Filed by Bowne Pure Compliance





Exhibit 4.2




THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.



Original Issue Date: November ___, 2008




$300,000




10% DEBENTURE

DUE MARCH 31, 2009




THIS DEBENTURE of Smart Move, Inc., a Delaware corporation, having a principal place of
business at 5990 Greenwood Plaza Blvd, #2 Suite 390, Greenwood Village, Colorado 80111 (the
“Company”), designated as its 10% Debenture, due March 31, 2009 (the “Debenture”).



FOR VALUE RECEIVED, the Company promises to pay to John Thomas Bridge & Opportunity Fund or
its registered assigns (the “Holder”), the principal sum of $300,000 on the earlier of (i)
March 31, 2009, unless such Maturity Date is extended by the Company pursuant to and compliant with
Section 7 hereof, or (ii) upon the New Financing Date, as defined in Section 11 (the “Maturity
Date”), and to pay accrued interest to the Holder at the Maturity Date on the then outstanding
principal amount of this Debenture at the rate of 10% per annum, payable in cash. The Company may
pre-pay this Debenture at any time without penalty.



This Debenture is subject to the terms and conditions set forth in the Bridge Loan Agreement,
as well as to the following additional provisions:



Section 1. This Debenture is exchangeable for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder surrendering the same.
No service charge will be made for such registration of transfer or exchange.



Section 2. This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Bridge Loan Agreement and may be
transferred or exchanged only in compliance with the Bridge Loan Agreement and applicable federal
and state securities laws and regulations. Prior to due presentment to the Company for transfer of
this Debenture, the Company and any agent of the Company may treat the Person in whose name this
Debenture is duly registered on the Debenture register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not this Debenture is
overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.




 


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Section 3. Events of Default.



(a) “Event of Default”, wherever used herein, means any one of the following
events (whatever the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or any order,
rule or regulation of any administrative or governmental body):




(i) any default in the payment of the principal amount of, or interest on, the
Debenture;




(ii) any representation or warranty made by the Company in the Bridge Loan
Agreement or any other Transaction Documents was incorrect in any material respect
on or as of the date made;




(iii) the Company shall fail to observe or perform any other covenant or
agreement contained in this Debenture or any of the other Transaction Documents
which failure is not cured, if possible to cure, within 10 Trading Days after notice
of such default is sent by the Holder or by any other holder to the Company; or




(iv) the Company shall commence, or there shall be commenced against the
Company a case under any applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or the Company commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or there is commenced
against the Company any such bankruptcy, insolvency or other proceeding which
remains undismissed for a period of 60 days; or the Company is adjudicated insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company suffers any appointment of any custodian or
the like for it or any substantial part of its property which continues undischarged
or unstayed for a period of 60 days; or the Company makes a general assignment for
the benefit of creditors; or the Company shall fail to pay, or shall state that it
is unable to pay, or shall be unable to pay, its debts generally as they become due;
or the Company; or any corporate or other action is taken by the Company or any
subsidiary thereof for the purpose of effecting any of the foregoing;




(v) default shall occur with respect to any other indebtedness for borrowed
money of the Company or under any agreement to which the Company is a party and such
default shall exceed $100,000, excluding the defaults set forth in Schedule 1
hereto; and




(vi) final judgment for the payment of money in excess of $100,000 shall be
rendered against the Company and the same shall remain undischarged for a period of
60 days during which execution shall not be effectively stayed;




(b) If any Event of Default occurs, the full principal amount of this Debenture,
together with interest and other amounts owing in respect thereof, to the date of
acceleration shall become immediately due and payable in cash; provided, however, that the
Holder shall have the right to convert all or a portion of such principal of the Debenture
into shares of Common Stock pursuant to the terms set forth in Section 4 below (and to
receive cash on the (i) accrued interest and (ii) principal amount Holder elects not to
convert). Commencing 5 days after the occurrence of any Event of Default that results in
the eventual acceleration of this Debenture, the interest rate on this Debenture shall
accrue at the rate of 18% per annum, or such lower maximum amount of interest permitted to
be charged under applicable law. The Holder need not provide and the Company hereby waives
any presentment, demand, protest or other notice of any kind, and the Holder may immediately
and without expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such declaration may
be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder
shall have all rights as a Debenture holder until such time, if any, as the full payment
under this Section shall have been received by it. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.


 


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Section 4. Conversion Upon Event of Default.




(a) The Holder, if elected pursuant to Section 3(b) above, shall convert all or a
portion of the principal of this Debenture into shares of Common Stock, the Holder shall
effect such conversion by
delivering to the Company a notice of conversion (a “Notice of Default
Conversion”), specifying therein the principal amount of the Debenture to be converted
and the date on which such conversion is to be effected (a “Default Conversion
Date”). The number of shares of Common Stock issuable upon a conversion shall be
determined by the quotient obtained by dividing (x) the outstanding principal amount of, and
accrued interest on, this Debenture to be converted by (y) the default conversion price per
share as defined in subsection 4(b).




(b) The default conversion price per share in effect on the Default Conversion Date
shall be equal to the greater of (i) $.10 and (ii) 75% of the last sale price of the Company
common stock on the Default Conversion Date.




(c) The number of shares of common stock issuable upon a Default Conversion Date and
the default conversion price per share shall be subject to adjustments as described in
Section 7.1 of the Bridge Loan Agreement in the event of any reverse split or other
reclassification of the shares of the Company which uniformly affects all stockholders of
the Company.



Section 5. This Debenture is a direct obligation of the Company, and the obligation of the
Company to repay this Debenture is absolute and unconditional, but is expressly subordinated to all
currently outstanding secured and unsecured indebtedness of the Company outstanding on the date
hereof. The repayment terms hereof and the separate consideration described in the Bridge Funding
Agreement agreed to be paid to Holder for making the Loan evidenced by this Debenture reflect the
substantial risks Holder is assuming by virtue of such subordination and Holder’s further agreement
evidenced hereby that no recourse shall be had for the payment of the principal of, or interest on
the Debenture, or for any claim based hereon, or otherwise in respect hereof, against any
shareholder, officer or director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the express terms hereof
and as part of the consideration for the repayment terms here or hereof, expressly waived and
released.



Section 6. Interest on the amount advanced will accrue on this Debenture until the Maturity
Date. at the rate of ten percent (10% per annum), and be payable at the Maturity Date except as
provided below in the case of an Extended Maturity Date. If any portion of this Debenture is
outstanding on the Maturity Date, interest at the rate of eighteen percent (18%) per annum or the
highest rate allowed by law, whichever is lower, shall accrue on the outstanding principal of this
Debenture from the Maturity Date to and including the date of payment by the Company. All past due
interest shall accrue on a daily basis and shall be payable in cash. The Holder may demand payment
of all or any part of this Debenture, together with accrued interest, if any, and any other amounts
due hereunder, as of the Maturity Date or any date thereafter.



Section 7. The Maturity Date may be extended by the Company in its discretion for up to two
(2) additional months, if no New Financing transaction(s) generating in the aggregate gross
proceeds of at least $5,000,000 has/have occurred as of the stated Maturity Date, and provided the
Company pays all interest accrued through the effective date of the extension election (being March
31, 2009, in the case of an initial one month extension and April 30, 2009 in the case of a second
election being made by the Company to extend the Maturity Date until May 31, 2009), and further
provided that an extension fee is paid concurrently with each extension election in an amount equal
to 200,000 shares of the Company’s restricted common stock per extension(“Extension Fee”).



Section 8. Any payment made by the Company to the Investor, on account of this Debenture shall
be applied in the following order of priority: (i) first, to any amounts other than principal and
accrued interest, if any, hereunder, (ii) second, to accrued interest, if any, through and
including the date of payment, and (iv) then, to principal of the Debenture.



Section 9. The outstanding principal of the Bridge Loan evidenced by this Debenture may be
prepaid in cash in whole or in part at the option of the Company without penalty. All payments
contemplated to be made “in cash” and shall be made in immediately available good funds of United
States of America currency by wire transfer to an account designated in writing by the Investor to
the Company (which account may be changed by
notice similarly given). For purposes of the Debenture, the phrase “date of payment” means the date
good funds are received in the account designated by the notice which is then currently effective.


 


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Section 10. The term “Maturity Date” means the earliest of (i) March 31, 2009, (the
“Stated Maturity Date”), (ii) the New Financing Date (as defined below), (iii) the Extended
Maturity Date (as defined in 5(c) below), if applicable; or (iv) the accelerated Maturity Date
applicable in the case of any uncured Event of Default prior to Maturity.



Section 11. The term “New Financing Date” means the third business day after the date on which
the Company consummates public or private offering of securities or a sale-leaseback, commercial
loan or other transaction (“New Financing”) in which the Company receives, gross proceeds of at
least Five Million Dollars ($5,000,000). All such gross proceeds are determined before deduction of
any fees or other expenses or disbursements of any kind in connection with the relevant
transaction, offering or placement of securities.



Section 12. The Maturity Date shall automatically be extended until May 15, 2009, if no New
Financing generating gross proceeds of at least $5,000,000 has occurred, and provided the Company
pays all interest accrued through March 31, 2009, together with an extension fee.



Section 13. This Debenture shall be governed by and interpreted in accordance with the laws
of the State of Colorado for contracts to be wholly performed in such state and without giving
effect to the principles thereof regarding the conflict of laws. Each of the parties consents to
the exclusive jurisdiction of the state courts of the State of Texas located in Harris County and
and the United States District Court for the Southern District of Texas in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non convenes, to the bringing of any such
proceeding in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in
enforcement of or protection of any of its rights under this Debenture. The Company and the Holder
hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other in respect of any matter arising out of or in connection with this
Agreement or the Debenture



Section 14. The Company covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon
Default Conversion of the Debenture, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder, not less than such number of shares of the Common
Stock as shall be issuable upon the conversion of the outstanding principal amount of the
Debenture. The Company covenants that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly and validly authorized, issued and fully paid and nonassessable.



Section 15. Upon a Default Conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of the Common Stock, but may if otherwise
permitted, make a cash payment in respect of any final fraction of a share. If the Company elects
not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of
the final fraction of a share, one whole share of Common Stock.



Section 16. Issuance of certificates for shares of the Common Stock on Default Conversion
of the Debentures shall be made without charge to the Holder thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such certificate.


 


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Section 17. Any and all notices or other communications or deliveries to be provided by
the Holder hereunder, including, without limitation, any notice of conversion, shall be in writing
and delivered personally, by facsimile, sent by a nationally recognized overnight courier service,
addressed to the Company, at the address set forth above, facsimile number                     , Attn:
                     or such other address or facsimile number as the Company may specify for such purposes
by notice to the Holder delivered in accordance with this Section. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile telephone number or address of Holder appearing on the
books of the Company, or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. Denver, Colorado time),
(ii) the date after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (Denver,
Colorado time) on any date and earlier than 11:59 p.m. (Colorado time) on such date, (iii) the
second Business Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is required to be
given. Whenever any payment or other obligation hereunder shall be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day.



Section 18. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new
Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.



Section 19. If any provision of this Debenture is invalid, illegal or unenforceable, the
balance of this Debenture shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other persons and
circumstances. If it shall be found that any interest or other amount deemed interest due
hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer
and permit the execution of every such as though no such law has been enacted.



*********************



 


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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly
authorized officer as of the date first above indicated.



	 	 	 	 	 
	 	SMART MOVE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




 


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