Document:

ex10-3.htm

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 24th day of March, 2016 (the “Effective Date”), by and between PARK STERLING CORPORATION, a North Carolina corporation (the “Company”), PARK STERLING BANK, a state bank organized and existing under the laws of the State of North Carolina (the “Bank”), and BRYAN KENNEDY (the “Executive”).

 

BACKGROUND:

 

The Company and the Bank (collectively, “Park Sterling”) desire to retain the services of the Executive and have agreed to provide Executive the terms in this Agreement.

 

In exchange for the terms in this Agreement, the Executive has agreed to be bound by the restrictive covenants herein and agrees that such covenants are supported by good and valid consideration.

 

This Agreement amends and restates in its entirety the prior employment agreement between the Company and/or the Bank and the Executive dated July 29, 2010.

 

AGREEMENT:

 

In consideration of the above premises and the mutual agreements hereinafter set forth, the parties hereby agree as follows:

 

1.     Duties.

 

1.1     Positions. The Executive shall be employed as the President of the Company and the Bank and, subject to the direction of the Board of Directors, shall perform and discharge faithfully the duties and responsibilities which may be assigned to the Executive from time to time in connection with the conduct of its business. The duties and responsibilities of the Executive shall be commensurate with the position of president of a bank and a bank holding company.

 

1.2     Full-Time Status. In addition to the duties and responsibilities specifically assigned to the Executive pursuant to Section 1.1 hereof, the Executive shall:

 

(a)     subject to Section 1.3, devote all of the Executive’s time, energy and skill during regular business hours to the performance of the duties of the Executive’s employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties;

 

(b)     diligently follow and implement all reasonable and lawful management policies and decisions communicated to the Executive by the Chief Executive Officer of Park Sterling; and

 

(c)     timely prepare and forward to the Chief Executive Officer of Park Sterling all reports and accountings as may be requested of the Executive.

 

 

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1.3     Permitted Activities. The Executive shall devote the Executive’s entire business time, attention and energies to the business of Park Sterling and shall not during the Term be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage, but as long as the following activities do not interfere with the Executive’s obligations to Park Sterling, this shall not be construed as preventing the Executive from:

 

(a)     investing the Executive’s personal assets in any manner which will not require any services on the part of the Executive in the operation or affairs of the entity and in which the Executive’s participation is solely that of an investor; provided, that such investment activity following the Effective Date shall not result in the Executive owning beneficially at any time one percent (1%) or more of the equity securities of any Competing Business;

 

(b)     investing the Executive’s personal assets in any manner which will not require any substantial services on the part of the Executive in the operation or affairs of an entity that is not a Competing Business and in which the Executive’s participation is principally that of an investor; 

 

(c)     participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books, teaching or serving on the board of directors of an entity so long as any such participation does not interfere with the ability of the Executive to effectively discharge the Executive’s duties hereunder; provided, however, that the Board of Directors may direct the Executive in writing to resign from any such organization and/or cease such activities should the Board of Directors reasonably conclude that continued membership and/or activities of the type identified would not be in the best interests of Park Sterling; or

 

(d)     participating in the activities approved by Board of Directors of the Company and set forth on Exhibit A to this Agreement, as may be updated from time to time.

 

2.     Term. This Agreement shall remain in effect for the Term. If the Agreement is in effect at the end of the Initial Term, the Term shall be renewed automatically for successive twelve-month periods unless and until one party gives written notice to the other of the intent not to extend this Agreement with such written notice to be given not less than one hundred eighty (180) days prior to the end of the Initial Term or any such twelve-month period. In the event such notice of non-extension is properly given, this Agreement shall terminate at the end of the remaining Term then in effect, subject to earlier termination in connection with the termination of the Executive’s employment pursuant to Section 4 hereof.

 

3.     Compensation. Park Sterling shall pay the Executive the following during the Term, except as otherwise provided below:

 

3.1     Annual Base Salary. From January 1, 2016 through March 31, 2016, the Executive shall be compensated at an annual base rate of $347,000 and from April 1, 2016 through December 31, 2016 the Executive shall be compensated at an annual base rate of $360,000 (the “Annual Base Salary”). The Executive’s Annual Base Salary shall be reviewed by the Compensation and Development Committee of Board of Directors of the Company (the “Committee”) at least annually for adjustments, as determined by the Committee based on its evaluation of the Executive’s performance. The Executive’s Annual Base Salary shall be payable in accordance with Park Sterling’s normal payroll practices.

 

 

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3.2     Annual Incentive Compensation. The Executive shall be eligible to receive annual bonus compensation, if any, as may be determined by the Committee based on performance measures established by the Committee consistent with Park Sterling’s strategic planning process and in consultation with the Chief Executive Officer of the Company, pursuant to any incentive compensation program as may be adopted from time to time by the Committee. Any annual bonus earned shall be payable, in cash or in securities of Park Sterling, or any combination thereof, in the year following the year to which the bonus relates in accordance with Park Sterling’s normal practices for the payment of short-term incentives. To be entitled to any payment of incentive compensation from Park Sterling, the Executive must be employed by Park Sterling on the date such payment is made.

 

3.3     Equity Compensation. The Executive shall be entitled to long-term equity incentive awards at the discretion of the Committee (or any committee thereof) based upon and/or subject to any performance measures as may be established by the granting entity; provided, however, that, in general, awards shall be made at such times and shall be subject to such terms and conditions that are no less favorable than awards granted to similarly situated executives. The granting of any and all forms of long-term equity compensation to the Executive is subject to applicable restrictions imposed by federal and state banking laws. 

 

3.4     Business and Professional Education Expenses; Memberships. Park Sterling specifically agrees to reimburse the Executive, in accordance with Park Sterling’s applicable reimbursement policies, for reasonable and necessary business expenses incurred by the Executive in the performance of the Executive’s duties hereunder; provided, however, that the Executive shall, as a condition of any such reimbursement, submit verification of the nature and amount of such expenses in accordance with such reimbursement policies and in sufficient detail to comply with rules and regulations promulgated by the United States Treasury Department and other applicable laws. In addition, Park Sterling shall reimburse the Executive for educational expenses related to the Executive’s professional development and for membership in professional and civic organizations to the extent such activities are consistent with Park Sterling’s strategic objectives, subject in each instance to advance approval by the Committee. The Executive acknowledges that Park Sterling makes no representation with respect to the taxability or nontaxability of the benefits provided under this Section 3.4.

 

3.5     Paid Leave. The Executive shall be entitled to thirty (30) days of paid leave per calendar year, prorated for partial calendar years. A maximum of ten (10) days of accrued paid leave may be carried over to an immediately succeeding calendar year. The provisions of this Section 3.5 shall apply unless a more generous paid leave policy is maintained by Park Sterling, in which case, such Park Sterling policy shall apply.

 

3.6     Benefits. In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to similarly situated employees. All such benefits shall be awarded and administered in accordance with Park Sterling’s standard policies and practices.

 

 

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3.7     Withholding. Park Sterling may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, FICA and other withholding requirements.

 

3.8     Apportionment of Obligations. The obligations for the payment of the amounts otherwise payable pursuant to this Section 3 and in Section 4 shall be apportioned between the Company and the Bank as they may agree from time to time in their sole discretion. The satisfaction of the obligations in this Section 3 and Section 4 shall be subject to any approvals or non-objections from, and any conditions or restrictions imposed by, any regulator of Park Sterling.

 

3.9     Reimbursement of Expenses; In-Kind Benefits. All expenses eligible for reimbursements described in this Agreement must be incurred by the Executive during the Term of this Agreement to be eligible for reimbursement. All in-kind benefits described in this Section 3 must be provided by Park Sterling during the Term of this Agreement. The amount of reimbursable expenses incurred, and the amount of in-kind benefits provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but in no event shall any such reimbursement be paid after the last day of the calendar year following the calendar year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits are subject to liquidation or exchanges for other benefits.

 

3.10     Clawback of Compensation. The Executive agrees to repay any compensation previously paid or otherwise made available to the Executive that is subject to recovery under any (a) applicable law (including any rule of any exchange or service through which the securities of Park Sterling are then traded), or (b) compensation recoupment, clawback or recovery policy adopted by Park Sterling. The Executive agrees to return promptly any such compensation identified by Park Sterling. If the Executive fails to return such incentive compensation promptly, the Executive agrees that the amount of such compensation may be deducted from any and all other compensation owed to the Executive. The Executive acknowledges that Park Sterling may take appropriate disciplinary action (up to, and including, Termination of Employment) if the Executive fails to return such incentive compensation. The provisions of this Section 3.10 shall remain in effect for the period required by applicable law.

 

4.     Termination; Suspension or Reduction of Benefits.

 

4.1     Termination of Employment. During the Term, the Executive’s Termination of Employment under this Agreement may only occur as follows:

 

(a)     By Park Sterling:

 

(1)     for Cause;

 

(2)     without Cause (other than pursuant to Section 4.1(a)(3) below) at any time, provided, that the Chief Executive Officer must have given the Executive thirty (30) days’ prior written notice of its intent to effect the Executive’s Termination of Employment; or

 

 

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(3)     in the event that a regulator for Park Sterling requires the Executive’s removal from service as the President of the Bank and/or the Company.

 

(b)     By the Executive:

 

(1)     for any reason (other than pursuant to Section 4.1(b)(2)), provided, that the Executive must have given Park Sterling thirty (30) days’ prior written notice of the Executive’s intent to effect the Executive’s Termination of Employment; or

 

(2)     for Good Reason, provided, that the Executive must have given Park Sterling the prior written notice described in Section 23(m).

 

(c)     Upon the Executive becoming subject to a Disability.

 

(d)     At any time upon mutual, written agreement of the parties.

 

(e)     Upon expiration of the Term.

 

(f)     Notwithstanding anything in this Agreement to the contrary, the Term shall end automatically upon the Executive’s death.

 

4.2     Severance. If, during the Term, the Executive experiences a Termination of Employment, either by Park Sterling without Cause pursuant to Section 4.1(a)(2) or by the Executive for Good Reason pursuant to Section 4.1(b)(2), then, upon the Executive’s Termination of Employment, Park Sterling will pay (a) severance to the Executive in an amount equal to two (2) times the Executive’s Annual Base Salary at the highest rate in effect in the twelve-month period immediately preceding the Termination of Employment, with such amount payable in substantially equal cash installments not less frequently than monthly over a period of twenty-four (24) months, commencing on the date determined by Park Sterling but in no event later than sixty (60) days following the date of the Executive’s Termination of Employment, (b) an amount equal to two (2) times the highest annual bonus the Executive received or earned (if the Executive’s termination occurs prior to the payment of a particular annual bonus) during the three years immediately preceding the year in which the Executive experienced a Termination of Employment, payable in a lump sum payment within 60 days following the Executive’s Termination of Employment, and (c) a monthly amount payable for 18 months following the Executive’s Termination of Employment equal to the monthly COBRA premium amount the Executive would have to pay for continuation coverage under Park Sterling’s group health plan.

 

 

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4.3     Change of Control. If, within the period beginning with the signing of a letter of intent or similar agreement contemplating a transaction that, if consummated, would constitute a Change of Control or within twelve (12) months following a Change of Control, the Executive experiences a Termination of Employment, either (a) by Park Sterling without Cause pursuant to Section 4.1(a)(2), (b) by the Executive for Good Reason pursuant to Section 4.1(b)(2) or (c) the Executive experiences a Termination of Employment as a result of the buyer’s failure to renew this Agreement in accordance with Section 2, then, upon the Executive’s Termination of Employment, Park Sterling will pay severance to the Executive in an amount equal to (i) two (2) times the Executive’s Annual Base Salary at the highest rate in effect in the twelve-month period immediately preceding the Termination of Employment, with such amount payable in substantially equal cash installments not less frequently than monthly over a period of twenty-four (24) months, commencing on the date determined by Park Sterling but in no event later than sixty (60) days following the date of the Executive’s Termination of Employment, plus (ii) an amount equal to two (2) times the highest annual bonus the Executive received or earned (if the Executive’s termination occurs prior to the payment of a particular annual bonus) during the three (3) years immediately preceding the year in which the Executive experienced a Termination of Employment, payable in a lump sum payment within sixty (60) days following the Executive’s Termination of Employment, plus (iii) a monthly amount payable for eighteen (18) months following the Executive’s Termination of Employment equal to the monthly COBRA premium amount the Executive would have to pay for continuation coverage under Park Sterling’s group health plan.

 

4.4     Parachute Payment Reduction. Tax Penalty Protection.  Notwithstanding any other provision in this Agreement to the contrary, any payment or benefit received or to be received by the Executive in connection with a “change in ownership or control” (as such term is defined under Section 280G of the Code — a “Corporate Transaction”) or the termination of employment (whether payable under the terms of this Agreement or any other plan, arrangement or agreement with the Company or its subsidiaries and affiliates (collectively, the “Payments”) that would constitute a “parachute payment” within the meaning of Section 280G of the Code, shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), but only if, by reason of such reduction, the net after-tax benefit received by the Executive shall exceed the net after-tax benefit that would be received by the Executive if no such reduction was made.  Whether and how the provisions of this Section 4.4 are applicable shall be determined as set forth below.

 

(a)     The “net after-tax benefit” shall mean (i) the Payments (as defined in this Section 4.4) which the Executive receives or is then entitled to receive from the Company or a subsidiary or affiliate that would constitute “parachute payments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state and local income and employment taxes payable by the Executive with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be paid to the Executive (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (i) above.

 

(b)     All determinations under this Section 4.4 will be made by an accounting firm or law firm that is selected for this purpose by the Company prior to a Corporate Transaction (the “280G Firm”).  All fees and expenses of the 280G Firm shall be borne by the Company.  The Company will direct the 280G Firm to submit any determination it makes under this Section 4.4 and detailed supporting calculations to both the Executive and the Company as soon as reasonably practicable.

 

 

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(c)     If the 280G Firm determines that one or more reductions are required under this Section 4.4, the 280G Firm shall also determine which Payments shall be reduced (first from non-cash benefits and then from cash payments) to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, and the Company shall pay such reduced amount to the Executive.  The 280G Firm shall make reductions required under this Section 4.4 in a manner that maximizes the net after-tax amount payable to the Executive.

 

(d)     As a result of the uncertainty in the application of Section 280G of the Code at the time that the 280G Firm makes its determinations under this provision, it is possible that amounts will have been paid or distributed to the Executive that should not have been paid or distributed (collectively, the “Overpayments”), or that additional amounts should be paid or distributed to the Executive (collectively, the “Underpayments”).  If the 280G Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive, which assertion the 280G Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, the Executive must repay the Overpayment amount promptly to the Company, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Section 4999 of the Code or generate a refund of tax imposed under Section 4999 of the Code.  If the 280G Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the 280G Firm will notify the Executive and the Company of that determination, and the Underpayment amount will be paid to the Executive promptly by the Company.

 

(e)     The Executive will provide the 280G Firm access to, and copies of, any books, records and documents in the Executive’s possession as reasonably requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 4.4.

 

4.5     Effect of Termination of Employment.

 

(a)     Upon Executive’s Termination of Employment hereunder for any reason, Park Sterling shall have no further obligations to the Executive or the Executive’s estate with respect to this Agreement, except for the payment of any amount earned and owing under this Agreement and payment set forth in Section 4.2 or Section 4.3, if applicable.

 

(b)     Notwithstanding any other provision of this Agreement to the contrary, as a condition of Park Sterling’s payment of any amount in connection with the Executive’s Termination of Employment, the Executive must execute within such period of time following Termination of Employment as is permitted by Park Sterling (and not timely revoke during any revocation period provided pursuant to such release) a release and non-disparagement agreement in the form provided by Park Sterling. All payments of severance shall accrue from the date of the Executive’s Termination of Employment and, notwithstanding the timing provisions under Section 4.2 and Section 4.3, shall be made or commence on the sixtieth (60th) day following the Executive’s Termination of Employment, with any accrued but unpaid severance being paid on the date of the first payment.

 

 

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(c)     Notwithstanding any provision in the Agreement to the contrary, to the extent necessary to avoid the imposition of tax on the Executive under Code Section 409A, any payments that are otherwise payable to the Executive within the first six (6) months following the effective date of Termination of Employment, shall be suspended and paid as soon as practicable following the end of the six-month period following such effective date if, immediately prior to the Executive’s Termination of Employment, the Executive is determined to be a “specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of Park Sterling (or any related “service recipient” within the meaning of Code Section 409A and the regulations thereunder). Any payments suspended by operation of the foregoing sentence shall be paid as a lump sum within thirty (30) days following the end of such six-month period. Payments (or portions thereof) that would be paid latest in time during the six-month period will be suspended first.

 

(d)     Any purported termination of the Executive’s employment which does not rise to the level of a Termination of Employment shall not entitle the Executive to any of the payments or benefits described in Section 4.

 

(e)     If the Executive is a member of the Board of Directors of either the Company or the Bank and the Executive’s employment is terminated by Park Sterling or by the Executive pursuant to Section 4.1, the Executive shall immediately resign from Executive’s position(s) on the Board(s) of Directors, effective as of the date Executive’s employment is terminated.

 

(f)     Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to Section 4 or any other provision herein in contravention of the requirements of Section 2[18(k)] of the Federal Deposit Insurance Act (12 U.S.C. 1828(k)).

 

4.6     Regulatory Action.

 

(a)     If the Executive is removed and/or permanently prohibited from participating in the conduct of Park Sterling’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of Park Sterling under this Agreement shall terminate, as of the effective date of such order, except for the payment of Annual Base Salary due and owing under Section 3.1 on the effective date of said order, and reimbursement under Section 3.4 of expenses incurred as of the effective date of termination.

 

(b)     If the Executive is suspended and/or temporarily prohibited from participating in the conduct of Park Sterling’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of Park Sterling under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, Park Sterling shall reinstate (in whole or in part) any of its obligations which were suspended.

 

 

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(c)     If Park Sterling is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the parties shall not be affected.

 

(d)     All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of Park Sterling (1) by the director of the Federal Deposit Insurance Corporation (the “FDIC”) or his or her designee (the “Director”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of Park Sterling under the authority contained in 13(c) of the FDIA; or (2) by the Director, at the time the Director approves a supervisory merger to resolve problems related to operation of Park Sterling when Park Sterling is determined by the Director to be in an unsafe and unsound condition. Any rights of the Executive that have already vested, however, shall not be affected by such action. 

 

(e)     All obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture provisions as may separately apply pursuant to any applicable state banking laws.

 

4.7     Reimbursement of Legal Fees. Park Sterling shall reimburse the Executive, on a current basis, for all reasonable legal fees and related expenses incurred by the Executive in contesting or disputing any termination of the Executive’s employment after the date of this Agreement, or the Executive’s seeking to obtain or enforce any right or benefit provided by this Agreement or any employment agreement between Employee and Park Sterling; provided, however, the Executive shall be required to repay to Park Sterling any such amounts plus the reasonable legal fees and related expenses incurred by Park Sterling and its affiliates, as applicable, to the extent that an arbitral panel or a court issues a final and non-appealable order, judgment, decree or award in favor of Park Sterling (or its affiliates, as applicable). Any such payments to the Executive shall be made within five (5) business days after delivery of the Executive’s, respective written requests for payment accompanied with such evidence of fees and expenses incurred as Park Sterling reasonably may require, but in any event no later than December 31 of the year after the year in which the expense was incurred. Any payments the Executive may be required to make to Park Sterling shall be made within five (5) business days after the date on which an arbitral panel or a court issues a final and non-appealable order, judgment, decree or award in favor of Park Sterling (or its affiliates, as applicable).

 

4.8     D&O Insurance. During the Term, Park Sterling shall maintain commercially reasonable and appropriate directors and officers insurance policies under which the Executive shall be a covered person.

 

 

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5.     Employer Information.

 

5.1     Ownership of Employer Information. All Employer Information received or developed by the Executive or by Park Sterling while the Executive is employed by Park Sterling will remain the sole and exclusive property of Park Sterling.

 

5.2     Obligations of the Executive. The Executive agrees:

 

(a)     to hold Employer Information in strictest confidence;

 

(b)     not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Employer Information or any physical embodiments of Employer Information to any unauthorized recipient; and

 

(c)     in any event, not to take any action causing or fail to take any action necessary in order to prevent any Employer Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret.

 

In the event that the Executive is required by law to disclose any Employer Information, the Executive will not make such disclosure unless (and then only to the extent that) the Executive has been advised by independent legal counsel (whose reasonable fees and expenses shall be paid by Park Sterling) that such disclosure is required by law. This Section 5 shall survive for a period of two (2) years following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets. Notwithstanding this Section 5, this Agreement does not prohibit communications directly with the Securities and Exchange Commission about a possible securities law violation.

 

5.3     Delivery upon Request or Termination. Upon request by Park Sterling, and in any event upon the Executive’s Termination of Employment with Park Sterling, the Executive will promptly deliver to Park Sterling all property belonging to Park Sterling and its Affiliates, including, without limitation, all Employer Information then in the Executive’s possession or control. 

 

6.     Non-Competition. The Executive agrees that during the Executive’s employment by Park Sterling hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of one (1) year thereafter, the Executive will not (except on behalf of or with the prior written consent of Park Sterling), within the Area, either directly or indirectly, on the Executive’s own behalf or in the service or on behalf of others, perform for any Competing Business any services which are the same as or essentially the same as the services the Executive provided for Park Sterling. 

 

7.     Non-Solicitation of Customers. The Executive agrees that during the Executive’s employment by Park Sterling hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of one (1) year thereafter, the Executive will not (except on behalf of or with the prior written consent of Park Sterling) on the Executive’s own behalf or in the service or on behalf of others, solicit, divert or appropriate or attempt to solicit, divert or appropriate, any business from any of Park Sterling’s customers, including prospective customers actively sought by Park Sterling, with whom the Executive has or had material contact during the last two (2) years of the Executive’s employment with Park Sterling, for purposes of providing products or services that are competitive with those provided by Park Sterling. 

 

 

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8.     Non-Solicitation of Employees. The Executive agrees that during the Executive’s employment by Park Sterling hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of one (1) year thereafter, the Executive will not (except on behalf of or with the prior written consent of Park Sterling) on the Executive’s own behalf or in the service or on behalf of others, solicit, recruit or hire away or attempt to solicit, recruit or hire away, any employee of Park Sterling with whom the Executive had material contact during the last two (2) years of the Executive’s employment, whether or not such employee is a full-time employee or a temporary employee of Park Sterling, such employment is pursuant to written agreement, for a determined period, or at will.

 

9.     Remedies. The Executive agrees that the covenants contained in Section 5 through Section 8 of this Agreement are of the essence of this Agreement; that each of the covenants is reasonable and necessary to protect the business, interests and properties of Park Sterling, and that irreparable loss and damage will be suffered by Park Sterling should the Executive breach any of the covenants. Therefore, the Executive agrees and consents that, in addition to all the remedies provided by law or in equity, Park Sterling shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of the covenants. Furthermore, in addition to any other remedies, the Executive agrees that any violation of the covenants in Section 5 through Section 8 will result in the immediate forfeiture of any remaining payment that otherwise is or may become due under Section 4.2 or Section 4.3, if applicable. The Executive further agrees that should the Executive breach any of the covenants contained in Section 5 through Section 8 of this Agreement, the Executive shall repay to Park Sterling a portion of any amounts previously received by the Executive pursuant to Section 4. The amount to be repaid shall be equal to the aggregate amount payable (whether or not paid) multiplied by a fraction the numerator of which shall be twenty-four (24) minus the number of consecutive, full calendar months immediately following the Executive’s termination of employment during which the Executive was not in breach of Section 5 through Section 8 of this Agreement and the denominator of which is twenty-four (24). Park Sterling and the Executive agree that all remedies available to Park Sterling or the Executive, as applicable, shall be cumulative. 

 

10.     Severability. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, the law or public policy.

 

11.     No Set-Off by the Executive. The existence of any claim, demand, action or cause of action by the Executive against Park Sterling whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by Park Sterling of any of its rights hereunder.

 

 

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12.     Notice. All notices, requests, waivers and other communications required or permitted hereunder shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

 

If to Park Sterling:      Park Sterling Bank 

                                     Attn: Chief Executive Officer

                                     1043 E. Morehead Street, Suite 201

                                     Charlotte, North Carolina 28204

 

If to the Executive:     Bryan Kennedy

                                      3020 Belvedere Avenue

                                      Charlotte, North Carolina 28205

 

 

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. All such notices, requests, waivers and other communications shall be deemed to have been effectively given: (a) when personally delivered to the party to be notified; (b) when sent by confirmed facsimile to the party to be notified; (c) five (5) business days after deposit in the United States Mail postage prepaid by certified or registered mail with return receipt requested at any time other than during a general discontinuance of postal service due to strike, lockout, or otherwise (in which case such notice, request, waiver or other communication shall be effectively given upon receipt) and addressed to the party to be notified as set forth above; or (d) two (2) business days after deposit with a national overnight delivery service, postage prepaid, addressed to the party to be notified as set forth above with next-business-day delivery guaranteed. A party may change its or his/her notice address given above by giving the other party ten (10) days’ written notice of the new address in the manner set forth above.

 

13.     Assignment. The rights and obligations of Park Sterling under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Park Sterling, as applicable, including without limitation, a purchaser of all or substantially all the assets of Park Sterling. If the Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation and Park Sterling shall have no further liability hereunder, and the successor or assign, as applicable, shall become “Park Sterling” hereunder, but the Executive will not be deemed to have experienced a Termination of Employment by virtue of such assignment. The Agreement is a personal contract and the rights and interest of the Executive may not be assigned by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 

 

 

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14.     Waiver. A waiver by one party to this Agreement of any breach of this Agreement by any other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.

 

15.     Mediation. Except as provided in Section 16 hereof, if any dispute arises out of or relates to this Agreement, or a breach thereof, and if the dispute can not be settled through direct discussions between the parties, the parties agree to first endeavor to settle the dispute in an amicable manner by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to any other process for resolving the dispute.

 

16.     Applicable Law and Choice of Forum. This Agreement shall be construed and enforced under and in accordance with the laws of the State of North Carolina. The parties agree that any appropriate state court located in Mecklenburg County, North Carolina or federal court for the Western District of North Carolina shall have exclusive jurisdiction of any case or controversy arising under or in connection with this Agreement shall be a proper forum in which to adjudicate such case or controversy. The parties consent and waive any objection to the jurisdiction or venue of such courts.

 

17.     Interpretation. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms “herein,” “hereunder,” “hereby,” “hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.

 

18.     Entire Agreement. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon Park Sterling or the Executive unless made in writing and signed by all parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated. 

 

19.     Mutual Non-disparagement. Park Sterling agrees that during the Term and for a period of two (2) years thereafter, each will not make any statement (written or oral) that could reasonably be perceived as disparaging to the Executive. The Executive agrees that during the Term and for a period of two (2) years thereafter, the Executive will not make any statement (written or oral) that could reasonably be perceived as disparaging to Park Sterling or any person or entity that he reasonably should know is an affiliate of Park Sterling. 

 

20.     Rights of Third Parties. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.

 

21.     Survival. The obligations of the parties pursuant to Section 3.10, Section 5 through Section 9, Section 15, Section 16 and Section 19, as applicable, shall survive the Executive’s Termination of Employment hereunder for the period designated under each of those respective sections.

 

 

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22.     Representation Regarding Restrictive Covenants. The Executive represents that the Executive is not and will not become a party to any non-competition or non-solicitation agreement or any other agreement which would prohibit the Executive from entering into this Agreement or providing the services for Park Sterling contemplated by this Agreement on or after the Effective Date. In the event the Executive is subject to any such agreement, this Agreement shall be rendered null and void and Park Sterling shall have no obligations to the Executive under this Agreement.

 

23.     Definitions. Whenever used in this Agreement, the following terms and their variant forms shall have the meanings set forth below:

 

(a)     “Affiliate” shall mean any entity which controls, is controlled by, or is under common control with another entity. For this purpose, “control” means ownership of more than fifty percent (50%) of the ordinary voting power of the outstanding equity securities of an entity.

 

(b)     “Agreement” shall mean this Agreement and any exhibits incorporated herein together with any amendments hereto made in the manner described in this Agreement.

 

(c)     “Area” shall mean a radius of twenty-five (25) miles or, at the election of Park Sterling upon written notice to the Executive, a radius of fifteen (15) miles, from each office maintained by Park Sterling at the time a breach of Section 6 of the Agreement is alleged by Park Sterling, provided, that the preceding shall not apply to an office first established by Park Sterling after the end of the Term. It is the express intent of the parties that the Area as defined herein is the area where the Executive performs services, or for which the Executive has work responsibilities, on behalf of Park Sterling under this Agreement.

 

(d)     “Board of Directors” shall mean the board of directors of the Bank or the Company or both, as the context indicates, and includes any committee thereof or other designee.

 

(e)     “Business” shall mean the business conducted by Park Sterling, which is the business of commercial and consumer banking and wealth management.

 

(f)     “Cause” shall mean:

 

(1)     A material breach of the terms of this Agreement by the Executive not cured by the Executive within thirty (30) days after the Executive’s receipt of Park Sterling’s written notice thereof, including, without limitation, failure by the Executive to perform the Executive’s duties and responsibilities in the manner and to the extent required under this Agreement; 

 

(2)     Any act by the Executive of fraud against, material misappropriation from, or material dishonesty to either the Company or the Bank;

 

 

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(3)     Conviction of the Executive of a crime involving breach of trust or moral turpitude or any felony;

 

(4)     Conduct by the Executive that amounts to willful misconduct, gross and willful insubordination, gross neglect or inattention to or material failure to perform the Executive’s duties and responsibilities hereunder, including prolonged absences without the written consent of the Chief Executive Officer; provided, that the nature of such conduct shall be set forth with reasonable particularity in a written notice to the Executive who shall have ten (10) days following delivery of such notice to cure such alleged conduct, provided, that such conduct is, in the reasonable discretion of the Board of Directors, susceptible to a cure;

 

(5)     the exhibition of a standard of behavior within the scope of or related to the Executive’s employment that is materially disruptive to the orderly conduct of Park Sterling’s business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct) in the reasonable opinion of the Chief Executive Officer (with the Executive abstaining from participating in the consideration of, and vote on, such matter); 

 

(6)     Receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over Park Sterling has made a final determination that the Executive has violated a particular law or regulation; or 

 

(7)     Executive’s removal and/or permanent prohibition from participating in the conduct of Park Sterling’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)). 

 

(g)     “Change of Control” means a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Code Section 409A, provided, however, that for purposes of determining an “effective change of control,” “50 percent” shall be used instead of “30 percent” and for purposes of determining a “substantial portion of the assets of a corporation,” “85 percent” shall be used instead of “40 percent.”  For purposes of the preceding sentence, a “corporation” refers to the Company and the Bank.  Notwithstanding the foregoing, in the event of a merger, consolidation, reorganization, share exchange or other transaction as to which the holders of the capital stock of the Bank or the Company before the transaction continue after the transaction to hold, directly or indirectly through a holding company or otherwise, shares of capital stock of the Bank or the Company (or other surviving company) representing more than fifty percent (50%) of the value or ordinary voting power to elect directors of the capital stock of the Bank or the Company (or other surviving company), such transaction shall not constitute a Change of Control; provided, however, that, in the event that the transaction at issue involves a change in the ownership of the Company and if the holders of the capital stock of the Company before the transaction that continue to represent more than fifty percent (50%) of the value or ordinary voting power to elect directors of the capital stock of the Company (or other surviving company) at the time of the consummation of such transaction also hold 50% or more of the value or ordinary voting power to elect directors of the capital stock of the other entity involved in the acquisition or similar transaction, then such transaction shall be considered a Change of Control.

 

 

15

 

 

(h)     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(i)     “Competing Business” shall mean any entity (other than Park Sterling and its Affiliates) that is conducting business that is the same or substantially the same as the Business of Park Sterling. 

 

(j)     “Confidential Information” means data and information relating to the business of Park Sterling and its Affiliates (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive’s relationship to Park Sterling and its Affiliates and which has value to Park Sterling and its Affiliates and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by Park Sterling or its Affiliates, provided, that such public disclosure shall not be deemed to be voluntary when made without authorization by the Executive or any other employee of Park Sterling, or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. 

 

(k)     “Disability” shall mean that the Executive suffers from a physical or mental disability or infirmity that qualifies him for disability benefits under any accident and health plan maintained by Park Sterling that provides income replacement benefits due to disability or, if Park Sterling does not maintain such a plan, the Executive’s inability to perform the essential functions of the Executive’s job for a period of ninety (90) or more days, with or without reasonable accommodation, as a result of a physical or mental disability or infirmity, as reasonably determined by Park Sterling. 

 

(l)     “Employer Information” means Confidential Information and Trade Secrets.

 

(m)     “Good Reason” shall mean any of the following which occurs on or after the Effective Date:

 

(1)     a material reduction of the Executive’s Annual Base Salary from its then-current rate without the Executive’s consent, other than, prior to a Change of Control, a reduction that also is applied to substantially all other executive officers of Park Sterling if Executive’s reduction is substantially proportionate to, or no greater than, the reduction applied to substantially all other executive officers; 

 

(2)     a material diminution in the authority, responsibilities or duties of the Executive hereunder without the Executive’s consent, including and without limitation, the Executive serving in the same or a similar role as prior to a Change of Control, but for a subsidiary or division of the ultimate parent company of the resulting entity; or

 

 

16

 

 

(3)     a requirement that the Executive relocate the Executive’s principal work location to a location that is more than twenty-five (25) miles from Park Sterling’s current headquarters.

 

provided, however, that for a Termination of Employment by the Executive to be for Good Reason, the Executive must notify Park Sterling in writing of the event giving rise to Good Reason within thirty (30) days following the occurrence of the event (or, if later, thirty (30) days following the Executive’s knowledge of occurrence of the event), the event must remain uncured after the expiration of sixty (60) days following the delivery of written notice of such event to Park Sterling by the Executive, and the Executive must resign effective no later than sixty (60) days following Park Sterling’s failure to cure the event and must give at least thirty (30) days’ advance written notice prior to the Executive’s effective date of resignation. 

 

(n)     “Initial Term” shall mean that period of time commencing on the Effective Date and running until the earlier of (1) the close of business on the last business day immediately preceding the third anniversary of the Effective Date, or (2) any earlier termination of employment of the Executive under this Agreement as provided for in Section 4.

 

(o)     “Term” shall mean the Initial Term and all subsequent extension periods.

 

(p)     “Termination of Employment” shall mean a termination of the Executive’s employment where either (1) the Executive has ceased to perform any services for Park Sterling and all affiliated companies that, together with Park Sterling, constitute the “service recipient” within the meaning of Code Section 409A and the regulations thereunder (collectively, the “Service Recipient”) or (2) the level of bona fide services the Executive performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Executive has been providing services to the Service Recipient for less than 36 months).

 

(q)     “Trade Secrets” means Park Sterling or Affiliate information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which: 

 

 

17

 

 

(1)     derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

 

(2)     is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

[Signatures on Next Page]

 

 

 

18

 

 

 

IN WITNESS WHEREOF, the Company, the Bank and the Executive have executed and delivered this Agreement as of the 24th day of March, 2016.

 

	
 
	
 

Park Sterling Corporation

 

By:/s/ James C. Cherry                                                         

Signature

 

James C. Cherry                                                            

Print Name

 

CEO                                                                                 

Title

 

 

 

Park Sterling Bank

 

By:/s/ James C. Cherry                                                         

Signature

 

James C. Cherry                                                             

Print Name

 

CEO                                                                                 

Title

 

 

 

/s/ Bryan Kennedy                                                               

Bryan Kennedy

 

	
 
	
 

	
 
	
 

 

 

 

19

 

 

 

Exhibit A

 

Approved Outside Activities

 

	 	
●
	
Member of the The Cato Corporation Board of Directors

 

 

 20ex-10.1

 EXHIBIT 10.1
 

 DEBTOR-IN-POSSESSION TERM SHEET
 

 This Term Sheet, together with the interim order of the United States Bankruptcy Court for the Northern District of California (the “Bankruptcy Court”) authorizing, on an interim basis, the transactions contemplated in this Term Sheet and the other Loan Documents in form and substance satisfactory to the Lender (the “Interim Order”) and the final order of the Bankruptcy Court authorizing, on a final basis, the transactions contemplated in this Term Sheet and the other Loan Documents in form and substance satisfactory to the Lender (the “Final Order ” and together with the Interim Order, collectively, the “Orders”), sets forth the terms and conditions of the Debtor-In-Possession Credit Facility (the “DIP Facility”) to be provided by Jackson Investment Group, LLC (“Lender”) to the Borrowers.  Capitalized terms used herein and not defined herein shall have meaning specified in the Orders.
 

 	 	 	
	 1.
	 Borrowers:
	 Blue Earth, Inc. (“Blue Earth”) and Blue Earth Tech, Inc. (“BE Tech” and collectively, the “Borrowers” or “Debtors”), each a Nevada corporation and a debtor and debtor in possession in the Cases.  Borrowers’ obligations shall be joint and several.

	  
	  
	  

	 2.
	 DIP Facility Amount:
	 Up to $3,000,000 (the “Commitment”). To be made as a term loan available in one or more advances on and after the closing date and prior to the Termination Date (the “Term Loan”), subject to satisfaction of conditions precedent. No portion of the Term Loan may be reborrowed once repaid. 

	  
	  
	  

	 3.
	 DIP Facility Termination Date/ Repayment:
	 The DIP Facility shall terminate (the “Termination Date”) on the earlier of (a) the 125th day after the Petition Date, (b) the acceleration of the Term Loan as result of any Event of Default, and (c) as otherwise provided in one or both Orders.  On the Termination Date, Lender shall have no further obligation to make any advances under the DIP Facility, and all outstanding Obligations shall immediately become due and payable by Borrowers to Lender. 

	  
	  
	  

	 4.
	 Closing Date: 
	 The first initial funding date, subject to the conditions precedent set forth below (the “Closing Date”).

	 5.
	 Use of Proceeds: 
	 Proceeds to be used solely for: (a) working capital and general corporate purposes of Borrowers consistent with the Approved Budget and to pay the costs and expenses related to the administration of the Cases; and (b) if necessary, the initial advance will be used to pay amounts specified in a funds flow memorandum to be attached to the initial notice of borrowing, which funds flow must be consistent with the Approved Budget and satisfactory to Lender.

	  
	  
	  

	 6.
	 Interest Rate: 
	 Interest shall accrue on all outstanding advances at a rate per annum equal to 9%, and shall be payable in arrears on the last business day of each month on and after the Closing Date and on the Termination Date and such interest shall be included in the Approved Budget and be paid from the proceeds of the Term Loan.

	  
	  
	  

	 7.
	 Default Rate: 
	 11% per annum. The Default Rate shall automatically accrue from and after the occurrence and continuance of any Event of Default or event or condition that constitutes an Event of Default or that, with the giving of notice, the passage of applicable grace periods, or both, would be an Event of Default (a “Default”).

	  
	  
	  

	 8.
	 Fees: 
	 Borrowers shall pay to Lender (a) on the Closing Date and on the date of any subsequent advances, a closing fee equal to 2% of the principal amount of each such advance, (b) an unused line fee, which shall accrue at the per annum rate of 0.50% on the daily undrawn portion of the DIP Facility and shall be payable in arrears on each required interest payment date; and (c) all other fees and expenses of Lender as set forth herein.  All such fees shall be deemed fully earned when due and shall be non-refundable and such fees shall be included in the Approved Budget and be paid from the proceeds of the Term Loan.

	  
	  
	  

	 9.
	 Voluntary Prepayments:
	 Voluntary prepayments of the DIP Facility are permitted at any time, without premium or penalty.

	  
	  
	  

	 10.
	 Mandatory Prepayments:
	 Not later than 5 business days after receipt by any Borrower of any cash proceeds (net of reasonable and customary fees and expenses relating thereto) in respect of any asset disposition, casualty event, condemnation, debt issuance or equity issuance by any Borrower or any direct or indirect subsidiary of any Borrower (individually a “Subsidiary” and, collectively, the “Subsidiaries”), Borrowers shall prepay the Obligations in an amount equal to 100% of such net cash proceeds.

	  
	  
	  

	 11.
	 Priority and Liens: 
	 All obligations of Borrowers to Lender under the DIP Facility, including, without limitation the principal amount of all advances by Lender to Borrowers, all accrued and unpaid interest thereon, all accrued fees owed by Borrowers to Lender hereunder, and all other amounts now or hereafter owing by the Borrowers to the Lender hereunder or under the Orders (collectively, the “Obligations”), shall at all times be secured by and have benefit of (a) the liens, security interests and the claim status provided for in the Orders, having the priority set forth in the Orders and (b) the first priority liens and security interests granted pursuant to the Orders (subject to the exceptions set forth therein including the Carve-Out).  

	  
	  
	  

	 12.
	 Collateral
	 Subject to the Orders, all of the real and personal property of the Debtors of any description whatsoever, wherever located and whenever arising or acquired, including all cash proceeds, accounts, inventory, equipment, fixtures, chattel paper, general intangibles, claims and causes of action under 11 U.S.C. § 549 and any proceeds and property received on account thereof, all leases and leaseholds, and all other assets, and all proceeds, rents, issues, profits and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any of the foregoing.

	  
	  
	  

	 13.
	 Approved Budget
	 Borrowers shall provide a 13-week budget on a weekly basis to Lender on or before the Closing Date in the form attached hereto as Exhibit A (the “Initial Budget”).  By no later than Monday on each calendar week following the Closing Date, Borrowers shall provide Lender with weekly updates and extensions of the Initial Budget in substantially the same form (including the assumptions and methodology made or used therein) as the Initial Budget covering the following 13-week period, along with budget to actual performance for the prior weeks, each such update and extension must be in form and substance satisfactory to Lender, provided, that all disbursements shall be made pursuant to the Initial Budget unless otherwise agreed to by Lender and Borrowers. The Initial Budget, and any subsequent budget agreed to by the Borrowers and the Lender from time to time, is referred to herein as the “Approved Budget”.  The Borrowers shall not make any disbursements other than those set forth in the Approved Budget; provided, however that the disbursements may exceed the amounts set forth in the Approved Budget (a) for any line-itemed expense (a “Line-Itemed Expense”) by no more than 10%  in respect of such Line-Itemed Expense and (b) in any event, and not to exceed the Commitment, no more than 5% in respect of the aggregate amounts set forth in the Approved Budget based on each consecutive non-overlapping 4 week post-petition period. 

	  
	  
	  

	 14.
	 Conditions Precedent to an Initial DIP Facility Advance:
	 The funding of an initial advance under the DIP Facility (which advances shall not exceed in the aggregate the lesser of (i) $1,000,000 and (ii) the amount permitted under the Interim Order) is subject, in each case, to satisfaction of the following conditions, each in form and substance satisfactory to Lender (unless waived in writing by Lender):  (a) Lender shall have received duly executed counterparts from each party thereto of this Term Sheet and any other collateral document, instrument or agreement as Lender may deem necessary or advisable to consummate the transactions contemplated hereby, executed by each Borrower in favor of Lender; (b) all reasonable costs, fees and expenses due and payable to Lender (including all reasonable fees and expenses of counsel to Lender and Lender’s financial advisor) shall have been paid (to be paid out of the proceeds of the initial advance of the Term Loan); (c) Lender shall have received financial forecasts and other financial information as requested by Lender and the Initial Budget; (d) Lender shall be reasonably satisfied with the form and substance of the “first day orders” (including a cash management order) in the Cases, and the Interim Order shall be in full force and effect, and shall not have been stayed, reversed or vacated, or modified or amended in a manner that Lender reasonably determines is adverse in any material respect to its interests (and no later than 3 calendar days following the Borrowers’ bankruptcy petition date (the “Petition Date”), the Bankruptcy Court shall have entered the Interim Order in form and substance satisfactory to Lender in its sole discretion); (e) no trustee or examiner shall have been appointed with respect to any of the Borrowers or any Subsidiary or their respective properties; (f) Lender shall be satisfied, in its sole discretion, with the cash management arrangements of the Borrowers and received any required deposit account control agreements executed by depository bank and applicable Borrower as required by Lender; (g) Borrowers shall have delivered to Lender a notice of borrowing, which shall include a funds flow memorandum; (h) the representations and warranties of the Borrowers as set forth in this Term Sheet and in any other document, agreement or instruments now or hereafter executed by either Borrower in favor of Lender in connection with the DIP Facility (such referenced documents collectively, the “Loan Documents”) shall be true and correct as of such date; (i) no Default or Event of Default exists; (j) Lender shall have received certificates of insurance naming Lender as loss payee and additional insured with respect to all property and casualty and liability insurance policies of the Borrowers; (k) the Borrowers shall be in compliance in all respects with the Approved Budget; (l) the amount of an initial advance (or the applicable portion thereof designated to be applied to any Line-Itemed Expense) shall not exceed the total amount set forth in the Approved Budget for such Line-Itemed Expenses (subject to the provisions of the section “Approved Budget”) for the applicable calendar week period; (m) initial advances shall be made no more frequently than once per calendar week; and (n) Lender shall be satisfied in its discretion that any investigation whether commenced presently or in the future by any governmental or regulatory unit has not caused and could not reasonably be expected to cause a material adverse effect on the business, assets, liabilities, prospects, operations, results of operations, or condition (financial or otherwise) of either Borrower.

	  
	  
	  

	 15.
	 Conditions Precedent to each Additional DIP Facility Advance:
	 Lender’s funding of any additional advances (which additional advances shall not exceed in the aggregate the lesser of (i) $2,000,000 and (ii) the amount permitted under the Final Order) after the initial advances under the DIP Facility is subject, in each case, to the following conditions precedent, each in form and substance satisfactory to Lender (unless waived in writing by Lender): (a) all of the conditions precedent to the initial advances under the DIP Facility as set forth above shall have been satisfied (or waived in writing by Lender), (b) the Borrowers shall be in compliance in all respects with the Approved Budget and Lender shall have received all required updates thereto subject to the provisions of the section “Approved Budget”; (c) the proposed additional advance shall be (1) in an amount necessary to finance the Borrowers’ expenses and disbursements in accordance with the Approved Budget and (2) used to pay one or more Line-Itemed Expense, and with respect to any such Line-Itemed Expense, the amount of an additional advance (or the applicable portion thereof designated to be applied to such Line-Itemed Expense) shall not exceed the total amount set forth in the Approved Budget for such Line-Itemed Expense (subject to the provisions of the section “Approved Budget”) for the applicable calendar week period; (d) Borrowers shall have delivered to Lender, an appropriate notice of borrowing, duly executed and completed; (e) the representations and warranties of the Borrowers as set forth herein and in the other Loan Documents shall be true and correct as of such date; (f) no Default or Event of Default shall exist; (g) the Bankruptcy Court shall have entered the Final Order, and the Final Order shall be in full force and effect, and shall not have been stayed, reversed or vacated, or modified or amended in a manner that Lender reasonably determines is adverse in any material respect to the interests of Lender and, after giving effect to the proposed additional advance, the aggregate principal amount of the outstanding Term Loan shall not exceed the amount authorized by the Final Order; (h) the Borrowers shall be in compliance in all material respects with the Orders and with any applicable cash management order of the Bankruptcy Court; (i) since the Closing Date, no event, circumstance or change shall have occurred that has caused or could reasonably be expected to cause, either in any case or in the aggregate, a material adverse effect (“Material Adverse Effect”) on the business, assets, liabilities, prospects, operations, results of operations, or condition (financial or otherwise) of either Borrower or any Subsidiary (other than as customarily occurs as a result of events leading up to and following the commencement of a proceeding under chapter 11 of the Bankruptcy Code and the commencement of the Cases and the continuation and prosecution thereof), or the ability of either Borrower to perform their respective obligations under any Loan Document or on the validity or enforceability of any the Loan Document or the rights and remedies of Lender thereunder; (j) no trustee or examiner shall have been appointed with respect to either Borrower or any Subsidiary or their respective properties; (k) the following milestones (the “Milestones”) shall have been achieved by Borrowers: (1) a plan of reorganization in form and substance acceptable to the Lender for the Debtors (the “Plan of Reorganization”) shall have been filed with the Bankruptcy Court no later than 30 days after the Petition Date, (2) a disclosure statement in form and substance acceptable to the Lender in respect of the Plan of Reorganization shall have been approved by an order of the Bankruptcy Court in form and substance acceptable to Lender no later than 75 days after the Petition Date, (3) the Plan of Reorganization shall have been confirmed by an order of the Bankruptcy Court in form and substance acceptable to Lender no later than 120 days after the Petition Date and (4) the effective date of the Plan of Reorganization shall have occurred no later than 125 days after the Petition Date; (l) all reasonable costs, fees and expenses due and payable to Lender (including all fees and expenses of counsel to Lender and Lender’s financial advisor) shall have been paid consistent with the DIP Order; (m) Lender shall have received duly executed counterparts from each Borrower and each Subsidiary (other than (x) Maili PV 01, LLC, a Hawaii limited liability company and (y) Sumter Heat and Power, LLC, a Nevada limited liability company) of a pledge and security agreement in form satisfactory to Lender by no later than the date of entry of the Final Order; (n) additional advances shall be made no more frequently than once per calendar week; and (o) Lender shall be satisfied in its discretion that any investigation whether commenced presently or in the future by any governmental or regulatory unit has not caused and could not reasonably be expected to cause a material adverse effect on the business, assets, liabilities, prospects, operations, results of operations, or condition (financial or otherwise) of either Borrower.

	  
	  
	  

	 16.
	 Representations and Warranties:
	 Each of the Borrowers represents and warrants to Lender on the Closing Date and as of each advance under the DIP Facility that: (a) each of the Borrowers is validly existing and in good standing; (b) subject to the entry of the Orders, each of the Borrowers has the power and authority to enter into the Loan Documents; (c) subject to the entry of the Orders, each of the Loan Documents to which it is a party constitutes the legal, valid and binding obligations of such Borrower, enforceable against it in accordance with its terms; and (d) each of the representations and warranties in the other Loan Documents are true, complete and correct. 

	  
	  
	  

	 17.
	 Affirmative Covenants:
	 Each of the Borrowers covenants and agrees with Lender that: (a) within 30 days after the end of each fiscal month (commencing with the fiscal month of March 2016), Borrowers shall deliver financial statements to Lender in a form and substance satisfactory to Lender; (b) Borrowers shall deliver the weekly updates to the Approved Budget as required herein, together with a variance report, in each case in form, scope and substance satisfactory to Lender; (c) Borrowers will promptly notify Lender of the occurrence of (1) any Default or Event of Default, any breach or default under any material post-petition contractual obligation of Borrowers or any of its Subsidiaries, (2) any dispute, litigation, investigation, proceeding or suspension between Borrowers or any of its Subsidiaries and any governmental authority, (3) the commencement of, or any material adverse development in, any litigation or proceeding affecting Blue Earth or any of its Subsidiaries, including pursuant to any applicable environmental law, (4) any litigation, investigation or proceeding affecting either Borrower or any Subsidiary; (d) each Borrower shall pay and discharge all material post-petition taxes, assessments and other governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become more than 90 days delinquent, (e) each Borrower shall preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization; (f) each Borrower shall take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal conduct of its business; (g) each Borrower shall maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (h) each Borrower shall maintain in full force and effect insurance (including worker’s compensation insurance, liability insurance, casualty insurance and business interruption insurance) in such amounts, covering such risk and liabilities and with such deductibles or self-insurance retentions as are customary for similar entities, businesses and industries as those of the Borrowers, and not later than 30 days following the Closing Date, Lender, shall be named as loss payees or mortgagees, as its interest may appear, with respect to all such policies; (i) each Borrower shall comply in all material respects with all requirements of law; (j) each Borrower shall maintain all employee benefit, retirement, pension and welfare plans (collectively, the “Plans”) and cause such plans to comply with and be qualified under applicable law and make all required contributions to any such Plan subject to Section 412 of the IRS Code and make all required contributions to multiemployer plans; (k) each Borrower shall ensure that there are no unfunded liabilities in respect of any Plan in excess of $50,000 unless the aggregate amount of such unfunded liabilities in respect of such Plan is reduced below the $50,000 within a 30-day period; (l) each Borrower shall make all contributions to such Plans required to be made in accordance with all applicable laws; (m) each Borrower shall keep books and records of its transactions that are complete and accurate in all material respects in accordance with GAAP (including the establishment and maintenance of appropriate reserves); (n) each Borrower shall permit representatives and independent contractors of Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (and each Borrower hereby authorizes, and Blue Earth shall cause each Subsidiary to authorize, such independent accountants to discuss its affairs, finances and accounts with Lender or any representative or independent contractor thereof; (o) neither Borrower nor any Subsidiary shall at any time on or after the Closing Date (1) form, acquire or create any new subsidiary or (2) acquire any real property; and (p) upon request by Lender, shall cause each of its lockboxes, deposit accounts and securities accounts to be subject to an account control agreement, in form and substance reasonably satisfactory to Lender, properly executed by such Borrower, the applicable bank or other financial institution at which such lockbox or account is maintained.  The Borrowers further covenant and agree to cause each of their Subsidiaries to comply with the Affirmative Covenants in clauses (d) through (o), inclusive, above. 

	  
	  
	  

	 18.
	 Negative Covenants:
	 Each of the Borrowers hereby further covenant and agree that it shall not, nor shall it permit any of their Subsidiaries, to directly or indirectly do any of the following: (a) incur, create, assume or permit to exist any indebtedness except for (1) any indebtedness that was incurred prior to the Closing Date and disclosed to Lender pursuant to a written schedule delivered by Borrowers to Lender prior to the Closing Date, in form and substance satisfactory to Lender (collectively, the “Pre-Petition Indebtedness”) and (2) ordinary course trade payables not overdue by more than 90 days and other amounts set forth in the Approved Budget subject to the provisions of the section “Approved Budget”; (b) create, incur, assume or permit to exist any lien on any of its property or assets now owned or hereafter acquired by it except as disclosed and consented to in writing by the Lender prior to the Closing Date, in form and substance satisfactory to Lender; (c) alter in any material respect the character or conduct of the business conducted by it as of the Closing Date; (d) enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself or its affairs (or suffer any liquidations or dissolutions); (e) sell, transfer or dispose of any of its assets or properties, except the sale of inventory in the ordinary course of business and the disposition of obsolete or worn-out equipment in the ordinary course of business, except as approved by the Bankruptcy Court; (f) hold, make or acquire, any investment (whether in the form of loans to, capital contributions in, or any other investments in or to any natural person, business form, government authority or other entity (a “Person”) or in any securities issued by any other Person), in any Person, except for any investments made prior to the Closing Date and disclosed to Lender pursuant to a written schedule delivered by Borrowers to Lender prior to the Closing Date, in form and substance satisfactory to Lender; (g) declare, make or pay any dividend, distribution or payment, or purchase, redeem or retire (or set aside for the purchase, redemption or retirement), any outstanding equity interest (including, without limitation, any common or preferred equity interests or units, and any options and warrants) of any Borrower or any Subsidiary, except for non-cash dividends payable solely in stock and for dividends and distributions payable to Borrowers; (h) amend or modify  any of the terms, agreements, covenants or conditions applicable to any document, instrument or agreement evidencing any Pre-Petition Indebtedness; (i) redeem, purchase, prepay, retire, defease or otherwise acquire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Pre-Petition Indebtedness, or set aside any funds for such purpose,  except as expressly provided for in the “first day” orders of the Bankruptcy Court entered upon pleadings in the form and substance acceptable to the Lender; (j) engage in any transaction or series of transactions with any officer, director, holder or affiliate of either Borrower or any Subsidiary, other than transactions which are engaged in by Blue Earth or any of its Subsidiaries in the ordinary course of its business on terms and conditions as favorable to such Person as would be obtainable by it in a comparable arms’-length transaction with an independent, unrelated third party; (k) change its fiscal year or make any changes in its accounting treatment and reporting policies, except as required by GAAP, or enter into any amendment, modification or waiver to its articles or certificate of incorporation, bylaws (or analogous organizational documents), in each case as in effect on the Closing Date; (l) create or permit to exist any encumbrance or restriction on the ability of either Borrower or any Subsidiary to (1) make restricted payments to or pay any Pre-Petition Indebtedness owed to any of the Borrowers or any Subsidiary, (2) make loans or advances to any other Borrower or any Subsidiary, (3) transfer any of its properties or assets to any Borrower or any Subsidiary, (4) act as a borrower or guarantor hereunder and grant liens in favor of Lender to secure the Obligations, except for (A) restrictions set forth in this Term Sheet for the benefit of Lender, and prohibitions or restrictions existing under or by reason of any document or other agreement evidencing the Pre-Petition Indebtedness that was entered into prior to the Closing Date; and (B) applicable law; (m) issue equity interests to any Person; (n) acquire any subsidiary; and (o) incur, create, assume, suffer to exist or permit any other superpriority claim which is pari passu with or senior to the claims of the Lender against the Borrowers in respect of the DIP Facility, except for the Carve-Out.

	  
	  
	  

	 19.
	 Events of Default:
	 An Event of Default shall exist upon the occurrence of any of the following specified events or conditions (each an “Event of Default” and collectively, “Events of Default”): (a) any Obligations fail to be paid when due, including without limitation, any principal, interest or fees in respect of the DIP Facility; (b) any representation or warranty of any Borrower is found to be materially incorrect when made; (c) any material breach by any Borrower of any affirmative, negative or financial covenant; (d) any post-petition judgment (excluding a judgment in favor of TCA or Laird Q. Cagan) is rendered against any Borrower or any Subsidiary in excess of $100,000 and not stayed or dismissed within 30 days; (e) any Borrower or any Subsidiary is enjoined from conducting any material portion of its business; (f) any Borrower or any Subsidiary suffers a material disruption of business operations or material damage to or a loss of its assets; (g) either Case (1) converts to a case under Chapter 7 of the Bankruptcy Code or (2) is dismissed; (h) a Chapter 11 trustee or an examiner with expanded powers in appointed in either Case; (i) any super priority administrative expense claim or any lien is granted (other than in favor of the holders of Prepetition Indebtedness as set forth above and except for the Carve-Out) which is pari passu with or senior to those of Prepetition or DIP Lender; (j) any pre-petition debt is paid (other than as provided herein and other than (1) payments under First Day Orders acceptable to Lender, and (2) payments as may be approved by the Bankruptcy Court that are reasonably acceptable to Lender); (k) the Bankruptcy Court enters an order granting relief from the automatic stay sufficient to permit foreclosure of security interests in assets of Borrowers of a value in excess of $75,000; (l) an order terminating exclusivity has been entered (or requested, unless actively contested by Borrowers); (m) any Milestone is not timely achieved; (n) the Bankruptcy Court fails to enter, within 30 days following the entry of the  Interim Order, the Final Order in respect of the matters covered by the Interim Order and that also permits the extensions of credit under the DIP Facility in form and substance satisfactory to Lender or there occurs any reversal, revocation or modification without the consent of Lender of such order or any other order of the Bankruptcy Court with respect to the Cases and affecting the DIP Facility; or (o) the consummation of a sale, transfer or disposition of all or substantially all of the assets of either Debtors or any Subsidiary thereof (including, without limitation a sale, transfer or disposition (x) of the equity interests of any Subsidiary of Blue Earth (y) pursuant to any merger or consolidation transaction), except to the extent that such sale, disposition or transfer has been consented to in writing by the Lender.

	  
	  
	  

	 20.
	 Remedies: 
	 Subject to any limitation in the Order, upon the occurrence and continuance of an Event of Default, Lender shall have the right to: (a) declare the Commitment terminated whereupon the Commitment shall be immediately terminated and Lender shall be under no obligation to fund the Term Loan; (b) declare the unpaid principal of and any accrued interest and fees in respect of the Term Loan and any and all other Obligations of any and every kind (other than contingent indemnification obligations) to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; and (c) enforce any and all rights and interests created and existing under the Loan Documents, and under applicable law, including, without limitation, any and all rights and remedies existing under the Loan Documents, any and all rights and remedies against any Borrower or all or any part of the collateral securing the DIP Facility (including any cash collateral, whether by foreclosure, setoff or otherwise), and all other rights and remedies available under applicable law. 

	  
	  
	  

	 21.
	 Expenses:
	 Borrowers shall be responsible for all reasonable fees, costs and expenses of Lender including all reasonable fees and expenses of Lender’s counsel and professional advisors and shall reimburse such amounts promptly upon demand consistent with the DIP Order. 

	  
	  
	  

	 22.
	 Indemnification:
	 Borrowers, jointly and severally, shall indemnify Lender (and any sub-agent thereof) and each director, officer, employee, agent, attorney, advisor and other related party (solely in its capacity as such) of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of counsel and professional advisors of the Lender), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrowers or any other Borrower arising out of, in connection with, or as a result of (a) the execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby, the performance by the parties hereto of their obligations thereunder, or the consummation of the transactions contemplated thereby, (b) the use or proposed use of the proceeds from the Term Loan, (c) any environmental liability related to any Borrower or any Subsidiary, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to the DIP Facility, the Loan Documents or the transactions contemplated hereby or by the Orders brought by a third party or by Borrowers or any Subsidiary, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or a related party (solely in its capacity as such) thereof. 

	  
	  
	  

	 23.
	 Interest Rate Limitation:
	 Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law, and if Lender shall receive interest in an amount that exceeds the maximum rate permitted by law, the excess interest shall be applied to repay the principal of the Term Loan or, if it exceeds such unpaid principal, refunded to Borrowers.

	  
	  
	  

	 24.
	 Severability:
	 If any provision of this Term Sheet or the other Loan Documents is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Term Sheet and the other Loan Documents shall not be affected or impaired thereby.

	  
	  
	  

	 25.
	 Governing Law:
	 The internal laws of the State of New York (including, without limitation, Section 5-1401 of the General Obligations law of the State of New York) and, to the extent applicable, the Bankruptcy Code. 

	  
	  
	  

	 26.
	 Submission to Jurisdiction:
	 Each Borrower irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Bankruptcy Court and, if the Bankruptcy Court does not have (or abstains from) jurisdiction, to the nonexclusive jurisdiction of the courts of the State of New York sitting in New York county and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to the DIP Facility or any Loan Document. 

	  
	  
	  

	 27.
	 Waiver of Venue:
	 Each Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may not or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Term Sheet or any other Loan Document in any court referred to the Section “Submission to Jurisdiction”.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

	  
	  
	  

	 28.
	 Waiver of Jury Trial:
	 Each Borrower and Lender hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to the DIP Facility, this Term Sheet or any other Loan Document or the transactions contemplated hereby or thereby (whether based on contract, tort or any other theory).

	  
	  
	  

	 29.
	 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:  (a) upon receipt, when delivered personally; (b) 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 (c) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.  The notice information for each party is set forth on this signature page to this Term Sheet. 

	  
	  
	  

	 30.
	 Assignments:
	 This Term Sheet and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither Borrower may assign or otherwise transfer any of its rights or obligations hereunder or thereunder without the prior written consent of Lender. Lender may freely assign any or all of its rights or obligations hereunder or in any other Loan Document without notice to or consent from either Borrower.

	  
	  
	  

 

  
  
 

 
 IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have duly executed this Term Sheet by their respective authorized officers as of this 21st day of March, 2016.  
 

 	 	
	 BLUE EARTH, INC., a Nevada corporation and a debtor and debtor-in-possession, as a Borrower

	  
	  

	 By: /s/  G. Robert Powell   
	  

	 Name: G. Robert Powell
	  

	 Title: Chief Executive Officer
	 With a copy to:

	 Address:
 235 Pine Street
 Suite 1100
 San Francisco, California 94104
 Attention: G. Robert Powell
 E-mail: bob@blueearthinc.com
 Fax:
	 Jeff Pomerantz, Esq.
 Pachulski Stang Ziehl & Jones LLP
 10100 Santa Monica Blvd.
 13th Floor
 Los Angeles, CA  90067-4003
 E-mail: jpomerantz@pszjlaw.com
 Fax: 310-201-0760

	  
	  

	 BLUE EARTH TECH, INC., a Nevada corporation and a debtor and debtor-in-possession, as a Borrower

	  
	  

	 By: /s/  G. Robert Powell    
	  

	 Name: G. Robert Powell
	  

	 Title: President
	 With a copy to:

	 Address:
 235 Pine Street
 Suite 1100
 San Francisco, California 94104
 Attention: G. Robert Powell
 E-mail: bob@blueearthinc.com
 Fax:
	 Jeff Pomerantz, Esq.
 Pachulski Stang Ziehl & Jones LLP
 10100 Santa Monica Blvd.
 13th Floor
 Los Angeles, CA  90067-4003
 E-mail: jpomerantz@pszjlaw.com
 Fax: 310-201-0760 

	  
	  

	 JACKSON INVESTMENT GROUP, LLC, as the Lender

	  
	  

	 By: /s/  Douglas B. Kline 
	  

	 Name:  Douglas B. Kline
	  

	 Title:    Chief Financial Officer
	 With a copy to:

	 Address:
 Jackson Investment Group, LLC
 2655 Northwinds Parkway
 Alpharetta, Georgia 30009
 Jackson Healthcare
 E-mail: kline@jacksonhealthcare.com
 Fax: (678)-485-5356
	 Todd C. Meyers, Esq.   
 Kilpatrick Townsend & Stockton LLP   
 Suite 2800
 1100 Peachtree Street NE 
 Atlanta, GA 30309-4528 
 E-mail: tmeyers@kilpatricktownsend.com
 Fax: 404-541-3307

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