NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit 10.1
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of September
_____
, 2007 (this “Agreement”), is
entered into by and between SMART MOVE, INC., a Delaware corporation (the “Company”), and
, an individual residing in the state of (“Purchaser”).
RECITALS
| A. | The Purchaser desires to purchase from the Company, and the Company desires to issue and sell
to the Purchaser at the Initial Closing (as defined in ), (a) an unsecured convertible
promissory note dated the date of the Initial Closing, due September 2, 2010 and bearing
interest payable quarterly and at maturity at 7% per annum, in the principal amount of five
hundred forty thousand ($540,000) dollars ($540,000), said note to be in the form attached
hereto as Exhibit A-1 (the “Initial Closing Note”); and (b) three warrants expiring December
5, 2011, covering an aggregate 300,000 shares of the common stock, par value $0.001 per share
of the Company, each respective warrant covering 100,000 shares to be in the form attached
hereto as Exhibit B-1, but with exercise prices of $7.50, $3.25 and $2.50 respectively (the
“Initial Closing Warrants”. The conversion price applicable to both the Initial Closing Notes
and the Second Closing Notes defined in Recitals B below, will be $1.80 per share. The notes
are convertible into shares of the Company’s common stock at the holder’s option and will
automatically convert into shares of the Company’s common stock on the date when closing bid
price of a share of the Company’s common stock equals $3.75 per share or greater for twenty
(20) of thirty (30) consecutive trading days on the American Stock Exchange, provided that the
underlying shares have either been registered for resale by the holders of the securities
pursuant to certain piggyback registration rights granted to the Holder as described in
paragraph D below or are eligible to be sold under and subject to Rule 144 under the
Securities Act of 1933. |
| B. | Subject to the consummation of the Initial Closing and Purchaser’s timely written election in
accordance with Section 1.2 hereof to exercise Purchaser’s right to purchase an additional
note in the principal amount of five hundred forty thousand ($540,000), the parties have
agreed to conduct a Second Closing (as defined herein) at which Second Closing the Investor
agrees to purchase from the Company, and the Company agrees to issue and sell to the
Purchaser: a) an additional unsecured convertible promissory note in the principal amount of
five hundred forty thousand ($540,000) dollars), said additional note to be in the same form
as the note issued at the Initial Closing, but dated the date of the Second Closing (the
“Second Closing Note”) and (b) three warrants expiring December 5, 2011, each in the same form
as the warrant issued at the Initial Closing, one such warrant covering 100,000 shares at an
exercise price of $7.50, and two warrants each covering 150,000 shares with exercise prices of
$3.25 and $3.50 respectively (the “Second Closing Warrants”). |
| C. | The Initial Closing Note and Initial Closing Warrants, and if applicable the Second Closing
Note and Second Closing Warrants issued to the Purchaser are herein called the “Securities”. |
In consideration of the foregoing Recitals which form part of this Agreement and the other
mutual promises made herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF SECURITIES
PURCHASE AND SALE OF SECURITIES
1.1 Initial Closing. On and subject to the terms and conditions of this Agreement,
on September
_____
, 2007, (the “Initial Closing”) the Purchaser hereby agrees to purchase, and the
Company agrees to sell and issue to Purchaser the Securities to be sold and issued at the Initial
Closing, (being the Initial Closing Note and Initial Closing Warrants) at an aggregate purchase
price for such Securities of $540,000.
1.2 Second Closing. Purchaser is granted the right and option to purchase Securities
(consisting of the Second Closing Note and Second Closing Warrants) at an additional closing to be
held in the Company’s offices at a mutually agreeable date on or before October 1, 2007, such
option to be exercisable by Purchaser’s written notification to the Company of Purchaser’s election
to purchase such additional Securities. At the Second Closing, Purchaser agrees to purchase, and
the Company agrees to sell and issue to Purchaser the Second Closing Note and Second Closing
Warrants) at an aggregate purchase price of $540,000.
1.3 Deliveries at Initial Closing and Second Closing. At the Initial Closing and
Second Closing (if applicable), the Company will deliver to the Purchaser: 1) the Initial Closing
Note or the Second Closing Note, as applicable, representing the $540,0000 principal amount of the
note then being purchased by the Purchaser; and ii) the Initial Closing Warrants (representing the
number of Warrant Shares as described in Recitals A) or the Second Closing Warrants (representing
the number of Warrant Shares as described in Recitals B) as applicable. The Purchaser will deliver
to the Company the $540,000 face amount of the unsecured convertible note then being purchased, by
wire transfer of immediately available funds to an account of the Company as the Company shall
direct in writing.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
2.1 Organization, etc. The Company has been duly formed, and is validly existing as a
corporation in good standing under the laws of Delaware and is qualified to do business as a
foreign corporation in each jurisdiction in which the failure to be so qualified could reasonably
be expected to have a material adverse effect on the assets, liabilities, condition (financial or
other), business or results of operations of the Company and its Subsidiary taken as a whole (a
“Material Adverse Effect”). The Company and its Subsidiary each have the requisite corporate power
and authority to own, lease and operate their respective properties and to conduct their respective
businesses as presently conducted. The Company has the requisite corporate power and authority to
enter into, execute, deliver and perform all of its duties and obligations under this Agreement and
to consummate the transactions contemplated hereby.
2.2 Authorization. The execution, delivery and performance of this Agreement and the
issuance of the Securities have been duly authorized by all necessary corporate action on the part
of the Company, including, without limitation, the due authorization by the affirmative votes of a
majority of the disinterested directors of the Company’s Board of Directors.
2.3 Validity; Enforceability. This Agreement and the Initial Closing Note and Initial
Closing Warrants shall at the Initial Closing have each been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with their respective terms, except as such enforceability may be limited
by, or subject to, any bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and subject to general principles of equity. If
applicable, the Second Closing Note and Second Closing Warrants shall likewise be executed and
delivered at the Second Closing do as to be legal and valid obligations of the Company to the same
extent as the Securities issued at the Initial Closing.
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2.4 Capitalization.
(a) As of the date hereof, the authorized capital stock of the Company consists of the Company
consists of 100,000,000 shares of Common Stock, $0.001 par value, of which 10,975,361 shares are
issued and outstanding, and 10,000,000 shares of preferred stock, none of which has been issued.
The Company has reserved 11,235,406 shares of its Common Stock for future issuance upon the
exercise or conversion of outstanding options, warrants, and convertible securities, including the
Securities covered by this Agreement. Except as set forth in the Documents, the Reports or other
written information provided by the Company to the Subscriber, there are no options, warrants or
rights to subscribe to, or securities, rights or obligations convertible into or exchangeable for
or giving any right to subscribe for any shares of, capital stock of the Company. All of the
outstanding shares of Common Stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable. The issue and sale of the Securities will not, immediately or
with the passage of time, obligate the Company to issue shares of Common Stock or other securities
to any person (other than those purchasing Units) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price under such
securities.
(b) The Company owns all of the issued and outstanding capital stock of any of its
subsidiaries, free and clear of all liens and encumbrances. All of such shares of capital stock are
duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with
the registration exemption and qualification requirements of all applicable federal, state and
foreign securities laws. There are no options, warrants, conversion privileges, subscription or
purchase rights or other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of capital stock or other securities of,
or any proprietary interest in, the Company’s subsidiaries, and there is no outstanding security of
any kind convertible into or exchangeable for such shares or proprietary interest. “Subsidiary”
means, with respect to the Company, a corporation or other entity of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the outstanding economic
equity interest is held, directly or indirectly, by the Company.
2.5 Governmental and Stock Exchange Approvals and Consents. The execution and delivery
by the Company of this Agreement, and the performance by the Company of the transactions
contemplated hereby, do not and will not require the Company to effectuate or obtain any
registration with, consent or approval of, or notice to any federal, state or other governmental
authority or regulatory body, other than: i) periodic and other filings under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”); and ii) approval of a listing application
and/or notifications to the American Stock Exchange with respect to the issuance of the Common
Stock issuable upon conversion or exercise of the notes and exercise of the warrants comprising the
Securities. The parties hereto agree and acknowledge that, in making the representations and
warranties in the foregoing sentence of this Section 2.5, the Company is relying on the
representations and warranties made by the Purchaser in Article III. To the best knowledge of the
Company, the issuance and sale of the Securities will not contravene the rules and regulations of
the American Stock Exchange, whose rules and regulations require under certain circumstances that
a listed company obtain shareholder approval in connection with a transaction (other than a public
offering), involving the potential issuance of shares of common stock (including shares of common
stock issuable upon the conversion or exercise of other securities) equal to 20% or more of its
aggregate shares of common stock, or its aggregate voting power, outstanding before the transaction
for less than the greater of book or market value of its common stock as of the date of the
transaction. Based on the specification of a fixed Conversion Price for conversion to equity
pursuant to the notes and a fixed warrant exercise price for exercise of the warrants to purchase a
specified number of share (subject only to adjustments for recapitalization or reclassification of
stock into a different number of shares that do not involving any change in the shareholder’s
equity or the aggregate market value of shares outstanding as a result thereof), no approval of the
shareholders of the Company thereunder is required for the Company to issue and deliver the
Securities.
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2.6 No Violation. The execution and delivery of this Agreement and the performance by
the Company of the transactions contemplated hereby will not (i) conflict with or result in a
breach of any provision of the articles of incorporation or by-laws of the Company, (ii) result in
a default or breach of, or require any consent, approval, authorization or permit of, or filing or
notification to, any person, company or entity under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, loan, factoring arrangement, license, agreement, lease or
other instrument or obligation to which the Company is a party or by which the Company or its
assets may be bound or (iii) violate any law, judgment, order, writ, injunction, decree, statute,
rule or regulation of any court, administrative agency, bureau, board, commission, office,
authority, department or other governmental entity applicable to the Company or its subsidiaries,
except, in the case of clause (ii) or (iii) above, any such event that could not reasonably be
expected to have a Material Adverse Effect or materially impair the transactions contemplated
hereby.
2.7 Issuances of Securities. The Securities to be delivered at the Initial Closing
have been, and Securities to be delivers at the Second Closing, if applicable, shall be validly
issued, and, upon payment therefore, will be fully paid and non-assessable. The offering, issuance,
sale and delivery of the Securities as contemplated by this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the
“Securities Act”), are being made in compliance with all applicable federal and (except for any
violation or non-compliance that could not reasonably be expected to have a Material Adverse
Effect) state laws and regulations concerning the offer, issuance and sale of securities, and are
not being issued in violation of any preemptive or other rights of any stockholder of the Company.
The parties hereto agree and acknowledge that, in making the representations and warranties in the
foregoing sentence of this Section 2.7, the Company is relying on the representations and
warranties made by the Investors in Section 3.4.
2.8 Absence of Certain Developments. Since December 31, 2006, except as disclosed in
the Company’s periodic and current reports and other public filings with the SEC under the
Securities Exchange Act of 1934 , there has not been any: (i) material adverse change in the
condition, financial or otherwise, of the Company (taken as a whole) or in the assets, liabilities,
properties or business of the Company and its Subsidiary (taken as a whole); (ii) declaration,
setting aside or payment of any dividend or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any capital stock of the Company; (iii) waiver of any
valuable right of the Company or its Subsidiary or cancellation of any material debt or claim held
by the Company or its Subsidiary; (iv) material loss, destruction or damage to any property of the
Company or its Subsidiary, whether or not insured; (v) acquisition or disposition of any material
assets (or any contract or arrangement therefore) or any other material transaction by the Company
or its Subsidiary otherwise than for fair value in the ordinary course of business consistent with
past practice; or (vi) other agreement or understanding, whether in writing or otherwise, for the
Company or its Subsidiary to take any action of the type, or any action that would result in an
event of the type, specified in clauses (i) through (v).
2.9 Commission Filings. The Company has filed all required forms, reports and other
documents with the Securities and Exchange Commission (the “Commission”) for periods from and after
the completion of its initial public offering in December 2006 (collectively, the Commission
Filings”), each of which has complied in all material respects with all applicable requirements of
the Securities Act and/or the Exchange Act (as applicable). The Company has heretofore made
available to the Investors all of the Commission Filings, including the Company’s Annual Report on
Form 10-KSB for the year ended December 31, 2006 and the Company’s Quarterly Reports on Form 10-QSB
for the quarterly periods ended March 31, 2007 and June 30, 2007. As of their respective dates, the
Commission Filings did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial statements and unaudited
interim consolidated financial statements of the Company included or incorporated by reference in
such Commission Filings have been prepared in accordance with generally accepted accounting
principles, consistently applied (“GAAP”) (except as may be indicated in the notes thereto or, in
the case of the unaudited consolidated statements, as permitted by Form 10-QSB), complied as of
their respective dates in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, and fairly present, in all
material respects, the financial position of the Company as of the dates thereof and the results of
operations for the periods then ended (subject, in the case of any unaudited consolidated interim
financial statements, to the absence of footnotes required by GAAP and normal year-end
adjustments).
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2.10 Brokers. The Company has employed the brokerage firm of XX Xxxxxx & Company,
L.L.C., a member of the National Association of Securities Dealers with respect to this
transaction, and has agreed to pay the Broker a cash fee equal to 8% of gross invested capital
received by the company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
3.1 Validity; Enforceability. This Agreement has been duly executed and delivered by
the Purchaser, and constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such enforceability may
be limited by, or subject to, any bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors’ rights generally and subject to general principles of
equity.
3.2 Investment Representations. The Purchaser understands that the Securities are
being offered and sold pursuant to an exemption from registration pursuant to Federal Rule 506 of
Regulation D under the Securities Act of 1933 and are based in part upon Purchaser’s
representations contained in this Agreement, including, without limitation, that the Purchaser is
an “accredited investor” within the meaning of Regulation D under the Securities as stated in 3.7
below. Purchaser confirms that Purchaser has received or has had full access to all the
information Purchaser considers necessary or appropriate to make an informed investment decision
with respect to the Securities to be purchased by it under this Agreement and the common stock
acquired by Purchaser upon the conversion of the convertible notes and exercise of the warrants,
respectively. Purchaser further confirms that Purchaser has had an opportunity to ask questions and
receive answers from the Company regarding the Company’s business, management and financial affairs
and the terms and conditions of the sale of the Securities and to obtain additional information (to
the extent the Company possessed such information or could acquire it without unreasonable effort
or expense) necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access. No oral or written representations have been made or oral or written
information furnished to the Purchaser or the Purchaser’s advisors in connection with the
Securities that were in any way inconsistent with this Agreement. The Purchaser is not purchasing
the securities as a result of or subsequent to: (1) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast over television,
radio or the internet or (2) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
3.3 Purchaser Understands Economic Risks. Purchaser acknowledges that Purchaser can
bear the economic risk and complete loss of Purchaser’s investment in the Securities. Purchaser
has substantial experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it Purchaser is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to protect his own
interests. Purchaser understands that Purchaser must bear the economic risk of this investment
until the Securities are sold pursuant to: (i) an effective registration statement under the
Securities Act; or (ii) an exemption from registration is available with respect to such sale.
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3.4 Purchaser’s Awareness of Specific Risks Relating to the Company’s Business. The
Purchaser has been given the opportunity to review the merits and risks of the investment provided
for in this Agreement with legal counsel and with an investment advisor to the extent the Purchaser
deemed advisable. Purchaser acknowledges that purchaser has been advised by the Company carefully
to consider the risks and uncertainties described in the Company’s periodic and reports filed with
the SEC before executing this Agreement. In particular, the Company had advised Purchaser that the
Company anticipates that significant additional equity or debt funding may be required in addition
to Purchaser’s investment not only to expand the Company’s operations, but also to sustain its
operations and satisfy its contractual obligations until the Company achieves profitability. There
can be no assurance that the Company will achieve cash flow from operations sufficient to satisfy
its working capital requirements, or at all, or that the additional financing the Company may
require will be available to the Company on commercially reasonable terms, or at all.
3.5 Acquisition For Own Account. The Purchaser is acquiring the Securities for the
Purchaser’s own account for investment only, and not as a nominee or agent and not with a view
towards or for resale in connection with their distribution.
3.6 Purchaser Can Protect His Interest. and has such knowledge and experience in
financial or business matters that
3.7 Accredited Investor. The purchaser represents and warrants to the Company that
Purchaser is an accredited investor within the meaning of Regulation D under the Securities Act
because Purchaser comes within one of the categories of investors as defined in the certification
attached as Exhibit C hereto and herby confirms that Purchaser has provided a separate signed copy
of the certification to X.X Xxxxxx, LLC, on which purchaser has also signed his name next to the
appropriate category(ies) in which Purchaser is included.
3.8 Legends.
(a) The Convertible Note shall bear substantially the following legend:
“THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE
AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR
SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SMART MOVE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”
(b) The shares issued upon conversion of the unsecured convertible notes shall bear a legend
which shall be in substantially the following form until such shares are covered by an effective
registration statement filed with the SEC:
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SMART
MOVE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”
(c) The Warrants shall bear substantially the following legend:
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“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SMART MOVE, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.”
3.9 Covenants of The Company. The Company covenants and agrees with the Purchaser
that, so long as the Initial Closing Note and/or Second Closing Note, or any portion thereof,
remain outstanding:
(a) STOP-ORDERS. The Company will advise the Purchaser, promptly after it receives notice of
issuance by the Securities and Exchange Commission (the “SEC”), any state securities commission or
any other regulatory authority of any stop order or of any order preventing or suspending any
offering of any securities of the Company, or of the suspension of the qualification of the Common
Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding
for any such purpose.
(b) MARKET REGULATIONS. The Company shall notify the SEC, American Stock Exchange and
applicable state authorities, in accordance with their requirements, to the extent applicable to
the Company, of the transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule and regulation, for
the legal and valid issuance of the Securities to the Purchaser and promptly provide copies thereof
to the Purchaser.
(c) REPORTING EQUIREMENTS. The Company will timely file with the SEC all reports required to
be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required
by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination.
(d) USE OF FUNDS. The Company agrees that it will use the proceeds of the sale of the
Convertible Notes and the Warrants for general working capital and general business purposes of the
Company and its subsidiaries.
(e) ACCESS TO FACILITIES. Each of the Company and each of his Subsidiaries will permit any
representatives designated by the Purchaser (or any successor of the Purchaser), upon reasonable
notice and during normal business hours, at such person’s expense and accompanied by a
representative of the Company, to:
| (i) | Visit and inspect any of the properties of the
Company or any of its Subsidiaries; |
| (ii) | examine the corporate and financial records of the
Company or any of its Subsidiaries (unless such examination is not
permitted by federal, state or local law or by contract) and make copies
thereof or extracts there from; and |
| (iii) | discuss the affairs, finances and accounts of the
Company or any of its Subsidiaries with the directors, officers and
independent accountants of the Company or any of its subsidiaries. |
Notwithstanding the foregoing, neither the Company nor any of its subsidiaries will provide any
material, non-public information to the Purchaser unless the Purchaser signs a confidentiality
agreement and otherwise complies with Regulation FD, under the federal securities laws.
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(f) Taxes. Each of the Company and each of its Subsidiaries will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments
and governmental charges or levies imposed upon the income, profits, property or business of the
Company and its Subsidiaries; provided, however, that any such tax, assessment, charge or levy need
not be paid if the validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company and/or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Company and its Subsidiaries will
pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings
to foreclose any lien which may have attached as security therefore.
(g) Insurance. Each of the Company and its Subsidiaries will keep its assets which are
of an insurable character insured by financially sound and reputable insurers against loss or
damage by fire, explosion and other risks customarily insured against by companies in similar
business similarly situated as the Company and its Subsidiaries; and the Company and its
Subsidiaries will maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the manner which the
Company reasonably believes is customary for companies in similar business similarly situated as
the Company and its Subsidiaries and to the extent available on commercially reasonable terms.
(h) Reissuance of Securities. The Company agrees to reissue certificates representing
the Securities without the legends set forth in Section 5.7 above at such time as:
| (i) | the holder thereof is permitted to dispose of such
Securities pursuant to Rule 144(k) under the Securities Act; or |
| (ii) | upon resale subject to an effective registration
statement after such Securities are registered under the Securities Act. |
The Company agrees to cooperate with the Purchaser in connection with all resales pursuant to Rule
144(d) and Rule 144(k) and provide legal opinions necessary to allow such resales provided the
Company and its counsel receive reasonably requested representations from the selling Purchaser and
broker, if any.
3.10 Covenants of the Purchaser. The Purchaser, and each of them, covenant and agree
with the Company as follows:
(a) CONFIDENTIALITY. The Purchaser, agrees that Purchaser will not disclose, and will not
include in any public announcement, the name of the Company, unless expressly agreed to by the
Company or unless and until such disclosure is required by law or applicable regulation, and then
only to the extent of such requirement.
(b) NON-PUBLIC INFORMATION. The Purchaser agrees not to effect any sales in the shares of the
Company’s Common Stock while in possession of material, non-public information regarding the
Company if such sales would violate applicable securities law.
3.11 Covenants of the Company and Purchaser Regarding Indemnification.
(a) COMPANY INDEMNIFICATION. The Company agrees to indemnify, hold harmless, reimburse and
defend Purchaser against any claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Purchaser which results,
arises out of or is based upon a third party claim attributable to: (i) any misrepresentation by
the Company in this Agreement, any other schedules attached hereto or thereto; or (ii) any breach
or default in performance by Company of any covenant or undertaking to be performed by the Company
hereunder.
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(b) PURCHASER’S INDEMNIFICATION. Purchaser agrees to indemnify, hold harmless, reimburse and
defend the Company and each of the Company’s officers, directors, agents, affiliates, control
persons and principal shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company which results, arises out of or is based upon: (i) any misrepresentation by
Purchaser or breach of any warranty by Purchaser in this Agreement or any Related Agreement or in
any exhibits or schedules attached hereto; or (ii) any breach or default in performance by
Purchaser of any covenant or undertaking to be performed by Purchaser hereunder, under any Related
Agreement or any other agreement entered into by the Company and Purchaser relating hereto or
thereto.
3.12 Piggyback Registration Rights. Purchaser is hereby granted “piggyback rights”
entitling Purchaser to register and sell Purchaser’s shares of common stock of the Company may
conduct a public offering under the Securities Act of 1933, as amended. Purchaser shall have no
right to require or demand that the Company conduct a public offering, but, rather, shall be
allowed to include his shares in any registration that is initiated by the Company for which the
registration form used permits the registration of securities owned by existing shareholders of the
Company. The expenses of such registration shall be paid by the Company. Such piggyback rights
shall expire on the third anniversary of the date hereof.
ARTICLE 4
MISCELLANEOUS
MISCELLANEOUS
4.1 Miscellaneous.
(a) GOVERNING LAW. This agreement and the other related agreements shall be governed by and
construed and enforced in accordance with the laws of the state of Colorado applicable to contracts
made and performed in such state, without regard to principles of conflicts of laws.
(b) DISPUTES. The parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of the judicial system
and of arbitration, the parties hereto waive all rights to trial by jury in any action, suit, or
proceeding brought to resolve any dispute, whether arising in contract, tort, or otherwise between
the purchaser and/or the company arising out of, connected with, related or incidental to the
relationship established between them in connection with this agreement, any other related
agreement or the transactions related hereto or thereto.
(c) SUCCESSORS. Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, heirs, executors and administrators
of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall
be a holder of the Securities from time to time, other than the holders of Common Stock which has
been sold by the Purchaser pursuant to Rule 144 or an effective registration statement. No
Purchaser shall be permitted to assign its rights hereunder or under any Related Agreement to a
competitor of the Company.
(d) ENTIRE AGREEMENT. This Agreement, the Related Agreements, the exhibits and schedules
hereto and thereto and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations, warranties, covenants
and agreements except as specifically set forth herein and therein.
(e) SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
(f) AMENDMENT AND WAIVER.
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| (i) | This Agreement may be amended or modified only upon
the written consent of the Company and the Purchaser. |
| (ii) | The obligations of the Company and the rights of the
Purchaser under this Agreement may be waived only with the written consent
of the Purchaser. |
| (iii) | The obligations of the Purchaser and the rights of
the Company under this Agreement may be waived only with the written
consent of the Company. |
(g) NOTICES. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given:
| (i) | upon personal delivery to the party to be notified; |
| (ii) | when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next business
day; |
| (iii) | three (3) business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid;
or |
| (iv) | one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with
written verification of receipt. |
All communications shall be sent as follows:
IF TO THE COMPANY, TO:
|
SMART MOVE, INC. | |
| 0000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000 | ||
| Attention: Chief Executive Officer | ||
| Facsimile: 000-000-0000 | ||
IF TO THE PURCHASER, TO: |
||
or at such other address as the Company or the Purchaser may designate by written notice to the
other party hereto given in accordance herewith.
(h) TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this Agreement.
(i) FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may be executed by facsimile signatures
and in any number of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(j) BROKER’S FEES. Each party hereto represents and warrants that XX Xxxxxx is the broker for
this transaction and that no other agent, broker, investment banker, person or firm acting on
behalf of or under the authority of such party hereto is or will be entitled to any broker’s or
finder’s fee or any other commission directly or indirectly in connection with the transactions
contemplated herein.
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IN WITNESS WHEREOF, the parties hereto have executed the NOTE PURCHASE AGREEMENT as of the
date set forth in the first paragraph hereof.
| COMPANY: | ||||
| SMART MOVE, INC. | ||||
| By: | ||||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Chief Executive Officer | |||
| PURCHASER: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | ||||
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