Document:

blue_ex10-19.htm

EXHIBIT 10.19

ESCROW AGREEMENT

ESCROW AGREEMENT (this "Agreement") dated as of October 30,2009, among Genesis Fluid Solutions Holdings, Inc., a Delaware corporation (the "Company"), Michael Hodges, a shareholder of Genesis Fluid·Solutions, Ltd., a Colorado corporation ("GFS"), that received shares of the Company in the Merger (as defined below) ("Hodges"), and Sichenzia Ross Friedman Ference LLP, as escrow agent (the "Escrow Agent").

WHEREAS, pursuant to an Agreement of Merger and Plan of Reorganization, dated as of the date hereof (the "Merger Agreement"), among the Company, Genesis Fluid Solutions Acquisition Corp. ("Merger Sub") and GFS, Merger Sub shall be merged with and into GFS (the "Merger");

WHEREAS, at or prior to the closing of the Merger (the "Closing"), the Company shall deliver to the Escrow Agent, to hold in an escrow account (the "Escrow Account") pursuant to the terms of this Agreement, (i) certificates representing in the aggregate 1,300,000 shares (the "Escrowed Shares") of the Company's common stock, par value $0.001 per share (the "Common Stock") that represents a portion of the Merger consideration that was to be delivered by the Company to Hodges but is being held back for satisfaction of certain claims or breaches of representations or warranties, and costs, as more fully described herein, and (ii) any cash as may be delivered by Hodges from time to time in order to withdraw an equivalent value of Escrowed Shares, as permitted hereby (the "Escrowed Cash" and together with the Escrowed Shares, the "Escrowed Amount"). The Escrowed Amount shall constitute a reserve established and to be managed and disbursed by the Escrow Agent, in its sole and absolute discretion, to satisfy any Liabilities (as defined below);

WHEREAS, the Company, Hodges and GFS desire to appoint Sichenzia Ross Friedman Ference LLP to act as Escrow Agent for the Escrowed Amount and any other funds deposited or held in the Escrow Account from time to time in accordance with this Agreement, including without limitation interest, income or earnings thereon; and

WHEREAS, the Company and Hodges desire that the Escrowed Amount shall be held in the Escrow Account by the Escrow Agent to satisfy: (i) any and all claims, indebtedness or liabilities of GFS, whether or not appearing on the balance sheet of GFS, (ii) breaches of representations, warranties or covenants made by GFS in the Merger Agreement, and (iii) any potential taxes owed or claimed to be owed by GFS for activities prior to the Closing (the "Liabilities").

NOW, THEREFORE, In consideration of the mutual covenants and agreements contained herein and in the Merger Agreement, the parties hereto hereby agree as follows:

1. Appointment. Sichenzia Ross Friedman Ference LLP is hereby appointed the Escrow Agent to accept, retain and dispose of the Escrowed Amount in accordance with the provisions of this Agreement. The Escrow Agent hereby accepts such appointment and agrees to accept, retain and dispose of the Escrowed Amount in accordance with the provisions of this Agreement.

  

  

  

2. Deposit of Escrowed Amount.

(a) At or prior to the Closing, the Company shall deposit with the Escrow Agent certificates registered in the name of the Escrow Agent representing the Escrowed Shares.

(b) At any time, and from time to time, Hodges may substitute Escrowed Cash in immediately available funds, delivered to the Escrow Account in accordance with the wiring instructions attached hereto as Annex I, in exchange for any unsold Escrowed Shares registered in the Escrow Agent's name. The amount of Escrowed Cash required to replace Escrowed Shares shall equal $1.00 per Escrowed Share (subject to adjustment in the case of stock splits and similar transactions). Hodges must provide at least 20 days prior written notice of his intention to replace Escrowed Shares with Escrowed Cash, and the Escrow Agent shall within 15 days following such request notify Hodges if the Escrow Agent will consent to such exchange. In no event shall the Escrow Agent be obligated to honor any exchange request or refrain from sale or disposition of Escrowed Shares, including following notice.

(c) So long as the Escrow Agent is holding the Escrowed Cash or any other funds or cash in the Escrow Account in accordance with this Agreement, it shall invest such Escrowed Cash, funds or cash in a federally insured - bank or money-market account. The Escrow Agent shall have no duty, responsibility or obligation to invest any Escrowed Cash or any other funds or cash held in the Escrow Account other than in accordance with Sections 2 and 3 hereof. The Escrow agent shall have no liability or responsibility for any investment losses, including without limitation any market 'loss on any investment liquidated (whether at or prior to maturity) in order to make a payment required under this Agreement. The Escrow Agent may, in making or disposing of any investment permitted by this Agreement, deal with itself, in its individual capacity, or any of its affiliates, whether or not it or such affiliate is acting as a subagent of the Escrow Agent or for any third person or dealing as principal for its own account.

(d) The Escrow Agent is hereby directed to hold the Escrowed Amount in the Escrow Account and to retain and dispose of the Escrowed Amount in accordance with the provisions of this Agreement.

3. Amounts Earned or Lost on Escrowed Amount. All amounts earned on the investment of the Escrowed Cash shall be credited to, and shall become part of, the Escrowed Cash, and any losses on any such investments shall be debited to the Escrowed Cash. The Escrow Agent is hereby authorized and instructed to promptly deliver all amounts earned on the Escrowed Shares (dividends or other distributions), upon the transfer of such amounts into the Escrow Account, and all amounts in excess of the Liabilities as shall be finally determined, and unliquidated Escrowed Shares, shall be delivered to Hodges upon termination of the Agreement, provided, however, that if there remain any contingent Liabilities, the Escrow Agent may establish a reasonable reserve for payment or settlement of such contingencies.

4. Registration and Sale of Payment Shares; Payment of Liabilities.

(a) As soon as practicable following the Closing of the Merger, the Company shall prepare and file with the Securities and Exchange Commission a registration statement covering the

  

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Escrowed Shares. The Company shall use its best efforts to cause the registration statement to be declared effective under the Securities Apt of 1933, as amended (the "Securities Act"), as soon as possible. The Company shall use its best efforts to keep the registration statement continuously effective under the Securities Act for a period of 12 months, unless all Escrowed Shares covered by such registration statement have been sold, or may be sold, without restriction or limitation pursuant to Rule 144 of the Securities Act, as determined by the counsel to the Company.

(b) The Escrow Agent, upon receipt of written instructions from the Chief Financial Officer of the Company, is hereby authorized and instructed to sell such number of Escrowed Shares as may be reasonably required to satisfy any Liability as is set forth in the instruction. The Escrow Agent shall deliver the proceeds to the claimant or to the Company to pay the Liabilities. In the event the Escrow Agent has more proceeds than necessary to cover the Liabilities, such amount shall remain in the Escrow Account pursuant to the terms of this Agreement. The Escrow Agent shall have no liability or responsibility for the sales price of the Escrowed Shares, nor shall the Escrow Agent be obligated to sell Escrowed Shares in any market, or in any particular manner, as long as Escrow Agent acts reasonably, given the nature, timing and amount of such sales.

5. Release of Escrowed Amount.

(a) In the event GFS or the Company is found to be liable for a Liability, as soon as practicable after the settlement or applicable judgment is issued and receipt by the Escrow Agent of written instructions from the Chief Financial Officer of the Company, the Escrow Agent is hereby authorized and instructed to deliver to the Company or the claimant an amount of Escrowed Cash or Escrowed Shares equal to the amount of such Liability. If the Escrowed Cash at any time is not sufficient to cover such Liability, then the Escrow Agent shall be entitled to sell the certificates representing such number of Escrowed Shares equal to the remaining amount of the Liability, and the Escrow Agent shall deliver such proceeds from the sale to the claimant or the Company to be used to satisfy the Liability. The Escrow Agent shall have complete and absolute discretion on the method and timing of the sale.

(b) Subject to the provisions of Sections 6, 7 and 8 below, at or as soon as practicable after the three (3) year anniversary of the date hereof (the "Release Date"), the Escrow Agent is hereby authorized and instructed to deliver to Hodges the certificates representing all remaining Escrowed Shares and the remaining Escrowed Cash held in the Escrow Account.

6. Claims Against Escrowed Amount. At any time or times prior to the Release Date, the Company may make claims for Liabilities against the Escrowed Amount. The Company shall simultaneously notify Hodges and the Escrow Agent in writing of each such claim (the "Claim Notice"), which shall include a brief description of the amount and nature of such claim, and a good faith estimate of the amount of cash and the number of shares, if any, to be withheld by the Escrow Agent if such Claim is not resolved or otherwise adjudicated by the Release Date. If Hodges shall reasonably dispute such claim, he shall give written notice thereof to the Company and to the Escrow Agent (the "Dispute Notice") so that the Dispute Notice is received by the Company and the Escrow Agent within twenty (20) calendar days after the date on which the Escrow Agent and Hodges received such Claim Notice, in which case the Escrow Agent is hereby authorized and instructed to continue to hold the cash and shares specified in the Claim Notice in accordance with the terms of this Agreement.

  

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If the Escrow Agent does not receive the Dispute Notice within such twenty-day period, then such claim shall be deemed to have been acknowledged by Hodges as valid and the Escrow Agent is hereby authorized and instructed to promptly deliver to the Company, the amount of cash and the number of shares in the amounts specified in the Claim Notice. If the amount of the claim exceeds the Escrowed Amount, the Escrow Agent shall not have any liability or responsibility for any deficiency. The Escrow Agent shall have no liability or responsibility for the performance of any calculations pursuant to this Agreement.

7. Disputed Claims.

(a) If Hodges shall dispute a Claim Notice issued by the Company within such twenty-day period as provided above, the Escrow Agent shall set aside the cash and shares specified in the Claim Notice (the "Set Aside Amount"). In the event the Company notifies the Escrow Agent in writing (the "Expense Notice") that it has made out-of-pocket expenditures or anticipates that it will incur legal expenses in connection with any such disputed claim, the Escrow Agent shall also set aside the cash and shares specified in the Expense Notice, which shall be added to and become a part of the Set Aside Amount, which aggregate Set Aside Amount shall be set forth in a written notice to the Escrow Agent and Hodges executed by the Company; provided, however, that in the event and to the extent that it shall be agreed (as evidenced by a written notice executed by the Company and Hodges) or determined through a proceeding described in Section 7(b) below, that the Company is not entitled to indemnification with respect to such claim, then the Company shall not be entitled to such shares or such cash and the Escrow Agent is hereby authorized and instructed to hold the shares and cash in the Escrow Account until the Release Date and such amount shall then be distributed in accordance with the terms of this Agreement.

(b) If within thirty (30) days after the date on which the Escrow Agent received a Dispute Notice, the Escrow Agent has not received written notice executed by the Company and Hodges stating that the disputed indemnification claim has been resolved, the Escrow Agent is hereby authorized and instructed to continue to hold the Set Aside Amount until directed to distribute it pursuant to (i) a final non-appealable order of a court of competent jurisdiction or taxing authority (or the expiration of any applicable appeal period) or (ii) joint instructions or directions furnished in writing signed by the Company and Hodges. In no event shall the Escrow Agent be responsible for any fees or expenses of any party to any litigation proceeding.

8. Termination: Distribution. Except as set forth in Sections 9 and 10 hereof, this Agreement shall terminate on the Release Date, provided that there are no outstanding Liability claims as to which the Escrow Agent has received a Claim Notice pursuant to Section 6 hereof; otherwise this Agreement shall continue in effect until the resolution of all such Liability claims. On the Release Date or as soon thereafter as is practicable, pursuant to and in accordance with joint written instructions of the Company and Hodges, the Escrow Agent is hereby authorized and instructed to distribute the remaining Escrowed Amount less (i) the amount of any then existing Set Aside Amount and (ii) the amount specified by the Company in any Claim Notice delivered to the Escrow Agent on or within 30 days prior to the Release Date with respect to which no Set Aside Amount has yet been established, and the Escrow Agent has not otherwise been instructed in writing by the Company and Hodges. At such time thereafter as any remaining Liability claim hereunder has been resolved and the Escrow Agent has received a written notice executed by the Company and Hodges to that effect and any shares to be

  

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distributed to the Company for cancellation and any cash in connection therewith have been so distributed, the Escrow Agent is hereby authorized and instructed to distribute any portion of the remaining Escrowed Amount relating to such Liability claim to Hodges, and this Agreement shall then terminate. The Company shall not be required to issue certificates for fractional shares in any distribution of Escrowed Shares pursuant to this Agreement; but rather shall be entitled to round such shares to a whole number, based upon a reasonable method to be agreed upon by the Company and Hodges.

9. The Escrow Agent.

(a) The Escrow Agent is expressly authorized and directed, but shall not be obligated, to charge against and withdraw from the Escrow Account for its own account or for the account of an Indemnitee (as hereinafter defined) any amounts due to the Escrow Agent under this Section 9(a) or to an Indemnitee under Section 9(b). To the extent that (i) the Escrow Agent in its sole discretion decides to charge against and withhold from the Escrow Account any such amounts and the Escrowed Amount is insufficient to pay the amounts due to the Escrow Agent under this Section 9(a) or to an Indemnitee under Section 9(b) or (ii) the Escrow Agent decides not to charge and withhold any such amounts from the Escrow Account, the Company agrees to pay such amounts to the Escrow Agent or such Indemnitee on demand. The obligations contained in this Section 9(a) shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(b) The Company agrees to indemnify, defend, protect, save and keep harmless the Escrow Agent and its affiliates and their respective successors, assigns, directors, officers, partners, managers, employees, agents, attorneys, accountants and experts (collectively the "Indemnitees"), from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, actions, suits, proceedings, litigation, investigations, costs or expenses, including without limitation reasonable fees and disbursements of counsel (collectively "Losses"), that may be imposed on, incurred by, or asserted against any Indemnitee, at any time, and in any way relating to or arising out of the execution, delivery or performance of this Agreement, the enforcement of any rights or remedies under or in connection with this Agreement, the establishment of the Escrow Account, the acceptance or administration of the Escrowed Amount and any payment, transfer or other application of funds pursuant to this Agreement, or as may arise by reason of any act, omission or error of the Indemnitee. The obligations contained in this Section 9(b) shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(c) The Escrow Agent shall not be liable for any error of judgment or for any action taken, suffered or omitted to be taken, except in the case of its own gross negligence or bad faith, as determined by a final, non-appealable order, judgment, decree or ruling or a court of competent jurisdiction. In no event shall the Escrow Agent be (i) liable for acting in accordance with a notice, instruction, direction, request or other communication, paper or document from Hodges, the Company or any other person or entity authorized to deliver such hereunder, or (ii) liable or responsible for special, punitive, indirect, consequential or incidental loss or damages of any kind whatsoever to any person or entity (including without limitation lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage. Any liability of the Escrow Agent under this Agreement will be limited to the amount of fees paid to the Escrow Agent

  

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(d) The Escrow Agent shall act hereunder as an escrow agent only and shall not be responsible or liable in any matter whatsoever for the sufficiency, collection, correctness, genuineness or validity or any revenues, cash, payments, securities, property, funds, investments, income, earnings, or other amounts deposited with or held by it or for the identity, authority or rights of any person or entity executing and delivering or purporting to execute or deliver any thereof to the Escrow Agent.

(e) The Escrow Agent shall be fully protected in acting upon any written notice, instruction, direction, request or other communication, paper or document which the Escrow Agent believes to be genuine, and shall have no duty to inquire into or investigate the validity, accuracy or content or any thereof.

(f) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to refrain from taking any action other than to keep safely the Escrowed Amount until it shall (i) receive written instructions signed by Hodges and the Company; or (ii) is directed otherwise by a court of competent jurisdiction. The Escrow Agent shall not be liable for failure to act if in reasonable doubt as to its duties under this Agreement.

(g) The Escrow Agent may consult with and obtain advice from counsel (who may be counsel to a party hereto) and shall be fully protected in taking or omitting to take any action in reliance on said advice.

(h) The Escrow Agent shall have no duties, responsibilities or obligations as the Escrow Agent except those which are expressly set forth herein, and in any modification or amendment hereof to which the Escrow Agent has consented in writing, and no duties, responsibilities or obligations shall be implied or inferred. Without limiting the foregoing, the Escrow Agent shall not be subject to, nor be required to comply with, or determine if any person or entity has complied with, the Merger Agreement or any other agreement between or among the parties hereto, even though reference thereto may be made in this Agreement, or to comply with any notice, instruction, direction, request or other communication, paper or document other than as expressly set forth in this Agreement.

(i) The Escrow Agent shall not be obligated to expend or risk its own funds or to take any action which it believes would expose it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

(j) The Escrow Agent shall not take instructions or directions except those given in accordance with this Agreement.

(k) The Escrow Agent shall not incur any liability for not performing any act, duty, obligation or responsibility by reason of any occurrence beyond the control of the Escrow Agent (including without limitation any act or provision of any; present or future law or regulation or governmental authority, any act of God, war, civil disorder or failure of any means of communication).

(l) The Escrow Agent shall not be called upon to advise any person or entity as to any investments with respect to any security, property or funds held in escrow hereunder or the dividends, distributions, income, interest or earnings thereon.

  

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(m) The Escrow Agent shall have no duty to make inquiry as to the genuineness, accuracy or validity of any statements or instructions or any signatures on statements or instructions.

(n) The Escrow Agent shall have the right at any time to resign hereunder by giving written notice of its resignation to the parties hereto, at the addresses set forth herein or at such other addresses as the parties shall provide in writing, at least thirty (30) days prior to the date specified for such resignation to take effect In such event, Hodges and the Company shall appoint a successor escrow agent within said thirty (30) days. If Hodges and the Company do not designate a successor escrow agent within such period, the Escrow Agent may appoint a successor escrow agent Upon the effective date of such resignation, the Escrowed Amount held by the Escrow Agent shall be delivered by it to such successor escrow agent. In the event a successor escrow agent has not been appointed within thirty (30) days, the Escrowed Amount held by the Escrow Agent shall be delivered to and deposited with a court of competent jurisdiction to act as successor escrow agent. Upon the delivery of the Escrowed Amount to a successor escrow agent pursuant to this Section 9(n), the Escrow Agent shall be relieved of all liability hereunder.

(o) The Escrow·Agent may be removed by mutual agreement of the parties upon written notice to the Escrow Agent stating such removal and designating a successor escrow agent and, upon delivery of the Escrowed Amount held by the Escrow Agent to such successor escrow agent, the Escrow Agent shall be relieved of all liability hereunder.

(p) In the event that the Escrow Agent should at any time be confronted with inconsistent or conflicting claims or demands by the parties hereto, the Escrow Agent shall have the right to interplead said parties in any court of competent jurisdiction and request that such court determine the respective rights of such parties with respect to this Agreement and, upon doing so, the Escrow Agent shall be released from any obligations or liability to either party as a consequence of any such claims or demands.

(q) The Escrow Agent may execute any of its powers or responsibilities hereunder and exercise any rights hereunder, either directly or by or through its agents, attorneys, accountants or other experts.

(r) The Escrow Agent shall not be responsible for and shall not be under a duty to examine, inquire into or pass upon the validity, binding effect, execution or sufficiency of this Agreement or of any amendment or supplement hereto.

10. Tax Issues. The parties hereto acknowledge that the Escrow Agent does not have any interest in the Escrowed Amount or the Escrow Account, but is serving as escrow holder hereunder. Without limiting the foregoing, the Company and Hodges shall be responsible for any taxes relating to the Escrowed Amount, the Escrow Account and funds on deposit therein and the income and earnings thereon. Any disbursement of the Escrowed Amount or payments from the Escrow Account shall be subject to withholding taxes and regulations then in force under the United States Federal Income Tax Code. The Company and Hodges will provide the Escrow Agent with appropriate forms for tax certifications, as requested by the Escrow Agent This Section 10 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

  

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11. Voting Rights. The Escrow Agent hereby agrees to permit Michael Hodges to vote the Escrowed Shares held in the Escrow Account in his discretion, pursuant to a proxy to be provided by the Escrow Agent.

12. Compliance with Process. Notwithstanding anything in this Agreement to the contrary, if at any time the Escrow Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process which in any way affects the Escrow Agent, the Escrow Account or the Escrowed Amount (including without limitation orders of attachment or garnishment or levies or injunctions), the Escrow Agent is authorized to comply therewith in any manner it deems appropriate, and shall be fully protected from doing so even if such order, judgment, decree, writ or process may be subsequently amended, modified, vacated or otherwise determined to be invalid or without legal force or effect.

13. Cumulative Remedies. The rights and remedies of the Escrow Agent set forth in this Agreement shall be cumulative, and not exclusive, of any rights and remedies available to it at law or equity or otherwise.

14. Governing Law. This Agreement is governed by the laws of New York without regard to its conflict of law provisions, and shall inure to the benefit of and be binding upon the successors, assigns, heirs and personal representatives of the parties hereto. Each party hereto hereby irrevocable submits to the personal jurisdiction of the state and federal courts located within the City and State of New York with respect to any action, suit or proceeding relating to or arising from this Agreement. Each party hereto irrevocably waives (i) any claim or defense based upon improper venue or inconvenient forum with respect to any action, suit or proceeding brought in any such court and (ii) the right to trial by jury in any action, suit or proceeding relating to or arising under this Agreement. Each party waives personal service of process and consents to the service of process by the manner set forth in Section 15 below, in addition to any other method of service of process permitted by applicable law.

15. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same document, and shall become a binding agreement when one or more counterparts have been signed by each party hereto and delivered to each other party or such party's representative.

16. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when so delivered in person, by FedEx or equivalent overnight courier, by facsimile transmission (with receipt confirmed by telephone or by automatic transmission report) or two business days after being sent by registered or certified mail (postage prepaid, return receipt requested), as follows:

TO HODGES:

Michael Hodges

c/o Genesis Fluid Solutions, Ltd.

6660 Delmonico Drive, Suite 242-D

Colorado Springs, CO 80919

Fax: ________________

  

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TO THE ESCROW AGENT:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attention: Harvey Kesner, Esq.

Fax: (212) 930-9725

TO THE COMPANY:

Genesis Fluid Solutiol,ls Holdings, Inc.

6660 Delmonico Driv~, Suite 242-D

Colorado Springs, Cb-80919

Attention: Michael Hodges

Fax: ________________ _

and a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attention: Harvey Kesner, Esq.

Fax: (212) 930-9725

Addresses may be changed by written notice given to each of the other parties hereto pursuant to this Section. Any notice given hereunder may be given on behalf of any party by his counselor other authorized representative.

17. Entirety of Agreement. This Agreement (and the exhibits and schedules hereto) together with the Merger Agreement (and the exhibits and schedules thereto), constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes any prior oral or written agreements in regard thereto.

18. Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by each of the parties hereto.

19. Nonwaiver. No waiver by any party of any provision contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such provision (or breach) on any other occasion or as a waiver of any other provision (or of the breach of any other provision) contained in this Agreement on the same or any other occasion.

20. Headings. The headings and titles in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

  

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21. Conflicts and Severability. In the event of any conflict between the terms and provisions of this Agreement and those of the Merger Agreement, the terms and conditions of this Agreement shall control. If any provisions of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written.

22. Construction. In this Agreement (i) words denoting the singular include the plural and vice versa, (ii) "it" or "its" or words denoting any gender include all genders, (iii) the word "including" shall mean "including without limitation," whether or not expressed, (iv) any reference herein to a Section refers to a Section of this Agreement, unless otherwise stated, and (v) when calculating the period of time within or following which any act is to be done or steps taken, the date which is the reference day in calculating such period shall be excluded and if the last day of such period is not a business day, then the period shall end on the next day which is a business day.

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be duly executed as of the day and year first above written.

GENESIS FLUID SOLUTIONS HOLDINGS, INC.

By: __________________

Name:

Title:

Sichenzia Ross Friedman Ference LLP, as Escrow Agent

By: __________________

Name:

Title:

______________________

Michael Hodges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

11blue_ex10-28.htm

EXHIBIT 10.28

FORM OF WARRANT TO BE DISTRIBUTED UPON THE EFFECTIVE DATE OF A REGISTRATION STATEMENT INCLUDING THE WARRANT AND UNDERLYING SECURITIES

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

2010-A-                    

WARRANT TO PURCHASE SHARES

OF THE COMMON STOCK OF

BLUE EARTH , INC.

(Void after Expiration Date – December 31, 2013)

Issue Date: ___________ ___, 2011

     This certifies that ___________________________ or his successors or assigns (“Holder”) shall be entitled to purchase from Blue Earth, Inc., a Nevada corporation (“Company”), having its principal place of business at 2298 Horizon Ridge Parkway, Suite 205, Henderson, NV 89052, ______ fully paid and non-assessable shares (“Warrant Shares”) of the Company’s common stock, par value $.001 per share (“Common Stock”), at a price per share equal to the Exercise Price (as defined below).

     This Warrant is being issued to the Holder in connection with the distribution (the “Offering”) of one Class A Warrant for each two (2) shares of Common Stock issued of record by each stockholder of the Company on December 31, 2010.  This Warrant is one of several which will be identical except for names and amounts.

     The initial exercise price (“Exercise Price”) of this Warrant will be equal to $3.00 per share, subject to redemption and/or a temporary reduction by the Company as described in Sections 16 and 2.1, respectively, below.

     This Warrant shall be exercisable into shares of Common Stock at any time, or from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on December 31, 2013  (“Expiration Date”), unless previously called or extended by the Company on thirty (30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date. This Warrant is exercisable in whole or in part upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with a form of subscription in substantially the form attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised as determined in accordance with the provisions hereof.

     Upon the exercise of this Class A Warrant for the $3.00 Exercise Price, the holder shall receive one share of Common Stock and a Class B Common Stock Purchase Warrant (“Class B Warrant”) to purchase one share of Common Stock at $6.00 per share, subject to redemption and/or temporary reduction by the Company. The Class B Warrant shall be exercisable into shares of Common Stock at any time, or from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on the third anniversary date from the date of the last issuance of the Class B Warrants (“Class B Expiration Date”), unless previously called or extended by the Company on thirty (30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date.

  

  

  

     Upon the exercise of the Class B Warrant for the $6.00 Exercise Price, the holder shall receive one share of Common Stock and a Class C Common Stock Purchase Warrant (“Class C Warrant”) to purchase one share of the Common Stock at $12.00 per share, subject to redemption and/or temporary reduction by the Company. The Class C Warrant shall be exercisable into shares of Common Stock at any time, or from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on the third anniversary date from the date of the last issuance of the Class C Warrants (“Class C Expiration Date”), unless previously called or extended by the Company on thirty (30) days prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date.

	
1.

	  	
Exercise; Issuance of Certificates; Payment for Shares.

 

	  	
1.1

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

	  	  	  
	  	  	  	  
	  	
1.2

	  	
Exercise for Cash

	  	  	  	  
	  	  	  	
This Warrant may be exercised, in whole at any time or in part from time to time after the Effective Date, prior to 5:00 P.M., Pacific Coast time, December 31, 2013, unless previously called or extended by the Company, by the Holder by the facsimile delivery of the exercise notice, as attached hereto, on the date of the exercise and by surrender of this Warrant within three (3) business days from the exercise day at the address set forth hereof, together with proper payment of the aggregate Exercise Price payable hereunder for the Warrant Shares (“Aggregate Warrant Price”), or the proportionate part thereof if this Warrant is exercised in part. Payment for the Warrant Shares shall be made by wire, certified or bank check or check payable to the order of the Company. If this Warrant is exercised in part, this Warrant must be exercised for a number of whole shares of the Common Stock, and the Holder is entitled to receive a new Warrant covering the Warrant Shares which have not been exercised and setting forth the proportionate part of the Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender of this Warrant, the Company will (a) issue a certificate or certificates in the name  of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and (b) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.

  

2

  

	  	
1.3

	  	
Exercise for Non-Cash Consideration:

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

	  	  	  	  
	
 1.4

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

	  	  
	  	  
	  	
1.5

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

2. Determination or Adjustment of Exercise Price and Number of Shares. The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 2. Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment.

  

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2.1

	  	
Adjustment of Exercise Price: Temporary Reduction. Upon written Notice as provided for herein, at the sole discretion of the Company, the Exercise Price of this Warrant may be temporarily reduced. At the end of such discretionary reduction period, the price shall revert back to the defined Exercise Price.

	  	  	  	  
	  	
2.2

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

	  	  	  	  
	  	
2.3

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

 

	  	
2.3.1

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

	  	  	  	  
	  	
2.3.2

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

	  	  	  	  
	  	
2.3.3

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

 

	  	
2.4

	  	
Reorganization, Reclassification, Consolidation, Merger or Sale.

 

	  	
2.4.1

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

  

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2.4.2

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

 

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

	  	
2.6

	  	
Notices of Change.

	  	
2.6.1

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

	  	  	  	  
	  	
2.6.2

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

	  	  	  	  
	  	
2.6.3

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

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

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

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

6. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, shall survive the exercise of this Warrant.

  

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7. Further Representations, Warranties and Covenants of the Company.

	  	
7.1

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

	  	  	  	  
	  	
7.2

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

	  	  	  	  
	  	
7.3

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

	  	  	  	  	  	  
	  	
7.4

 

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

	  	  	  	  
	  	
7.5

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

	  	  	  	  
	  	
7.6

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

	  	  	  	  
	  	
7.7

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

 

	
8.

	  	
Representations and Covenants of the Holder.

	  	
8.1

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

	  	
8.1.1

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

	  	
8.1.2

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

	  	  	  	  

  

6

  

	  	
8.1.3

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

	  	  	  	  
	  	
8.1.4

	  	
Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of

	  	  	  	
evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

	  	  	  	  
	  	
8.1.5

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

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

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

  

7

  

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

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

13. Descriptive Headings and Governing Law. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by the laws of the State of Nevada.

14. Lost Warrants. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.

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

16. Redemption. This Warrant may be redeemed at the option of the Company, at a redemption price (the “Redemption Price”) of $.001 per Warrant at any time upon twenty (20) days’ prior written notice. On and after the date fixed for redemption, the Holder shall have no rights with respect to this Warrant except to receive the $.001 per Warrant upon surrender of this Certificate. The Company covenants and agrees that it will honor all Exercise Notices tendered through the Business Day immediately preceding the Redemption Date. The redemption payment shall be made in cash on the date fixed for redemption in the Company’s notice of redemption, as described below (the “Redemption Date”). The redemption payment is due in full on the Redemption Date. Notwithstanding anything to the contrary contained in this Warrant, the Company shall have the option, without further compensation to the Holder other than the payment of the Redemption Price per Warrant, to cause any or all of the Warrants (each, a “non-Exercised Warrant”) which were not properly exercised on or before the Redemption Date to be assigned to one or more third parties (each, a “ Standby Purchaser”), effectively immediately upon the Redemption Date, for the consideration equal to $.001 per Non-Exercised Warrant payable to the Company, and (c) each Standby Purchaser shall have the right to exercise the Non-Exercised Warrants so assigned to such Standby Purchaser through the tenth business day following the Redemption Date.

     The notice of redemption shall specify: (i) the Redemption Price; (ii) the date not more than twenty (20) days from mailing which is fixed for redemption (the “Redemption Date”); (iii) the place where Warrant Certificates shall be delivered and the redemption price paid; and (iv) that the right to exercise the Warrants shall terminate at 5:00 p.m. (Pacific Coast Time) on the Business Day immediately preceding the Redemption Date. An affidavit of the Secretary or an Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be conclusive evidence of the facts stated therein.

     From and after the Redemption Date, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the Holder thereof of this Warrant, deliver or cause to be delivered to or upon the written order of such holder a sum of cash equal to the Redemption Price of each such Warrant. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption, such Warrants shall expire and become void and all rights hereunder and shall cease, except the right, if any, to receive payment of the Redemption Price.

  

8

  

     In Witness Whereof, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this

     Dated: _____________ ____, 2011

	  	
Blue Earth, Inc.

a Nevada corporation

 

	  	
By:  

	  
	  	  	
Name:  

	
Johnny R. Thomas 

	  	  	
Title:  

	
CEO

	  	  	
Address:

2298 Horizon Ridge Parkway, Suite 205 Henderson, NV 89052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

9

  

SCHEDULE A

SUBSCRIPTION FORM

Date:                                         ,                     

Blue Earth, Inc. — Attn: CEO

Ladies and Gentlemen:

    

The undersigned hereby elects to exercise the Warrant issued to it by Blue Earth, Inc. (“Company”) and dated _____________ ____, 2011, (“Warrant”) and to purchase thereunder _______ shares of the Common Stock of the Company (“ Shares”) at a purchase price of  $_____ per Share or an aggregate purchase price of ____________ Dollars ($___) (“Exercise Price”).

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

Very truly yours,

_____________________

Signature

_____________________

Print Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

10

  

ASSIGNMENT

To Be Executed by the Holder

in Order to Assign Warrants

FOR VALUE RECEIVED,

                                                             hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

	  	  	  	  	  
	  	  	  	  	
  

	  	  	  	  	  
	  	  	  	  	
  

	  	  	  	  	  
	  	  	  	  	
  

	  	  	
[please print or type name and address]

	  	  

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

	
Dated:

	  	  	  	  	  	  	
x 

	
 

 

Signature Guaranteed

	  	  

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

11

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