Document:

ex10.3

 EXHIBIT 10.3
 

 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT IS PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE 1933 ACT; OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT. 
 

 2011-W-44
 WARRANT TO PURCHASE 212,500 SHARES
OF THE COMMON STOCK OF
BLUE EARTH, INC.
 (Void after Expiration Date – December 11, 2022) 
 Issue Date: as of December 12, 2012
 

      This certifies that Laird Q. Cagan, or his successors or assigns (“Holder”) shall be entitled to purchase from Blue Earth, Inc., a Nevada corporation (“Company”), having its principal place of business at 2298 Horizon Ridge Parkway, Suite 205, Henderson, NV 89052, Two Hundred Twelve Thousand Five Hundred (212,500) fully paid and non-assessable shares (“Warrant Shares”) of the Company’s common stock, par value $.001 per share (“Common Stock”), at a price per share equal to the Exercise Price (as defined below).   This Warrant is being issued to the Holder in connection with a loan made by the Holder to the Company on December 12, 2012 
 

      The initial exercise price (“Exercise Price”) of this Warrant will be equal to $0.01 per share.  Upon the exercise of this Warrant for the $0.01 Exercise Price, the holder shall receive one share of Common Stock.
 

      This Warrant shall be exercisable into shares of Common Stock from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on December 11, 2022 (“Expiration Date”), unless previously extended by the Company on thirty (30) days’ prior written notice provided, however, if such date is not a Business Day, then on the Business Day immediately following such date.  This Warrant is immediately exercisable on the date hereof.  This Warrant is exercisable in whole or in part upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with a form of subscription in substantially the form attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised as determined in accordance with the provisions hereof.
 

 	 	 	 	 	
	 1.
	  
	 EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.

	  
	 1.1
	  
	 General.  This Warrant is exercisable in full, or in part for 100 or more shares, in increments of 100 shares, except for the final exercise which may be for the remainder, at the option of the Holder of record at any time or from time, to time, up to the Expiration Date for all of the shares of Common Stock (but not for a fraction of a share) which may be purchased hereunder. In the case of the exercise of less than all of the Warrants represented hereby, the Company shall cancel this Warrant Certificate upon the surrender hereof and shall execute and deliver a new Warrant Certificate or Warrant Certificates of like tenor for the balance of such Warrants. The Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which the exercise notice (attached hereto as Schedule A or B) is delivered to the Company via facsimile; provided, however, that in such case this Warrant shall be surrendered to the Company within three (3) business days. Certificates for the shares of Common Stock so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company ’s expense within a reasonable time after the rights represented by this Warrant have been so exercised, and in any event, within three business days of such exercise and delivery of the Exercise Price. The Company shall, no later than the close of business on the first business day following the date on which the Company receives the exercise notice by facsimile transmission issue and deliver to the Company’ s Transfer Agent irrevocable instructions to issue and deliver or cause to be delivered to such Holder the number of Warrant Shares exercised within two business days thereafter by either express mail or hand delivery. Notwithstanding the foregoing, delivery of the Warrant Shares is contingent upon receipt of the Exercise Price in cleared U.S. funds within two business days following the Company’s receipt of the exercise notice. Each Common Stock certificate so delivered shall be in such denominations of 1,000 or more shares of Common Stock, in increments of 1,000 or more, as may be requested by the Holder hereof and shall be registered on the Company’s books in the name designated by such Holder.

	  
	  
	  

	  
	  
	  
	  

	  
	 1.2
	  
	 Exercise for Cash

	  
	  
	  
	  

	  
	  
	  
	 This Warrant may be exercised, in whole at any time or in part from time to time, prior to 5:00 P.M., Pacific Coast time, December 11, 2022, unless previously extended by the Company, by the Holder by the facsimile delivery of the exercise notice, as attached hereto, on the date of the exercise and by surrender of this Warrant within three (3) business days from the exercise day at the address set forth hereof, together with proper payment of the aggregate Exercise Price payable hereunder for the Warrant Shares (“Aggregate Warrant Price”), or the proportionate part thereof if this Warrant is exercised in part. Payment for the Warrant Shares shall be made by wire, certified or bank check or check payable to the order of the Company. If this Warrant is exercised in part, this Warrant must be exercised for a number of whole shares of the Common Stock, and the Holder is entitled to receive a new Warrant covering the Warrant Shares which have not been exercised and setting forth the proportionate part of the Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender of this Warrant, the Company will (a) issue a certificate or certificates in the name  of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and (b) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.

 

 	 	 	 	
	  
	 1.3
	  
	 Exercise for Non-Cash Consideration:

	  
	  
	  
	  

	  
	  
	  
	 In case any portion of the consideration to be received by the Company shall be in a form other than cash, then such Exercise Price shall be measured to that extent by the fair market value of such non-cash consideration. The Exercise Price may be tendered in the form of notes, exchanges, services, goods and any and all consideration deemed acceptable by the Company. The fair market value shall be determined solely in good faith by the Board of Directors of the Company, without need for disclosure of fair market value calculation.

	  
	  
	  
	  

	  1.4
	  
	 Cashless Exercise. The Holder may initiate a cashless exercise (a “Cashless Exercise”), as hereinafter provided.  The Holder may effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the Subscription Form that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to the Holder the number of Warrant Shares determined as follows:
 

 X = Y x (A-B)/A
             where:              
 X = the number of Warrant Shares to be issued to the Holder; 
 Y = the number of Warrant Shares with respect to which this Warrant is being exercised;
 A = the Market Price as of the Exercise Date; and
 B = the Exercise Price.
 

 For purposes of Rule 144 under the Securities Act, it is intended and acknowledged that the Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the date this Warrant was originally issued by the Company.

	  1.5
	  
	 Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that, during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock or other securities may be listed; provided, however, that the Company shall not be required to effect a registration under federal or state securities laws with respect to such exercise other than as required by Section 7.7 herein. The Company will not take any action which would result in any adjustment of the Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock or equity securities then authorized by the Company’s Certificate of Incorporation, as amended (“ Company Charter”).

	  
	  
  

	  
	  

 

 	 	 	 	
	  
	 1.6
	  
	 Buy-In. In addition to any other rights available to a Holder, if the Company fails to deliver to the Holder a certificate representing Warrant Shares by the third Trading Day after the date on which delivery of such certificate is required by this Warrant, and if after such third Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder on or after the Exercise Date of the Warrant Shares that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving rise to the Company’s obligation to deliver such certificate. Notwithstanding the foregoing, the Company shall have no liability under this subsection for the Buy-In Price if it has compiled with the requirements of subsection 1.1 above and, notwithstanding it using its best efforts to have its transfer agent deliver the Warrant Shares to the Holders within three trading days of the Holder’s request, such Warrant Shares are not delivered on a timely basis.

 

 2.  DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 2. Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment. 
 

 	 	 	 	 	 	
	  
	 2.1
	  
	 [Intentionally Left Blank]

	  
	  
	  
	  

	  
	 2.2
	  
	 Subdivision or Combination of Common Stock. In case the Company shall at any time subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined or reclassified into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

	  
	  
	  
	  

	  
	 2.3
	  
	 Dividends in Common Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefore:

	  
	 2.3.1
	  
	 Stock, Common Stock or any shares of capital stock or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,

	  
	  
	  
	  

	  
	 2.3.2
	  
	 Any cash paid or payable otherwise than as a cash dividend, or

	  
	  
	  
	  

 

 	 	 	 	 	 	 	
	  
	 2.3.3
	  
	 Stock, Common Stock or additional capital stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 2.1 above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock or other capital stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (2.3.2) above and this clause (2.3.3)) which such Holder would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

	  
	 2.4
	  
	 Reorganization, Reclassification, Consolidation, Merger or Sale.

 

 	 	 	 	
	  
	 2.4.1
	  
	 If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right, upon exercise of this Warrant, to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder, upon Holder’s exercise of this Warrant and payment of the purchase price in accordance with the terms hereof, such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

	  
	  
	  
	  

	  
	 2.4.2
	  
	 No adjustment of the Exercise Price, however, shall be made in an amount less than $.01 per Share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per Share or more.

 

 2.5 Certain Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of this Section 2 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Exercise Pricethe total number, and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 
 

 	 	 	 	 	 	
	  
	 2.6
	  
	 Notices of Change.

	  
	 2.6.1
	  
	 Upon any determination or adjustment in the number or class of shares subject to this Warrant and of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such determination or adjustment.

	  
	  
	  
	  

	  
	 2.6.2
	  
	 The Company shall give written notice to the Holder at least 20 business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions.

	  
	  
	  
	  

	  
	 2.6.3
	  
	 The Company shall also give written notice to the Holder at least 20 days prior to the date on which an Organic Change shall take place.

 

 3.  ISSUE TAX. The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 
 

 4. CLOSING OF BOOKS.  The Company will at no time close its transfer books against the transfer of any warrant or of any shares of stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 
 

 5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant, the interest represented hereby, or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised, subject to the Holder’s rights under Section 2 of this Warrant. The Holder of this Warrant shall receive all notices as if a shareholder of the Company. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 
 

 6. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, shall survive the exercise of this Warrant. 
 

 7. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. 
 

 	 	 	 	 	 	
	  
	 7.1
	  
	 Articles and Bylaws. The Company has made available to the Holder true, complete and correct copies of the Company’s Charter and Bylaws, as amended, through the date hereof.

	  
	  
	  
	  

	  
	 7.2
	  
	 Due Authority. The execution and delivery by the Company of this Warrant and the performance of all obligations of the Company hereunder, including the issuance to Holder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary corporate action on the part of the Company, and the Warrant is not inconsistent with the Company Charter or Bylaws and constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms.

	  
	  
	  
	  

	  
	 7.3
	  
	 Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for  any filing required by applicable federal and state securities laws, which filing will be effective by the time required thereby.

	  
	  
	  
	  

	  
	 7.4
  
	 Issued Securities. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of capital stock were issued in full compliance with all federal and state securities laws.

	  
	 7.5
	  
	 Exempt Transaction. Subject to the accuracy of the Holders’ representations in Section 8 hereof, the issuance of the Common Stock upon exercise of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the 1933 Act , in reliance upon Section 4(2) thereof, or upon the applicable exemption under Regulation D, and (ii) the qualification requirements of the applicable state securities laws.

	  
	  
	  
	  

	  
	 7.6
	  
	 Compliance with Rule 144. At the written request of the Holder, who proposes to sell Common Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the SEC, the Company shall furnish to the Holder, within five (5) days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time.

	  
	  
	  
	  

	  
	 7.7
	  
	 Registration. The Company hereby grants to the Holder in respect of the Warrant Shares, and any securities of the Company into which the Warrant Shares are convertible, “piggy-back” registration rights. During the five-year Exercise Period commencing on the date hereof, if the Company shall file a registration statement other than on Form S-4, S-8, or their successor forms, on which Company counsel determine the Warrants and Warrant Shares can be registered, it shall provide the Holder with at least ten (10) days prior notice of its filing such registration statement and the opportunity for the Holder to register its Shares, subject to any limitations issued by an underwriter in an underwritten public offering.

	 8.
	  
	 Representations and Covenants of the Holder.

 

 	 	 	 	 	 	
	  
	 8.1
	  
	 This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder:

	 	 	 	 	 	
	  
	 8.1.1
	  
	 Investment Purpose. The Warrant or the Common Stock issuable upon exercise of the Warrant will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

 	 	 	 	
	  
	 8.1.2
	  
	 Private Issue. The Holder understands (i) that the Warrant and the Common Stock issuable upon exercise of this Warrant are not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 8.

	 	 	 	
	  
	 8.1.3
	  
	 Disposition of Holders Rights. In no event will the Holder make a disposition of the Warrant or the Common Stock issuable upon exercise of the Warrant unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be inside or outside counsel to the Holder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Common Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the Holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Holder at its request by the staff of the SEC or a ruling shall have been issued to the Holder at its request by the SEC stating that no action shall be recommended by such staff or taken by the SEC, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Holder or holder of a share of stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such Holder, one or more new certificates for the Warrant or for such shares of stock not bearing any restrictive legend.

	  
	  
	  
	  

	  
	 8.1.4
	  
	 Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

	  
	  
	  
	  

	  
	 8.1.5
	  
	 Risk of No Registration. The Holder understands that if the Company does not file reports pursuant to Section 15(d) and/or Section 12(g), of the Securities Exchange Act of 1934 (“1934 Act”), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the Warrant, or (ii) the Common Stock issuable upon exercise of the Warrant, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the Warrant or the Common Stock issuable upon exercise of the Warrant which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

 

 9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by (a) the party against which enforcement of the same is sought or (b) the Company and the holders of at least a majority of the number of shares into which the Warrants are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (a) and (b) above, each Warrant (including any Warrant held by the Holder who did not execute the agreement specified in (b) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof. Notwithstanding the foregoing, no modification to this Section 9 will be effective against any Holder without his consent. 
 

 10. Transfer of this Warrant. The Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption from the registration requirements of the 1933 Act. Upon such transfer or other disposition (other than a pledge), the Holder shall deliver this Warrant to the Company together with a written notice to the Company, substantially in the form of the Transfer Notice attached hereto as Exhibit B (the “Transfer Notice”), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this Warrant is transferred, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such person. Within three (3) Business Days of receiving a Transfer Notice and the original of this Warrant, the Company shall deliver to the each transferee designated by the Holder another Warrant(s) of like tenor and terms for the appropriate number of Warrant Shares and, if less than all this Warrant is transferred, shall deliver to the Holder another Warrant for the remaining number of Warrant Shares. 
 

 11. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given upon (i) personal delivery, against written receipt thereof, (ii) delivery via facsimile or e-mail as set forth below (iii) two business days after deposit with Federal Express or another nationally recognized overnight courier service, or (iv) five business days after being forwarded, postage paid, via certified or registered mail, return receipt requested, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days advance written notice. 
 

 12. BINDING EFFECT ON SUCCESSORS; BENEFIT. As provided in Section 2.4 above, this Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof. This Warrant shall be for the sole and exclusive benefit of the Holder and nothing in this Warrant shall be construed to confer upon any person other than the Holder any legal or equitable right, remedy or claim hereunder. 
 

 13. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by the laws of the State of Delaware.
  
 14. LOST WARRANTS. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant. 
 

 15. FRACTIONAL SHARES.  No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Exercise Price. 
  
  

 
  
 

      IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 
 

      Dated: as of December 12, 2012 
 

 

 	 	 	 	 	
	  
	 Blue Earth, Inc.
a Nevada corporation

	  

	  
	 By:  
	  /S/ Johnny R. Thomas
	  

	  
	  
	 Name:
	 Johnny R. Thomas 
	  

	  
	  
	 Title:  
	 CEO
	  

	  
	  
	 Address:
2298 Horizon Ridge Parkway, Suite 205
Henderson, NV 89052
	  

 

 

 

 

 

 

  
 

  

 
  SCHEDULE A 
 SUBSCRIPTION FORM 
 

 

 

 Date:                                         ,                      
 

 

 

 Blue Earth, Inc. — Attn: President 
 

 Ladies and Gentlemen: 
     
 The undersigned hereby elects to exercise the Warrant issued to it by Blue Earth, Inc. (“Company”) and dated December 12, 2012 (“Warrant”) and to purchase thereunder _______ shares of the Common Stock of the Company (“Shares”) at a purchase price of  $_____ per Share or an aggregate purchase price of ____________ Dollars ($___) (“Exercise Price”).
 

 Pursuant to the terms of the Warrant, the undersigned has delivered the Exercise Price herewith in full in cash or by certified check or wire transfer. [  ]
 

 The undersigned, by marking the box follow this sentence, indicates his or her intention to exercise this Warrant on a cashless basis in accordance with the terms of the Warrant. [  ]
 

 The Warrant Shares should be issued in the following names(s) and delivered as following:
 

 _____________________
 _____________________
 _____________________
 

 

 Purchaser:
 

        By: ____________________ 
 Name:
 Date:
   
 

  
 

 

 

  
 

 
  ASSIGNMENT 
 To Be Executed by the Holder
in Order to Assign Warrants
  
 FOR VALUE RECEIVED, _______________________________________________________________  hereby sells, assigns and transfers unto 
  
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	 [please print or type name and address]
	  
	  

 

                                          of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitutes and appoints _________________________ Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises. 
 	 	 	 	 	 	 	 	 	 	 	
	  
	  
	  
	  
	  
	  
	  
	  
	  
	  
	  

	 Dated: 
	  
	   
  
	  
	  
	  
	  
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 Signature Guaranteed 
	  
	  

 

 THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK EXCHANGE.ex10-1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”), is dated as of the 19th day of December, 2012, between Omni Bio Pharmaceutical, Inc., 5350 S. Roslyn, Suite 430, Greenwood Village, CO (the “Employer”) and Bruce E. Schneider, PhD, 112 Shandon Place, Malvern, PA 19355 (the “Executive”).

 

RECITALS

 

A.           The Employer is a biopharmaceutical company exploring new methods of use of Alpha-1 antitrypsin (“AAT”) and Fc-AAT (the “Business”).

 

B.           The Employer desires to employ the Executive as its Chief Executive Officer under the terms and conditions below set forth.  The Executive desires to be so employed upon the terms and conditions below set forth.

 

E.           The Executive acknowledges that his receipt of benefits under this Agreement depends on, among other things, the Executive’s willingness to agree to and abide by the Confidentiality and Covenants Not to Compete or Solicit provisions in Sections 8 and 9 below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the terms and the mutual undertakings contained herein, it is agreed as follows:

 

1.             Term.

 

(a)           Subject to the terms of this Agreement, this Agreement shall commence on January 1, 2013 and shall terminate on the earlier of December 31, 2013 (the “Term”), the Executive’s death or legally-determined disability, or the termination of this Agreement in accord with the provisions contained in Section 6 below (the “Termination Date”).  The Agreement may be renewed on an annual basis upon mutual written agreement of Employer and Executive.

 

2.             Title.  The Employer agrees to employ the Executive as its Chief Executive Officer and the Executive accepts such employment.

 

3.             Duties.

 

(a)           The Executive shall render all services of the nature of the services that a Chief Executive Officer would render to a company in the biopharmaceutical industry.

 

(b)           During the Term of this Agreement, the Executive shall devote his full time, energy, skill and best efforts to promote the Employer’s Business and affairs and to perform his duties hereunder.

 

  

  

  

 

(c)           The Executive shall report directly to the Board of Directors of the Employer.

 

4.             Compensation.

 

(a)           Commencing on January 1, 2013, and continuing during the Term of this Agreement, the Employer shall pay to the Executive for the loyal and consistent services provided to it hereunder a salary of $15,000 per month.

 

(b)           The Executive will be eligible for the following cash bonus payments during the Term of this Agreement:

 

(i)      $50,000 upon the Employer obtaining regulatory authorization to conduct its first human tests of Fc-AAT in any geography; and

(ii)     The greater of $25,000 or 2% of net cash proceeds from any “plasma-derived” AAT IP licensing arrangement entered into by the Employer.

 

(c)           The Executive shall also receive time vesting warrants with a seven year term to purchase 1,500,000 shares of Employer common stock with an exercise price equal to the closing price of the common stock on the date of hereof.  Fifty percent (50%) of such warrants will vest on January 1, 2013 and the remaining fifty percent (50%) on June 30, 2013 contingent upon Executive’s continued employment with the Employer on each vesting date.  The Executive will also receive performance vesting warrants with a seven year term to purchase 1,500,000 shares of Employer common stock with an exercise price equal to the lower of $1.00 or the market price of the common stock on the date of the milestone achievement. Such warrants will vest upon the achievement of the milestones listed in Exhibit A contingent upon Executive’s continued employment with the Employer on each milestone date.

 

(d)           Executive will be eligible to receive a change in control bonus (the “Change in Control Bonus”) in connection with the occurrence of a Liquidity Event (as defined in Exhibit B) on the terms set forth on Exhibit B, so long as Executive has been continuously employed by the Employer through the effective date of the Liquidity Event.

 

(e)           The Employer will reimburse the Executive for all reasonable and necessary out-of-pocket business, travel, and entertainment expenses incurred by the Executive in the performance of the Executive’s duties and responsibilities to the Employer during the Executive’s employment under this Agreement.  Employer shall also reimburse Executive reasonable commuting expenses for travel from the Executive’s primary residence to the Employer’s headquarters. Such reimbursement shall be subject to the Employer’s normal policies and procedures for expense verification, documentation, and reimbursement.

 

5.             D&O Insurance.  In the event that (a) this Agreement is terminated for other than “Cause” (as defined in Section 6(a) below) or (b) the Employer ceases to have a directors and officers liability insurance policy in force, Employer shall purchase a directors and officers liability insurance “tail” policy with a six year term for the benefit of Executive, effective upon the earlier of (a) or (b) as described above in this Section 5.

 

  

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6.             Termination.

 

(a)           This Agreement may be terminated by either party for any reason or no reason upon thirty (30) days’ advance written notice of termination from one party to the other.  This Agreement may also be terminated by the Employer for Cause immediately upon written notice to the Executive.  The term “Cause”, as used herein means any willful misconduct,  gross negligence, breach of Executive’s obligations under Sections 8 or 9, or the commission of any felony or dishonest act, including, without limitation, any fraud against the Employer, any of the affiliates, clients or customers of the Employer.

 

 (b)           If the Executive’s employment with the Employer is terminated by the Employer without Cause and the Termination Date is prior to the expiration of the Term, then the Employer will, subject to the conditions in Section 6(d), pay to Executive as severance pay an amount equal to his then current monthly base salary, commencing in accordance with Section 6(c), for the remainder of the Term. Notwithstanding anything herein to the contrary, in no event will the severance pay available to the Executive under this Section 6(b) exceed the amount payable under Treas. Reg. Section 1.409A-1(b)(9)(iii).

 

(c)           Severance pay pursuant to Section 6(b) will be paid to the Executive in equal installments in accordance with the Employer’s regular payroll schedule, less all legally required and authorized deductions and withholdings, commencing on the first normal payroll date of the Employer following the expiration of the applicable rescission periods provided by law applicable to the release specified in Section 6(d) below and continuing for the applicable period thereafter; provided, however, that if the Termination Date occurs before December 31 of any year, any severance amounts that remain payable under Section 6(b) after the last normal payroll date before March 15 of the following year shall be payable in a lump sum on March 15 of that following year, less all legally required and authorized deductions and withholdings, and that if such rescission periods have not then expired, the severance pay pursuant to Section 6(b) will be forfeited and not paid to the Executive.  Notwithstanding the foregoing, the Employer’s obligations to make severance payments pursuant to this Section 6 shall cease to be effective upon the date that the Executive accepts employment with another employer.  The Executive shall notify the Employer promptly upon his acceptance of such employment.

 

(d)           Notwithstanding the foregoing provisions of this Section 6, the Employer will not be obligated to make any payments under Section 6 hereof unless (i) the Executive, if reasonably requested by the Board of Directors of the Employer and for no additional consideration, completes such transitional duties as the Board of Directors may assign; (ii) the Executive signs a release of claims in favor of the Employer and its affiliates (substantially in a form to be prescribed by the Board of Directors) on or before expiration of the applicable consideration period specified therein, if any, and all applicable consideration and rescission periods provided by law have expired; and (iii) the Executive is in strict compliance with the terms of this Agreement and any other agreements with the Employer that survive the termination of the Executive’s employment.

 

7.             Return of Documents.  On termination of this Agreement, or at any time upon the request of the Chief Executive Officer, the Executive shall return to the Employer all documents, including all copies thereof, and all other property relating to the business or affairs of the Employer, including, without limitation, customer lists, agents or representatives lists, commission schedules and information manuals, letters, materials, reports, lists and records (all such documents and other property being hereinafter referred to collectively as the “Materials”), in his possession or control, no matter from whom or in what manner he may have acquired such property.  The Executive acknowledges and agrees that all of the Materials are property of the Employer and releases all claims of right of ownership thereto.

 

  

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8.             Confidentiality. As a condition of Executive’s employment with Employer, Executive will sign the Confidentiality and Inventions Assignment Agreement attached hereto as Exhibit C.

 

9.             Covenants Not to Compete or Solicit.

 

(a)           Executive agrees that during the Term of this Agreement and for one (1) year thereafter, he will not, directly or indirectly (whether as sole proprietor, partner, stockholder, director, officer, employee or in any other capacity as principal or agent) compete with, or participate in any business that competes with, the Employer’s Business, as then conducted, anywhere in the world; provided that the Executive may invest in (i) the securities of any business or enterprise (but without otherwise participating in the activities of such business or enterprise) which are listed on a national or regional securities exchange or traded in the over-the-counter market, and (ii) equity interests of the Employer.

 

(b)           Executive undertakes that during the Term of this Agreement and for one (1) year thereafter he will not, directly or indirectly (whether as a sole proprietor, partner, stockholder, director, officer, employee or in any other capacity as principal or agent), do any of the following:  (i) hire, or attempt to hire for employment, any person who is an employee of the Employer on the date of such termination of employment, or attempt to influence any such person to terminate his or her employment by the Employer; or (ii) in any other manner interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Employer and any of its employees, or disparage the business or reputation of the Employer to any such person.

 

(c)           Executive undertakes that during the Term of this Agreement and for one (1) year thereafter he will not, directly or indirectly (whether as a sole proprietor, partner, stockholder, director, officer, employee or in any other capacity as principal or agent), do any of the following:  (i) solicit, service or accept any actual or prospective accounts, clients, business partners or customers of the Employer during the period of the Executive’s employment by the Employer; (ii) influence or attempt to influence any of the accounts, customers, business partners or clients referred to in Subsection 9(c)(i) to transfer their business, relationship or patronage from the Employer to any other person or company engaged in a similar business; (iii) directly assist any person or company soliciting, servicing or accepting any of the accounts, customers, partners or clients referred to in Subsection 9(c)(i); or (iv) in any other manner directly interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Employer and any of its accounts, customers, business partners or clients referred to in Subsection 9(c)(i), or any other person, or disparage the business or reputation of the Employer to any such person.

 

  

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(d)           Executive will not make any statement or remark to any person or entity that defames or disparages the reputation, character, image, products, or services of Employer, or the reputation or character of Employer’s employees, officers or directors. Employer, its employees, officers and directors will not make any statement or remark to any person or entity that defames or disparages the reputation, character, image, products, or services of Executive.

 

10.           Enforcement of Covenants.

 

The parties acknowledge and agree that the covenants contained in Sections 8 and 9 are essential elements of this Agreement that are required for the protection of the Employer’s confidential, proprietary and trade secret information, its relationships with its clients and customers and its goodwill, and that, but for the agreements of the Executive to comply with such covenants, the Employer would not have entered into this Agreement. The parties further acknowledge and agree that a breach by the Executive of the covenants contained in Sections 8 and 9 may result in irreparable injury to the Employer for which there is no adequate remedy at law and that the Employer shall be entitled to seek enforcement of the same by means of a temporary restraining order and/or a preliminary or permanent injunction issued by any court having jurisdiction thereof.  In the event that the Executive breaches any of the covenants contained in Sections 8 and 9, the Employer shall be entitled to an accounting and repayment of all profits, commissions and benefits the Executive receives in connection with such breach.  The Executive agrees to indemnify and hold harmless the Employer against all of its costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred in connection with the enforcement of the covenants contained in Sections 8 and 9, except, with respect to the enforcement of any such covenant by the Employer, to the extent that the Employer is the prevailing party in any action or proceeding commenced by the Employer in connection therewith.  The covenants contained in Sections 8 and 9 shall survive the termination of this Agreement.  The remedies provided in this Section 10 shall be in addition to, and not in lieu of, any other remedies and relief including damages to which the Employer may be entitled.

 

11.           Employer’s Inventions.  The Executive hereby sells, transfers and assigns to the Employer or to any person, or entity designated by the Employer, all of the entire right, title and interest of the Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by the Executive, solely or jointly, or in whole or in part, during the term hereof which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, manufactured, used or under construction or development by the Employer or any subsidiary or (ii) otherwise relate to or pertain to the business, functions or operations of the Employer or any subsidiary.  The Executive shall communicate promptly and disclose to the Employer, in such form as the Employer requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the term hereof or thereafter, the Executive shall execute and deliver to the Employer such formal transfers and assignments and such other papers and documents as may be required of the Executive to permit the Employer or any person or entity designated by the Employer to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon.  Any invention by the Executive within one (1) year following the termination of this Agreement shall be deemed to fall within the provisions of this Section 11 unless proved by the Executive to have been first conceived and made following such termination.  This provision shall not apply to any ideas, skills, methods or knowledge that the Executive possesses prior to the term of Employment.

 

  

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12.           Blue-Pencil.  If a court of competent jurisdiction shall at any time deem the terms of any of the covenants and undertakings of the Executive under Sections 8 and 9 herein too broad, the court shall modify the offending provisions to make such provisions enforceable to the maximum extent permitted by law and the other provisions of those Sections 8 and 9 shall nevertheless stand.  The court in each case shall reduce the period of restriction to a permissible duration and shall modify any other provision deemed overly broad so that it is enforceable to the maximum extent permitted by law.

 

13.           Notices.  Unless otherwise specifically provided herein, all notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid at the following addresses, and/or to such other addresses and/or persons which either party may designate by like notice:

 

(a)           If to the Executive, to:

 

Bruce E. Schneider, PhD

112 Shandon Place

Malvern, PA  19355

 

(b)           If to the Employer, to:

 

Attn: Chairperson of the Board

Omni Bio Pharmaceutical, Inc.

5350 S. Roslyn, Suite 430

Greenwood Village, CO 80111

 

With a copy to:

 

Jason Day, Esq.

Perkins Coie, LLP

1900 16th Street, Suite 1400

Denver, CO 80202

14.           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Colorado without regard to conflict of law provisions.  Any disputes with respect to the interpretation of this Agreement or the rights and obligations of the parties hereto shall be exclusively brought in any federal or state court of competent jurisdiction located in the State of Colorado.  Each of the parties waives any right to object to the jurisdiction or venue of such courts or to claim that such courts are an inconvenient forum.

 

  

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15.           Additional Provisions.

 

(a)           The Executive may not assign or delegate the performance of any of his rights and/or obligations under this Agreement.  The Employer may assign its rights and/or obligations under this Agreement.

 

(b)           This Agreement constitutes the entire agreement, representation and understanding of the parties hereto with respect to the subject matter hereof, and no amendment or modification hereof shall be valid or binding unless made in writing and signed by the parties hereto.

 

(c)           No waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by the party against whom it is sought to be enforced.  No waiver of any default or breach of this Agreement shall be deemed a continuing waiver or a waiver of any other breach or default.

 

(d)           Executive acknowledges that prior to the execution of this Agreement he had full opportunity to consult with his independent attorneys and advisors as he deemed appropriate and he fully understands the nature and scope of his rights and obligations hereunder.

 

(e)           The Employer may withhold from any amounts payable under this Agreement such federal, state and local income and employment taxes as the Employer shall determine are required to be withheld pursuant to any applicable law or regulation.

 

(f)           The parties intend that this Agreement and the payments and other benefits provided hereunder be exempt from the requirements of Section 409A of the Internal Revenue Code (“Section 409A”) to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Section 409A is applicable to this Agreement, the parties intend that this Agreement comply with the deferral, payout and other limitations and restrictions imposed under Section 409A.  If either party believes, at any time, that any payments and other benefits under this is not so exempt or does not so comply, such party will promptly advise the other party and they each will negotiate reasonably to amend the terms of this Agreement such that it is exempt or complies with the most limited possible economic effect on the parties or to mitigate any additional tax or interest (or both) that may apply under Section 409A if exemption or compliance is not practicable.  With respect to any payments and benefits under this Agreement to which Section 409A applies, all references in this Agreement to the termination of the Executive’s employment are intended to mean the Executive’s “separation from service,” within the meaning of Section 409A(a)(2)(A)(i).  Notwithstanding the foregoing, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with Section 409A from the Executive or any other individual to the Employer or any of its affiliates.

 

  

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(g)           If any provision of this Agreement is invalid or unenforceable in any jurisdiction such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability, but the foregoing shall not render invalid or unenforceable in such jurisdiction the remainder of this Agreement or the remainder of such provision or affect the validity or unenforceability of any provision of this Agreement in any other jurisdiction.

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused this Agreement to be executed on the date first above written.

 

	 	 	

OMNI BIO PHARMACEUTICAL, INC.

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
  

	
  

	

/s/ Vicki Barone

	 
	 	 	

By: Vicki Barone

	 
	 	 	

Its:  Chairperson

	 

 

 

 

	 	 	Bruce E. Schneider	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
  

	
  

	

/s/ Bruce E. Schneider

	 
	 	 	

Bruce E. Schneider

	 

 

  

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Exhibit A

 

Milestones

 

	
  

	
·

	
300,000 warrants vest upon first licensing of plasma derived IP to one or more manufacturers

	
  

	
·

	
100,000 warrants vest upon filing of Fc:AAT patents in US and PCT countries

	
  

	
·

	
100,000 warrants vest upon selection of Fc:AAT development candidate and qualified assay for testing/release of drug product

	
  

	
·

	
100,000 warrants vest upon production of lab-scale drug quantities sufficient to enable confirmatory pharmacology studies and 2-week tox studies in two species

	
  

	
·

	
300,000 warrants vest upon completion of GMP drug product campaign sufficient to enable definitive tox program and first clinical studies

	
  

	
·

	
100,000 warrants vest upon completion of IND-enabling tox studies

	
  

	
·

	
500,000 warrants vest upon submission and acceptance of IND to enable first human studies

 

  

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Exhibit B

 

Change in Control Bonus

 

Bonus Calculation and Payment. The Change in Control Bonus amount payable to you in connection with the occurrence of a Liquidity Event (defined below) will be equal to the Net Proceeds (defined below) multiplied by the Applicable Percentage (defined below). Subject to the paragraph below dealing with escrows and hold-backs, any Change in Control Bonus payable hereunder will be paid to you in a single lump sum payment as soon as administratively practicable after the occurrence of the Liquidity Event giving rise to such payment, but in no event later than the 15th day of the third calendar month after the close of the calendar year in which the Liquidity Event occurred. Payment of any Change in Control Bonus hereunder will be made from the general assets of the Employer.

 

Definitions. The following definitions will apply for purposes of the Change in Control Bonus.

 

	
(a)

	  	
“Applicable Percentage” means the percentage specified in the table below corresponding to the amount of Net Proceeds received in connection with a Liquidity Event:

 

 

 

	
Applicable

	  	  
	
Percentage

	  	
Net Proceeds

	
2.0%

	  	
Less than $200 million

	
3.0%

	  	
Equal to or greater than $200 million

 

	
(b)

	  	
“Liquidity Event” means the consummation of:

 

	  	
(1)

	  	
the sale (including in one or a series of related transactions) of all or substantially all of the Employer’s consolidated assets to a person or a group of persons acting in concert (other than a person or group affiliated with the Employer);

 

	  	
(2)

	  	
the sale or transfer (including in one or a series of related transactions) to a person or a group of persons acting in concert (other than a person or group affiliated with the Employer) of Employer equity securities representing more than 50% of the combined voting power of the Employer’s then outstanding equity securities entitled to vote generally in the election of directors;

 

	  	
(3)

	  	
the merger or consolidation of the Employer with or into another entity, unless immediately following such transaction, all or substantially all of the persons who were the beneficial owners of the Employer’s outstanding voting securities immediately before the transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities (or comparable equity interests) of the surviving or resulting entity (or its parent entity); or

  

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(4)

	  	
the sale (including in one or a series of related transactions) of the Employer’s intellectual property related to the use of the FDA approved drug Alpha-1 Antitrypsin to a person or a group of persons acting in concert (other than a person or group affiliated with the Employer). Net Proceeds will be aggregated over any series of applicable transactions, and any difference due to an increase in the Applicable Percentage as a result of such aggregation will be paid in connection with the most recent transaction.

 

	
(d)

	  	
“Net Proceeds” means the fair market value, as of the date of the Liquidity Event and as determined in good faith by the Board of Directors of the Employer, of the aggregate consideration (whether cash, notes, stock or other securities) actually received by the Employer or its stockholders as a result of the Liquidity Event, less all transaction fees and expenses incurred by the Employer in connection with such Liquidity Event, including legal, accounting and investment banking fees.

 

Escrow or Hold-Back. Notwithstanding the foregoing, if any portion of the proceeds from a Liquidity Event are deposited into an escrow account (whether established by the Employer or any purchaser or acquirer) or are subject to a hold-back by the purchaser or acquirer for distribution upon the occurrence or satisfaction of any event, that portion of the proceeds shall be included in calculating Net Proceeds, but a comparable portion of the incentive bonus amount shall be withheld and released to you only as and when that portion of the Liquidity Event proceeds are released from any escrow or hold-back arrangement.

 

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