Blueprint





 






Exhibit
10.1


 


CONVERTIBLE NOTE
PURCHASE AGREEMENT


 


This
Convertible Note Purchase Agreement (this “Agreement”)
is entered into as of March 28, 2018 among SharpSpring, Inc., a
Delaware corporation (the “Company”), and SHSP
Holdings, LLC, a Delaware limited liability company
(“Investor”).


 


BACKGROUND


 

A.         
The Board of Directors of the Company has authorized the issuance
to Investor of a Convertible Promissory Note in the principal
amount of $8,000,000 in the form attached hereto as Exhibit A (the
“Note”).





B           
Investor desires to purchase the Note on the terms and conditions
set forth in this Agreement.


 

C.          
Concurrently with the issuance of the Note, the Company, Investor
and certain officers of the Company will enter into an
Investors’ Rights Agreement substantially in the form
attached hereto as Exhibit B (the “Investors’ Rights
Agreement”).


 

D.          
Concurrently with the issuance of the Note, Investor and Western
Alliance Bank will enter into a Subordination Agreement
substantially in the form attached hereto as Exhibit C (the
“Subordination Rights Agreement”).


 


NOW
THEREFORE, in consideration of the foregoing recitals and the
covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Investor hereby agree as
follows:


 


1.           DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings specified or indicated below, and such meanings
shall be equally applicable to the singular and plural forms of
such defined terms:


 


“1933
Act” means the Securities Act of 1933, as
amended.


 


“1934
Act” means the Securities Exchange Act of 1934, as it may be
amended.


 


         
     “Affiliate” means a person that
directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
person specified.


 


“Agreement”
has the meaning set forth in the preamble.


 


“Common
Stock” means the common stock of the Company, par value
$0.001 per share.


 


“Company”
has the meaning set forth in the preamble.


 


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


 




 








 






 


“Investor”
has the meaning set forth in the preamble.


 


“Investors’
Rights Agreement” has the meaning set forth in the
recitals.


 


“IP
Rights” has the meaning set forth in Section 3.10.


 


“Law”
means any law, rule, regulation, order, judgment or decree,
including any federal and state securities Laws.


 


“Material
Adverse Effect” means any material adverse effect on (i) the
businesses, properties, assets, prospects, operations, results of
operations or financial condition of the Company and the
Subsidiaries, taken as a whole, or (ii) the ability of the Company
to consummate the transactions contemplated by this Agreement and
to perform its obligations under the Note or the Investors’
Rights Agreement; provided, however, that “Material Adverse
Effect” shall not include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or
attributable to: (i) general economic or political conditions; (ii)
conditions generally affecting the industries in which the Company
operates; (iii) any changes in financial or securities markets in
general; (iv) acts of war (whether or not declared), armed
hostilities or terrorism, or the escalation or worsening thereof;
(v) any changes in applicable Laws or accounting rules, including
GAAP; (vi) the public announcement or completion of the
transactions contemplated by this Agreement; (vii) actions taken by
the Company in compliance with the terms of this Agreement, the
Note or the Investors’ Rights Agreement, provided further,
however, that any event, occurrence, fact, condition or change
referred to in clauses (i) through (iv) immediately above shall be
taken into account in determining whether a Material Adverse Effect
has occurred or could reasonably be expected to occur to the extent
that such event, occurrence, fact, condition or change has a
disproportionate effect on the Company compared to other
participants in the industry in which the Company
operates.


 


“Note”
has the meaning set forth in the recitals.


 


“PIK
Notes” means any additional convertible promissory notes
issued by the Company in payment of interest under the Note or any
other PIK Note.


 


“Proceedings”
has the meaning set forth in Section 3.6.


 


“SEC”
means the United States Securities and Exchange
Commission.


 


“SEC
Documents” has the meaning set forth in Section 3.5(a).


 


“Stockholder
Approval Requirement” has the meaning set for in Section 3.2.


 

        
      “Subordination Agreement” has
the meaning set forth in the recitals.


 


“Subsidiaries”
and “Subsidiary” have the meaning set forth in
Section
3.4(b).


 




 

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2.           PURCHASE
AND SALE OF THE NOTE.


 


2.1           Purchase
and Sale of the Note. Subject to the terms and conditions
set forth herein, concurrently with the execution hereof, the
Company shall issue and sell to Investor, and Investor shall
purchase from the Company, a Note in the principal amount of Eight
Million Dollars ($8,000,000). Concurrently with the issuance and
sale of the Note, (i) Investor shall pay Eight Million Dollars
($8,000,000) to the Company, by wire transfer of immediately
available funds and (ii) the Company shall deliver to Investor the
Note being purchased by Investor.


 


2.2           Investors’
Rights Agreement. Concurrently with the issuance and sale of
the Note, the Company, Investor and certain officers of the Company
will execute and exchange the Investors’ Rights
Agreement.






2.3       
Subordination
Agreement. Concurrently with the issuance and sale of the
Note, the Investor will execute and exchange with Western Alliance
Bank the Subordination Agreement, and the Company and certain of
its subsidiaries will acknolwedge and agree to the terms
thereof.


 


3.           REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to Investor and covenants with Investor that, except as is
set forth in the Disclosure Letter being delivered to Investor as
of the date hereof, the following representations and warranties
are true and correct:


 


3.1        
Organization and
Qualification. The Company is a corporation duly organized
and validly existing in good standing under the Laws of the State
of Delaware and has the requisite corporate power and authority to
own its properties and to carry on its business as now being
conducted. The Company is duly qualified to do business and is in
good standing in every jurisdiction in which the ownership of its
property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect.


 


3.2        
Authorization;
Enforcement; Compliance with Other Instruments. The Company
has the requisite corporate power and authority to execute this
Agreement, the Investors’ Rights Agreement and the Note, to
issue and sell the Note pursuant hereto, and to perform its
obligations under this Agreement, the Investors’ Rights
Agreement and the Note. The execution and delivery of this
Agreement, the Investors’ Rights Agreement and the Note by
the Company and the issuance and sale of the Note pursuant hereto,
including without limitation the reservation of the Conversion
Shares for future issuance, have been duly and validly authorized
by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors,
or, subject to the requirement for future stockholder approval
described in Section 2.12 of the Note (the “Stockholder
Approval Requirement”), its stockholders in connection
therewith. This Agreement, the Investors’ Rights Agreement,
the Subordination Agreement and the Note have been duly and validly
executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar Laws relating to, or affecting generally,
the enforcement of creditors’ rights and
remedies.


 




 

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3.3           No
Conflicts. The execution, delivery and performance of this
Agreement, the Investors’ Rights Agreement, the Subordination
Agreement and the Note by the Company and the issuance and sale of
the Note hereunder will not (i) conflict with or result in a
violation of the Company’s Certificate of Incorporation or
Bylaws, (ii) conflict with, or constitute a material default (or an
event which, with notice or lapse of time or both, would become a
material default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, any
material agreement to which the Company or any of the Subsidiaries
is a party, or (iii) subject to the making of the filings referred
to in Section 5,
and subject to the Stockholder Approval Requirement, violate in any
material respect any Law or any rule or regulation of the Nasdaq
Stock Market applicable to the Company or any of the Subsidiaries
or by which any of their properties or assets are bound or
affected. Assuming the accuracy of the Investor’s
representations in Section 4 and subject to
the making of the filings referred to in Section 5 and subject to
the Stockholder Approval Requirement, (i) no approval or
authorization will be required from any governmental authority or
agency, regulatory or self-regulatory agency or other third party
(including the Nasdaq Stock Market) in connection with the issuance
of the Note and the other transactions contemplated by this
Agreement (including the issuance of the Conversion Shares upon
conversion of the Note) and (ii) the issuance of the Note and the
issuance of the Conversion Shares upon the conversion of the Note
will be exempt from the registration and qualification requirements
under the 1933 Act and all applicable state securities
Laws.


 


3.4           Capitalization
and Subsidiaries.


 


(a)           The
authorized capital stock of the Company consists of: (i) 50,000,000
shares of Common Stock; and (ii) 5,000,000 shares of preferred
stock, par value $0.001 per share, of the Company (the
“Preferred Stock”). As of the close of business on
March 26 2018: (A) 8,446,740 shares of Common Stock were issued and
outstanding (not including shares held in treasury); (B) 20,000
shares of Common Stock were issued and held by the Company in its
treasury; and (C) no shares of Preferred Stock were issued and
outstanding or held by the Company in its treasury; and since March
26, 2018 and through the date of this Agreement, no additional
shares of Common Stock or Preferred Stock have been issued. As of
the date of this Agreement, an aggregate of 80,937 shares of Common
Stock are reserved for issuance pursuant to stock option awards not
yet granted under the Company’s equity compensation plans,
and 1,517,450 shares of Common Stock are reserved for issuance
pursuant to outstanding options to purchase Common Stock granted
under the Company’s equity compensation plans. The Company
has duly reserved 1,066,667 shares of Common Stock for issuance
upon conversion of the Note. The Conversion Shares, when issued
upon conversion of the Note in accordance with its terms, will be
validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof. No
shares of the Company’s capital stock are subject to
preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. The
Company’s Certificate of Incorporation, as amended, and
Bylaws on file on the SEC’s EDGAR website are true and
correct copies of the Company’s Certificate of Incorporation
and Bylaws as in effect as of the date hereof. The Company is not
in violation of any provision of its Certificate of Incorporation
or Bylaws.


 




 

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(b)           Schedule
3.4(b) lists each subsidiary of the Company (each, a
“Subsidiary” and collectively, the
“Subsidiaries”) and indicates for each Subsidiary (i)
the authorized capital stock of such Subsidiary as of the date
hereof, (ii) the number and kind of shares or other ownership
interests of such Subsidiary that are issued and outstanding as of
the date hereof, and (iii) the owner of such shares or other
ownership interests. No Subsidiary has any outstanding stock
options, warrants or other instruments pursuant to which such
Subsidiary may at any time or under any circumstances be obligated
to issue any shares of its capital stock. Each Subsidiary is duly
organized and validly existing in good standing under the laws of
its jurisdiction of formation and has all requisite power and
authority to own its properties and to carry on its business as now
being conducted.


 


(c)           Except
(i) as provided in the Asset Purchase Agreement dated as of August
12, 2014 between SharpSpring, LLC and SMTP, Inc. and (ii) for the
Investors’ Rights Agreement, neither the Company nor any
Subsidiary is bound by any agreement or arrangement pursuant to
which it is obligated to register the sale of any securities under
the 1933 Act. There are no outstanding securities of the Company or
any of the Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to redeem or purchase any security of the Company or
any Subsidiary. There are no outstanding securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Note. Neither the Company nor any
Subsidiary has any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or
agreement.


 


3.5           SEC
Documents; Financial Statements.


 


(a)           As
of the date hereof, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the 1934 Act
(all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). As of
their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.


 




 

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(b)           As
of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with
generally accepted accounting principles, and audited by a firm
that is a member a member of the Public Companies Accounting
Oversight Board consistently applied, during the periods involved
(except as may be otherwise indicated in such financial statements
or the notes thereto, or, in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations
and consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). No other written information provided by or on behalf
of the Company to Investor in connection with Investor’s
purchase of the Note which is not included in the SEC Documents
contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein, in the
light of the circumstance under which they are or were made, not
misleading.


 


(c)           The
Company and each of the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) reasonable controls to
safeguard assets are in place and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.


 


3.6        
Litigation and Regulatory
Proceedings. There are no material actions, causes of
action, suits, claims, proceedings, inquiries or investigations
(collectively, “Proceedings”) before or by any court,
public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the executive officers of
Company or any of the Subsidiaries, threatened against or affecting
the Company or any of the Subsidiaries, the Common Stock or any of
the Company’s or the Subsidiaries’ officers or
directors in their capacities as such and, to the knowledge of the
executive officers of the Company, there is no reason to believe
that there is any basis for any such Proceeding.


 


3.7         
No Undisclosed Events,
Liabilities or Developments. No event, development or
circumstance has occurred or exists, or to the knowledge of the
executive officers of the Company is reasonably anticipated to
occur or exist that (i) would reasonably be anticipated to have a
Material Adverse Effect or (ii) would be required to be disclosed
by the Company under applicable securities Laws on a registration
statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly
announced.


 


3.8           Compliance
with Law. The Company and each of the Subsidiaries have
conducted and are conducting their respective businesses in
compliance in all material respects with all applicable Laws and
are in compliance in all material respects with the rules and
regulations of the Nasdaq Stock Market. The Company is not aware of
any facts which could reasonably be anticipated to lead to a
delisting of the Common Stock by the Nasdaq Stock Market in the
future.


 




 

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3.9      
     Employee Relations. Neither the
Company nor any Subsidiary is involved in any union labor dispute
nor, to the knowledge of the Company, is any such dispute
threatened. Neither the Company nor any Subsidiary is a party to
any collective bargaining agreement. No executive officer (as
defined in Rule 501(f) of the 1933 Act) has notified the Company
that such officer intends to leave the Company’s employ or
otherwise terminate such officer’s employment with the
Company.


 


3.10           Intellectual
Property Rights. The Company and each Subsidiary owns or
possesses adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names,
patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other
intellectual property rights (collectively, “IP
Rights”) necessary to conduct their respective businesses as
now conducted. None of the material IP Rights of the Company or any
of the Subsidiaries are expected to expire or terminate within
three (3) years from the date of this Agreement. To the
Company’s knowledge, neither the Company nor any Subsidiary
is infringing, misappropriating or otherwise violating any IP
Rights of any other Person. No claim has been asserted, and no
Proceeding is pending, against the Company or any Subsidiary
alleging that the Company or any Subsidiary is infringing,
misappropriating or otherwise violating the IP Rights of any other
Person, and, to the Company’s knowledge, no such claim or
Proceeding is threatened, and the Company is not aware of any facts
or circumstances which might give rise to any such claim or
Proceeding. The Company and the Subsidiaries have taken
commercially reasonable security measures to protect the secrecy,
confidentiality and value of all of their material IP
Rights.


 


3.11           Environmental
Laws. Except, in each case, as would not be reasonably
anticipated to have a Material Adverse Effect, the Company and the
Subsidiaries (i) are in compliance with any and all applicable Laws
relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants
or contaminants, (ii) have received and hold all permits, licenses
or other approvals required of them under all such Laws to conduct
their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or
approval.


 


3.12           Title
to Assets. The Company and the Subsidiaries have good and
marketable title to all personal property owned by them which is
material to their respective businesses, in each case free and
clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company or any Subsidiary. Any real property and facilities held
under lease by the Company or any Subsidiary are held under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and the
Subsidiaries.


 


3.13           Insurance.
The Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Company reasonably
believes to be prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor
any of the Subsidiaries has been refused any insurance coverage
sought or applied for, and the Company has no reason to believe
that it will not be able to renew all existing insurance coverage
as and when such coverage expires or to obtain similar coverage
from similar insurers.


 




 

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3.14           Regulatory
Permits. The Company and the Subsidiaries have in full force
and effect all certificates, approvals, authorizations and permits
from all regulatory authorities and agencies necessary to own,
lease or operate their respective properties and assets and conduct
their respective businesses, and neither the Company nor any
Subsidiary has received any notice of Proceedings relating to the
revocation or modification of any such certificate, approval,
authorization or permit, except for such certificates, approvals,
authorizations or permits with respect to which the failure to hold
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.


 


3.15           No
Materially Adverse Contracts, Etc. Neither the Company nor
any of the Subsidiaries is (i) subject to any charter, corporate or
other legal restriction, or any judgment, decree or order which in
the judgment of the Company’s officers has or is expected in
the future to have a Material Adverse Effect or (ii) a party to any
contract or agreement which in the judgment of the Company’s
management has or would reasonably be anticipated to have a
Material Adverse Effect.


 


3.16           Taxes.
The Company and the Subsidiaries have made or filed all United
States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company or any
Subsidiary has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and, the knowledge of the
Company, there is no basis for any such claim.


 


3.17           Certain
Transactions. Other than as disclosed in the SEC Documents,
there are no contracts, transactions, arrangements or
understandings between the Company or any of its Subsidiaries, on
the one hand, and any director, officer or employee of thereof on
the other hand, that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated by the SEC in the
Company’s Form 10-K or proxy statement pertaining to an
annual meeting of stockholders.


 


3.18           No
General Solicitation. Neither the Company, nor any of its
Affiliates, nor any person acting on its behalf, has engaged in any
form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of
the Note pursuant to this Agreement.


 




 

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3.19           Acknowledgment
Regarding Investor’s Purchase of the Note. The
Company’s Board of Directors has approved the execution of
this Agreement, the Investors’ Rights Agreement and the Note
and the issuance and sale of the Note based on its own independent
evaluation and determination that the terms of this Agreement, the
Investors’ Rights Agreement and the Note are reasonable and
fair to the Company and in the best interests of the Company and
its stockholders. The Company is entering into this Agreement, the
Investors’ Rights Agreement and the Subordination Agreement
and is issuing and selling the Note voluntarily and without
economic duress. The Company has had independent legal counsel of
its own choosing review this Agreement, the Investors’ Rights
Agreement, the Subordination Agreement and the Note and advise the
Company with respect thereto. The Company acknowledges and agrees
that Investor is acting solely in the capacity of an arm’s
length purchaser with respect to the Note and the transactions
contemplated hereby and that neither Investor nor any person
affiliated with Investor is acting as a financial advisor to, or a
fiduciary of, the Company (or in any similar capacity) with respect
to execution of this Agreement or the Investors’ Rights
Agreement or the issuance of the Note or any other transaction
contemplated hereby.


 


3.20           No
Brokers’, Finders’ or Other Advisory Fees or
Commissions. Other than certain fees payable to one advisory
firm with respect to advisory services provided to the Company in
connection with the transactions contemplated by this Agreement, no
brokers, finders or other similar advisory fees or commissions will
be payable by the Company or any Subsidiary or by any of their
respective agents with respect to the issuance of the Note or any
of the other transactions contemplated by this
Agreement.


 


4.           REPRESENTATIONS
AND WARRANTIES OF INVESTOR. Investor represents and warrants
to the Company as follows:


 


4.1           Organization
and Qualification. Investor is a limited liability company,
duly organized and validly existing in good standing under the laws
of the State of Delaware.


 


4.2           Authorization;
Enforcement; Compliance with Other Instruments. Investor has
the requisite power and authority to enter into this Agreement and
the Investors’ Rights Agreement and to execute the Note, and
to perform its obligations under this Agreement, the
Investors’ Rights Agreement and the Note. The execution and
delivery by Investor of this Agreement, the Investors’ Rights
Agreement and the Note have been duly and validly authorized by
Investor’s governing body and no further consent or
authorization is required. This Agreement, the Investors’
Rights Agreement and the Note have been duly and validly executed
and delivered by Investor and constitute valid and binding
obligations of Investor, enforceable against Investor in accordance
with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’
rights and remedies.


 


4.3           No
Conflicts. The execution, delivery and performance of this
Agreement, the Investors’ Rights Agreement and the Note by
Investor and the purchase of the Note by Investor will not (i)
conflict with or result in a violation of Investor’s
organizational documents, (ii) conflict with, or constitute a
material default (or an event which, with notice or lapse of time
or both, would become a material default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, any material agreement, contract, indenture mortgage,
indebtedness or instrument to which Investor is a party, or (iii)
violate any Law applicable to Investor or by which any of
Investor’s properties or assets are bound or affected. Except
for the Stockholder Approval Requirement, no approval or
authorization will be required from any governmental authority or
agency, regulatory or self-regulatory agency or other third party
in connection with the purchase of the Note and the other
transactions contemplated by this Agreement.


 




 

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4.4           Investment
Intent; Accredited Investor. Investor is purchasing the Note
for its own account, for investment purposes, and not with a view
towards distribution. Investor is an “accredited
investor” as such term is defined in Rule 501(a) of
Regulation D of the 1933 Act. Investor has, by reason of its
business and financial experience, such knowledge, sophistication
and experience in financial and business matters and in making
investment decisions of this type that it is capable of (i)
evaluating the merits and risks of an investment in the Note and
the Conversion Shares and making an informed investment decision,
(ii) protecting its own interests and (iii) bearing the economic
risk of such investment for an indefinite period of
time.


 


4.5           Opportunity
to Discuss. Investor has received all materials relating to
the business, finance and operations of the Company and the
Subsidiaries as it has requested and has had an opportunity to
discuss the business, management and financial affairs of the
Company and the Subsidiaries with the Company’s management.
In making its investment decision, Investor has relied solely on
its own due diligence performed on the Company by its own
representatives.


 


5.           COVENANTS.


 


5.1           Covenants
of the Company.


 


(a)           The
Company shall at all times keep authorized and reserved and
available for issuance, free of preemptive rights, such number of
shares of Common Stock as are issuable upon conversion of the Note
and any PIK Notes at any time. If the Company determines at any
time that it does not have a sufficient number of authorized shares
of Common Stock to reserve and keep available for issuance as
described in this Section
5.1, the Company shall use all commercially reasonable
efforts to increase the number of authorized shares of Common Stock
by seeking stockholder approval for the authorization of such
additional shares.


 


(b)           Promptly
following the Closing (and in any event within the time period
required by applicable Law), the Company will (i) file a Current
Report on Form 8-K describing the terms of the transaction
contemplated by this Agreement, (ii) file a Form D with the SEC
with respect to the issuance and sale of the Note, and (iii) file
any and all other notice filings that may be required under any
applicable state securities Laws with respect to the issuance and
sale of the Note.


 


(c)           The
Company will use the proceeds from the sale of the Note for general
corporate and working capital purposes.


 


5.2           Covenants
of Investor.


 


(a)           Promptly
following the Closing (and in any event within the time period
required by applicable Law), Investor will make all required
filings under Section 13 and Section 16 of the 1934 Act reporting
its ownership of the Note and its right to acquire the Conversion
Shares upon the conversion thereof.


 




 

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(b)           So
long as Investor continues to hold the Note or any portion thereof,
Investor will comply with the provisions of Section 9 of the 1934
Act, and the rules promulgated thereunder, with respect to
transactions involving the Common Stock and will not, either
directly or indirectly through its Affiliates, principals or
advisors, engage in any short sales or other similar hedging
transactions with respect to the Common Stock.


 


6.           GENERAL
PROVISIONS


 


6.1           Governing
Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without
reference to principles of conflict of laws or choice of
laws.


 


6.2           Expenses.
The Company and Investor shall each pay their own fees and expenses
incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement.


 


6.3           Severability.
If any provision of this Agreement is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining
provisions of this Agreement will not in any way be affected or
impaired thereby.


 


6.4           Jurisdiction
and Venue. Any action, proceeding or claim arising out of,
or relating in any way to this Agreement shall be brought and
enforced in the New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New
York. The Company and Investor irrevocably submit to the
jurisdiction of such courts, which jurisdiction shall be exclusive,
and hereby waive any objection to such exclusive jurisdiction or
that such courts represent an inconvenient forum. The prevailing
party in any such action shall be entitled to recover its
reasonable and documented attorneys’ fees and out-of-pocket
expenses relating to such action or proceeding.


 


6.5           WAIVER
OF RIGHT TO JURY TRIAL. THE COMPANY AND INVESTOR HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE.


 


6.6           Entire
Agreement. This Agreement, the Investors’ Rights
Agreement and the Note constitute the full and final agreement of
the Company and Investor with respect to the subject matter hereof
and thereof.


 




 

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6.7           Amendments.
No provision of this Agreement may be amended other than by an
instrument in writing signed by the party against which such
amendment is to be enforced. No provision of this Agreement may be
waived other than by an instrument in writing signed by the party
against which enforcement of such provision is sought.


 


6.8           Successors
and Assigns. This Agreement shall be binding upon, and inure
to the benefit of and be enforceable by, the Company and Investor
and their respective successors and assigns.


 


6.9           Publicity.
The Company and Investor shall consult with each other in issuing
any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither the
Company nor Investor shall issue any such press release or
otherwise make any such public statement without the prior consent
of the other party, which consent shall not be unreasonably
withheld or delayed; provided, however, that no such prior consent
shall be required if such disclosure is required by Law, in which
such case the disclosing party shall provide the other party with
prior notice of such public statement to the extent practicable.
Investor acknowledge that the Company may be required to file
copies of this Agreement, the Investors’ Rights Agreement and
the Note as exhibits to, and to include descriptions of the
material terms of such documents and the transactions contemplated
by this Agreement in, reports or registration statements filed or
furnished under the 1933 Act or the 1934 Act.


 


6.10        
Further Assurances.
Each party hereto shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated
hereby.


 


6.11        
Counterparts. This
Agreement may be executed in two identical counterparts, both of
which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party. Signature pages delivered by
facsimile or e-mail shall have the same force and effect as an
original signature.


 


[Signature
Page Follows]


 


 


 




 

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IN
WITNESS WHEREOF, the undersigned have executed this Convertible
Note Purchase Agreement as of the date first set forth
above.


 


	


COMPANY:

	


INVESTOR:


	
 

	
 


	

SHARPSPRING,
INC.

	

SHSP
HOLDINGS, LLC


	
 

	
 


	
 

	
 


	

By:
/s/ Richard A.
Carlson                      



	

By:
/s/ Daniel
Allen                              




	

Name:
Richard A.
Carlson                      



	

Name:
Daniel
Allen                              




	

Title:
CEO and
President                        



	

Title:
Manager 
                                     









 


 




[Signature
Page of Convertible Note Purchase Agreement]


 








 






 



EXHIBIT A


 



FORM OF CONVERTIBLE NOTE


 


 


 


 



EXHIBIT B


 



FORM OF INVESTORS’ RIGHTS AGREEMENT


 


 


 


 



EXHIBIT C


 



FORM OF SUBORDINATION AGREEMENT


 


 


 











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