any lien for current Taxes not yet due and payable). No claim has ever been made by an authority in a jurisdiction where Buyer does not file Tax returns or reports that it is or may be subject to taxation by that jurisdiction. 
 5.9.
 Brokers or Finder’s Fee. Except for the issuance of the Finder Shares to the Finder by Buyer, Buyer has not entered into any agreement, arrangement or understanding with any party as to which Seller or Kenmont may have any liability for a finder’s fee, brokerage commission, advisory fee or other similar payment.
 ARTICLE VI
COVENANTS
 6.1.
 Until the Closing Date or the earlier termination of this Agreement as provided herein, Kenmont shall not work with or assist any third party other than Buyer in connection with the development of potential business development contract(s) and sales opportunities. 
 6.2.
 At the Closing, the Seller shall continue as the president and chief executive officer of Kenmore pursuant to the terms of the Employment Agreement.
 6.3.
 During the period from the date of this Agreement to the Closing Date, except as specifically contemplated by this Agreement, Kenmont will conduct its operations in the ordinary course of business and consistent with past practices.  Without limiting the generality of the foregoing, Kenmont will not, without the prior written consent of authorized signatories of each, take or undertake or incur or permit to exist any of the following acts, transactions, events or occurrences:
 (a)
 Incur, create, assume or guarantee any obligation, liability or indebtedness, absolute, accrued, contingent, or otherwise, whether due or to become due;
 (b)
 Make any capital expenditures or capital additions;
 (c)
 Enter into any transaction, contract or commitment (including any acquisition of assets) or pay any other expenses, other than normal sales contracts and service agreements as they relate to profitable sales revenue generation for the respective companies;
 

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 (d)
 Make any payments or other distributions to Seller, other than the payment of the salaries, business expenses etc. currently being paid as employees of Kenmont;
 (e)
 Pay accounts payable and other obligations of the Business when they become due and payable in the ordinary course of the Business consistent with past practice;
 (f)
 Collect accounts receivable in the ordinary course of the Business consistent with past practice;
 (g)
 Maintain in full force and effect and pay all premiums when due on, all insurance policies covering the Business and the Assets and not permit such policies to be cancelled or terminated or any coverage thereunder lapse prior to the Closing Date.
 6.4.
 Between the date of this Agreement and the Closing Date, Kenmont agrees to give Buyer and its representatives full access to its premises and books and records and agree to furnish Buyer with such financial and operating data and other information with respect to its Business and properties; provided, however, that any such investigation shall be conducted in such manner as not to interfere unreasonably with the operation of Kenmont.
 6.5.
 Prior to Closing, Kenmont will not, directly or indirectly, solicit, initiate or encourage submission of proposals or offers from any person or third party relating to any acquisition or purchase of any equity interest or assets of Kenmont.
 ARTICLE VII
CLOSING CONDITIONS
 7.1.
 The obligations of Seller to perform this Agreement and its obligations hereunder are subject to the satisfaction of each of the following conditions at or prior to the Closing Date, unless waived in writing by Seller:
 (a)
 All representations and warranties of Buyer contained herein or in any document delivered pursuant hereto shall be true and correct in all material respects when made and on and as of the Closing Date as though made on and as of the Closing Date, and a certificate shall be delivered to Seller so confirming;
 (b)
 Issuance of the Consideration Shares to Seller.
 (c)
 An executed counterpart of the Employment Agreement by Buyer.
 (d)
 An executed counterpart of the Assignment by Buyer.
 7.2.
 The obligations of Buyer to perform this Agreement and its obligations hereunder are subject to the satisfaction of each of the following conditions at or prior to the Closing Date, unless waived by Buyer:
 (a)
 All covenants, agreements and obligations required by the terms of this agreement to be performed by Seller, as may be required, at or before the Closing shall have been duly and properly performed in all material respects.
 

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 (b)
 Receipt of a certificate executed by Seller, dated as of the Closing Date, certifying that the provisions of the Agreement have been fulfilled.
 (c)
 Receipt of a certificate of Seller, in his capacity as an officer of Kenmont dated as of the Closing Date, certifying (A) that true and complete copies of the Operating Agreement and organizational documents of Kenmont as in effect on the Closing Date are attached thereto; (B) that true, correct and complete copies of resolutions of Seller as the sole member of Kenmont authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby are attached thereto; and (C) a good standing certificate of Kenmont as of a date within ten (10) days prior to the Closing Date.
 (d)
 Seller shall use its best efforts to obtain all authorizations, consents, orders and approvals of Governmental Authorities and officials that may be or become necessary for their execution and delivery of, and the performance of their respective obligations pursuant to, this Agreement and will cooperate fully with each other in promptly seeking to obtain all such authorizations, consents, orders and approvals.
 (e)
 An executed Lock-Up Agreement.
 (f)
 An executed counterpart of the Employment Agreement by Seller.
 (g)
 An executed counterpart of the Assignment by Seller.
 (h)
 The Amended Operating Agreement.
 (i)
 The completed Investor Questionnaire. 
 (j)
 Such other instruments of transfer and assignment as shall be necessary to transfer, assign, convey and vest in Buyer all of Seller’s right, title and interest in and to the Membership Interests as provided in this Agreement.
 ARTICLE VIII
TERMINATION
 This Agreement may be terminated at any time prior to the Closing by any of the following:
 8.1.
 The mutual consent of the parties to this Agreement.
 8.2.
 If either Seller or Buyer, shall have materially breached or failed in any material respect to comply with any of their material obligations under this Agreement, or any material representation or warranty of either Seller or Buyer contained in this Agreement shall have been inaccurate when made in any material respect, the non-breaching Party shall have the right to terminate this Agreement.
 

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 ARTICLE IX
CONFIDENTIALITY
 9.1.
 The Parties will hold and will cause their respective representatives to hold in strict confidence, unless compelled to disclose by judicial or administrative process, or, in the opinion of its counsel, by other requirements of law, all documents and information concerning the other furnished to them in connection with the transactions contemplated by this Agreement (the “Confidential Information”) and will not release or disclose such information to any other Person, except, in connection with this Agreement, to their auditors, attorneys, financial advisors and other consultants and advisors.
 9.2.
 The provisions of Section 9.1 shall not apply to any information which (i) is or becomes publicly known or readily ascertainable by the public through no wrongful act of the party receiving the Confidential Information; (ii) is independently developed by or for the receiver of the Confidential Information; (iii) the recipient of the Confidential Information receives it from a third party, if the recipient does not know of any restrictions on the disclosure of that information; or (iv) the owner of the Confidential Information discloses the Confidential Information to a third party without similar restrictions.
 9.3.
 If a particular portion or aspect of Confidential Information becomes subject to any of the foregoing exceptions, all other portions or aspects of such information shall remain subject to all of the provisions of this Agreement.
 9.4.
 If the transactions contemplated by this Agreement are not consummated, such Confidential Information shall be maintained and, if requested by the other party will be destroyed or returned to the owner of the Confidential Information.
 9.5.
 In the event that any Party is ordered to disclose another Party’s Confidential Information pursuant to a judicial or governmental request, requirement or order, the Party ordered shall promptly notify the Party owning the Confidential Information and those Parties shall take reasonable steps to assist each other in contesting such request, requirement or order or in otherwise in protecting each other’s rights prior to disclosure.
 ARTICLE X
INDEMNIFICATION 
 10.1.
 Each Party (the “Indemnifying Party”) agrees to indemnify, defend, and hold harmless the other Party (the “Indemnified Party”) from and against any and all claims, damages, and liabilities, including any and all expense and costs, legal or otherwise, incurred by the Indemnified Party in the investigation and defense of any claim, demand, or action, including breach by the Indemnifying Party of this Agreement, caused by the negligent act or omission of the Indemnifying Party, its subcontractors, agents, or employees. The Indemnifying Party shall not be liable for any claims, damages, or liabilities caused by the sole negligence of the Indemnified Party, its subcontractors, agents, or employees.
 

 13
 

 
 
 10.2.
 The Indemnified Party shall notify promptly the Indemnifying Party of the existence of any claim, demand, or other matter to which the Indemnifying Party’s indemnification obligations would apply, and shall give them a reasonable opportunity to settle or defend the same at their own expense and with counsel of their own selection, provided that the Indemnified Party shall at all times also have the right to fully participate in the defense. If the Indemnifying Party, within a reasonable time after this notice, fails to take appropriate steps to settle or defend the claim, demand, or the matter, the Indemnified Party shall, upon written notice, have the right, but not the obligation, to undertake such settlement or defense and to compromise or settle the claim, demand, or other matter on behalf, for the account, and at the risk, of the Indemnifying Party.
 10.3.
 Survival of Representations. All representations and warranties of the Parties and the indemnification provisions contained in this Agreement or in any agreements, documents or other papers delivered pursuant to or in connection with this Agreement shall survive for a period of one (1) year from the Closing and/or termination of this Agreement.  The rights and obligations of the Parties under this Article X shall be binding upon and inure to the benefit of any successors, assigns, and heirs of the Parties.
 ARTICLE XI
MISCELLANEOUS
 11.1.
 This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada as applied to residents of the State of Nevada entering into contracts to be wholly performed therein, without giving effect to principles of conflict of laws. The venue of any legal proceeding shall be the County of Clark, State of Nevada. The prevailing party in any legal proceeding shall be entitled to reasonable attorneys’ fees.
 11.2.
 This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder, shall be assigned by any Party hereto without the prior written consent of all other Parties. This Agreement is not intended to confer upon any third person or entity, except the Parties hereto, any rights or remedies hereunder.
 11.3.
 This Agreement and the additional documents called for herein together contain the entire agreement among the Parties with respect to the transactions contemplated hereby and supersede all prior arrangements or understandings with respect thereto.
 11.4.
 Except as otherwise provided in this Agreement, the Parties shall be responsible for and shall pay their respective expenses incurred in connection with this Agreement and the transactions contemplated hereby.
 11.5.
 All notices, consents, requests, instructions, approvals and other communications provided for herein shall be validly given, made or served, if in writing and delivered personally, sent by registered or certified mail, postage prepaid, sent by established overnight delivery service, or transmitted by facsimile (except for legal process) to:
 

 14
 

 
 

 	 	
	 To Seller or Kenmont:
	 Kenmont Solutions Capital GP, LLC
 711 Louisiana, Suite 1750
 Pennzoil Building, South Tower
 Houston, Texas 77002
 Attn:  Donald R. Kendall, Jr.

	 With a copy to:
	 Locke Lord LLP 
600 Travis, Suite 2800
Houston, Texas 77002
Attn:  Gregory C. Hill
Fax No.: (713) 229-2636

	 To Buyer:
	 Blue Earth, Inc.
 2298 Horizon Ridge Parkway, Suite 205
 Henderson, NV 89052
 Attention: Johnny R. Thomas, CEO
 Fax No.: (702) 263-1823

	 With a copy to:
	 Davidoff Hutcher & Citron LLP 
 605 Third Avenue, 34th Floor 
 New York, NY 10158 
 Attention: Elliot H. Lutzker, Esq.
 Fax No.: (212) 286-1884

 

 or to such other address or fax number or email address as any party hereto may, from time to time, designate in a written notice given in a like manner. Notice given by mail as set out above shall be deemed delivered three days after the date it is postmarked. Notice given by overnight delivery service shall be deemed delivered when received. Notice given by facsimile or email shall be deemed given when transmitted, provided that the sender retains a written confirmation of such transmission and mails an original thereof to the other party within one business day after said transmission.
 

 11.6.
 This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. Electronic, photocopy and facsimile copies of signatures may be used in place and stead of original signatures with the same force and effect as originals.
 

 

 15
 

 
 
 11.7.
 The Parties acknowledge that this Agreement has been negotiated by all Parties and that neither this Agreement nor any of its provisions should be interpreted for or against any Party on the basis said Party or its attorney drafted the Agreement or the provision in question.
 11.8.
 The Parties have consulted with their respective legal counsel and other advisors with regard to the negotiation and execution of this Agreement and neither have relied in any manner upon the advice of the other’s legal counsel or advisors.
 11.9.
 Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 [Signature page follows]
 

 16
 

 
 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date and year first above written.
 BUYER
 

 BLUE EARTH, INC.
 

 

 By: /s/ Johnny R. Thomas
 Name: Johnny R. Thomas
 Title: Chief Executive Officer
 

 

 SELLER:
 

 

 /s/ Donald R. Kendall, Jr. 
 DONALD R. KENDALL, JR.
 

 

 KENMONT:
 

 KENMONT SOLUTIONS CAPITAL GP, LLC
 

 

 By:/s/ Donald R. Kendall, Jr.
 Name: Donald R. Kendall, Jr.
 Title: Chief Executive Officer
 

 

 

 

 

 [Signature page to Equity Exchange Agreement]
 

 

 17
 

 
 
 EXHIBIT B
 

 LOCK-UP/LEAK-OUT AGREEMENT
 

 LOCK-UP/LEAK-OUT AGREEMENT (the “Lock-Up Agreement”) dated as of January 31, 2014 (the “Closing Date”), by and between Donald R. Kendall, Jr. (the “Seller”) and Blue Earth, Inc., a Nevada corporation (“BE”).
 

 W I T N E S S E T H:
 

 WHEREAS, BE, Kenmont Solutions Capital GP, LLC (“Kenmont”), and the Seller have entered into an Equity Exchange Agreement, dated as of January 31, 2014 (the “Exchange Agreement”) pursuant to which BE will acquire 100% of the equity interests of Kenmont (the “Membership Interests”) from the Seller;
 

 WHEREAS, in exchange for the Membership Interests, BE will: (i) issue to the Seller 25,000 shares of restricted common stock of BE (the “Consideration Shares”) and (ii) enter into a Sale of Goodwill Agreement (“Goodwill Agreement”) pursuant to which it will issue to Seller 1,725,000 Consideration Shares, subject to the respective terms of the such agreements; and
 

 WHEREAS, pursuant to the terms of the Exchange Agreement and the Goodwill Agreement, the Seller shall not sell, transfer or otherwise dispose of the Consideration Shares (hereinafter, the “BE Shares”), except as set forth in this Lock-Up Agreement.
 

 NOW, THEREFORE, in consideration of the foregoing and the terms, conditions and mutual covenants appearing in this Lock-Up Agreement, the parties hereto hereby agree as follows:
 SECTION 1.
 
 (a)
 The resale of the BE Shares shall be according to the following schedule:  Beginning on the closing of the Exchange Agreement (the “Closing Date”) and for eighteen (18) months thereafter, Seller may not sell any BE Shares (the “Initial Lock-Up Period”).  For the period commencing on the expiration of the Initial Lock-Up Period and for the period twelve (12) months thereafter (the “Second Lock-Up Period”) an amount equal to 20,000 BE Shares per calendar month on a non-cumulative basis. Following the expiration of the Second Lock-Up Period, except as set forth in this Section 1, there shall be no restriction or limitations on the sale of BE Shares (other than restrictions generally imposed on the resale of common stock of BE, including under applicable law or the rules and regulations of the markets and/or exchanges on which the common stock of BE is traded or exchanged).
 
 (b)
 All sales of BE Shares shall be by means of “in-the-market” transactions.  “In the market” shall mean a sale made on the OTC Bulletin Board, or any subsequent primary trading market, or customary trading channels on which the common stock of BE is exchanged.
 

 1
 

 
  

 (c)
 Notwithstanding the foregoing, BE may, at the Seller’s request, and at BE’s sole discretion, release all or any number of BE Shares from the terms of this Lock-Up Agreement.  BE shall determine when daily trading volumes and prices reasonably permit sales of BE Shares by Seller.  
 
 (d)
 BE represents, warrants and covenants that BE will remove the restrictive legend on the BE Shares certificate within seventy-two (72) hours of receipt of a request from Seller or Seller's representative so long as BE determines that such removal is in compliance with applicable securities laws.
 
 (e)
 Notwithstanding the foregoing, BE Shares may be included in a secondary offering registration statement which offers shares of BE for sale to the public, provided Investment Bankers and management of BE agree that inclusion of such Shares would not be adverse to the funding opportunity for BE.
 
 (f)
 The Seller acknowledges that his breach or impending violation of any of the provisions of this Lock-Up Agreement may cause irreparable damage to BE for which remedies at law would be inadequate.  The Seller further acknowledges that the provisions set forth herein are essential terms and conditions of this Lock-Up Agreement, the Exchange Agreement, and the other agreements referenced therein.  The Seller therefore agrees that BE shall be entitled to a decree or order by any court of competent jurisdiction enjoining such impending or actual violation of any of such provisions.  Such decree or order, to the extent appropriate, shall specifically enforce the full performance of any such provision by the Seller and BE hereby consents to the jurisdiction of any such court of competent jurisdiction, state or federal, sitting in the State of Nevada.  This remedy shall be in addition to all other remedies available to BE at law or equity.  If any portion of this Section 1 is adjudicated to be invalid or unenforceable, this Section 1 shall be deemed amended to delete therefrom the portion so adjudicated, such deletion to apply only with respect to the operation of this Section 1 in the jurisdiction in which such adjudication is made.
 
 (g)
 BE Shares shall not at any time, including after the Second Lock-Up Period, be used to cover “short” sales of the common stock of BE. 
 
 (h)
 Notwithstanding the foregoing, there shall be no restriction on Seller’s ability to transfer the Consideration Shares to family members, affiliates, trusts or similar transactions for estate planning purposes.
 
 SECTION 2.
 Subject to Section 5 hereunder, this Lock-Up Agreement shall inure to the benefit of and be binding upon BE, its successors and assigns, and upon the Seller, his heirs, executors, administrators, legatees and legal representatives.
 

 2
 

 
  

 SECTION 3.
 Should any part of this Lock-Up Agreement, for any reason whatsoever, be declared invalid, illegal, or incapable of being enforced in whole or in part, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Lock-Up Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Lock-Up Agreement without including therein any portion which may for any reason be declared invalid.
 
 SECTION 4.
 This Lock-Up Agreement shall be construed and enforced in accordance with the laws of the State of Nevada applicable to agreements made and to be performed in such State without application of the principles of conflicts of laws of such State.  The venue of any legal proceeding shall be the County of Clark, State of Nevada.
 
 SECTION 5.
 This Lock-Up Agreement and all rights hereunder are personal to the parties and shall not be assignable, and any purported assignments in violation thereof shall be null and void.
 
 (a)
 All notices, requests, consents, and demands by the parties hereunder shall be delivered by hand, recognized national overnight courier or by deposit in the United States Mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the party to be notified at the address set forth below:
 (i)
 If to the Seller to:
 

 Donald R. Kendall, Jr.
 711 Louisiana, Suite 1750
 Pennzoil Building, South Tower
 Houston, Texas 77002 
 

 With a copy to:
 

 Locke Lord LLP
 600 Travis, Suite 2800
 Houston, Texas 77002
 Attn:  Gregory C. Hill
 Telecopier No.: (713) 229-2636
 

 (ii)
 If to BE to:
 

 Blue Earth, Inc.
 2298 Horizon Ridge Parkway, Suite 207
 Henderson, NV 89052
 Attention:  Johnny R. Thomas, CEO
 Telecopier No.:  (702) 263-1823
 

 

 3
 

 
 With a copy to:
 

 Davidoff Hutcher & Citron LLP
 605 Third Avenue
 New York, NY 10158
 Attention:  Elliot H. Lutzker, Esq.
 Telecopier No.: (212) 286-1884
 

 
 (b)
 Notices given by mail shall be deemed effective on the earlier of the date shown on the proof of receipt of such mail or, unless the recipient proves that the notice was received later or not received, three (3) days after date of mailing thereof.  Other notices shall be deemed given on the date of receipt.  Any party hereto may change the address specified herein by written notice to the other parties hereto.
 
 SECTION 6.
 The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Lock-Up Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect.  No waiver of any term or condition of this Lock-Up Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.
 
 SECTION 7.
 This Lock-Up Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. Electronic, photocopy and facsimile copies of signatures may be used in place and stead of original signatures with the same force and effect as originals.
 

 

 

 

 

 

 

 

 

 4
 

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

 BLUE EARTH, INC.
 

 By:  /s/ Johnny R. Thomas
 Johnny R. Thomas
 CEO
 

 

 /s/ Donald R. Kendall, Jr.
 DONALD R. KENDALL, JR.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 5EX-10.63

 EXHIBIT 10.63
 

  SALE OF GOODWILL AGREEMENT
 

 AGREEMENT (the “Agreement”) dated as of January 31, 2014 (the “Execution Date”)by and between Donald R. Kendall, Jr., an individual with an address at 711 Louisiana, Suite 1750, Pennzoil Building, South Tower, Houston, Texas 77002 (referred to as “Seller”) and Blue Earth, Inc. a Nevada corporation with a principal place of business located at 2298 Horizon Ridge Parkway, Suite 205, Henderson, Nevada 89052 (referred to herein as “Blue Earth” or “Purchaser”).
 

 

 WHEREAS, simultaneously with the execution of this Agreement, Seller has sold a 100% interest in Kenmont Solutions Capital GP, LLC (the “Company”) to Blue Earth pursuant to an Equity Exchange Agreement of even date herewith (the “Purchase Agreement”); 
 

 WHEREAS, the Seller is an indispensable part of the Company’s relationship with Purchaser;
 

 WHEREAS, there has never been nor is there currently a written employment agreement, restrictive covenant, non-competition agreement or any other similar agreement between the Seller and the Company restricting Seller’s activities, and the Company would not enter into this Agreement unless Seller agreed to the non-competition and other restrictive covenants set forth in the employment agreement between Seller and the Company dated as of the date hereof;
 

 WHEREAS, the Seller desires to sell Seller’s Goodwill to the Purchaser in consideration of the payment of the Purchase Price (as hereinafter defined) and in consideration of the terms and subject to the conditions set forth herein;
 

 WHEREAS, Purchaser desires to purchase and secure the Seller’s Goodwill pursuant to the terms and subject to the conditions set forth herein;
 

 WHEREAS, in connection with selling and transferring Seller’s Goodwill to the Purchaser, the parties have also agreed to enter into an employment agreement of even date herewith, that provides, among other things, that the Seller will help transition the Seller’s Goodwill to the Purchaser in an efficient and productive manner beneficial to Purchaser and Seller will not compete against Purchaser; and
 

 NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, and for valuable consideration, the receipt of which is hereby acknowledged by the Seller and the Purchaser, the parties hereby agree as follows: 
 

 1.
 Sale of Seller’s Goodwill.  Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, all of Seller’s Goodwill, free from all liabilities and encumbrances and Seller, in particular, agrees to (i) permit the Purchaser to use his name and contacts at the Company (ii) transfer to Purchaser certain documents he owns and controls related to certain prior relationships, (iii) recommend the Purchaser to contacts in the energy efficiency and clean tech industry, and (iv) enter into the employment agreement (the “Employment Agreement”) of even date herewith.
 

 

 
 
 2.
 Purchase Price.  The purchase price (the “Purchase Price”) for the Seller’s Goodwill is 1,725,000 shares of Restricted Common Stock of Blue Earth, and in consideration for the non-competition and other restrictions in the employment agreement options to purchase 200,000 shares of common stock of Blue Earth at an exercise price of $2.00 per share, equal to the fair market value of Blue Earth Common Stock when the business terms, including the Purchase Price, was reached between the parties.
 

 3.
 Method of Payment.  The Purchase Price shall be paid by the Purchaser as follows:  
 (a)
 1,725,000 shares of restricted Common Stock shall be delivered to Seller upon the completion of this Agreement (the “Closing”) subject to a lock-up/leak-out agreement, in the form attached hereto as Exhibit A; and
 (b)
 execution of a non-qualified stock option agreement dated the Closing Date to purchase 200,000 shares of common stock at an exercise price of $2.00 per share in the form attached hereto as Exhibit B. 
 4.
 Representations by Seller.  Seller makes the following representations and warranties to Purchaser as of the Execution Date, as well as those representations and warranties set forth in the Representation Letter and Agreement executed on this date, all of which shall survive the Execution Date:
 

 (a)
 Title.  Seller is the owner of and has good and marketable title to the Seller’s Goodwill, free of all debts, liens, security interests and encumbrances.
 

 (b)
 Due Execution.  This Agreement has been duly executed and delivered by the Seller and is the valid and binding obligation of the Seller, enforceable in accordance with its terms (subject, as to enforcement of remedies, to bankruptcy, reorganization, insolvency, moratorium and other similar laws relating to or affecting creditors’ rights generally and to general equitable principles).
 

 (c)
 No Conflict.  The execution, delivery and performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby, do not and will not violate, conflict with, result in a breach or termination of, or constitute a default or event of default under (or an event which with due notice or lapse of time, or both, would constitute a default or event of default under), or require a notice or consent under, or result in the creation of any lien on the Seller’s Goodwill under, or enable another party thereto to terminate, or impose any penalty or additional payment obligations or accelerate any obligations under (i) any lease, license, contract or agreement to which Seller is a party or by which Seller or the Seller’s Goodwill is bound, (ii) any judgment, order, writ, decree, ruling or injunction of any governmental official, agency, instrumentality or other authority applicable to Seller or the Seller’s Goodwill, or (iii) any statute, law, regulation or rule of any governmental agency, instrumentality or other authority applicable to Seller or the Seller’s Goodwill.
 

 

 2
 

 
 
 (d)
 Proceedings.  There is no action, suit or proceeding pending, and, to the best of Seller’s knowledge, there is no investigation pending or threatened or action, suit or proceeding threatened, against Seller which, if decided adversely to Seller, may (i) prevent or in any material way impair the consummation of the transactions contemplated by this Agreement, or (ii) have, individually or in the aggregate, a material adverse effect upon the Seller’s Goodwill.  To the best of Seller’s knowledge, Seller is not subject to any judicial or administrative judgment, order, writ, injunction, decree or restraint with respect to the use or right to sell and convey the Seller’s Goodwill.
 

 5.
 Representations by Purchaser.  Purchaser makes the following representations and warranties to Seller as of the Execution Date, all of which shall survive the Execution Date: 
 

 (a)
 Organization and Qualification.  Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has the corporate power and authority to execute, deliver and perform the Agreement.  
 

 (b)
 Authority.  The execution, delivery and performance by Seller of this Agreement, and the consummation by Purchaser of the transactions contemplated hereby, have been duly authorized by all necessary and required corporate action of Purchaser.
 

 (c)
 Due Execution.  This Agreement has been duly executed and delivered by Purchaser and is the valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms (subject, as to enforcement of remedies, to bankruptcy, reorganization, insolvency, moratorium and other similar laws relating to or affecting creditors’ rights generally and to general equitable principles).  
 

 (d)
 No Conflict.  The execution, delivery and performance by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby, do not and will not violate, conflict with, result in a breach or termination of, or constitute a default or event of default under (or an event which with due notice or lapse of time, or both, would constitute a default or event of default under), or require a notice or consent under, or enable another party thereto to terminate, or impose any penalty or additional payment obligations or accelerate any obligations under (i) the certificate of incorporation, as amended, of Purchaser, (ii) any lease, license, contract or agreement to which Purchaser is a party or by which Purchaser is bound, (iii) any judgment, order, writ, decree, ruling or injunction of any governmental official, agency, instrumentality or other authority applicable to Purchaser, or (iv) any statute, law, regulation or rule of any governmental agency, instrumentality or other authority applicable to Purchaser.
 

 (e)
 Proceedings.  There is no action, suit or proceeding pending, and, to the best of Purchaser’s knowledge, there is no investigation pending or threatened or action, suit or proceeding threatened, against Purchaser which, if decided adversely to Purchaser may prevent or in any material way impair the consummation of the transactions contemplated by this Agreement.
 

 

 3
 

 
 
 6.
 Indemnification.
 

 (a)
 Seller’s Indemnification Obligation to Purchaser.  Seller shall defend, indemnify and hold harmless Purchaser, and will reimburse Purchaser, including any affiliates, for any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses) (collectively, “Damages”) suffered by Purchaser, arising from or in connection with:
 

 (i)
 the failure of any representation or warranty of Seller set forth herein to be true and correct in all material respects; and
 

 (ii)
 the material breach of any covenant or other agreement on the part of Seller under this Agreement. 
 

 (b)
 Purchaser’s Indemnification Obligation to Seller. Purchaser shall defend, indemnify and hold harmless Seller, and will reimburse Seller for any Damages, arising from or in connection with:
 

 (i)
 the failure of any representation or warranty of Purchaser set forth herein to be true and correct in all material respects; and
 

 (ii)
 the material breach of any covenant or other agreement on the part of Purchaser under this Agreement.
 

 7.
 Covenants.
 

 (a)
 Confidentiality.  The parties acknowledge and agree that information about the Seller’s Goodwill is confidential.  Except as required by law, or court order, the parties agree not to disclose information about Seller’s Goodwill from and after the Execution Date until the second (2nd) anniversary of the termination date of the Employment Agreement, to any third-party.  The parties may disclose such confidential information to their respective family members, the parties’ respective employees who have need to know, attorneys, accountants, or tax or financial planning agents; provided that such persons are directed to treat such confidential information confidentially and agree to the nondisclosure terms set forth herein (the “Receiving Party”).  It is acknowledged and agreed that the disclosing party will be liable for a breach by the Receiving Party of its nondisclosure obligations.  
 

 (b)
 Cooperation.  Seller will cooperate and take all such steps after the Execution Date to transfer title to the Seller’s Goodwill to Purchaser.
 

 

 

 

 

 

 

 

 4
 

 
 
 (c)
 Release of Seller.  Notwithstanding anything to the contrary herein, Seller shall be released from any and all obligations pursuant to Sections 7(a), 7(b), 7(c) and 7(d) herein, without notice to Purchaser and without further action from Seller, upon the occurrence of an event of Default (as defined thereunder) under the Purchase Agreement or this Agreement; provided however that if the Default is in respect of a failure by Purchaser to make timely payments under the Purchase Agreement or a breach of any material obligation under this Agreement, then Seller shall only be released pursuant to this Section 7(e) upon a (i) agreement of the parties as to the occurrence of such Default or (ii) a final adjudication (after the exhaustion or expiration of all remedies and appeals) by a court of competent jurisdiction of the occurrence of such Default.  The right of Seller to the release provided herein shall be cumulative and in addition to any other rights and remedies Seller may have under the documents relating to this transaction or at law or in equity.
 

 (d)
 Injunctive Relief with Respect to Covenants; Certain Acknowledgments.  Each party hereto hereby acknowledges and agrees that the covenants, obligations and agreements obligations and agreements (i) of Seller contained in Sections 7(a), 7(b), 7(c) and 7(d), and (ii) of Purchaser contained in Section 7(a), in each case, relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants, obligations or agreements will cause (A) Purchaser and its affiliates, in the case of Section 7(f)(i), and (B) Seller and his affiliates, in the case of Section 7(f)(ii) , irreparable injury for which adequate remedies are not available at law.  Therefore, in the event of a breach or threatened breach by a party of any such covenant, obligation or agreement, such party agrees that a non-breaching party (the Seller, on one hand, and, Purchaser, on the other hand, as the case may be) shall be entitled to an immediate injunction, restraining order or such other equitable relief (without the requirement to post a bond) as a court of competent jurisdiction may deem necessary or appropriate to restrain the breaching party from breaching or attempting to breach any covenant, obligation or agreement hereunder.  In addition, the non-breaching party (the Seller, on one hand, and, Purchaser, on the other hand, as the case may be) shall be entitled to enforce all of the rights and remedies set forth in this Agreement and the other documents relating to this transaction. These injunctive remedies are cumulative and in addition to any other rights and remedies a party may have under this Agreement or any other document relating to this transaction, or at law or in equity.
 

 (e)
 Attorneys’ Fees.  If any action at law or equity is necessary to enforce the terms, conditions or covenants set forth in Section 7(a) – (f), the prevailing party shall be entitled to reasonable attorneys’ fees and actual out-of-pocket costs in addition to any other relief to which it or he may be entitled.
 

 (f)
 Blue Pencil Doctrine.  If any court of competent jurisdiction shall at any time deem any term, covenant, obligation or condition of Section 7 not be enforceable, the other terms, covenants, obligations and conditions of Section 7 shall nevertheless remain in effect and the unenforceable term, covenant, obligation or condition shall be deemed to have been amended so that the same shall be enforceable. 
 

 

 5
 

 
 
 (i)
 Acceleration of Vesting.  At any time after the Execution Date hereof, the Purchaser hereby agrees that any and all restricted shares issued as part of the Purchase Price and shares underlying the Option issued as part of the Purchase Price which have not yet vested shall be accelerated and become immediately vested without notice to Purchaser and without further action from Seller upon (A) Seller’s death; (B) the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company; (C) the occurrence of a Change In Control of Blue Earth; or (D) the consummation of an initial public offering of the Company.  For purposes of this Agreement, the term “Change In Control” shall mean any consolidation or merger of Blue Earth in which the Purchaser is not the continuing or surviving corporation, other than a consolidation or merger of the Purchaser in which the then current shareholders of Blue Earth at the time of the Merger shall hold more than 50% of the Common Stock of the surviving corporation.
 

 8.
 Tax Position.  Neither party will take a position for federal, state or local tax purposes that is not fully consistent with this Agreement.  Purchaser and Seller agree to file Form 8594, if required, using the amounts set forth herein. 
 

 9.
 Governing Law; Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to conflicts of laws.  Any dispute arising out of or relating to this Agreement and the transactions contemplated hereby and thereby may be brought in the courts of the State of Nevada located within Clark County, or, if a party has or can acquire jurisdiction, in the United States District Court for Las Vegas, Nevada, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect thereof shall be heard and determined only in any such court and agrees not to bring any action, proceeding, or other suit arising out of or relating to this Agreement in any other court.
 

 10.
 Notices.  Any notice given hereunder shall be deemed sufficient if in writing and shall be deemed to have been given or made: (a) if by personal delivery, immediately upon delivery; (b) if by certified mail, return receipt requested, the third business day after delivery to the U.S. Postal Service; (c) if by facsimile transmission (with confirmation thereof), one business day after transmission; or (d) if by Federal Express, Express Mail, or any nationally recognized overnight courier service, two business days after delivery to the overnight courier service, in each case addressed as follows (or to such other address, facsimile number, or person as a party may designate by notice as required under this Section to the other parties):
 

 

 

 

 

 

 

 6
 

 
 

 	 	
	 If to Purchaser:
	 Blue Earth, Inc.
 2298 Horizon Ridge Parkway, Suite 205
 Henderson, Nevada 89052
 Attn:  Johnny R. Thomas, CEO

	 With a copy to:
	 Davidoff Hutcher & Citron LLP
 605 Third Avenue, 34th Floor
 New York, New York 10158
 Attn.:  Elliot H. Lutzker
 E-Mail: ehl@dhclegal.com
 Facsimile:  (212) 286-1884

	 If to Seller:
	 Donald R. Kendall, Jr.
 c/o Kenmont Solutions Capital GP, LLC
 711 Louisiana, Suite 1750
 Pennzoil Building, South Tower
 Houston, Texas 77002

	 With a copy to:
	 Locke Lord LLP 
 600 Travis, Suite 2800
 Houston, Texas 77002
 Attn:  Gregory C. Hill
 Fax No.: (713) 229-2636

 

 11.
 Counterparts; Facsimile or Email Signatures.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  This Agreement may be executed and delivered by facsimile or email, and the exchange of copies of this Agreement and of signature pages by facsimile transmission or email transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile or email shall be deemed to be their original signatures for all purposes.
 

 12.
 Construction.  Should any of the provisions of this Agreement or any agreement executed in connection herewith require judicial interpretation, it is agreed that the court interpreting or construing the same shall not apply a presumption that any provisions shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agent prepared the same, it being agreed that both parties and their respective agents have participated in the preparation of this Agreement.
 

 

 7
 

 
 
 13.
 Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement, except as otherwise provided herein.  No assignment of this Agreement or of any rights or obligations hereunder may be made by either party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.
 

 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above. 
 

 

 PURCHASER:
 

 BLUE EARTH, INC.
 

 

 /s/  Johnny R. Thomas
 By:  Johnny R. Thomas
 Title:  Chief Executive Officer
 

 

 /s/  Donald R. Kendall, Jr.
       Donald R. Kendall, Jr.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 8
 

 
 

 

 EXHIBIT A
 

 LOCK-UP/LEAK-OUT AGREEMENT
 

 LOCK-UP/LEAK-OUT AGREEMENT (the “Lock-Up Agreement”) dated as of January 31, 2014 (the “Closing Date”), by and between Donald R. Kendall, Jr. (the “Seller”) and Blue Earth, Inc., a Nevada corporation (“BE”).
 

 W I T N E S S E T H:
 

 WHEREAS, BE, Kenmont Solutions Capital GP, LLC (“Kenmont”), and the Seller have entered into an Equity Exchange Agreement, dated as of January 31, 2014 (the “Exchange Agreement”) pursuant to which BE will acquire 100% of the equity interests of Kenmont (the “Membership Interests”) from the Seller;
 

 WHEREAS, in exchange for the Membership Interests, BE will: (i) issue to the Seller 25,000 shares of restricted common stock of BE (the “Consideration Shares”) and (ii) enter into a Sale of Goodwill Agreement (“Goodwill Agreement”) pursuant to which it will issue to Seller 1,725,000 Consideration Shares, subject to the respective terms of the such agreements; and
 

 WHEREAS, pursuant to the terms of the Exchange Agreement and the Goodwill Agreement, the Seller shall not sell, transfer or otherwise dispose of the Consideration Shares (hereinafter, the “BE Shares”), except as set forth in this Lock-Up Agreement.
 

 NOW, THEREFORE, in consideration of the foregoing and the terms, conditions and mutual covenants appearing in this Lock-Up Agreement, the parties hereto hereby agree as follows:
 SECTION 1.
 
 (a)
 The resale of the BE Shares shall be according to the following schedule:  Beginning on the closing of the Exchange Agreement (the “Closing Date”) and for eighteen (18) months thereafter, Seller may not sell any BE Shares (the “Initial Lock-Up Period”).  For the period commencing on the expiration of the Initial Lock-Up Period and for the period twelve (12) months thereafter (the “Second Lock-Up Period”) an amount equal to 20,000 BE Shares per calendar month on a non-cumulative basis. Following the expiration of the Second Lock-Up Period, except as set forth in this Section 1, there shall be no restriction or limitations on the sale of BE Shares (other than restrictions generally imposed on the resale of common stock of BE, including under applicable law or the rules and regulations of the markets and/or exchanges on which the common stock of BE is traded or exchanged).
 
 (b)
 All sales of BE Shares shall be by means of “in-the-market” transactions.  “In the market” shall mean a sale made on the OTC Bulletin Board, or any subsequent primary trading market, or customary trading channels on which the common stock of BE is exchanged.
 

 1
 

 
 

 

 
 (c)
 Notwithstanding the foregoing, BE may, at the Seller’s request, and at BE’s sole discretion, release all or any number of BE Shares from the terms of this Lock-Up Agreement.  BE shall determine when daily trading volumes and prices reasonably permit sales of BE Shares by Seller.  
 
 (d)
 BE represents, warrants and covenants that BE will remove the restrictive legend on the BE Shares certificate within seventy-two (72) hours of receipt of a request from Seller or Seller's representative so long as BE determines that such removal is in compliance with applicable securities laws.
 
 (e)
 Notwithstanding the foregoing, BE Shares may be included in a secondary offering registration statement which offers shares of BE for sale to the public, provided Investment Bankers and management of BE agree that inclusion of such Shares would not be adverse to the funding opportunity for BE.
 
 (f)
 The Seller acknowledges that his breach or impending violation of any of the provisions of this Lock-Up Agreement may cause irreparable damage to BE for which remedies at law would be inadequate.  The Seller further acknowledges that the provisions set forth herein are essential terms and conditions of this Lock-Up Agreement, the Exchange Agreement, and the other agreements referenced therein.  The Seller therefore agrees that BE shall be entitled to a decree or order by any court of competent jurisdiction enjoining such impending or actual violation of any of such provisions.  Such decree or order, to the extent appropriate, shall specifically enforce the full performance of any such provision by the Seller and BE hereby consents to the jurisdiction of any such court of competent jurisdiction, state or federal, sitting in the State of Nevada.  This remedy shall be in addition to all other remedies available to BE at law or equity.  If any portion of this Section 1 is adjudicated to be invalid or unenforceable, this Section 1 shall be deemed amended to delete therefrom the portion so adjudicated, such deletion to apply only with respect to the operation of this Section 1 in the jurisdiction in which such adjudication is made.
 
 (g)
 BE Shares shall not at any time, including after the Second Lock-Up Period, be used to cover “short” sales of the common stock of BE. 
 
 (h)
 Notwithstanding the foregoing, there shall be no restriction on Seller’s ability to transfer the Consideration Shares to family members, affiliates, trusts or similar transactions for estate planning purposes.
 
 SECTION 2.
 Subject to Section 5 hereunder, this Lock-Up Agreement shall inure to the benefit of and be binding upon BE, its successors and assigns, and upon the Seller, his heirs, executors, administrators, legatees and legal representatives.
 

 

 2
 

 
 

 

 
 SECTION 3.
 Should any part of this Lock-Up Agreement, for any reason whatsoever, be declared invalid, illegal, or incapable of being enforced in whole or in part, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Lock-Up Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Lock-Up Agreement without including therein any portion which may for any reason be declared invalid.
 
 SECTION 4.
 This Lock-Up Agreement shall be construed and enforced in accordance with the laws of the State of Nevada applicable to agreements made and to be performed in such State without application of the principles of conflicts of laws of such State.  The venue of any legal proceeding shall be the County of Clark, State of Nevada.
 
 SECTION 5.
 This Lock-Up Agreement and all rights hereunder are personal to the parties and shall not be assignable, and any purported assignments in violation thereof shall be null and void.
 
 (a)
 All notices, requests, consents, and demands by the parties hereunder shall be delivered by hand, recognized national overnight courier or by deposit in the United States Mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the party to be notified at the address set forth below:
 (i)
 If to the Seller to:
 

 Donald R. Kendall, Jr.
 711 Louisiana, Suite 1750
 Pennzoil Building, South Tower
 Houston, Texas 77002 
 

 With a copy to:
 

 Locke Lord LLP 
 600 Travis, Suite 2800
 Houston, Texas 77002
 Attn:  Gregory C. Hill
 Telecopier No.: (713) 229-2636
 

 (ii)
 If to BE to:
 

 Blue Earth, Inc.
 2298 Horizon Ridge Parkway, Suite 207
 Henderson, NV 89052
 Attention:  Johnny R. Thomas, CEO
 Telecopier No.:  (702) 263-1823
 

 

 3
 

 
 

 

 With a copy to:
 

 Davidoff Hutcher & Citron LLP
 605 Third Avenue
 New York, NY 10158
 Attention:  Elliot H. Lutzker, Esq.
 Telecopier No.: (212) 286-1884
 

 
 (b)
 Notices given by mail shall be deemed effective on the earlier of the date shown on the proof of receipt of such mail or, unless the recipient proves that the notice was received later or not received, three (3) days after date of mailing thereof.  Other notices shall be deemed given on the date of receipt.  Any party hereto may change the address specified herein by written notice to the other parties hereto.
 
 SECTION 6.
 The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Lock-Up Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect.  No waiver of any term or condition of this Lock-Up Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.
 
 SECTION 7.
 This Lock-Up Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. Electronic, photocopy and facsimile copies of signatures may be used in place and stead of original signatures with the same force and effect as originals.
 

 

 

 

 

 

 

 

 

 

 

 4
 

 
 

 

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

 BLUE EARTH, INC.
 

 By:  /s/ Johnny R. Thomas
 Johnny R. Thomas
 CEO
 

 

 /s/ Donald R. Kendall, Jr.
 DONALD R. KENDALL, JR.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 5
 

 
 

 

 

 EXHIBIT B
 

 BLUE EARTH, INC.
 

 NONQUALIFIED STOCK OPTION AGREEMENT
 

 This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of January 31, 2014 (the “Grant Date”), is between Blue Earth, Inc., a Nevada corporation (the “Company”), and Donald R. Kendall, Jr., an individual with an address at 711 Louisiana, Suite 1750, Pennzoil Building, South Tower, Houston, Texas 77002 (the “Optionee”), the president and chief executive officer of Kenmont Solutions Capital GP, LLC, a wholly owned subsidiary of the Company (“Kenmont”).
 

 WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company, par value $0.001 (“Common Shares”).
 

 WHEREAS, the Option for 200,000 of the Common Shares granted hereunder are in consideration of the non-competition and other restrictive covenants of the Optionee set forth in his employment agreement dated as of the date hereof, and the Option for the remaining 1,200,000 Common Shares are in the form of compensation.
 

 NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:
 

 1.
 Grant of Option.  The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of ONE MILLION FOUR-HUNDRED THOUSAND (1,400,000) Common Shares.  The Option is in all respects limited and conditioned as hereinafter provided, and is not being granted under the Company’s 2009 Equity Incentive Plan.   The Option granted hereunder is intended to be a nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
 

 2.
 Exercise Price.  The exercise price of the Common Shares covered by this Option shall be $2.00 per share.  It is the determination of the committee (the “Committee”) or the entire Board Of Directors that on the date when the terms of this Option Agreement were agreed to (which was December 4, 2013) the exercise price was not less than the greater of (i) 100% of the “Fair Market Value” of a Common Share, or (ii) the par value of a Common Share.
 

  
 3.
 Term.  Unless earlier terminated this Option Agreement shall expire on the ten year anniversary of the Grant Date (the “Expiration Date”).  This Option shall not be exercisable on or after the Expiration Date.
 

 4.
 Exercise of Option.  The Option shall vest according to the terms and conditions of Schedule A attached hereto, provided that Optionee remains continuously employed as a key employee of the Company or of its subsidiaries from the date hereof through the applicable vesting date:
 

 1
 

 
 

 

 In the event that Optionee’s employment with the Company is terminated due to (i) death, (ii) Disability, (iii) non-renewal of the Employment Agreement between the Company and Optionee dated January 31, 2014; (iv) by the Company without Cause, or (v) by Optionee for Good Reason (with each of “Disability”, “Cause” and “Good Reason” having the definitions provided in the Employment Agreement, Optionee shall have up to ninety (90) days from the termination date to exercise all options vested as of the termination date.  
 

 Notwithstanding the foregoing, in the event the Optionee (or his estate) does not timely exercise the Option prior to the termination date and the fair market value of the underlying Common Share is greater than the exercise price, then such Option shall automatically be deemed exercised (on a cashless basis) to the extent vested on the ninetieth (90th) day following the termination date.  In the event the Optionee’s employment with the Company is terminated by Optionee without Good Reason (as defined in the Employment Agreement) the Option shall be immediately forfeited by Optionee.  The Committee may accelerate any vesting date of the Option, in its discretion, if it deems such acceleration to be desirable.  Once the Option becomes exercisable, it will remain exercisable until it is exercised or until it terminates.
 

 5.
 Method of Exercising Option.  Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Company at its principal office.  The form of such notice is attached hereto and shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; and shall be accompanied by payment of the full exercise price of such shares. Only full shares will be issued.  
 

 The exercise price shall be paid to the Company: 
 

 (a)
 in cash, or by certified check, bank draft, or postal or express money order;
 

 (b)
 through the delivery of Common Shares previously acquired by the Optionee;
 

 (c)
 by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount necessary to pay the exercise price of the Option;
 

 (d)
 in Common Shares newly acquired by the Optionee upon exercise of the Option; or
 

 (e)
 in any combination of (a), (b), (c) or (d) above.
 

 In the event the exercise price is paid, in whole or in part, with Common Shares, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Shares surrendered on the date of exercise.
 

 

 2
 

 
 

 

 Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the Common Shares with respect to which the Option is so exercised. The Optionee shall obtain the rights of a shareholder upon receipt of a certificate(s) representing such Common Shares.
 

 Such certificate(s) shall be registered in the name of the person so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship), and shall be delivered as provided above to, or upon the written order of, the person exercising the Option.  In the event the Option is exercised by any person after the death or disability (as determined in accordance with Section 22(e)(3) of the Code) of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person to exercise the Option.  All Common Shares that are purchased upon exercise of the Option as provided herein shall be fully paid and non-assessable.
 

 Upon exercise of the Option, Optionee shall be responsible for all employment and income taxes then or thereafter due (whether Federal, State or local), and if the Optionee does not remit to the Company sufficient cash (or, with the consent of the Committee, Common Shares) to satisfy all applicable withholding requirements, the Company shall be entitled to satisfy any withholding requirements for any such tax by disposing of Common Shares at exercise, withholding cash from Optionee’s salary or other compensation or such other means as the Committee considers appropriate to the fullest extent permitted by applicable law.  Nothing in the preceding sentence shall impair or limit the Company’s rights with respect to satisfying withholding obligations.
 

 6.
 Non-Transferability of Option.  This Option may be assigned or transferred, in whole or in part, by the Optionee to a trust or family limited partnership and by will or by the laws of descent and distribution.  During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.  The foregoing notwithstanding, the Option may be transferred without consideration to (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships (a “Permitted Transferee”), (ii) a trust in which Permitted Transferees have more than 50% of the beneficial interest, (iii) a foundation in which Permitted Transferees (or the Optionee) control the management of assets, and (iv) any other entity in which Permitted Transferees (or the Optionee) own more than 50% of the voting interests.
 

 7.
 Termination of Employment. If the Optionee's employment with the Company and all of its subsidiaries is terminated for any reason (other than death or disability) prior to the Expiration Date, then this Option may be exercised by Optionee, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of employment, at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after such termination of employment. Any part of the Option that was not exercisable immediately before the termination of Optionee's employment shall terminate at that time.
 

 3
 

 
 

 

 

 8.
 Disability.  If the Optionee becomes disabled (as determined in accordance with section 22(e)(3) of the Code) during his or her employment and, prior to the Expiration Date, the Optionee’s employment is terminated as a consequence of such disability, then this Option may be exercised by the Optionee or by the Optionee’s legal representative, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of employment at any time prior to the earlier of (i) the Expiration Date or (ii) one year after such termination of employment.  Any part of the Option that was not exercisable immediately before the Optionee’s termination of employment shall terminate at that time.
 

 9.
 Death.  If the Optionee dies during his or her employment and prior to the Expiration Date, or if the Optionee’s employment is terminated for any reason (as described in Paragraphs 7 and 8) and the Optionee dies following his or her termination of employment but prior to the earliest of (i) the Expiration Date, or (ii) the expiration of the period determined under Paragraph 7 or 8 (as applicable to the Optionee), then this Option may be exercised by the Optionee’s estate, personal representative or beneficiary who acquired the right to exercise this Option by bequest or inheritance or by reason of the Optionee’s death, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of his or her death, at any time prior to the earlier of (i) the Expiration Date or (ii) one year after the date of the Optionee’s death.  Any part of the Option that was not exercisable immediately before the Optionee’s death shall terminate at that time. 
 

 10.
 Securities Matters.  
 

 (a)  
 If, at any time, counsel to the Company shall determine that the listing, registration or qualification of the Common Shares subject to the Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of Common Shares hereunder, such Option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors.  The Company shall be under no obligation to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.  The Committee shall inform the Optionee in writing of any decision to defer or prohibit the exercise of an Option.  During the period that the effectiveness of the exercise of an Option has been deferred or prohibited, the Optionee may, by written notice, withdraw the Optionee’s decision to exercise and obtain a refund of any amount paid with respect thereto.
 

 

 4
 

 
 

 

 (b)
 The Company may require: (i) the Optionee (or any other person exercising the Option in the case of the Optionee’s death or Disability) as a condition of exercising the Option, to give written assurances, in substance and form satisfactory to the Company, to the effect that such person is acquiring the Common Shares subject to the Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to make such other representations or covenants; and (ii) that any certificates for Common Shares delivered in connection with the exercise of the Option bear such legends, in each case as the Company deems necessary or appropriate, in order to comply with federal and applicable state securities laws, to comply with covenants or representations made by the Company in connection with any public offering of its Common Shares or otherwise.  The Optionee specifically understands and agrees that the Common Shares, if and when issued upon exercise of the Option, may be “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933 and, accordingly, the Optionee may be required to hold the shares indefinitely unless they are registered under such Securities Act of 1933, as amended, or an exemption from such registration is available.
 

 (c)
 The Optionee shall have no rights as a shareholder with respect to any Common Shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to the Optionee for such Common Shares.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
 

 11.
 Governing Law.  This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible.  Otherwise, the laws of the State of Nevada (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, the Options granted thereunder.
 

 

 

 

 

 

 

 [SIGNATURE PAGE FOLLOWS]
 

 

 

 

 

 

 

 

 5
 

 
 

 

 IN WITNESS WHEREOF, the parties hereto have duly executed this Nonqualified Stock Option Agreement as of the date first listed above.
 

 

 BLUE EARTH, INC.
 

 

 By:  /s/ Johnny R. Thomas
 Name: Johnny R. Thomas
 Title: CEO
 

 

 /s/  Donald R. Kendall, Jr.
 Optionee: Donald R. Kendall, Jr.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 6
 

 
 

 

 

  BLUE EARTH, INC.
 

 Notice of Exercise of Nonqualified Stock Option
 

 I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified Stock Option Agreement dated as of January 31, 2014, by, Blue Earth Inc. (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $0.001 per Share, covered by said option:
 

 Number of Shares to be purchased:
   _______
 

 Purchase price per Share:
 $_______
 

 Total purchase price:
 $_______
 

      
 A.
 Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $__________ in full/partial [circle one] payment for such Shares;
 

 and/or
 

      
 B.
 Enclosed is/are           Share(s) with a total fair market value of $           on the date hereof in full/partial [circle one] payment for such Shares;
 

 and/or
 

      
 C.
 I have provided notice to                         [insert name of broker], a broker, who will render full/partial [circle one] payment for such Shares.  [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full exercise price.]
 

 and/or
 

 ___
 D.
 I elect to satisfy the payment for Shares purchased hereunder by having the Company withhold newly acquired Shares pursuant to the exercise of the Option. 
 

 Please have the certificate or certificates representing the purchased Shares registered in the following name or names*:  ____________________________; and sent to _____________________________________________.
 

 

 DATED: ___________, 20__
 _______________________________ 
 Optionee’s Signature
 

 7
 

 
 

 

 SCHEDULE A
 

 Vesting Schedule
 

 

 (1)
 Time Vesting.  An aggregate of 1,200,000 Common Shares under this Option shall vest at the end of each of eight (8) three-month periods in 150,000 share increments commencing upon the third month anniversary date of this employment agreement.  The remaining 200,000 Common Shares issuable under this Option are being granted pursuant to the Sale of Goodwill Agreement dated the date hereof and are fully vested and immediately exercisable.
 (2)
 Accelerate vesting based upon performance.  Upon the Company achieving each performance criteria set forth herein share vesting of the "last unvested group of options" shall accelerate and they will be immediately exercisable.  The intent is for the time vesting to continue vesting the early ones and the success vesting would vest the last, so that achieving all the success goals could vest them all much earlier.
 (a)
 early vesting of one quarter's 150,000 options upon closing of a qualified funding of BE corporate (equity or debt) of $30M.
 (b)
 early vesting of one quarter's 150,000 options upon closing of a qualified funding of BE EE &Technology (equity or debt) of $12M.
 (c)
 early vesting of one quarter's 150,000 options upon closing of a qualified funding of BE CHP projects (equity or debt) of $30M.
 (d)
 early vesting of one quarter's 150,000 options upon closing of a qualified BE Capital fund for a managed fund or an acquisition fund of $25M.
 (e)
 early vesting of one quarter's 150,000 options upon closing of a qualified acquisition or joint venture.
 (f)
 early vesting of one quarter's 150,000 options upon closing of a qualified BE Solar project fund of $30M.
 Each of the above vesting criteria is quantitative and even multiples of those dollars amounts would vest a like number of options. Meaning that if the EE & Technology success is $24M then two quarters of options would vest. 
 

 

 

 

 

 8

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