SUBORDINATED CONVERTIBLE NOTE
Exhibit 10.10
| $ | Greenwood Village, Colorado July ___, 2006 |
FOR VALUE RECEIVED, A SMART MOVE L.L.C., a Colorado limited liability company, 0000 Xxxxxxxxx
Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, and its successors and assigns, (the
“Maker”) promises to pay to the order of [INVESTOR] at [INVESTOR ADDRESS] (the “Holder”) or at such
other place as Holder may from time to time designate in writing, the principal sum of ___
Million Dollars ($ .00)] in lawful money of the United States of America, together with
interest on so such thereof as is from time to time outstanding at the rate hereinafter provided,
and payable as hereinafter provided.
1. Interest Rate. The unpaid balance of this Note shall bear interest at the rate of ten
percent (10%) per annum, simple interest.
2. Payment/Maturity Date. Interest on the Note shall be paid annually, on the
30tht day of June, beginning June 30, 2007, and continuing until the first to occur of
(a) the entire principal amount of the Note has been converted pursuant to paragraph 5 below, or
(b) the total outstanding principal balance hereof, together with accrued and unpaid interest, is
be paid. The principal is due and payable on June ___, 2011.
3. Default Interest and Attorney Fees. Upon declaration of a default hereunder, the
balance of the principal remaining unpaid, interest accrued thereon, and all other costs, and fees
shall bear interest at the rate of eighteen percent (18%) per annum from the date of default. In
the event of default, the Maker and all other parties liable hereon agree to pay all costs of
collection, including reasonable attorneys’ fees.
4. Interest Calculation. Daily interest shall be calculated on a 365-day year and the
actual number of days in each month.
5. Security Agreement. This Note is subject to a Security Agreement of even date between
the Maker and the Holder.
6. Conversion. Holder may convert the balance of the Note, or any portion thereof, and all
accrued interest into shares of the Company’s Common Stock (“Common Stock”) at any time. Such
shares will be referred to as the “Conversion Shares.” The conversion price shall be the lower of
(a) $7.50 per share (which shall be adjusted if the Common Stock is split) or (b) 75% of the of the
price of a share in the Company’s initial public offering (“IPO”) (or the equivalent per share
price if units are sold in the IPO). The Notes shall automatically convert into Conversion Shares
when the price of the Common Stock trades on an exchange or on Nasdaq, if it is not listed on an
exchange, or on the Electronic Bulletin Board, at a price that is a 25% premium to the IPO price
of the shares for 20 consecutive trading days, and if the Conversion Shares can be immediately sold
pursuant to a current registration statement filed for such purpose with the Securities and
Exchange Commission.
7. Prepayment. This Note may be prepaid, in whole or in part subject to a pre-payment
penalty for the first two years of 102% of Face value, and no prepayment penalty for years
therafter. The Company may exercise its right to prepay all or a portion of the outstanding
principal balance by sending to Holder thirty (30) days’ prior written notice of such
prepayment.
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8. Costs of Collection. Maker agrees that if, and as often as, this Note is placed in
the hands of an attorney for collection or to defend or enforce any of Xxxxxx’s rights hereunder or
under any instrument securing payment of this Note, Maker shall pay to Holder its reasonable
attorneys’ fees and all court costs and other expenses incurred in connection therewith, regardless
of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgment or
not. Such costs and expenses shall include, without limitation, all costs, reasonable attorneys’
fees, and expenses incurred by Holder in connection with any insolvency, bankruptcy,
reorganization, foreclosure, deed in lieu of foreclosure or similar proceedings involving Maker or
any endorser, surety, guarantor, or other person liable for this Note which in any way affect the
exercise by Holder of its rights and remedies under this Note, or any other document or instrument
securing, evidencing, or relating to the indebtedness evidenced by this Note.
9. Default. At the option of Holder, the unpaid principal balance of this Note and all
accrued interest thereon shall become immediately due, payable, and collectible, without notice or
demand, upon the occurrence at any time of any of the following events, each of which shall be
deemed to be an event of default hereunder.
(a) Maker’s failure to make any payment of principal, interest, or other charges on or before the
date on which such payment becomes due and payable under this Note;
(b) Maker’s breach or violation of any agreement or covenant contained in this Note, or in any
other document or instrument securing, evidencing, or relating to the indebtedness evidenced by
this Note;
(c) The default in (a) any material financial agreement to which Maker is a party, (b) any Notes,
or any agreement referenced therein or related thereto and such default (i) occurs at the final
maturity of the obligations thereunder or (ii) results in a right by the other party thereto,
irrespective of whether exercised, to accelerate the maturity of the Maker’s obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein;
(d) Dissolution, liquidation, or termination of Maker.
10. Application of Payments. Any payment made against the indebtedness evidenced by this
Note shall be applied against the following items in the following order: (1) costs of collection,
including reasonable attorneys’ fees incurred or paid and all costs, expenses, default interest,
late charges and other expenses incurred by Xxxxxx and reimbursable to Holder pursuant to this Note
(as described herein); (2) default interest accrued to the date of said payment; (3) ordinary
interest accrued to the date of said payment; and (4) finally, outstanding principal.
11. Assignment of Note. This Note may not be assigned by Maker, except to a corporation
into which Maker merges. The Note may be assigned by Holder with the express written consent of
the Maker.
12. Non-Waiver. No delay or omission on the part of Holder in exercising any rights or
remedy hereunder shall operate as a waiver of such right or remedy or of any other right or remedy
under this Note. A waiver on any one or more occasion shall not be construed as a bar to or waiver
of any such right and/or remedy on any future occasion.
13. Maximum Interest. In no event whatsoever shall the amount paid, or agreed to be paid,
to Holder for the use, forbearance, or retention of the money to be loaned hereunder
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(“Interest”)
exceed the maximum amount permissible under applicable law. If the performance or fulfillment of
any provision hereof, or any agreement between Maker and Holder shall result in Interest exceeding
the limit for Interest prescribed by law, then the amount of such Interest shall be reduced to such
limit. If, from any circumstance whatsoever, Holder should receive as Interest an amount which
would exceed the highest lawful rate, the amount which would be excessive Interest shall be applied
to the reduction of the principal balance owing hereunder (or, at the option of Holder, be paid
over to Maker) and not to the payment of Interest.
14. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for
business or commercial purposes and that the proceeds thereof will not be used primarily for
personal, family, household or agricultural purposes.
15. Waiver of Presentment. Maker and the endorsers, sureties, guarantors and all persons
who may become liable for all or any part of this obligation shall be jointly and severally liable
for such obligation and hereby jointly and severally waive presentment and demand for payment,
notice of dishonor, protest and notice of protest, and any and all lack of diligence or delays in
collection or enforcement hereof. Said parties consent to any modification or extension of time
(whether one or more) of payment hereof, the release of all or any part of the security for the
payment hereof, and the release of any party liable for payment of this obligation. Any
modification, extension, or release may be without notice to any such party and shall not discharge
said party’s liability hereunder.
16. Governing Law. As an additional consideration for the extension of credit, Maker and
each endorser, surety, guarantor, and any other person who may become liable for all or any part of
this obligation understand and agree that the loan evidenced by this Note is made in the State of
Colorado and the provisions hereof will be construed in accordance with the laws of the State of
Colorado, and such parties further agree that in the event of default this Note may be enforced in
any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the
jurisdiction of such court regardless of their residence or where this Note or any endorsement
hereof may be executed.
17. Binding Effect. The term “Maker” as used herein shall include the original Maker of
this Note and any party who may subsequently become liable for the payment hereof as an assumer
with the consent of the Holder, provided that Holder may, at its option, consider the original
Maker of this Note alone as Maker unless Xxxxxx has consented in writing to the substitution of
another party as Maker. “Maker” shall include any corporation into which A Smart Move L.L.C.
merges.
18. Relationship of Parties. Nothing herein contained shall create or be deemed or
construed to create a joint venture or partnership between Maker and Xxxxxx, Xxxxxx is acting
hereunder as a lender only.
19. Severability. Invalidation of any of the provisions of this Note or of any paragraph,
sentence, clause, phrase, or word herein, or the application thereof in any given circumstance,
shall not affect the validity of the remainder of this Note.
20. Amendment. This Note may not be amended, modified, or changed, except only by an
instrument in writing signed by both of the parties.
21. Time of the Essence. Time is of the essence for the performance of each and every
obligation of Maker hereunder.
IN WITNESS WHEREOF, the undersigned has executed this Note this ___day of July, 2006.
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| A SMART MOVE L.L.C. a Colorado Limited Liability Company |
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| By: | ||||||
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