Document:

ex-10.1

 EXHIBIT 10.1
 

 

 NOTE AND WARRANT PURCHASE AGREEMENT
 Dated as of March 10, 2015
 by and between
 BLUE EARTH, INC.
 as Borrower
 and
 JACKSON INVESTMENT GROUP, LLC, AS THE PURCHASER 
 OF 12% SENIOR SECURED CONVERTIBLE NOTE AND WARRANT 
 as Lender
 ______________________________________________________________________________
 $10,000,000 SENIOR SECURED CONVERTIBLE NOTE
 ______________________________________________________________________________
 

 

 

 

 

 

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 NOTE AND WARRANT PURCHASE AGREEMENT
 This NOTE AND WARRANT PURCHASE AGREEMENT (as modified, amended, extended, restated, amended and restated or supplemented from time to time, this “Agreement”), dated as of March 10, 2015, is being entered into by and between Blue Earth, Inc. (“Borrower”), a Nevada corporation, and Jackson Investment Group, LLC, a Georgia limited liability company, as the Purchaser (the “Lender”).
 RECITALS
 WHEREAS, the Borrower has authorized a new 12.0% senior secured convertible note of the Borrower, (ii) A Warrant to purchase 2,000,000 shares of Common Stock of Blue Earth, Inc., and (iii) the Option to Purchase up to 10,000,000 shares of Common Stock of Blue Earth, Inc. 
 WHEREAS, the Lender wishes to purchase, and the Borrower wishes to sell, at the Closing, upon the terms and conditions stated in this Agreement, the Note substantially in the form attached hereto as Exhibit A, together with the Warrant (defined below) and the Option (as defined below);
 WHEREAS, the Borrower intends to use the net proceeds of the Note issued pursuant to this Agreement in accordance with the Use of Proceeds table attached hereto as Schedule 8.17; 
 WHEREAS, repayment of the Note and the other Obligations (as defined below) are being guaranteed by certain subsidiaries of the Borrower pursuant to the terms of the Guaranty; and 
 WHEREAS, contemporaneously with the execution and delivery of this Agreement, (a) the Obligors (as defined below) and the Lender are executing and delivering a Pledge and Security Agreement, dated as of the date hereof by and among the Obligors (as defined below) and the Lender, substantially in the form attached hereto as Exhibit B (as amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”), pursuant to which, among other things, Lender will be granted a pledge of not less than 100% of the Equity Interests of the Borrower’s Subsidiaries (as defined herein) and a security interest in all assets of the Borrower and the Borrower’s Subsidiaries to secure the Obligations (as defined below).
 NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the Borrower and the Lender hereby agree as follows:
 

 

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 ARTICLE 1
 DEFINITIONS; CERTAIN TERMS
 Section 1.1
 Definitions
 .  As used in this Agreement, the following terms have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
 “1933 Act” means the Securities Act of 1933, as amended.
 “1934 Act” means the Securities Exchange Act of 1934, as amended.
 “Affiliate” means, with respect to a specified Person, another Person that (i) is a director or officer of such specified Person, or (ii) directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified.
 “Asset Sale” means (i) the sale of any Equity Interests of the Subsidiaries, or (ii) the sale of all or substantially all of the assets of the Borrower or any of the Subsidiaries.
  “Business Day” means any day other than Saturday or Sunday or any day that banks in New York, New York are required or permitted to close.
 “Borrower” has the meaning set forth in the preamble to this Agreement. 
 “Brooks” means Brooks Heat & Power Ltd., a British Columbia Canada corporation and indirect wholly-owned subsidiary of Borrower.
 “Brooks Project” means the combined heat and power (CHP) plant located in Brooks, Alberta Canada that Borrower owns, for which Borrower shall use the majority of proceeds from the Note to finance the construction of said power facility to Commercial Operation Date as such term is customarily used in EPC contracts. It is understood that by definition, the Brooks Project has Permitted Liens, and shall have the ability to obtain up to $16.3 million of senior secured funds required during the construction phase of the Brooks Project from Caterpillar Financial Services Limited or any similar source (hereinafter referred to as “Cat Power Finance”) provided that (i) such lien subordination in favor of Cat Power Finance shall apply only to Collateral comprising the Brooks Project, and (ii) such loan and lien subordination documentation shall be acceptable in form and substance to Lender.  
 “Capital Expenditures” means any expenditure or obligation, which should be capitalized in accordance with GAAP.  
 

 

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 “Capital Stock” means (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, and any and all warrants, rights, or options to purchase any of the foregoing, but excluding from all of the foregoing any debt securities convertible into, or exchangeable for, Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
 “Cash Equivalent Investment” means, at any time, (a) any evidence of debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case rated at least A-l by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any commercial banking institution of the nature referred to in clause (c) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder, (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by the Lender.
 “Closing” has the meaning set forth in Section 3.1.
 “Closing Date” has the meaning set forth in Section 3.1.
 “Code” means the Internal Revenue Code of 1986, as amended.  
 “Collateral” means the “Collateral” as defined in the Pledge Agreement. 
 “Commitment Fee Shares” has the meaning set forth in Section 8.21.
  “Common Stock” means Borrower’s common stock, $0.001 per value per share.
 “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.  
 

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 “Control” means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Capital Stock having ordinary voting power for the election of directors of a Person or (ii) to direct or cause the direction of management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. 
 “Destruction” means any and all damage to, or loss or destruction of, or loss of title to, all or any portion of the Collateral (i) in excess of $250,000 in the aggregate for any Fiscal Year or (ii) that results, individually or in the aggregate, in a Material Adverse Effect.
 “Diligence Date” has the meaning set forth in Section 7.14.
 “Environmental Laws” means all applicable federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, the exposure of humans thereto, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all regulatory authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices of violation or similar notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
 “Equity Interests” means Capital Stock and all warrants, options and other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock, whether or not such debt security includes the right of participation with Capital Stock).
 “Event of Default” has the meaning set forth in Article 9.
 “Event of Loss” means any destruction to, or any taking of, any asset or property of any of the Obligors or the Brooks Project.
 “Existing Term Loan Agreement” means that certain Credit Agreement dated as of January 31, 2013, by and among Blue Earth, TCA Global Credit Master Fund LP and Blue Earth Subsidiaries (which, for purposes of this definition only include Maili PV 01 LLC and Sumter Heat & Power, LLC), as amended by that certain First Amendment to Credit Agreement dated as of September 11, 2013 and that certain Second Amendment to Credit Agreement, dated as of February 24, 2015, as further amended, restated, supplemented or modified from time to time. 
  “Fiscal Year” means a fiscal year of the Borrower.
 “GAAP” means United States generally accepted accounting principles, consistently applied.
 

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 “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision of any of the foregoing, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 
 “Guarantor” means (i) each of the Subsidiaries party to the Guaranty, and (ii) any other Person that now or hereafter is a party to the Guaranty or otherwise agrees to guaranty any of the Obligations.  For the avoidance of doubt, Maili PV 01, LLC and Sumter Heat & Power, LLC are not party to the Guaranty and are not Guarantors.
 “Guaranty” has the meaning set forth in Section 8.19.
 “Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, notes or similar instruments whether convertible or not, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all indebtedness referred to in clauses (i) through (v) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, (vii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vi) above; (viii) banker’s acceptances; (ix) the balance deferred and unpaid of the purchase price of any property or services due more than three months after such property is acquired or such services are completed; (x) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging agreements, in each case, determined after taking into account any netting of payment obligations provided for under such agreements; and (xi) obligations under convertible securities of the Borrower.  
 “Inventory” has the meaning provided in the UCC.
 “Investment” means, with respect to any Person, any investment in another Person, whether by acquisition of any debt security or Equity Interest, by making any loan or advance, by becoming contingently liable in respect of obligations of such other Person, or by making an acquisition of all or any portion of the Capital Stock or assets in such other Person.
 

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 “Lender” has the meaning set forth in the preamble to this Agreement.
 “Lien” means any mortgage, lien, pledge, security interest, conditional sale or other title retention agreement, charge or other security interest or encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease or license in the nature thereof, any option or other agreement to sell or give a security interest.
 “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, the Collateral, results of operations or condition (financial or otherwise) of the Borrower and the Subsidiaries, taken as a whole, or on the transactions contemplated hereby and by the other Transaction Documents, or on the authority or ability of the Borrower or any other Obligor to fully and timely perform their obligations under any Transaction Documents.
 “Material Contract” means any contract or other arrangement to which the Borrower or any of its Subsidiaries is a party (other than the Transaction Documents) for which breach, nonperformance, cancellation, termination or failure to renew could reasonably be expected to have a Material Adverse Effect.
 “Maturity Date” means the earliest of (a) September 10, 2015, (b) such earlier date as the unpaid principal balance of the Note becomes due and payable pursuant to the terms of this Agreement and the Note.
  “Note” has the meaning set forth in Section 2.1.
 “Obligations” means any and all obligations, liabilities and indebtedness, including without limitation, principal, interest (including, but not limited to, interest calculated at the default rate and post-petition interest in any proceeding under any applicable bankruptcy law), and other fees, costs, expenses and other charges and other obligations under this Agreement, the Note and the other Transaction Documents, of the Borrower to the Lender (or any of Lender’s successors, permitted transferees or permitted assigns) of any and every kind and nature, howsoever created, arising or evidenced and howsoever owned, held or acquired, whether now or hereafter existing, whether now due or to become due, whether primary, secondary, direct, indirect, absolute, contingent or otherwise, whether several, joint or joint and several, and whether arising or existing under written or oral agreement or by operation of law.  
 “Obligors” means the Borrower and each Guarantor.
 “Option” has the meaning set forth in Section 8.20.
 “Option Shares” has the meaning set forth in Section 8.20.
  “Permitted Indebtedness” has the meaning set forth in the Note.
 “Permitted Liens” has the meaning set forth in the Note.
 

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 “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.
 

 “Pledge Agreement” has the meaning set forth in the Recitals.
  “Proceeding” has the meaning set forth in Section 7.15.
  “Schedules” has the meaning set forth in ARTICLE 7.
 “SEC” means the United States Securities and Exchange Commission.
 “SEC Documents” has the meaning set forth in Section 6.7.
 “Security Documents” means the Pledge Agreement, Guaranty, and all other instruments, documents and agreements executed and/or delivered by any Obligor in order to grant to Lender a Lien on any Collateral as security for the Obligations or to perfect such Lien.
 “Subsidiaries” means every direct or indirect subsidiary of Blue Earth, Inc., whether presently existing or hereafter acquired or formed, except for Maili PV 01, LLC and Sumter Heat & Power, LLC.  As used in this definition, the term subsidiary means, as to any Person, any corporation, limited liability company, partnership or joint venture, whether now existing or hereafter organized or acquired: (i) in the case of a corporation, of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (other than stock having such voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person and/or one or more of its Subsidiaries or (ii) in the case of a limited liability company, partnership or joint venture, in which such Person or a Subsidiary of such Person is a member, general partner or joint venturer or of which a majority of the partnership or other ownership interests are at the time owned by such Person or one or more of its Subsidiaries.
  “Taking” means any taking of any property of the Borrower or any of its Subsidiaries or any portion thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition of the use of such assets or any portion thereof, by any Governmental Authority, civil or military (i) in excess of $250,000 in the aggregate for any Fiscal Year or (ii) that results, either individually or in the aggregated,  in a Material Adverse Effect.
  “Transaction Documents” has the meaning set forth in Section 7.2.
 “UCC” means the Uniform Commercial Code as in effect in the State of New York, unless the context requires application of the Uniform Commercial Code as in effect in another State, in which case such term means the Uniform Commercial Code as in effect in such State.  For purposes of this Agreement, “UCC” also means the equivalent, similar or analogous statutes, regulations and other laws of Canada and each relevant province thereof (including, without limitation, the applicable Personal Property Security Act), as the same may be applicable, and any successor statute, regulation or law thereto.
 

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 “Warrant” shall mean, collectively, (i) the Warrant to purchase common stock of the Borrower dated the date hereof issued and delivered by the Borrower to the Lender on the Closing Date, in substantially the form of Exhibit E hereto, and (ii) any warrant issued and delivered by the Borrower to the Lender (or any successors or assigns of the Purchasers) on or after the date hereof in substitution, replacement or exchange of the Warrant referred to in clause (i) of this definition, in each case as amended, restated, supplemented or modified from time to time.
 Section 1.2
 Terms Generally.
 The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.  References in this Agreement to “determination” by the Lender include good faith estimates by the Lender (in the case of quantitative determinations) and good faith beliefs by the Lender (in the case of qualitative determinations).
 Section 1.3
 Accounting and Other Terms
   Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the Borrower’s financial statements. 
 ARTICLE 2
 BORROWER’S AUTHORIZATION OF ISSUE
 Section 2.1
 Senior Secured Convertible Note; Warrant and Option
   The Borrower has authorized the issuance to the Lender of (i) its senior secured convertible note in the aggregate principal amount of Ten Million Dollars ($10,000,000), to be dated the date of issue thereof, to mature on the Maturity Date, to bear interest as provided in Section 2.2 below and to be in the form of Exhibit A hereto (the “Note”), (ii) the Warrant, and (iii) the Option.  
 

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 The Borrower shall repay the outstanding principal balance plus all accrued and unpaid interest on the Note in full in cash on the Maturity Date, unless accelerated, or prepaid or converted in accordance with the terms of the Note.  The term “Note” as used herein shall include each such senior secured convertible Note delivered pursuant to any provision of this Agreement and each such senior secured convertible Note delivered in substitution or exchange for, or otherwise in respect of, any other Note pursuant to any such provision.
 Section 2.2
 Interest
   The Borrower shall pay interest on the unpaid principal amount of the Note at the rates, time and manner set forth in Section 2 of the Note.  
 Section 2.3
 Conversion. 
 Principal and interest under the Note shall be convertible, at the Lender’s option, in whole or in part, and from time to time before payment thereof, and the Warrant shall be exercisable, into shares of Common Stock of the Borrower in accordance with the terms and conditions of Section 2 and 4 of the Note and Section 1 of the Warrant, as applicable.
 ARTICLE 3
 PURCHASE AND SALE OF NOTE, WARRANT AND OPTION
 Section 3.1
 Closing  
 In consideration for the Lender’s payment of the Purchase Price (as defined below), the Borrower shall issue and sell to the Lender, and the Lender agrees to purchase from the Borrower on the Closing Date (as defined below), (i) the Note in the aggregate principal amount of Ten Million Dollars ($10,000,000), in substantially the form attached hereto as Exhibit A, (ii) the Warrant and (iii) the Option. The closing (the “Closing”) of the purchase of such Note, the Warrant and the Option by the Lender shall occur on or before March 10, 2015, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Section 4.1 and Section 5.1 below (or such later date as is mutually agreed to in writing by the Borrower and the Lender).  The aggregate purchase price (the “Purchase Price”) consideration for the Note, the Warrant and the Option payable by the Lender to the Borrower at the Closing shall be equal to Ten Million Dollars ($10,000,000).  On the Closing Date upon satisfaction of the conditions precedent to the Closing, (i) the Lender shall pay the Purchase Price to the Borrower by wire transfer of immediately available funds to an account of the Borrower as specified in writing by Borrower to Lender, and (ii) the Borrower shall issue and deliver to Lender the Note in the principal amount of Ten Million Dollars ($10,000,000), the Warrant and the Option, duly executed on behalf of the Borrower and registered in the name of the Lender or its designees.  
 

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 ARTICLE 4
 CONDITIONS TO THE BORROWER’S OBLIGATION TO SELL
 Section 4.1
 Closing
   The obligations of the Borrower hereunder to issue and sell the Note, the Warrant and the Option to the Lender at the Closing are subject to the satisfaction, at or before the Closing Date, of each of the following conditions:
 (a)
 The Lender shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Borrower. 
 (b)
 The Lender shall have delivered to the Borrower the Purchase Price for the Notes being purchased by the Lender at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Borrower.
 (c)
 The representations and warranties of the Lender shall be true and correct in all material respects as of the Closing  Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date).
 

 ARTICLE 5
 CONDITIONS TO LENDER’S OBLIGATION TO PURCHASE 
 Section 5.1
 Closing
   The obligation of the Lender hereunder to purchase the Note, the Warrant and the Option at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:
 (a)
 (i) The Borrower shall have executed and delivered to the Lender the Note, the Warrant and the Option being purchased by the Lender at the Closing pursuant to this Agreement, and (ii) the Borrower and each other Obligor shall have executed and delivered to the Lender each of the other Transaction Documents to which it is a party. 
 (b)
 The Borrower and each other Obligor shall have executed and delivered, or caused to be delivered, to the Lender the Pledge Agreement.  
 (c)
 The Borrower and each other Obligor shall have delivered, or caused to be delivered, to the Lender a certificate evidencing their respective incorporation and good standing in its jurisdiction of incorporation issued by the Secretary of State or Province of such jurisdiction, as of a date reasonably proximate to the Closing Date.
 

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 (d)
 The Borrower and each Obligor shall have executed and delivered, or caused to be delivered, to the Lender a certificate, executed by the secretary of such Person and dated the Closing  Date, as to (i) the resolutions consistent with Section 7.2 as adopted by the such Obligor’s board of directors (or similar governing body) in a form reasonably acceptable to the Lender (ii) each Obligor’s articles or certificate of incorporation (or similar document), each as in effect at the Closing, (iii) each Obligor’s by-laws (or similar document), each as in effect at the Closing, (iv) incumbency certification of each authorized officer/manager/member, as applicable, executing documents on behalf of such Obligor, and (v) no action having been taken by any Obligor or its stockholders, directors or officers in contemplation of any amendments to items (i), (ii), or (iii) listed in this Section 5.1(d), as certified in the form attached hereto as Exhibit C.
 (e)
 Searches of UCC filings (and equivalent in foreign jurisdictions, including PPSA filings in Canada) in the jurisdictions of formation or incorporation of each Obligor and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Lender’s security interests in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens shall have been obtained by Lender. 
 (f)
 The filing of UCC financing statements (and equivalent in foreign jurisdictions, including PPSA filings in Canada) naming the Obligors as debtor and the Lender as secured party  in each appropriate jurisdiction as is necessary, in the Lender’s sole discretion, to perfect the Lender’s security interests in the Collateral.  
 (g)
 Each Obligor shall have delivered, or caused to be delivered, to the Lender original stock/membership unit certificates, if any, evidencing any Pledged Equity (as defined in the Pledge Agreement) pledged to the Lender pursuant to the Pledge Agreement, together with duly executed in blank, undated stock or unit powers attached thereto.
 (h)
 The representations and warranties of the Borrower and each other Obligor under this Agreement and the other Transaction Documents shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of the date when made and as of each Closing  Date as though made at that time (except for representations and warranties that speak as of a specific date, which representations and warranties shall be true and correct in all material respects as of such specific date (without duplication of any materiality qualifier contained therein), and the Borrower and each other Obligor shall have performed, satisfied and complied in all material respects (without duplication of any materiality qualifier contained therein) with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Borrower and such other Obligors at or prior to each Closing  Date.  
 (i)
 The Borrower shall have caused to be executed and/or delivered to Lender such payoff letters, termination statements, lien releases and other similar items as Lender or its counsel may reasonably request, in form and substance reasonably acceptable to Lender and its counsel. 
 

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 (j)
 The Borrower and the Subsidiaries shall have executed and/or delivered to the Lender such other documents relating to the transactions contemplated by this Agreement as the Lender or its counsel may reasonably request, including a legal opinion from counsel to the Obligors in form and substance reasonably satisfactory to the Lender and its counsel.
 (k)
 No Event of Default (or event or circumstance that, with the passage of time, the giving of notice, or both, would become an Event of Default) shall have occurred and be continuing or would result from the issuance of the Note, the Warrant and the Option at the Closing.
 (l)
 Each of the Guarantors shall have executed and delivered to the Lender the Guaranty.
 (m)
 The Borrower shall have issued to the Lender the Warrant described in Section 8.20 below in the form attached hereto as Exhibit E.
 (n)
 The Borrower shall have issued to the Lender the Option described in Section 8.20 below in the form attached hereto as Exhibit F.
 (o)
 The Borrower shall have issued and delivered in the name of the Lender or its designee one or more stock certificates representing the Commitment Fee Shares described in Section 8.21, in form and substance reasonably acceptable to Lender and its counsel.
 (p)
 The Borrower shall have paid to the Lender all fees and expenses due and payable to the Lender on the Closing Date, including but not limited to, the payment of all fees and expenses of legal counsel and other advisors to the Lender in connection with the transactions contemplated by the Transaction Documents and the preparation, negotiation, execution and delivery of the Transaction Documents.  The Borrower hereby authorizes the Lender to deduct from the proceeds of the Purchase Price to be paid pursuant to Section 3.1 all such fees and expenses to the extent not paid directly by the Borrower on the Closing Date.
 ARTICLE 6
 LENDER’S REPRESENTATIONS AND WARRANTIES
 The Lender represents and warrants as of the Closing Date that:
 Section 6.1
 No Public Sale or Distribution
   The Lender is acquiring the Note for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in a manner that would violate the 1933 Act, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, the Lender does not agree to hold the Note for any minimum or other specific term and reserves the right to dispose of the Note at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.  The Lender does not presently have any agreement or understanding, directly or indirectly, with any Person to assign, sell or transfer the Note.
 

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 Section 6.2
 Investor Status
   (a) The Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D and a sophisticated investor who can afford the risk of this investment pursuant to Section 4(a)(2) of the 1933 Act. 
 (b)
 The Lender is a United States person.
 Section 6.3
 No Governmental Review
   The Lender understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Note or the fairness or suitability of the investment in the Note nor have such authorities passed upon or endorsed the merits of the purchase of the Note.
 Section 6.4
 Transfer or Resale
   The Lender understands that the Note has not been and is not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred except pursuant to an effective registration statement or an exemption from registration; provided, however, that, the Note may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Note and such pledge of the Note shall not be deemed by the Borrower to be a transfer, sale or assignment of the Note hereunder, and the Lender effecting such a pledge of the Note shall not be required to provide the Borrower with any notice thereof or otherwise make any delivery to the Borrower pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 6.4.
 Section 6.5
 Legends
   The Lender understands that the certificates or other instruments representing the Note, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form:
 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR 
 

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 (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE NOTE, PROVIDED SUCH PLEDGE IS MADE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
 The legend set forth above shall be removed and the Borrower shall issue a Note without such legend to the holder of the Note upon which it is stamped, if (i) such Note is registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, Lender provides the Borrower with an opinion of counsel, in a form reasonably acceptable to the Borrower, to the effect that such sale, assignment or transfer of the Note may be made without registration under the applicable requirements of the 1933 Act, or (iii) the Note is sold, assigned or transferred pursuant to Rule 144 or Rule 144A under the 1933 Act, or Lender provides the Borrower with reasonable assurance that the Note the can be sold, assigned or transferred pursuant to Rule 144 under the 1933 Act.
 Section 6.6
 Valid and Binding Obligations
  The Lender has full power and authority to enter into this Agreement.  This Agreement, when executed and delivered by the Lender, will constitute a valid and legally binding obligation of the Lender, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.
 Section 6.7
 Offering Documents
  The following filings (the “SEC Documents”) made by the Borrower with the U.S. Securities and Exchange Commission (the “SEC”), all of which have been provided to the Lender or are available at the SEC’s website (www.sec.gov) consist of the Borrower’s Annual Report on Form 10-K for December 31, 2013, as amended; Form 10-Q for the quarter ended September 30, 2014, all Form 8-K’s filed since January 1, 2014 through the date hereof, and definitive proxy statement dated June 16, 2014 under which this Offering is being made, all of which are incorporated by reference herein.  The Lender acknowledges receipt of the SEC Documents and all exhibits thereto and other documents furnished in connection with this transaction and provided (collectively, the “Offering Documents”) and hereby represents that it has been furnished by the Borrower during the course of this transaction with all information regarding the Borrower which it has requested or desires to know; that it has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Borrower concerning the terms and conditions of the Offering, and any additional information which it had requested.
 

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 Section 6.8
 Tax Consequences
 The Lender acknowledges that this Offering may involve tax consequences and that the contents of the Offering Documents do not contain tax advice or information. The Lender acknowledges that it must retain its own professional advisors to evaluate the tax and other consequences of a purchase of Note.  The Lender acknowledges that it has had an opportunity to consult with counsel of its choice and that it must retain its own legal advisor. The Lender has not relied on the Borrower, its officers, directors, or professional advisors for advice as to such tax consequences.
 Section 6.9
 Rule 144
 The Lender understands that Rule 144 (“Rule 144”) promulgated under the 1933 Act requires, among other conditions, a six-month holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the 1933 Act.  The Lender understands that the Borrower makes no representation or warranty regarding its fulfillment in the future of any reporting requirements under the 1934 Act, or its dissemination to the public of any current financial or other information concerning the Borrower, as is required by Rule 144 as one of the conditions of its availability.  The Lender consents that the Borrower may, if it desires, permit the transfer of the Notes out of its name only when his request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Borrower that neither the sale nor the proposed transfer results in a violation of the 1933 Act or any applicable state “blue sky” laws (collectively “Securities Laws”). The Lender agrees to hold the Borrower and its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by the Lender contained herein or any sale or distribution by the undersigned Lender in violation of any Securities Laws.
 Section 6.10
 State Securities Laws
 The Lender acknowledges that at such time, if ever, as the Common Stock issuable under the Transaction Documents is registered, sales of such securities may be subject to state securities laws, including those of states which may require any securities sold therein to be sold through a registered broker-dealer or in reliance upon an exemption from registration.
 Section 6.11
 No Other Representations
 No oral or written representations have been made other than as stated in this Agreement or in a Transaction Document.
 Section 6.12
 Use of Proceeds
 The undersigned understands that the net proceeds (see Article 8) from this Offering (after deduction for expenses of the Offering) will be used in all respects exclusively for the purposes set forth under “Use of Proceeds” in Article 8 below.  Neither Lender nor Borrower will pay any commission with respect to this transaction.
 

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 Section 6.13
 Survival of Representations
 The undersigned Lender acknowledges that the representations, warranties and agreements made by the undersigned herein shall survive the execution and delivery of this Agreement and the purchase of the Note.
 Section 6.14
 Regulation FD
 The Lender understands that the fact that the Borrower is undertaking this offering, as well as certain information contained in this Agreement, may be considered to be material, non-public information under Regulation FD (Fair Disclosure) promulgated under the 1934 Act.  Each recipient expressly agrees to maintain such information in confidence until such time as public disclosure of same is made.
 ARTICLE 7
 BORROWER’S REPRESENTATIONS AND WARRANTIES
 As an inducement to the Lender to enter into this Agreement and to consummate the transactions contemplated hereby, the Borrower and each Obligor represents and warrants to the Lender that each and all of the following representations and warranties (as supplemented by the disclosure schedules attached hereto and made a part of this Agreement (the “Schedules”)) are true and correct as of the Closing Date.  The Schedules shall be arranged by the Borrower in paragraphs corresponding to the sections and subsections contained in this ARTICLE 7 and shall be a part of this Agreement.
 Section 7.1
 Organization and Qualification
   The Borrower and each Obligor are entities duly incorporated or organized and validly existing in good standing under the laws of the jurisdiction in which they are formed or incorporated, and have the requisite power and authorization to own their properties, carry on their business as now being conducted, enter into the Transaction Documents to which they are party and carry out the transactions contemplated thereby.  The Borrower and each Obligor is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have, either individually or in the aggregate, a Material Adverse Effect.  All Capital Stock or other equity or similar interests of the Subsidiaries is directly or indirectly owned by the Borrower.  All of the Borrower’s foreign and domestic, direct and indirect, subsidiaries (other than Maili PV 01, LLC and Sumter Heat & Power, LLC) existing as of the Closing Date are signatories to the Guaranty.
 

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 Section 7.2
 Authorization; Enforcement; Validity
   Each Obligor has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Note, the Pledge Agreement, the Warrant, the Guaranty to which it is party, and each of the other agreements, documents and certificates entered into executed and delivered by any Obligor to Lender in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Note, the Warrant, the Option and the Commitment Fee Shares in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by the Borrower and each Obligor has been duly authorized by the Borrower’s and each Obligor’s Board of Directors and the consummation by the Borrower and each Obligor of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Note, the Warrant, the Option and the Commitment Fee Shares by the Borrower and each Obligor, has been duly authorized by their respective Board of Directors, and no further filing, consent, or authorization is required by any Borrower and each Obligor, their respective boards of directors (or other governing body) or its stockholders.  This Agreement and the other Transaction Documents have been duly executed and delivered by the Borrower and each Obligor and constitute the legal, valid and binding obligations of the Borrower and each Obligor, enforceable against the Borrower and each Obligor in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable regulatory, bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 Section 7.3
 Issuance of Note, Warrant and Option
   The Note, the Warrant and the Option are each duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof.  Assuming the truth and accuracy of the representations and warranties of the Lender set forth in ARTICLE 6 of this Agreement, the issuances by the Borrower of the Note, the Warrant and the Option and the underlying shares of Common Stock issuable to the Lender are exempt from registration under the 1933 Act.
 Section 7.4
 No Conflicts
   The execution, delivery and performance of the Transaction Documents by the Borrower and each Obligor and the consummation by the Borrower and each Obligor of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Note) will not (i) result in a violation of  Borrower’s or any Obligor’s certificate or articles of incorporation or bylaws or other governing documents, or the terms of any capital stock or other equity interests of the Borrower or any Obligor; (ii) conflict with, or constitute a breach or default (or an event which, with notice or lapse of time or both, would become a breach or default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Borrower or any Obligor is a party; or (iii) result in any “price reset” or other material change in or other modification to the terms of any Indebtedness, Equity Interests or other securities of the Borrower or any Obligor.
 

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 Section 7.5
 Consents.
   None of the Obligors is required to obtain any consent, authorization, approval, order, license, franchise, permit, certificate or accreditation of, or make any filing or registration (collectively, “Consents and Filings”) with, any court, governmental agency or any regulatory or self-regulatory agency or authority or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof (other than  (x) UCC filings, and equivalent foreign filings with respect to any foreign organized Subsidiary required to perfect liens granted under the Pledge Agreement and (y) and federal and state securities law filings).  All Consents and Filings which the Obligors are required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Borrower is unaware of any facts or circumstances which might prevent it or any other Obligor from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.  
 Section 7.6
 Subsidiary Rights
   The Borrower has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital and other equity securities of the Subsidiaries as owned by the Borrower.
 Section 7.7
 Equity Capitalization; Authorized Common Stock
   (a)
 The authorized and issued and outstanding Capital Stock of the Borrower is as set forth in Schedule 7.7 and described in the SEC Documents.  All of such outstanding shares of Capital Stock have been duly authorized, validly issued and are fully paid and nonassessable and are owned by the Persons and in the amounts set forth in the SEC Filings.  Except as set forth on Schedule 7.7 and/or in the SEC Filings (i) none of Borrower’s or any Subsidiary’s Capital Stock in Borrower or any Subsidiary is subject to preemptive rights (other than the Warrants to be issued to Lender) or any other similar rights or any liens or encumbrances suffered or permitted by Borrower or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any Capital Stock in the Borrower or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Borrower or any of its Subsidiaries is or may become bound to issue additional Capital Stock in Borrower or any Subsidiary or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any Capital Stock in the Borrower or any of its Subsidiaries; (iii) there are no agreements or arrangements under which the Borrower or any of its Subsidiaries is obligated to register the sale of any of its Subsidiaries securities under the 1933 Act; (iv) there are no outstanding securities or instruments of the Borrower or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Borrower or any of its Subsidiaries is or may become bound to redeem a security of the Borrower or any of its Subsidiaries; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Note, the Warrant or the Option, and 
 

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 (vi) none of the Borrower or any of its Subsidiaries has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
 (b)
 The Common Stock of the Borrower underlying the Note, the Warrants, the Option Shares (described in Section 8.20 below), and the Commitment Fee Shares (described in Section 8.21 below) has been duly and validly authorized and when issued, will be duly and validly issued, fully paid and non-assessable, and such shares of Common Stock of the Borrower will not be issued in violation of any preemptive or other rights of stockholders of the Borrower and will be free from all taxes, liens, and charges with respect to the issuance thereof.
 Section 7.8
 Indebtedness and Other Contracts
   Except as disclosed on Schedule 7.8,  no Obligor (i) has any outstanding Indebtedness (other than trade debt as incurred in the ordinary course of business and not past due by more than 90 days), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness or any contract, agreement or instrument entered into in connection therewith that could reasonably be expected to result in, either individually or in the aggregate,  a Material Adverse Effect, or (iv) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Borrower or any of its Subsidiaries or by which the Borrower or any of its Subsidiaries is or may become bound; or (v) there are no financing statements in respect of any securing obligations in any material amounts, any singly or in the aggregate, filed in connection with the Borrower or any of its Subsidiaries and no Liens on any Collateral other than Permitted Liens.
 Section 7.9
 Off Balance Sheet Arrangements
   There is no transaction, arrangement, or other relationship between the Borrower or any Obligor and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Borrower in a 1934 Act filing or that otherwise would be reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect.
 Section 7.10
 Ranking of Note
   The Note will rank pari passu with all other senior Indebtedness of the Borrower, whether with respect to payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise. 
 Section 7.11
 Title
   Except as described in the SEC Documents, the Borrower and each Obligor has (i) good and marketable title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in intellectual property rights), and (iv) good and marketable title to (in the case of all other personal property) all of its real property and other properties and assets owned by it which are material to the business of Borrower or Brooks, in each case free and clear of all liens, encumbrances and defects, other than Permitted Liens.
 

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 Any real property and facilities held under lease by the Borrower or Brooks are held by it under valid, subsisting and enforceable leases.  
 Section 7.12
 Intellectual Property Rights
   The Borrower and each Obligor owns or possesses adequate and valid rights to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”) that are necessary to conduct its respective businesses as now conducted, and such Intellectual Property Rights are free and clear of all liens, encumbrances and defects other than Permitted Liens; (i) neither the Borrower nor any other Obligor has any knowledge of any infringement, misappropriation, dilution or other violation by the Borrower or each Obligor of Intellectual Property Rights of other Persons; (ii) neither the Borrower nor any other Obligor has any knowledge of any infringement, misappropriation, dilution or other violation by any other Persons of the Intellectual Property Rights of the Borrower or any other Obligor; (iii) there is no claim, action or proceeding pending or, to the knowledge of each of the Borrower and each Obligor, threatened in writing, against the Borrower or any other Obligor regarding its Intellectual Property Rights or the Intellectual Property Rights of other Persons; and (iv) neither the Borrower nor any other Obligor is aware of any facts or circumstances of reasonable likelihood of giving rise to any of the foregoing infringements or claims, actions or proceedings.  The Borrower and each Obligor has taken and is taking commercially reasonable measures, consistent with industry standards, to maintain and protect the value of its Intellectual Property Rights.
 Section 7.13
 Creation, Perfection, and Priority of Liens
   The Security Documents are effective to create in favor of the Lender, a legal, valid, binding, and (upon the filing of the appropriate UCC financing statements and equivalent filings in respect of any foreign organized Subsidiaries) enforceable first-priority perfected security interest and Lien in the Collateral described therein as security for the Obligations to the extent that a legal, valid, binding, and enforceable security interest and Lien in such Collateral may be created under applicable law including without limitation, the UCC and any other applicable governmental agencies. 
 Section 7.14
 Absence of Certain Changes
   Since January 1, 2015 (the “Diligence Date”), there has been no material adverse change in the business, assets, properties, operations, condition (financial or otherwise), results of operations or prospects of the Borrower or each Obligor.  Since the Diligence Date, except as incurred in the ordinary course of business, the Borrower and each Obligor has not (i) declared or paid any dividends, or (ii) sold any assets (other than the sale of Inventory in the ordinary course of business).  Neither the Borrower nor any Obligor has taken any steps to seek protection pursuant to any bankruptcy law nor does the Borrower or any Obligor have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.  Neither the Borrower nor any Obligor intends to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  Neither the Borrower nor any Obligor has any knowledge of any facts or circumstances 
 

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 which leads it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction.  Neither Borrower nor any Obligor is, as of the Closing Date, and after giving effect to the transactions contemplated hereby to occur at the Closing, will be, Insolvent.
 Section 7.15
 Absence of Litigation
   Except as set forth on Schedule 7.15 and in the SEC Filings, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency (including, without limitation, the SEC, self-regulatory organization or other governmental body) (in each case, a “Proceeding”) pending or, to the knowledge of Borrower or any Obligor, threatened in writing against or affecting Borrower or any Obligor or any of Borrower’s or any Obligor’ officers or directors, which (i) could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, (ii) if adversely determined, could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, or (iii) questions the validity of this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto. 
 Section 7.16
 No Undisclosed Events, Liabilities, Developments or Circumstances
   Except for the transactions contemplated by the Transaction Documents, no event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Borrower or any Obligor or their respective business, properties, prospects, operations or financial condition, that would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
 Section 7.17
 No Disagreements with Accountants and Lawyers
   There are no disagreements of any kind presently existing, or reasonably anticipated by the Borrower or any Obligor to arise, between the Borrower or any Obligor and the accountants and lawyers formerly or presently employed by the Borrower and any Obligor which could affect the ability of the Borrower or any Obligor to perform either of their obligations under any of the Transaction Documents.  
 Section 7.18
 Tax Status  
 The Borrower and each Obligor (i) have made or filed all foreign, federal and state income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject, except prior to the Closing  Date where any failure to do so did not result in any material penalties to the Borrower or any Obligor, (ii) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, and (iii) has set aside on its books adequate reserves in accordance with GAAP for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be delinquent by the taxing authority of any jurisdiction (other than those being contested in good faith by appropriate proceedings promptly instituted and 
 

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 diligently conducted and subject to adequate reserves taken by the Borrower or each Obligor as shall be required in conformity with GAAP), and the officers of the Borrower and each Obligor know of no basis for any such claim.
 Section 7.19
 Transfer Taxes
   On each applicable Closing Date, all transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Note, the Warrant, the Option to be sold to the Lender hereunder, or the issuance of the Commitment Fee Shares, will be, or will have been, fully paid or provided for by the Borrower, and all laws imposing such taxes will be or will have been complied with.
 Section 7.20
 Conduct of Business; Regulatory Permits
   Neither the Borrower nor any Obligor is in violation of any term of or in default under its certificate or articles of incorporation or bylaws or other governing documents.  Neither the Borrower nor any Obligor is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to Borrower or any Obligor.  Neither the Borrower nor any Obligor has received any notice of proceedings relating to the revocation or modification of any such consents, authorizations, approvals, orders, licenses, franchises, permits, certificates, accreditations or permits.  Except as set forth on Schedule 7.5, the Borrower and each Obligor are in compliance with all laws, rules, regulations and ordinances of all applicable Governmental Authorities and all applicable state regulatory and similar laws, rules, regulations and orders, except to the extent any such non-compliance would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
 Section 7.21
 Foreign Corrupt Practices
   Neither the Borrower nor any Obligor, nor any director, officer, employee or other Person acting on behalf of the Borrower or any Obligor has, in the course of its actions for, or on behalf of, the Borrower or any Obligor (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
 Section 7.22
 Environmental Laws
   To the best of their knowledge, the Borrower and each Obligor (a) (i) is in compliance with any and all Environmental Laws, (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its respective businesses, (iii) is in compliance with all material terms and conditions of any such permit, license or approval, and (iv) has no outstanding Liability under any Environmental Laws and is not aware of any facts that could reasonably result in Liability under any Environmental Laws, in each of the foregoing clauses of this clause (a), except to the extent, either individually or in the 
 

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 aggregate,  a Material Adverse Effect could not reasonably be expected to occur, and (b) has provided Lender with copies of all environmental reports, assessments and other documents related to any material Liability under any Environmental Laws.
 Section 7.23
 Margin Stock
   Neither the Borrower nor any Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds from the issuance of any Note will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock, or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.
 Section 7.24
 Investment Company
   Neither the Borrower nor any Obligor is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
 Section 7.25
 U.S. Real Property Holding Corporation
   Neither the Borrower nor any Obligor is, nor has it ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code, as amended, and the Borrower will so certify upon the request of the Lender.
 Section 7.26
 Internal Accounting and Disclosure Controls
   Except as disclosed in the SEC Filings, the Borrower and each Obligor maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. 
 Section 7.27
 Financial Statements
   Each of the (a) consolidated audited financial statements of Borrower and its consolidated subsidiaries dated December 31, 2013, (b) consolidated unaudited financial statements of Borrower and its subsidiaries dated September 30, 2014 for the nine-month period then ended, were prepared in accordance with GAAP, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects 
 

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 the consolidated financial position of the Borrower and its consolidated subsidiaries as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  
 Section 7.28
 Transactions With Affiliates
   Except (i) as set forth in the SEC Documents and Schedule 7.28  and (ii) for transactions that have been entered into on terms no less favorable to the Borrower and each Obligor than those that might be obtained at the time from a Person who is not an officer, director or employee, none of the officers, directors or employees of the Borrower or each Obligor is presently a party to any transaction with the Borrower or each Obligor (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.
 Section 7.29
 Acknowledgment Regarding Lender’s Purchase of Note
   The Borrower acknowledges and agrees that the Lender is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that the Lender is (i) not an officer or director of Borrower or any other Obligor, or (ii) not an Affiliate of Borrower or any other Obligor, however, it is a “beneficial owner” (as defined for purposes of Rule 13d-3 of the 1934 Act) of more than 10% of the shares of Capital Stock of Borrower.  The Borrower further acknowledges that the Lender is not acting as a financial advisor or fiduciary of Borrower or any other Obligor (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by Lender or either of its representatives in connection with the Transaction Documents and the transactions contemplated hereby, and thereby is merely incidental to the Lender’s purchase of the Notes.  The Borrower further represents to the Lender that the Borrower’s and each other Obligor’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Borrower, the other Obligors and their respective representatives.  
 Section 7.30
 Insurance
   Each Obligor is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which such Obligor is engaged.  None of the Obligors has been refused any insurance coverage sought or applied for and none of the Obligors believe that they will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
 

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 Section 7.31
 Employee Relations
   None of the Obligors is a party to any collective bargaining agreement or employs any member of a union in such person’s capacity as a union member or to perform union labor work.  Each of the Obligors believe that their relations with their employees are good.  As of each Closing Date, no executive officer of any Obligor has notified such Obligor that such officer intends to leave such Obligor or otherwise terminate such officer’s employment with such Obligor.  As of each Closing Date, no executive officer of any Obligor, to the knowledge of the Borrower, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant.  Each Obligor is in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
 Section 7.32
 Disclosure
   Notwithstanding any other provision of this Agreement, all disclosure provided to the Lender regarding the Obligors, their respective business and properties, and the transactions contemplated hereby, including the Schedules to this Agreement and the SEC Documents furnished by or on behalf of the Borrower, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, taken as a whole and in the light of the circumstances under which they were made, not materially misleading.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1933 Act and the rules and regulations of the SEC applicable to such SEC Documents.  No event or circumstance has occurred or information exists with respect to any Obligor or any of their respective business, properties, prospects, operations or condition (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure or announcement by any Obligor but which has not been so publicly announced or disclosed.  Each Obligor (i) is financially experienced and sophisticated, (ii) has been represented by competent counsel in connection with negotiation of the Transaction Documents, which negotiations have been conducted on an arm’s length basis in good faith, and (iii) is entering into the Transaction Documents of its own free will without duress or other unconscionable conduct on the part of the Lender, the proceeds of which in part are being used to finance the Brooks Project. 
 Section 7.33
 Patriot Act
   To the extent applicable, each Obligor is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, and (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).  
 

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 Section 7.34
 Material Contracts
 .  The SEC Filings contain a true, correct and complete list of all the Material Contracts of the Borrower and the other Obligors, and, all such Material Contracts are in full force and effect and no defaults currently exist thereunder.
 ARTICLE 8
 COVENANTS
 So long as the Note or any other Obligations shall remain outstanding pursuant to the Transaction Documents, unless the Lender shall otherwise consent in the manner set forth in Section 11.6, the Borrower and shall cause each of its Subsidiaries to comply with the following covenants in this Article 8:
 Section 8.1
 Deliveries
 .  The Borrower agrees to deliver the following to the Lender: 
 (a)
 Annual Reports.  The Borrower shall deliver to the Lender a copy of its Annual Report on Form 10-K, including the audited financial statements for the fiscal year ended December 31, 2014 not later than March 31, 2015.
 (b)
 Quarterly Reports.  The Borrower shall deliver to the Lender a copy of its quarterly Reports on Form 10-Q not later than forty-five (45) days from the end of each calendar quarter until repayment in full of the Note.
 (c) 
 Brooks Related Reports.  Within fifteen (15) days after the end of each calendar quarter while the Note remains outstanding, the Borrower shall deliver for the most recent ended quarter, in reasonable detail, and certified by the Chief Financial Officer of the Borrower as being true and correct, a report summarizing the status of the Brooks Project invested in.
 Section 8.2
 Notices
   The Borrower agrees to deliver the following to the Lender: 
 (a)
 Collateral Information.  Upon request of the Lender, a certificate of one of its duly authorized officers (i) either confirming that there has been no material change in the information concerning the Collateral or in the names and jurisdiction of organization of the Obligors as specified in the representations and warranties in the Pledge Agreement and in the Schedules thereto since the Closing Date or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes, and (ii) certifying that all UCC financing statements (including fixtures filings, as applicable) and other appropriate filings, recordings and registrations have been filed of record in each governmental, municipal and other appropriate office in each jurisdiction identified pursuant to clause (i) above (or in such certificate) to the extent necessary to effect, protect and perfect 
 

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 the security interests under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);
 (b)
 Notice of Default.  Promptly upon any officer of Borrower or any other Obligor obtaining knowledge, (i) of any condition or event that constitutes a default or an Event of Default or that notice has been given to Borrower or any other Obligor with respect thereto; (ii) that any Person has given any notice to Borrower or any other Obligor or taken any other action with respect to any event or condition set forth in the Note; (ii) any default or event of default under the Existing Term Loan Agreement, or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its chief executive officer or chief financial officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, default, event or condition, and the action(s) the Borrower or other applicable Obligor has taken, is taking and proposes to take with respect thereto;  
 (c)
 Notice of Litigation.  Promptly upon any officer of Borrower or any other Obligor obtaining knowledge of (i) the institution of, or non-frivolous threat of, any adverse Proceeding not previously disclosed in writing by the Borrower to the Lender, or (ii) any material development in any adverse Proceeding that, in the case of either clause (i) or (ii) if adversely determined, could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to the Borrower or any other Obligor to enable the Lender and its counsel to evaluate such matters; 
 (d)
 Existing Term Loan Reports and Notices.  The Company shall deliver to Lender copies of all reports and notices required to be delivered to TCA Global Credit Master Fund LP (“TCA”) at the same time as such reports and notices are delivered to TCA; 
 (e)
 Corporate Information.  Ten (10) Business Days’ prior written notice of any change (i) in any Obligor’s corporate name, (ii) in any Obligor’s identity or organizational structure, (iii) in Borrower’s jurisdiction of organization, or (iv) any Obligor’s Federal Taxpayer Identification Number or state organizational identification number.  The Borrower agrees not to effect or permit any change by itself or any other Obligor of the type referred to in the preceding sentence unless all filings have been made under the UCC or otherwise and all other actions that are required in order for the Lender to continue at all times following such change to have a valid, legal and first-priority perfected security interest in all the Collateral as contemplated in the Pledge Agreement and other Transaction Documents;
 (f)
 Event of Loss.  Promptly (and in any event within three (3) Business Days) notice of (i) any claim with respect to any liability against the Brooks Project or any Obligor that (A) is in excess of $250,000 and (B) could reasonably be expected to result in a Material Adverse Effect or (ii) any event which, with or without the passage of time, could reasonably be expected to constitute an Event of Loss. 
 

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 (g)
 Other Information.  Promptly upon their becoming available, deliver copies of all press releases and other statements made available generally by the Borrower or any Obligor to the public concerning the Brooks Project and such other information and data with respect to the Borrower or any other Obligor as from time to time may be reasonably requested by the Lender.
 Section 8.3
 Rank
 .  All Indebtedness due under the Note shall rank pari passu  in right of payment, whether with respect to payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise, with all other senior Indebtedness of Borrower.
 Section 8.4
 Existence of Liens
 .  Borrower shall not, and Borrower shall not permit any Obligor to, directly or indirectly, allow or suffer to exist any Liens, other than Permitted Liens.  
 Section 8.5
 Mergers; Acquisitions; Asset Sales
 .  Borrower shall not, and Borrower shall not permit any Obligor to, directly or indirectly, in any single transaction or series of related transactions (a) be a party to any merger or consolidation, (b) consummate any Investment (other than (x) Cash Equivalent Investments, and (y) Investments by the Borrower or any other Obligors in another Obligor, and (z) investments by any Obligor in Borrower), or (c) consummate any Asset Sale, other than with the prior written consent of the Lender.
 Section 8.6
 Insurance.
 (a)
 Borrower shall, and shall cause each Obligor to, keep all property owned by it properly insured against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of the Obligors, with such companies, in such amounts, with such deductibles and under policies in such customary form.  Certificates of insurance or, if requested by the Lender, original (or certified) copies of such policies of insurance have been or shall be, promptly following such request, delivered to the Lender, and shall contain an endorsement, in form and substance reasonably acceptable to Lender, showing loss under such insurance policies payable to the Lender.  Borrower will and will cause each Obligor to use commercially reasonable efforts to ensure that such endorsement, or an independent instrument furnished to the Lender, shall provide that the insurance company shall give the Lender at least thirty (30) days’ written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of any Obligor or any other Person shall affect the right of the applicable Obligor to recover under such policy of insurance in case of loss or damage and to use such proceeds to acquire additional Equity Interests. 
 

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 (b)
 Borrower shall, and shall cause each Obligor to maintain, at its expense, such public liability and third-party property damage insurance as is customary for Persons engaged in businesses similar to that of the Obligors with such companies and in such amounts with such deductibles and under policies in such form as shall be reasonably satisfactory to the Lender and certificates of insurance or, if requested by the Lender, original (or certified) copies of such policies have been or shall be, promptly following such request, delivered to the Lender; each such policy shall contain an endorsement showing the Lender as additional insured thereunder and Borrower shall and shall cause each Obligor to use its commercially reasonable efforts to ensure that the endorsement provides that the insurance company shall give the Lender at least thirty (30) days’ written notice before any such policy shall be altered or canceled.
 (c)
 If Borrower or any other Obligor shall at any time or times hereafter fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then the Lender, without waiving or releasing any obligation or default by the Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as the Lender reasonably deems advisable.  Such insurance, if obtained by the Lender, may, but need not, protect the applicable Obligor’s interests or pay any claim made by or against any applicable Obligor with respect to the Collateral.  Such insurance may be more expensive than the cost of insurance the Borrower or any other Obligor may be able to obtain on its own and may be cancelled only upon the Borrower providing evidence that it or the applicable Obligor has obtained the insurance as required above.  All sums disbursed by the Lender in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys’ fees, shall constitute part of the obligations due and owing hereunder, shall be payable on demand by the Borrower to the Lender and, until paid, shall bear interest at the highest rate applicable to Note hereunder.
 Section 8.7
 Corporate Existence and Maintenance of Properties
   Borrower shall, and shall cause each other Obligor to, maintain and preserve (a) its existence and good standing in the jurisdiction of its organization and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be so qualified or in good standing could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect).  Borrower will, and will cause each other Obligor to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of the Borrower and other Obligors and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof.
 Section 8.8
 Non-circumvention
   The Borrower hereby covenants and agrees that it will not, nor will it permit any other Obligor to, by amendment of its articles or certificate of incorporation or formation, bylaws, operating agreement, or other governing documents, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of 
 

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 any of the terms of this Agreement or the other Transaction Documents, and the Borrower will and will cause each other Obligor to at all times in good faith carry out all of the provisions of this Agreement and the other Transaction Documents and take all action as may be reasonably required to protect the rights of the Lender.
 Section 8.9
 Conduct of Business
   The Borrower shall not and shall not permit any other Obligor to engage in any line of business other than the businesses engaged in on the Closing Date except upon prior written consent of the Lender. 
 Section 8.10
 U.S. Real Property Holding Corporation
   Neither the Borrower nor any other Obligor shall become a U.S. real property holding corporation or permit or cause its shares to be U.S. real property interests, within the meaning of Section 897 of the Code.   
 Section 8.11
 Compliance with Laws
   The Borrower shall, and shall cause each Obligor to: (i) comply in all material respects with federal, state and other applicable securities laws, and (ii) comply in all material respects with the requirements of all other applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws).
 Section 8.12
 Additional Collateral
   With respect to any Property acquired after the Closing Date as to which the Lender, does not have a perfected Lien, the Borrower shall and shall cause and each applicable other Obligor shall promptly (i) execute and deliver to the Lender, such amendments to the Security Documents or such other documents as the Lender, deem necessary or advisable to grant to the Lender, a security interest in such Property and (ii) take all other actions necessary or advisable to grant to the Lender, a perfected first priority security interest in such Property, including, without limitation, the filing of mortgages, confessions of judgment and UCC financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested by the Lender. 
 Section 8.13
 Audit Rights; Field Exams; Meetings.  
 The Borrower shall, upon reasonable prior written notice (except during the occurrence and continuance of an Event of Default, when such written notice shall not be required), subject to reasonable safety and security procedures, and permit the Lender (or any of its designated representatives) up to two (2) times per year (except during the occurrence and continuance of an Event of Default, when no such limits shall exist) to visit and inspect any of the properties of the Borrower and the other Obligors, including but not limited to the Brooks Project, to examine the books of account of the Borrower and the other Obligors (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower and the other Obligors, and to be advised as to the same by their respective officers, 
 

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 and to conduct examinations and verifications (whether by internal commercial finance examiners or independent auditors), all at such reasonable times and intervals as the Lender may reasonably request.
 (a)
 The Borrower shall and shall cause each other Obligor, upon reasonable prior written notice, subject to reasonable safety and security procedures, and permit the Lender (or any of its designated representatives) to conduct field exams of the Collateral, all at such reasonable times and intervals as the Lender may reasonably request.
 (b)
 The Borrower will and will cause each other Obligor, upon the request of the Lender, participate in a meeting of the Lender once (or more frequently at Lender’s request at any time an Event of Default has occurred and is continuing during each Fiscal Year to be held at the Borrower’s corporate offices (or at such other location as may be agreed to by the Borrower and the Lender) at such time as may be agreed to by the Borrower and the Lender.
 Section 8.14
 Pledge of Note
   The Borrower acknowledges and agrees that the Note may be pledged by the Lender in connection with a bona fide margin account or other loan or financing arrangement that is secured by the Note; provided such pledge is made in compliance with applicable federal and state securities laws.  Such pledge of the Note shall not be deemed to be a transfer, sale or assignment of the Note hereunder, and no Lender effecting such pledge of a Note shall be required to provide the Borrower with any notice thereof or otherwise make any delivery to the Borrower pursuant to this Agreement or any other Transaction Document, unless required by applicable law.  The Borrower hereby agrees to execute and deliver such documentation as a pledgee of the Note may reasonably request in connection with a pledge of the Note to such pledgee by Lender.
 Section 8.15
 Additional Issuances of Securities
   The Borrower shall not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its Equity Interests, including without limitation any debt, preferred stock or other instrument or security that may be, at any time during its life, and under any circumstance, convertible into or exchangeable or exercisable for shares of Equity Interests, convertible securities or debt securities (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”) without the prior written consent of the Lender. 
 Section 8.16
 Use of Proceeds
   The Borrower will receive gross proceeds from the sale of the Note of $10,000,000 prior to deducting offering expenses of this Offering including legal, accounting, printing, Blue Sky and other miscellaneous expenses.  The Borrower shall use the net proceeds to fund Capital Expenditures and other expenses and for working capital as set forth on Schedule 8.16 attached hereto, in accordance with the following terms and conditions.
 

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 The Borrower will maintain a separate bank account for the proceeds of this Offering.   The Borrower will deposit into such bank account the entire net proceeds received by it from this Offering and disburse the funds in accordance with the Use of Proceeds table attached hereto.  Such bank account is not to be used for any business purpose other than holding funds of this Offering.  The corporate officers of the Borrower, rather than the management of the Borrower’s Blue Earth CHP subsidiary, will approve the transfer of funds and approval of payment of all invoices in accordance with the Use of Proceeds table attached hereto.  In the event that the Borrower does not require all or any portion of the Note in order to fund the Brooks Project and/or subsequent to the Closing, obtains financing for the Brooks Project of up to $16,300,000, then the Borrower shall be entitled to use the proceeds of this financing for working capital and other general corporate purposes, including, but not limited to, repayment of the Note.  The Borrower will not use the proceeds of the Note to repay any of the secured promissory notes referenced on Schedule 7.28 hereof.  
 Section 8.17
 Registration Rights; Indemnification
 (a)
 Registration Rights. The Common Stock issuable upon conversion of the Note plus accrued interest thereon, and upon exercise of Warrants, and the Commitment Fee Shares and the Option Shares will be included in an existing Form S-3 Registration Statement with a resale prospectus through an amendment to such registration statement if permitted or through a new resale registration statement, either of which shall be filed by the Borrower with the SEC at the Borrower’s sole expense not later than thirty (30) days from the Closing. The Borrower shall use its best efforts to cause such amendment to be declared effective by the SEC at the earliest practicable time and to remain effective for the period of the distribution contemplated thereby. The Borrower shall also (i)  prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period of the distribution and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement in accordance with the Lender’s intended method of disposition, (ii) use its commercially reasonable efforts to register or qualify the securities covered by such registration statement under the securities or blue sky laws of such jurisdictions as the sellers of securities or, in the case of an underwritten public offering, the managing underwriter, may reasonably request; and (iii) notify each seller when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective, of any request by the SEC for amendments or supplements to such registration statement or to amend or to supplement such prospectus or for additional information, of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose.
 

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 (b)
 Indemnification.   To the extent permitted by law, the Borrower shall indemnify and hold harmless the Lender, and any of its members, officers, managers, legal counsel and accountants, underwriter (as defined in the Securities Act), against any expenses, losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act or other applicable federal or state law, insofar as such expenses, losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (each a “Violation”):
 (i)
 any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;
 (ii)
 the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading;
 (iii)
 any violation or alleged violation by the Borrower of the Securities Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act or any federal or state securities law in connection with the offering covered by such registration statement;
 and the Borrower shall reimburse the Lender and/or its applicable members, officers, managers, underwriter or controlling person for any legal or other expenses reasonably incurred by it, as incurred, in connection with investigating or defending any such loss, claim, damage liability or action; provided, however, that the Borrower shall not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon an untrue statement or omission made in any such registration statement in reliance upon and in conformity with written information furnished to the Borrower by the Lender expressly for use in preparation thereof.  Lender agrees to promptly notify the Borrower in writing of any such claim or suit that the pleading, demand letter, or other notice is served upon Lender; and agrees to cooperate in a reasonable manner with the Borrower and at the Borrower’s expense, with respect to the defense and disposition of such claim. The Borrower shall have control of the defense or settlement of any such claim; provided, however, that the Borrower shall not enter into any settlement that obligates the Lender and/or its applicable members, officers, managers, underwriter or controlling person to take any action or incur any expense without such person’s prior written consent, and further provided that the Lender and/or its applicable members, officers, managers, underwriter or controlling person shall have the right to be represented by independent counsel of their own choosing, at their own expense, in connection with such claim or suit. If the Borrower fails to defend such suit, then the Lender and/or its applicable members, officers, managers, underwriter or controlling person, through counsel of their own choice, shall, at the expense of the Borrower, have the right to conduct the defense of such claim; provided however that the Lender and/or its applicable members, officers, managers, underwriter or controlling person shall not enter into any settlement that obligates the Borrower to take any action or incur any expense without the Borrower’s prior written consent.
 

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 Section 8.18
 Further Assurances
   At any time or from time to time upon the request of the Lender, the Borrower will and will cause each other Obligor, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Lender may reasonably request in order to effect fully the purposes of the Transaction Documents.  In furtherance and not in limitation of the foregoing, the Borrower shall and shall cause each other Obligor take such actions as the Lender may reasonably request from time to time to ensure that the Obligations are secured by a first priority perfected Lien under the Pledge Agreement and Guaranty. 
 Section 8.19
 Guaranty; Joinder.  
 Each of the Subsidiaries of the Borrower shall enter into the Guaranty dated as of the date hereof in favor of Lender, in the form attached hereto as Exhibit D (as amended, restated, supplemented or modified from time to time, the “Guaranty”).  Within five (5) Business days (or such later date as the Lender may agree in its sole discretion) after any Person becomes a direct or indirect subsidiary of the Company, cause such Person to (a) become a Guarantor under the Guaranty by executing and delivering to the Lender a joinder agreement in form and substance satisfactory to the Lender, (b) to deliver to the Lender an amendment to the Pledge Agreement in form and substance satisfactory to the Lender to accomplish (i) the pledge of all of the shares of such subsidiary as security for the Obligations, and (ii) to grant a Lien on its assets as security for the Obligations, and (c) deliver to the Lender such charter documents, resolutions and favorable opinions of counsel (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clauses (a) through (c)), all in form, content and scope reasonably satisfactory to Lender. 
 Section 8.20
 Warrants/Option.
 The Borrower shall issue to the Lender at the Initial Closing, the Warrant in the form attached hereto as Exhibit E to purchase 2,000,000 shares of Borrower’s Common Stock at $1.00 per share.  The Borrower shall issue to the Lender an option (the “Option”) in the form attached hereto as Exhibit F (the “Option Shares”) for Lender to purchase up to 10 million shares of Borrower’s Common Stock (less any shares previously issued upon conversion of the Note) for a six (6) month period as specified in the Option, unless extended, at a price of $1.00 per share.
 Section 8.21
 Closing Commitment Fee
 The Borrower shall issue to the Lender 200,000 shares of Borrower’s Common Stock (the “Commitment Fee Shares”) as a closing commitment fee, which fee shall be due and payable in full and such shares shall be issued on the first to occur of (i) the Closing, (ii) five (5) days after the date the Borrower determines not to proceed with a financing with Lender on the terms and conditions provided in this Agreement, or (iii) March 31, 2015, if the Closing has not occurred by such date (except where the Closing has not occurred because Lender elects not to close for reasons other than not being entirely satisfied with its due diligence findings or it being unable to negotiate mutually acceptable definitive agreement with the Borrower).
 

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 ARTICLE 9
 EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
 Section 9.1.  Events of Default.   The occurrence of any “Event of Default” as defined in Section 8 of the Note shall be deemed to be an Event of Default under this Agreement, and the provisions of Section 8 of the Note are incorporated herein by reference in their entirety.
 

 Section 9.2  Remedies.  Upon the occurrence and during the continuance of any Event of Default, the Lender shall have all rights and remedies provided for under the Note, the other Transaction Documents and under applicable law.  No Lender remedy herein or therein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given to Lender under this Agreement and each other Transaction Document or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to exercise any remedy reserved to the Lender in this Agreement or any other Transaction Document, it shall not be necessary to give any notice, other than such notice as may be herein expressly required herein or in such other Transaction Document.
 

 ARTICLE 10
 TERMINATION
 In the event that the Closing  shall not have occurred with respect to a Lender due to the Borrower’s or such Lender’s failure to satisfy the conditions set forth in Sections 4.1 and 5.1 (and the non-breaching party’s failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party, except with respect to the Borrower’s obligations to issue Commitment Fee Shares and payment of expenses under Section 11.1. 
 ARTICLE 11
 MISCELLANEOUS
 Section 11.1
 Payment of Expenses
 (a)
   The Borrower shall reimburse the Lender for all fees and expenses incurred by it related to this Agreement and the Offering including legal counsel, paid advisors and consultants, not to exceed $50,000 (exclusive of any out-of-pocket expenses incurred by Borrower or its legal counsel).  The Borrower will be so obligated  whether the transaction closes or not, except in the circumstances where Lender elects not to close for reasons other than (i) not being entirely satisfied with its due diligence findings, 
 

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 (ii) it being unable to negotiate mutually acceptable definitive agreements with the Borrower, or (iii) the failure of conditions to close under Section 5.1.  
 (b)
 The Borrower shall reimburse the Lender on demand for all reasonable costs and expenses, including, without limitation, legal expenses and reasonable attorneys’ fees (whether for internal or outside counsel), incurred by Lender in connection with the (i) collection, protection or enforcement of any rights in or to the Collateral or enforcement of any rights or remedies under any of the Transaction Documents; (ii) collection of any Obligations; (iii) administration and enforcement of Lender’s rights under this Agreement or any other Transaction Document (including, without limitation, any costs and expenses of any third party provider engaged by the Lender for such purposes); (iv) costs associated with any refinancing or restructuring of the Note whether in the nature of a “work-out,” in any insolvency or bankruptcy proceeding or otherwise, and whether or not consummated; (v) all reasonable out-of-pocket costs and expenses of the Lender and its assignees (including, without limitation, attorneys’ fees) in connection with the assignment, transfers or syndication of the Note; and (vi) from and against all liability for any intangibles, documentary, stamp or other similar taxes, fees and excises, if any, including any interest and penalties, and any finder’s or brokerage fees, commissions and expenses (other than any fees, commissions or expenses of finders or brokers engaged by the Lender), that may be payable in connection with the Note contemplated by this Agreement and the other Transaction Documents.  The Borrower shall also pay all normal service charges with respect to all accounts maintained by the Borrower with the Lender and any additional services requested by Borrower from the Lender.  All such costs, expenses and charges shall constitute Obligations hereunder, shall be payable by the Borrower to the Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to the Note hereunder.  Without limiting the foregoing, if (a) any Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or Lender otherwise takes action to collect amounts due under such Note or to enforce the provisions of such Note or (b) there occurs any bankruptcy, reorganization, receivership of either Borrower or any other Obligor, or other proceedings affecting creditors’ rights and involving a claim under such Note, then the Borrower shall pay the costs incurred by Lender for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, reasonable attorneys’ fees and disbursements (including such fees and disbursements related to seeking relief from any stay, automatic or otherwise, in effect under any Bankruptcy Law).
 Section 11.2
 Governing Law; Jurisdiction; Jury Trial
 ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK CITY, NEW YORK, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY TRANSACTION DOCUMENT, OR IN 
 

 37
 

 
 CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY.  NOTHING IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST ANY OBLIGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION
 Section 11.3
 Counterparts
   This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party; provided that a facsimile signature (e.g. pdf) shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
 Section 11.4
 Headings
   The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
 Section 11.5
 Severability
   If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
 

 38
 

 
 

 Section 11.6
 Entire Agreement; Amendments
   This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Lender, the Borrower, their Affiliates and Persons acting on their behalf with respect to the matters covered herein and therein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Borrower or the Lender makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement, the Note or any of the other Transaction Documents may be amended or waived other than by an instrument in writing signed by both the Borrower and the Lender.
 Section 11.7
 Notices
 .  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or email (provided, confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:
 If to the Borrower:
 

 Blue Earth, Inc.
 2298 Horizon Ridge Parkway, Suite 205
 Henderson, Nevada 89052
 Telephone:  (702) 263-1808
 Facsimile: (702) 263-1823
 Email:  jthomas@blueearthinc.com
 Attention: Johnny Thomas, CEO
 

 With a copy (for informational purposes only) to:
 

 Davidoff Hutcher & Citron LLP
 605 Third Avenue
 New York, New York 10158
 Telephone: (212) 557-7200
 Facsimile: (212) 286-1884
 Attention: Elliot H. Lutzker, Esq.
 

 

 

 39
 

 
 If to the Lender:
 

 Jackson Investment Group, LLC
 2655 Northwinds Parkway
 Alpharetta, Georgia
 Telephone:   (770) 643-5605
 Facsimile:    (678) 485-5356
 Email mblacker@jacksonhealthcare.com
 Attention:  Richard L. Jackson
 

 With a copy (for informational purposes only) to:
 

 Kilpatrick Townsend & Stockton LLP
 Suite 2800, 1100 Peachtree Street N.E.
 Atlanta, Georgia 30309-4528
 Telephone:   (404) 815-6444
 Facsimile:     (404) 541-3402
 Email: dstockton@kilpatricktownsend.com
 Attention:  David Stockton
 

 or to such other address and/or facsimile number email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clauses (i), (ii) or (iii) above, respectively.
 Section 11.8
 Successors and Assigns
   This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns, including any purchasers of the Note.  The Borrower shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Lender, including by way of a change of control.  Lender may assign some or all of its rights and obligations hereunder in connection with transfer of the Note without the consent of the Borrower, in which event such assignee shall be deemed to be the Lender hereunder with respect to such assigned rights and obligations, and the Borrower shall use its best efforts to ensure that such transferee is registered as the Lender and that any Liens on the Collateral shall also be for the benefit of such assignee to the extent of any such assignment.
 Section 11.9
 No Third Party Beneficiaries
   This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 

 40
 

 
 

 Section 11.10
 Survival
   Unless this Agreement is terminated under ARTICLE 11, the representations, warranties, agreements and covenants of the Borrower and the Lender contained in the Transaction Documents shall survive the Closing.  
 Section 11.11
 Further Assurances
   The Borrower shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 Section 11.12
 Indemnification  
 The Borrower agrees to indemnify, hold harmless, reimburse and defend the Lender and the Lender’s officers, directors, affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Lender or any such Person which results, arises out of or is based upon (i) any misrepresentation by Borrower or any other Obligor or any breach of any warranty by Borrower or any other Obligor in the Transaction Documents or in any other agreement delivered pursuant thereto; or (ii) after any applicable notice and/or cure periods, any breach or default in performance by the Borrower of any covenant or undertaking to be performed by the Borrower hereunder, or any other agreement entered into by the Borrower and Lender relating hereto.
 Section 11.13
 No Strict Construction
   The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
 Section 11.14
 Waiver
   No failure or delay on the part of the Lender in the exercise of any power, right or privilege hereunder or any of the other Transaction Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
 Section 11.15
 Payment Set Aside
   To the extent that Borrower or any Obligor makes a payment or payments to the Lender hereunder or pursuant to any of the other Transaction Documents or the Lender enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, 
 

 41
 

 
 repaid or otherwise restored to Borrower or such other Obligor, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
 Section 11.16
 NASAA UNIFORM LEGEND
 IN MAKING AN INVESTMENT DECISION LENDER SHOULD RELY ONLY ON ITS OWN EXAMINATION OF THE BORROWER AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS OF THE SECURITIES SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
 

 

 

 

 [Remainder of page intentionally blank; next page is signature page]
 

 

 

 

 

 42
 

 
 IN WITNESS WHEREOF, each party has caused its signature page to this Note and Warrant Purchase Agreement to be duly executed as of the date first written above.
 BORROWER:
 

 BLUE EARTH, INC.,
 a Nevada corporation
 

 

 

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

 

 LENDER:
 

 JACKSON INVESTMENT GROUP, LLC
 

 

 

 By:  /s/  Douglas B. Kline
 Name:  Douglas B. Kline
 Title:  Chief Financial Officer
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 43ex-10.2

 EXHIBIT 10.2
 

 

 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 

 Original Issue Date: March 10, 2015 
 Original Conversion Price: $1.00
 

 $10,000,000.00
 

 

 12% SENIOR SECURED CONVERTIBLE NOTE
 DUE SEPTEMBER 10, 2015
 

 

 FOR VALUE RECEIVED, Blue Earth, Inc., a Nevada corporation (the “Company”), having a principal place of business at 2298 Horizon Ridge Parkway, Suite 205, Henderson, NV 89052, hereby promises to pay to Jackson Investment Group, LLC, together with successors or its registered assigns (the “Holder”), the principal sum of $10,000,000 on September 10, 2015 (the “Maturity Date”), or such earlier date as this Senior Secured Convertible Note (hereinafter, this “Note”) is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.  This Note is subject to the following additional provisions:
 

 Section 1.
 Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement and (b) the following terms shall have the following meanings:
 

 

 1
 

 

 
 

 “Alternate Consideration” shall have the meaning set forth in Section 5(c).
 

 “Brooks” means Brooks Heat & Power Ltd., a British Columbia, Canada corporation and indirect wholly-owned subsidiary of the Company.
 

 “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.
 

 “Buy-In” shall have the meaning set forth in Section 4(d)(v).
 

 “Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company, or (ii) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than a majority of the aggregate voting power of the Company or the successor entity of such transaction, or (iii) the Company sells or transfers its assets, as an entirety or substantially as an entirety, whether in single transaction or a series of related transactions, to another Person and the stockholders of the Company immediately prior to such transaction own less than a majority of the aggregate voting power of the acquiring entity immediately after the transaction, or the Company ceases for any reason to be the direct or indirect holder of 100% of the outstanding Equity Interest of each of the Subsidiary Guarantors, (iv) a replacement at one time or within a three year period of more than one-half of the members of the Company’s board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (v) the execution by the Company of an agreement to which the Company  is a party or by which it is bound, providing for any of the events set forth above in (i) through (iv).
 

 “Common Stock” means the common stock, par value $0.001 per share, of the Company and stock of any other class of securities into which such securities may hereafter have been reclassified or changed into.
  
 “Conversion Date” shall have the meaning set forth in Section 4(a); provided that solely for purposes of the payment of interest on the Note in Interest Conversion Shares pursuant to Section 2(a), the Maturity Date shall be deemed the Conversion Date.
 

 2
 

 

 
 

 “Conversion Price” shall have the meaning set forth in Section 4(b).
 

 “Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.
 

 “Dividends” shall mean any direct or indirect distribution, dividend or payment to any Person on account of the Equity Interests of the Company or any of its Subsidiaries.
 

 “Event of Default” shall have the meaning set forth in Section 8.
 

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 

 “Fundamental Transaction” shall have the meaning set forth in Section 5(c).
 

 “Guarantor” shall have the meaning set forth in the Purchase Agreement.
 

 “Guaranty” shall have the meaning set forth in the Purchase Agreement.
  
 “Interest Conversion Shares” shall have the meaning set forth in Section 2(a).
  
 “Interest Payment Date” shall have the meaning set forth in Section 2(a).
 

 “Interest Share Amount” shall have the meaning set forth in Section 2(a).
 

  “Late Fees” shall have the meaning set forth in Section 2(d).
 

 “Mandatory Default Amount”  shall equal the sum of (i) the greater of: (A) 112% of the principal amount of this Note to be prepaid, plus all accrued and unpaid interest thereon, or (B) the principal amount of this Note to be prepaid, plus all other accrued and unpaid interest hereon, divided by the Conversion Price on (x) the date the Mandatory Default Amount is demanded or otherwise due or (y) the date the Mandatory Default Amount is paid in full, whichever is less, multiplied by the VWAP on (x) the date the Mandatory Default Amount is demanded or otherwise due or (y) the date the Mandatory Default Amount is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note.
  
 “New York Courts” shall have the meaning set forth in Section 9(d).
 

 “Notice of Conversion” shall have the meaning set forth in Section 4(a).
 

 “Note Register” shall have the meaning set forth in Section 2(b).
 

 3
 

 

 
 “Original Issue Date” shall mean the date of the first issuance of the Note regardless of the number of transfers of the Note and regardless of the number of instruments which may be issued to evidence such Note or transfer thereof.
 

 “Permitted Indebtedness” shall mean (a) with respect to Brooks, lease obligations and purchase money indebtedness incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets in accordance with Section 8.16 to the Purchase Agreement, provided any Lien thereon is limited to the assets so acquired or leased and to proceeds thereof, (b) with respect to Brooks, secured indebtedness in an aggregate principal amount not to exceed $16,300,000 which is incurred solely by Brooks with Caterpillar Financial Services Limited (“Cat Fin”) or similar source in connection with financing of the Brooks Project, and is to be secured by a first priority Lien in favor of Cat Fin on the Brooks Project provided that (i) any lien in favor of Cat Fin shall apply only to assets comprising the Brooks Project, and (ii) any lien subordination documentation in favor of Cat Fin shall be acceptable in form and substance satisfactory to the Holder, and (c) with respect to Blue Earth, indebtedness to Laird Q. Cagan under the promissory notes described in Schedule 7.28 of the Purchase Agreement provided that the aggregate amount of such indebtedness shall not at any time exceed $1,333,000 (less any repayments of principal made after the Closing Date).
 

 “Permitted Liens” shall mean: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of business, and (x) which do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or asset subject to such Lien, and adequate reserves have been established in accordance with GAAP, (c) Liens securing Permitted Indebtedness described under  clause (b) of the definition thereof, provided that such Liens (x) shall not apply to any Collateral other than assets comprising the Brooks Project, and (y) any lien subordination documentation in favor of Cat Fin shall be acceptable in form and substance satisfactory to the Holder, and (d) Liens securing Permitted Indebtedness described under  clause (c) of the definition thereof, provided such Liens are limited to the Collateral comprising Blue Earth’s right, title and interest in five photovoltaic projects in Southern California defined as the Solar PV Joint Development Agreement (the “Sun Valley JDA”).
 

 

 4
 

 

 
 

 “Pledge Agreement” shall have the meaning set forth in the Purchase Agreement.
 

 “Purchase Agreement” means the Note and Warrant Purchase Agreement, dated as of March 10, 2015, by and among the Company and the original Holder, as amended, restated, modified or supplemented from time to time in accordance with its terms.
 

 “Registration Statement” means a registration statement covering, among other things, the resale of the Conversion Shares and Interest Conversion Shares, Warrant Shares, Option Shares and Commitment Fee Shares and naming each Holder as a “selling stockholder” thereunder.
 

 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 

 “Subsidiary” means, with respect to any specified Person, any other corporation, partnership, joint venture, association or other entity in respect of which such specified person or entity directly or indirectly either (a) owns not less than a majority of the overall economic equity or (b) has the power to elect a majority of the board of directors (or individuals serving a function similar to that of a board of directors of a corporation).
  
 “Threshold Period” shall have the meaning set forth in Section 6. 
 

 “Trading Day” means a day on which the principal Trading Market is open for business.
 

 “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE MKT or the New York Stock Exchange.
 

 “Transaction Documents” shall have the meaning set forth in the Purchase Agreement.
 

 “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “OTC Markets Group, Inc.”
 

 5
 

 

 
 (or any similar organization or agency succeeding to its function of reporting price), formerly the Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.
 

 “Warrant Shares” shall have the meaning set forth in the Warrant.
 

 Section 2.
 Interest.
 

 a)
  Payment of Interest in Cash or Shares. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of 12% per annum which shall commence to accrue as of the Original Issue Date, and be payable on the Maturity Date, in cash or at the Holder’s sole option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock at a conversion rate (the “Interest Conversion Rate”) of $1.00 per share, subject to adjustment in the same manner as the conversion of principal set forth in Section 5 below (the dollar amount to be paid in shares, the “Interest Share Amount” and the amount of such shares, the “Interest Conversion Shares”) or a combination thereof. 
 

 b)
 Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made.  Payment of interest in shares of Common Stock shall otherwise occur pursuant to Section 4(d)(ii) herein and, solely for purposes of the payment of interest in shares, the Maturity Date shall be deemed the Conversion Date.  Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion Shares to the Holder within the time period required by Section 4(d)(ii) herein.  Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”). Except as otherwise provided herein, if at any time the Company pays interest partially in cash and/or, at the election of the Lender, partially in shares of Common Stock to the holders of the Notes, then such payment of cash shall be distributed ratably among the holders of the then-outstanding Notes based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.
 

 c)
 Late Fee.  To extent permitted under applicable law, all overdue principal and, accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from the date such principal and/or interest is due hereunder through and including the date of actual payment in full. 
  
 

 6
 

 

 
 

 d)
 Prepayment.  The Company may, at its option, at any time elect to prepay to the Holders the Permitted Redemption Amount (as defined below), on the Permitted Redemption Date, by prepaying the aggregate unpaid principal amount of the Notes, in whole, or in part (the “Permitted Redemption”).  On or prior to the date which is the fifth (5th) Business Day prior to the proposed Permitted Redemption Date, the Company shall deliver written notice (the “Permitted Redemption Notice”) to the Holders stating (i) that the Company elects to prepay the Notes pursuant to the Permitted Redemption, and (ii) the proposed Permitted Redemption Date.  The Permitted Redemption Amount shall be equal to (A) all or a portion of the unpaid outstanding principal amount of the Notes, (B) all accrued and unpaid interest with respect to such principal amount and all accrued and unpaid fees, and (C) all other amounts due under the Transaction Documents.  The Company acknowledges and agrees that subsection (c) represents bargained for consideration in exchange for the right and privilege to prepay the Notes.  During the five (5) Business Day period between when the Company delivers the Permitted Redemption Notice until the Permitted Redemption Date the Holders shall have the right to convert the Notes pursuant to the terms and conditions of Section 4 below.
 

 A Permitted Redemption Notice delivered pursuant to this subsection shall be irrevocable.  If the borrower elects to prepay the Notes pursuant to a Permitted Redemption under subsection (a), then the Permitted Redemption Amount which is to be paid to the Holders on the Permitted Redemption Date shall be redeemed by the Company on the Permitted Redemption Date, and the Company shall pay to the Holders on the Permitted Redemption Date, by wire transfer of immediately available funds, an amount in cash equal to the Permitted Redemption Amount.
 

 Section 3.
  Registration of Transfers and Exchanges. 
  
 a)
 Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be made for such registration of transfer or exchange.
  
 b)
 Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.  
 

 c)
 Reliance on Note Register. Prior to due presentment to the Company for transfer of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
 

 7
 

 

 
 

 Section 4.
   Conversion.
  
 a)
 Voluntary Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time.  The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date on which such conversion is to be effected (a “Conversion Date”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is provided hereunder.  To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note has been so converted and all accrued but unpaid interest thereon has been paid in full in cash. Conversions of principal of this Note hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions.  The Company shall deliver any objection to any Notice of Conversion within 1 Business Day of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof. Notwithstanding the foregoing, under no circumstances shall the Company effect a conversion into Common Stock under this subsection or issue shares of Common Stock in payment of interest, in the aggregate equal to twenty percent (20%) or more of the Common Stock or voting power outstanding prior to the issuance of the Notes without first obtaining stockholder approval if required by law or applicable stock exchange rules.
  
 b)
 Conversion Price.  The conversion price in effect on any Conversion Date shall be equal to $1.00 (subject to adjustment herein) (the “Conversion Price”)
 

 c)
 [Reserved]
  
 d)
 Mechanics of Conversion
  
 i.
 Conversion Shares Issuable Upon Conversion of Principal Amount.  The number of shares of Common Stock issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted, as well as accrued interest on such principal amount, by (y) the Conversion Price. 
 

 8
 

 

 
 

 ii.
 Delivery of Certificate Upon Conversion. Provided the Holder has submitted to the Company and the transfer agent all required documents reasonably requested not later than three Trading Days after any Conversion Date, the Company will deliver or cause to be delivered to the Holder (A) a certificate or certificates representing the Conversion Shares and/or Interest Conversion Shares, as applicable, which shall be free of restrictive legends and trading restrictions to the extent required hereunder, representing the number of shares of Common Stock being acquired upon the conversion of this Note (including, if the Company has given notice pursuant to Section 2(b) for payment of interest in shares of Common Stock, Interest Conversion Shares representing the payment of such accrued interest pursuant to Section 2(a) and (b)). The Company shall, if available and if allowed under applicable securities laws, use its best efforts to deliver any certificate or certificates required to be delivered by the Company under this Section electronically through the Depository Trust Company or another established clearing corporation performing similar functions.  
  
 iii.
 Failure to Deliver Certificates.  If in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the third Trading Day after a Conversion Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return the certificates representing the principal amount of this Note tendered for conversion (or representing accrued interest, in the case of requested conversion of interest on this Note made pursuant to Section 2(a)). 
  
 iv.
 Obligation Absolute; Partial Liquidated Damages.  If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, provided the Holder has provided the Company and its transfer agent with all required documentation reasonably requested, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day after 5 Trading Days after such damages begin to accrue) for each Trading Day after such third Trading Day until such certificates are delivered.  The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note and Interest Conversion Shares, if payment of interest in such shares is elected, in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person,
 

 9
 

 

 
 and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares and/or Interest Conversion Shares; provided, however, such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder.  In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof (or any interest on the Note pursuant to Section 2(a)), the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal amount of this Note outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment.  In the absence of an injunction precluding the same, the Company shall issue Conversion Shares and/or Interest Conversion Shares or, if applicable, cash, upon a properly noticed conversion.  Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 herein for the Company’s failure to deliver Conversion Shares and/or Interest Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
  
 v.
 Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, and if after such third Trading Day the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares and/or Interest Conversion Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the actual sale price of the Common Stock at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion or deliver to the Holder the 
 

 10
 

 

 
 number of shares of Common Stock that would have been issued had the Company timely complied with its delivery requirements under Section 4(d)(ii).  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares and/or Interest Conversion Shares, as applicable, at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.  Notwithstanding anything contained herein to the contrary, if a Holder requires the Company to make payment in respect of a Buy-In for the failure to timely deliver certificates hereunder and the Company timely pays in full such payment, the Company shall not be required to pay such Holder liquidated damages under Section 4(d)(iv) in respect of the certificates resulting in such Buy-In.
  
 vi.
 Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of principal of this Note and any accrued interest as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder (and the other holders of the Notes), not less than such number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Note and any conversion of interest on this Note pursuant to Section 2(a).  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, to the extent required hereunder, registered for public sale in accordance with such Registration Statement. The Company hereby covenants and agrees that the Registration Statement will be filed with the SEC at the Company’s sole expense within thirty (30) days after the Original Issue Date.
 

 vii.
 Fractional Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time.  If the Company elects not, or is unable, to make such cash payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.
 

 11
 

 

 
 

 viii.
 Transfer Taxes.  The issuance of certificates for shares of the Common Stock on conversion of this Note or any interest on this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
 

 Section 5.
 Certain Adjustments.  
  
 a)
 Stock Dividends and Stock Splits.  If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Note), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price and Interest Conversion Rate shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
    
 b)
 Pro Rata Distributions. If the Company, at any time while this Note is outstanding, shall distribute to all holders of Common Stock (and not to the holders of the Note) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price and Interest Conversion Rate shall be adjusted by multiplying such Conversion Price and Interest Conversion Rate in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  
 

 12
 

 

 
 In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.
  
 c)
 Fundamental Transaction. If, at any time while this Note is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share and/or Interest Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”).  For purposes of any such conversion, the determination of the Conversion Price and Interest Conversion Rate shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price or Interest Conversion Rate among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note or payment of interest following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
  
 

 13
 

 

 
 

 d)
 Calculations.  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
 

 e)
 Notice to the Holder.  
 

 i.
 Adjustment to Conversion Price.  Whenever the Conversion Price or Interest Conversion Rate is adjusted pursuant to any of this Section 5, the Company shall promptly mail to each Holder a notice setting forth the Conversion Price or Interest Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 
  
 ii.
 Notice to Allow Conversion by Holder.  If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be mailed to the Holder at its last addresses as it shall appear upon the  stock books of the Company, at least 10 Business Days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Note during the 10-day period commencing the date of such notice to the effective date of the event triggering such notice. 
 

 14
 

 

 
 

 Section 6.
 

 

 [INTENTIONALLY LEFT BLANK]
 

 

 Section 7.
 Negative Covenants. So long as any portion of this Note is outstanding, the Company will not, and will not permit any Subsidiary to, directly or indirectly:
 

 a)
 other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness of any kind, including but not limited to, a guarantee of any Indebtedness, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
  
 b)
 other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; 
 

 c)
 amend its certificate of incorporation, bylaws or other charter documents so as to materially and adversely affect any rights of the Holder;
 

 d)
  
 Pay or declare any Dividend or make any other distribution on or on account of any class of its stock or other equity or make cash distributions of equity, or make interest payments on equity, or redeem, purchase, or otherwise acquire, directly or indirectly, of any shares of its stock or other equity, except: (i) any Subsidiary may make distributions to the Company or any Guarantor, as the case may be and the Company may make investments in Guarantors (including the acquisition of additional shares of Equity Interests therein); or
 

 e)
 enter into any agreement with respect to any of the foregoing.
 

 

 Section 8.
 Events of Default.  
 

 a)
 “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 

 

 15
 

 

 
 

 i.
 any default in the payment of (A) the principal amount of any Note, or (B) interest or other amount (including Late Fees, but excluding principal which is covered by preceding clause (A) above) on, or liquidated damages in respect of, any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured, within 3 Trading Days; or
  
 ii.
 the Company or any other Obligor shall fail to observe or perform any other covenant contained in this Note or any other Transaction Document (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion which breach is addressed in clause (xi) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Business Days after notice of such default sent by the Holder or by any other Holder and (B) 10 Business Days after the Company shall become or should have become aware of such failure; or
 

 iii.
 a default or event of default (subject to any grace or cure period provided for in the applicable agreement, document or instrument) shall occur solely with regard to any Obligor, under (A) any of the Transaction Documents,  (B) any other material agreement, lease, document or instrument to which any Obligor is bound, (C) the Existing Term Loan Agreement; or
 

 iv.
 any representation or warranty made herein, in any other Transaction Documents by the Company or any other Obligor, in any written statement pursuant hereto or thereto, or in any other report, financial statement or certificate made or delivered to the Holder or any other holder of Notes shall be untrue or incorrect in any material respect as of the date when made or deemed made; or
 

 v.
 (i) the Company or any  other Obligor shall commence a case, as debtor, a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any other Obligor commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any other Obligor or (ii) there is commenced a case against the Company or any other Obligor, under any applicable bankruptcy or insolvency laws, as now or hereafter in effect or any successor thereto which remains undismissed for a period of 60 days; or (iii) the Company or any other Obligor is adjudicated by a court of competent jurisdiction insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or (iv) the Company or any other Obligor suffers any appointment of any custodian or the like for it or any substantial part of its property which continues 
 

 16
 

 

 
 undischarged or unstayed for a period of 60 days; or (v) the Company or any other Obligor makes a general assignment for the benefit of creditors; or (vi) the Company or any other Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or (vii) the Company or any other Obligor shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (viii) the Company or any other Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or (ix) any corporate or other action is taken by the Company or any other Obligor for the purpose of effecting any of the foregoing; or
  
 vi.
 any Obligor shall default in any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of such Obligor in an amount exceeding $100,000 whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; or
 vii.
 the Company or any other Obligor shall (A) be a party to any Change of Control Transaction or Fundamental Transaction, or (B) shall agree to sell or dispose of all or in excess of 50% of its assets in one or more transactions (whether or not such sale would constitute a Change of Control Transaction), or (C) redeem or repurchase more than a de minimis number of its outstanding shares of Common Stock or other equity securities of the Company or such other Obligor, or (D) if the current Chief Executive Officer of the Company resigns or is removed from office without the prior written consent of the Holder which consent shall not be unreasonably withheld.
 

 b)
 Remedies Upon Event of Default. If any Event of Default occurs, the full principal amount of this Note, together with all interest, fees (including late fees), expenses and all other amounts owing in respect thereof under this Note and the Transaction Documents, shall become, at the Holder’s election, immediately due and payable in cash via wire transfer; provided that upon the occurrence of any Event of Default of the type described under clauses (i) or (ii) of Section 8(a)(v), the full principal amount of this Note, together with all interest, fees (including late fees), expenses and all other amounts owing in respect thereof under this Note and the Transaction Documents, shall automatically become immediately due and payable in cash, without any notice to the Company or any other act by the Holder.  The aggregate amount payable upon an Event of Default shall be equal to the Mandatory Default Amount.  Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, the interest rate on this 
 

 17
 

 

 
 Note shall accrue at the rate of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law.  Upon the payment in full in cash to the Holder of the Mandatory Default Amount on this entire Note the Holder shall promptly surrender this Note to or as directed by the Company.  The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, if any, as the full payment  in cash under this Section shall have been received by it.  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.  In addition to and not in limitation of the foregoing, (i) upon the occurrence and during the continuance of any Event of Default, the Holder shall have all rights and remedies provided for under this  Note, the other Transaction Documents and under applicable law, (ii) no Holder remedy herein or therein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given to Holder under this Note and each other Transaction Document or now or hereafter existing at law or in equity or by statute, (iii) no delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient, and (iv) in order to exercise any remedy reserved to the Holder under this Note or any other Transaction Document, it shall not be necessary to give any notice, other than such notice as may be herein expressly required herein or in such other Transaction Document.
 

  Section 9.
 Miscellaneous.   
 

 a)
 Notices.  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by e-mail sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number (702) 263-1824, Attn: Chief Executive Officer, or such other address or facsimile number as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder.  
 

 18
 

 

 
 Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section or via email prior to 5:30 p.m. (Pacific time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (Pacific time) on any date and earlier than 11:59 p.m. (Pacific time) on such date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, (iv) upon actual receipt by the party to whom such notice is required to be given or (v) upon receipt when sent by e-mail, provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party.
  
 b)
 Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, interest and liquidated damages (if any) on, this Note at the time, place, and rate, and in the coin or currency, herein prescribed. Time is of the essence of this Note. This Note is a direct debt obligation of the Company.  This Note ranks pari passu with all other senior Indebtedness of the Company.   
  
 c)
 Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.  
 

 Governing Law.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION.  EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY ANY OF THE TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED IN THE STATE AND FEDERAL COURTS SITTING IN NEW YORK CITY, NEW YORK (SUCH COURTS REFERRED TO HEREIN AS THE “NEW YORK COURTS”).  EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK COURTS FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES,
 

 19
 

 

 
  AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR SUCH NEW YORK COURTS ARE IMPROPER OR INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS NOTE AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY. IF EITHER PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS NOTE, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS ATTORNEYS’ FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR PROCEEDING.  NOTHING IN THIS NOTE OR ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT THAT THE HOLDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST ANY OBLIGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
  
 d)
 Waiver.  Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
  
 e)
 Severability.  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which 
 

 20
 

 

 
 would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such power as though no such law has been enacted.
  
 f)
 Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 

 g)
 Headings.  The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
 

 h)
 Successors and Assigns.  This Note shall be binding upon the Company’s successors and assigns.  The Company may not assign or delegate its obligations under this Note to any other Person without the prior written consent of the Holder. 
 

 i)
 Secured Obligation.  The obligations of the Company under this Note are secured by certain assets of the Company and the Guarantors pursuant to (i) the Pledge Agreement, and (ii) the Guaranty.
 

 j)
 Assignment.  The Holder may sell, transfer, assign, pledge, or otherwise dispose of all or any portion of this Note to any person or entity.
 

 

 SIGNATURE PAGE TO FOLLOW
 

 

 

 

 

 

 

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 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
 

 

 	
	 BLUE EARTH, INC.
 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 22
 

 

 
 ANNEX A
 

 NOTICE OF CONVERSION
 

 

 The undersigned hereby elects to convert [principal][accrued interest] under the 12% Senior Secured Convertible Note of Blue Earth, Inc., a Nevada corporation (the “Company”), due on September 10, 2015 into shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below.  If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
 

 The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.  
 

 Conversion calculations:
 Date to Effect Conversion:
 

 [Specify: Principal Amount of Note to be Converted and/or Amount of  accrued interest to be Converted]:
 

 

 Number of shares of Common Stock to be issued:
 

 ______________________________________________
 

 Signature: _____________________________________
 

 Name: ________________________________________
 

 Address: ______________________________________
 

 

 

 

 

 

 

 23
 

 

 
 SCHEDULE 1
 

 CONVERSION SCHEDULE
 

 The 12% Senior Secured Convertible Notes due on September 10, 2015 in the aggregate principal amount of $10,000,000 issued by Blue Earth, Inc.  This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.
 

 Dated:
 

 

 	 	 	 	
	 Date of Conversion
 (or for first entry, Original Issue Date)
	 Amount of Conversion
	 Aggregate Principal Amount Remaining Subsequent to Conversion
 (or original Principal Amount)
	 Company Attest

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

 

 

 

 

 

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