Document:

Filed by Bowne Pure Compliance

Exhibit 10.4

EMPLOYMENT AGREEMENT

AGREEMENT, dated this 14th day of August, 2008 (the “Effective Date”), between Renegy
Holdings, Inc., a Delaware corporation (the “Company”) with offices at 301 W. Warner Road, Suite
132, Tempe, Arizona 85284, and Hugh Smith (the “Executive”),

W I T N E S S E T H:

WHEREAS, the Company and Executive wish to enter into an employment and compensation
arrangement on the terms and conditions set forth herein which shall supersede all previous
agreements concerning employment between Executive and the Company;

NOW, THEREFORE, the Company and Executive mutually agree as follows:

1. Employment. Subject to the terms and conditions of this Agreement, the Company
agrees to employ the Executive as its Chief Operating Officer during the Employment Period (as
defined in Section 5) and Executive agrees to perform such acts and duties and furnish such
services to the Company and its affiliates consistent with such position as the Company’s Chief
Executive Officer or Board of Directors shall from time to time direct. The Executive shall
report directly to the Chief Executive Officer of the Company and shall perform under his
supervision. The Executive hereby accepts such employment and agrees to devote one hundred percent
(100%) of his time and best efforts to the duties provided herein.

2. Compensation. For services rendered to the Company during the term of this
Agreement, the Company shall compensate the Executive with an initial salary, payable in bi-weekly
installments, of $350,000 per annum (“Base Salary”) less applicable withholding, effective March 3,
2008. Such Base Salary shall be reviewed on an annual basis by the Compensation Committee of the
Company’s Board of Directors (the “Compensation Committee”) and shall be subject to being
increased, but not decreased, in the sole discretion of the Compensation Committee. Additionally,
you will be granted 100,000 Renegy stock options, the value of which will be determined on your
date of hire. These options will vest pro-rata monthly over a 48 month period. Further, Renegy
will provide you up to fifteen (15) months of your monthly mortgage payments each month beginning
in March of 2008 and continuing until the Albuquerque house is sold (not to exceed $45,000),, and a
$100,000 signing bonus (paid $10,000 per month during your first ten (10) months of employment).

3. Incentive Compensation. The Executive shall be eligible to receive a annual bonus
on account of the Company’s 2008 fiscal year with a target payment equal to 125% of Base Salary
based upon criteria developed by the Board or its Compensation Committee (the “Target Bonus”). In
2009 and subsequent years, the Target Bonus may be increased by the Board or its Compensation
Committee, in its sole discretion and may only be decreased with the consent of Executive. The
Target Bonus may be paid to Executive in a mixture of cash and equity compensation, as determined
by the Compensation Committee in its sole discretion; provided, however, that the cash component
shall be no less than 50% of the Target Bonus; provided further, that for the 2008 fiscal year, the
mixture shall be 50% cash and 75% equity.

 

 

 

For 2008, the cash bonus opportunity shall be computed from your 2008 base earnings and the
stock bonus opportunity shall be computed from your 2008 Base Salary.. In the event that all or a
portion of the equity compensation component is paid in stock options, the number of options shall
be determined by dividing the dollar amount by the Black-Scholes value of Company options (or by
such other reasonable method of valuing Company options as the Compensation Committee shall
determine), and such options shall at a maximum be subject to a four-year vesting schedule, with
1/48th of the covered shares vesting each month thereafter, so as to be 100% vested on
the four year anniversary of the grant date, subject to Executive remaining a Service Provider, as
such term is defined in the Company’s 2007 Equity Incentive Plan (“Service Provider”) on each
vesting date.

4. Benefits; Vacation. During the Employment Period, the Company shall provide or
cause to be provided to the Executive such employee benefits as are provided to other executive
officers of the Company, including family medical and dental, disability and life insurance, and
participation in pension and retirement plans, incentive compensation plans, stock option plans and
other benefit plans (collectively, the “Applicable Benefit Plans”). The Executive shall be entitled
to annual vacations in accordance with the Company’s vacation policies in effect from time to time
for executive officers of the Company.

5. Term: Employment Period. The “Employment Period” shall commence on the Effective
Date and shall continue for an initial term of three (3) years (the “Initial Term”). Thereafter,
the Employment Period shall continue for successive one (1) year terms (the “Additional Terms”)
unless either the Company or the Executive provides written notice of termination of the Employment
Period not less than one hundred twenty (120) days prior to the end of the Initial Term or any
Additional Term, or unless earlier terminated pursuant to Section 6. If the Executive shall remain
in the full time employ of the Company beyond the Employment Period without any written agreement
between the parties, this Agreement shall be deemed to continue on a month to month basis and
either party shall have the right to terminate this Agreement at the end of any ensuing calendar
month on written notice of at least thirty (30) days.

6. Termination.

(a) Executive’s employment with the company shall be “at will”. Either the Company or the
Executive may terminate this Agreement and Executive’s employment at any time, with or without
Cause or Good Reason (as such terms are defined below), in its or his sole discretion, upon thirty
(30) days prior written notice of termination.

(b) Without limiting the foregoing Section 6(a), (i) the Executive may terminate his
employment with the company at any time for Good Reason, or (ii) the Company may terminate his
employment at any time for Cause. “Good Reason” shall mean any of the following: (i) the Company’s
failure to elect or reelect, or to appoint or reappoint, Executive to the office of Chief Operating
Officer of the Company; (ii) material changes by the Company in the Executive’s function, duties or
responsibilities of a scope less than that associated with the position of Chief Operating Officer
of the Company; (iii) Executive’s Base Salary is reduced by the Company below the highest Base
Salary of Executive in effect during the Employment Period; (iv) relocation of Executive’s
principal place of employment to a place that is not within twenty five (25) miles of the city
limits of Tempe, Arizona,;
(v) failure by the Company to obtain
the assumption of this Agreement by any successor or assign of the Company; or

 

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 (vi) a material
breach of this Agreement by the Company, which breach is not cured within five (5) days after
written notice thereof is delivered to the Company. “Cause” shall mean (i) the Executive’s
willful, repeated or negligent failure to perform his duties hereunder and to comply with any
reasonable or proper direction given by or on behalf of the Company’s Board of Directors and the
continuation of such failure following twenty (20) days written notice to such effect, (ii) the
Executive being guilty of serious misconduct on the Company’s premises or elsewhere, whether during
the performance of his duties or not, which is reasonably likely to cause material damage to the
reputation of the Company or render it materially more difficult for the Executive to
satisfactorily continue to perform his duties and the continuation or a second instance of such
serious misconduct following twenty (20) days written notice to such effect; (iii) the Executive
being found guilty in a criminal court of any offense of a nature which is reasonably likely to
materially adversely affect the reputation of the Company or to materially prejudice its interests
if the Executive were to continue to be employed by the Company; (iv) the Executive’s commission of
any act of fraud or theft involving the Company or its business, or any intentional tort against
the Company; or (v) the Executive’s violation of any of the material terms, covenants,
representations or warranties contained in this Agreement and failure to correct such violation
within twenty (20) days after written notice by the Company. Notwithstanding the foregoing,
“Cause” shall only be deemed to exist if it is so determined by the Board of Directors of the
Company, after the Executive and his counsel are first given the opportunity to address the Board
with respect to such determination at a duly noticed meeting of the Board of Directors.

(c) “Disability” shall mean that the Executive, in the good faith determination of the Board
of Directors of the Company, based on the advice of a qualified physician after a proper
examination of the Executive (which Executive shall take reasonable actions to facilitate), is
unable to render services of the character contemplated hereby and that such inability (i) may be
expected to be permanent, or (ii) may be expected to continue for a period of at least six (6)
consecutive months (or for shorter periods totaling more than six (6) months during any period of
twelve (12) consecutive months). Termination resulting from Disability may only be effected after
at least thirty (30) days written notice by the Company of its intention to terminate the
Executive’s employment.

(d) “Termination Date” shall mean (i) if this Agreement is terminated on account of death, the
date of death; (ii) if this Agreement is terminated for Disability, the date established by the
Company pursuant to Section 6(c) hereof; (iii) if this Agreement is terminated by the Company, the
date on which a notice of termination is given to the Executive; (iv) if the Agreement is
terminated by the Executive, the date the Executive ceases work; or (v) if this Agreement expires
by its terms, the last day of the term of this Agreement. Notwithstanding the foregoing, if within
thirty (30) days after any notice of termination is given, the party receiving such notice notifies
the other party that a dispute exists concerning the termination, the Termination Date shall be the
date finally determined to be the Termination Date, either by mutual written agreement of the
parties or by binding arbitration in the manner provided in Section 21 hereof; provided that the
Termination Date shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute with reasonable
diligence.

 

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7. Severance:

(a) If (i) the Company terminates the employment of the Executive against his will and without
Cause (including by giving notice of termination of the Agreement pursuant to Section 5), or (ii)
the Executive terminates his employment for Good Reason, if the Executive executes and does not
revoke a standard release in a form reasonably acceptable to the Company the Executive shall be
entitled to receive salary, Incentive Compensation and vacation accrued through the Termination
Date, plus the following:

(i) an amount equal to one year of Executive’s Base Salary in effect on the Termination Date;

(ii) a pro-rated portion of the amount of Incentive Compensation Executive would earn for the
fiscal year in which the termination occurs if the results of operations of the Company for the
period from the beginning of such fiscal year to the Termination Date were annualized (the
“Pro-Rated Incentive Compensation”); and

(iii) full vesting of all outstanding stock options held by Executive.

The Company shall make the termination payment required hereunder within thirty (30) days of the
Termination Date. Notwithstanding the foregoing, the Company shall not be required to pay any
severance pay for any period following the Termination Date if the Executive violates the
provisions of Section 13 of this Agreement in any material respect, and fails to cure such
violation within thirty (30) days after written notice from the Company to the Executive detailing
such violation.

(b) If (i) the Executive voluntarily terminates his employment other than for Good Reason,
(ii) the Executive’s employment is terminated due to death or Disability, or (iii) the Executive is
terminated by the Company for Cause, then the Executive shall be entitled to receive salary and
accrued vacation through the Termination Date only. In the event of death or Disability the
Executive shall also be entitled to receive the Pro-Rated Incentive Compensation and vesting of
outstanding stock options as provided in Section 7(a).

(c) Subject to Executive timely electing continuation coverage under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall subsidize
Executive and his eligible dependents’ COBRA premiums so that Executive pays the same premium as an
active employee of the Company for a period equal to the lesser of (i) eighteen (18) months
following Executive’s termination date, or (ii) the date on which Executive becomes covered under
the group health plans of another employer with comparable group health benefits and levels of
coverage; and

(d) The Executive acknowledges that, upon termination of his employment, he is entitled to no
other compensation, severance or other benefits other than those specifically set forth in this
Agreement or any applicable Stock Option Agreement, or pursuant to any Applicable Benefit Plan.

Expenses. The Company shall pay or reimburse the Executive for all
expenses normally reimbursed by Company, reasonably incurred by him in furtherance
of
his duties hereunder, and authorized and approved by the Company in compliance with
such rules relating thereto as the Company may, from time to time, adopt and as may
be required in order to permit such payments as proper deductions to Company under
the Internal Revenue Code of 1986, as amended, and the rule and regulations adopted
pursuant thereto now or hereafter in effect.

 

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8. Facilities and Services. The Company shall furnish the Executive with office
space, secretarial and support staff and such other facilities and services as shall be reasonably
necessary for the performance of his duties under this Agreement.

9. Mitigation Not Required. In the event this Agreement is terminated, the Executive
shall not be required to mitigate amounts payable pursuant hereto by seeking other employment or
otherwise. The Executive’s acceptance of any such other employment shall not diminish or impair
the amounts payable to the Executive pursuant hereto.

10. Place of Performance. The Executive shall perform his duties primarily in Tempe,
Arizona or locations within a reasonable proximity thereof, except for reasonable travel as the
performance of the Executive’s duties may require.

11. Insurance and Indemnity. During the Employment Period, if available at reasonable
costs, the Company shall maintain, at its expense, officers and directors fiduciary liability
insurance covering the Executive and all other executive officers and directors in an amount of no
less than $10,000,000. The Company shall also indemnify the Executive, to the fullest extent
permitted by law, from any liability asserted against or incurred by the Executive by reason of the
fact that the Executive is or was an officer or director of the Company or any affiliate or related
party or is or was serving in any capacity at the request of the Company for any other corporation,
partnership, joint venture, trust, employment benefit plan or other enterprise. This indemnity
shall survive termination of this Agreement.

12. Noncompete and Non-Solicitation.

(a) The Executive agrees that, except in accordance with his duties under this Agreement on
behalf of the Company, or with respect to any Permitted Activities (as defined in Section 13(c)
below):

(i) During the term of this Agreement, Executive will not participate in, be employed in any
capacity by, serve as director, consultant, agent or representative for, or have any interest,
directly or indirectly, in any enterprise which is engaged in a business competitive with the
business of the Company or any of its subsidiaries conducted during the term of the Executive’s
employment with the Company, or which is being actively developed during the term of the
Executive’s employment with the Company; and

(ii) The Executive acknowledges that the nature of the Company’s business is such that if
Executive were to become employed by, or substantially involved in, the business of a competitor of
the Company during the twelve (12) months following termination of Executive’s employment with the
Company, it would be very difficult for Executive not to rely on or use the Company’s trade secrets
and confidential information. Thus, to avoid the inevitable disclosure of the Company’s trade
secrets and confidential information, Executive agrees and
acknowledges that Executive’s right to receive the payments set forth in Section 7 or 14 (to
the extent Executive is otherwise entitled to such payments) shall be conditioned upon Executive
not directly or indirectly engaging in, as an employee of another company, that is engaged solely
in the business of converting biomass to electricity during the one year period following the
Termination Date (“Competition”).

 

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(b) Notwithstanding the provisions of Section 13(a), Executive may, without violating this
Section 13(a), own, as a passive investment, shares of capital stock of a publicly held-corporation
that engages in Competition where the number of shares of such corporation’s capital stock that are
owned by Executive represent less than three percent (3%) of the total number of shares of such
corporation’s capital stock outstanding.

(c) Non-Solicitation. The Executive further agrees and acknowledges, for such 12
month period following termination of Executive’s employment with the Company for any reason, that
Executive’s right to receive the payments set forth in Sections 7 and 14 (to the extent Executive
is otherwise entitled to such payments) shall be conditioned upon Executive not either directly or
indirectly soliciting, inducing, recruiting or encouraging an employee to leave his or her
employment either for Executive or for any other entity or person with which or whom Executive has
a business relationship.

(d) Understanding of Covenants. The Executive represents that he (i) is familiar with
the foregoing covenants not to compete and not to solicit, and (ii) is fully aware of his
obligations hereunder, including, without limitation, the reasonableness of the length of time,
scope and geographic coverage of these covenants.

13. Provisions After Change of Control.

(a) In the event Executive’s employment with the Company is terminated (other than as a
consequence of death or Disability) either (x) by the Company for any reason other than for Cause
during a Pending Change of Control (as hereinafter defined) or within twenty-four (24) months
following the occurrence of a Change of Control, or (y) by Executive for Good Reason within
twenty-four (24) months following the occurrence of a Change of Control, if the Executive executes
a standard release in a form reasonably acceptable to the Company, then Executive shall be entitled
to receive from the Company, in lieu of the severance payment otherwise payable pursuant to Section
7(a), the following:

(i) an amount equal to two (2) years of Executive’s Base Salary in effect on the Termination
Date;

(ii) the maximum amount of the Incentive Compensation which Executive could earn for the
fiscal year in which the Termination Date occurs; and

(iii) full vesting of all outstanding stock options held by Executive.

The Company shall make the termination payments required hereunder within ten (10) days of the
Termination Date. Notwithstanding the foregoing, the Company shall not be required to pay the
termination payments set forth in this Section 14 for any period following the Termination Date if
the Executive violates the provisions of Section 13 of this Agreement in any material
respect, and fails to cure such violation within thirty (30) days after written notice from the
Company to the Executive detailing such violation.

 

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(b) For purposes of this Agreement, the term “Change of Control” shall mean:

(i) The acquisition, other than from the Company, by any individual, entity or group (within
the meaning of Rule 13d-3 promulgated under the Exchange Act or any successor provision) (any of
the foregoing described in this Section 14(b)(i) hereafter a “Person”) of 50% or more of either (a)
the then outstanding shares of Capital Stock of the Company (the “Outstanding Capital Stock”) or
(b) the combined voting power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the “Voting Securities”), provided, however, that any
acquisition by (x) the Company or any of its subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any corporation
with respect to which, following such acquisition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the Outstanding Capital
Stock and Voting Securities, as the case may be, shall not constitute a Change of Control; or

(ii) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose election or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating to the election of
the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A, or any
successor section, promulgated under the Exchange Act); or

(iii) Approval by the shareholders of the Company of a reorganization, merger or consolidation
(a “Business Combination”), in each case, with respect to which all or substantially all holders of
the Outstanding Capital Stock and Voting Securities immediately prior to such Business Combination
do not, following such Business Combination, beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from the Business Combination; or

 

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(iv) a sale or other disposition of all or substantially all of the assets of the Company
other than to a corporation with respect to which, following such sale or disposition, more than
60% of respectively, the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Capital Stock and Voting Securities immediately prior to such sale or disposition
in substantially the same proportion as their ownership of the Outstanding Capital Stock and Voting
Securities, as the case may be, immediately prior to such sale or disposition; or

(v) The first purchase under a tender offer or exchange offer for 50% or more of the
outstanding shares of stock (or securities convertible into stock) of the Company, other than an
offer by the Company or any of its subsidiaries or any employee benefit plan sponsored by the
Company or any of its subsidiaries.

(c) For purposes of this Agreement, the term “Pending Change of Control” shall mean the
occurrence of one of the following events as the result of which a Change in Control pursuant
thereto is reasonably expected within ninety (90) days after the date of determination as to
whether there is a Pending Change in Control: (i) the Company executes a letter of intent, term
sheet or similar instrument with respect to a transaction or series of transactions, the
consummation of which would result in a Change of Control; (ii) the Board approves a transaction or
series of transactions, the consummation of which would result in a Change of Control; (iii) a
Person makes a public announcement of a tender offer for the Common Stock of the Company, the
consummation of which would result in a Change of Control; or (iv) a Person makes a public
announcement of, or makes a public filing with respect to, the intention of that Person to seek to
change the membership of the Board of Directors of the Company in a manner that would result in a
Change of Control. A Pending Change of Control shall cease to exist upon a Change of Control.

14. Code Section 409A. Notwithstanding any provisions of this Agreement to the
contrary, if Executive is a “specified employee” within the meaning of Section 409A of the Code and
any temporary, proposed or final regulations thereunder (together, “Section 409A”) at the time of
Executive’s termination, and any severance payments (including any benefits which provide for a
“deferral of compensation” within the meaning of Section 409A) to be made to Executive pursuant to
this Agreement will not be paid or provided in full by March 15 of the year following the year in
which Executive’s “separation from service” (within the meaning of Section 409A) occurs, then only
that portion of such severance payments up to the 409A Limit (as defined below) may be made within
the first six (6) months following Executive’s separation from service in accordance with the
applicable payment schedule. Any portion of such severance payments in excess of the 409A Limit
shall accrue and, to the extent such severance payments would otherwise have been payable within
the first six (6) months following Executive’s separation from service, will become payable the
date that is six (6) months and one (1) day following the date of Executive’s separation from
service. All subsequent severance payments, if any, will be payable as provided in this Agreement.
For purposes of this Agreement, the “409A Limit” means the lesser of:

(a) two (2) times the Executive’s annualized compensation based upon the Executive’s annual
rate of pay (the determination of Executive’s annual rate of pay for this purpose shall be
as determined in accordance with Section 409A if additional guidance is released after the
date of this Agreement or, if no such guidance is released, Executive’s annual rate of pay
shall be deemed to be Executive’s annual base salary); and

 

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(b) two (2) times the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Code for the year in which the Executive has a
separation from service.

The intent of this Agreement is for all payments made hereunder to comply with the requirements of
Section 409A; to the extent any terms of this Agreement are ambiguous, such terms shall be
interpreted in accordance with such intent.

15. Certain Additional Payments by Company.

(a) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that
any payment or distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) is
determined without regard to any additional payments required under this Section 16 (a “Payment”)
would be subject to the excise tax imposed by Section 409A, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then
Executive shall be entitled to receive, in addition to the Payment, a payment (a “Gross-Up
Payment”) in an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without limitation, any
federal or state income taxes (and any interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon the Gross-Up Payment, Executive will have received the Gross-Up Payment in
an amount equal to the Excise Tax imposed upon the Payment. The maximum amount of any Gross-Up
Payment shall be $150,000.

(b) Subject to the provision of Section 16(c), all determinations required to be made under
this Section 16, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a “Big Four” accounting firm retained by the Company as its auditor at the time such
determinations are required (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and Executive within fifteen (15) business days of the receipt of
notice from the Company that there has been a Payment, or such earlier time as is required by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 16, shall be paid by the Company to
Executive within ten (10) business days of the Company’s receipt of the Accounting Firm’s
determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive’s
applicable federal income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the Company and Executive.
As a result of the uncertainty in the application of Section 409A at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. If Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm should determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.

 

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(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable, but in no event later than ten (10) business
days after Executive has been informed in writing of such claim, and shall apprise the Company of
the nature of such claim and the date on which such claim is required to be paid. Executive shall
not pay such claim prior to the expiration of the thirty- (30)- day period following the date on
which Executive gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such thirty- (30)- day period that the Company desires to
consent such claim, Executive shall:

(i) give the Company any information reasonably required by the Company relating to such
claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, but not limited to, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relation to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall indemnify and hold
Executive harmless for (A) any Excise Tax or federal or state income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and payment of costs and
expenses, and (B) any federal, state and local income tax imposed with respect to the payment of
amounts pursuant to clause (A) above and this clause (B), based on the highest marginal income tax
rate applicable to Executive for the tax year such payments are includable in his taxable income.
Without limitation on the foregoing provisions of this Section 16(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearing sand conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold Executive harmless from (X) any Excise Tax or federal or state income tax
(including interest or penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance, and (Y) any federal, state and local
income tax imposed with respect to the payment of amounts pursuant to clause (X) above and this
clause (Y), based on the highest marginal income tax rate applicable to Executive for the tax year
such payments are includable in his taxable income; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of Executive with respect
to which
such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues within respect to
which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

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(d) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 16(c), Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Section 16(c))
promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto) and, as and when received, an amount equal to any savings
in federal and state income taxes realized by Executive by reason of the payment to the Company of
such refunds and interest. If, after the receipt by Executive of an amount advanced by the Company
pursuant to Section 16(c), a determination is made that Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.

16. Notices. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and if sent by registered or certified mail, return receipt requested
to his residence in the case of the Executive, or to its principal office in the case of the
Company, or to such other addresses as they may respectively designate in writing.

17. Entire Agreement; Waiver. This Agreement contains the entire understanding of the
parties and may not be changed orally but only by an agreement in writing, signed by the party
against whom enforcement of any waiver, change, modification or discharge is sought. Waiver of or
failure to exercise any rights provided by this Agreement in any respect shall not be deemed a
waiver of any further or future rights.

18. Binding Effect; Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of any successor of the Company by reorganization, merger or
consolidation, or any assignee of all or substantially all of the Company’s business or properties.
The Executive’s rights hereunder are personal to and shall not be transferable nor assignable by
the Executive.

19. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.

20. Governing Law; Arbitration. This Agreement shall be construed in accordance with
and governed for all purposes by the laws and public policy of the State of Arizona applicable to
contracts executed and to be wholly performed within such state. Any dispute or controversy
arising out of or relating to this Agreement shall be settled by arbitration in accordance with the
rules of the American Arbitration Association and judgment upon the award may be entered in any
court having jurisdiction thereof. The arbitration shall be held in Maricopa County or in such
other place as the parties hereto may agree.

 

11

 

21. Further Assurances. Each of the parties agrees to execute, acknowledge, deliver
and perform, and cause to be executed, acknowledged, delivered and performed, at any time and from
time to time, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney
and/or assurances as may be necessary or proper to carry out the provisions or intent of this
Agreement.

22. Severability. The parties agree that if any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.

23. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together will constitute one and the same
Agreement.

[Signature page follows.]

 

12

 

IN WITNESS WHEREOF, Renegy Holdings, Inc. has caused by instrument to be signed by a duly
authorized officer and the Executive has hereunto set his hand the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	Renegy Holdings, Inc.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By	 	/s/ Robert M. Worsley	 	 	 	/s/ Hugh W. Smith
	 	 	 	 	 	 	 
	 

	 	Name:
	 	Robert M. Worsley
	 	 	 	Hugh W.Smith
	 

	 	Title:
	 	Chief Executive Officer	 	 	 	 

Signature Page to Employment AgreementFiled by Bowne Pure Compliance

EXHIBIT 10.2

THIS NOTE HAS BEEN MADE FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH THE DISTRIBUTION THEREOF AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”). THIS NOTE MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED (“TRANSFER”)
UNLESS IT IS SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
MAKER CONSENTS IN WRITING TO SUCH TRANSFER. THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO BE MADE
IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

	 	 	 	 	 
	May
 _____, 2008

	 	$	25,000	 

SMART MOVE, INC.

11% Secured Convertible Note (“Note”)

Due May__, 2011

On or before thirty-six (36) months from the date hereof (the “Maturity Date”), Smart Move,
Inc., a Delaware corporation (“Maker” or the “Company”), for value received, promises to pay to the
order of
                                         (the “Holder”), an individual residing in the State of
 _____, the principal sum of
Twenty Five Thousand ($25,000) Dollars. The outstanding principal amount of this Note will bear
interest at an annualized rate of eleven percent (11%) per annum from the date of Holder’s advance
of the principal amount evidenced by this Note until the Maturity Date. Interest shall be due and
payable quarterly in arrears on the first day of July, October, January and April of each year and
at the Maturity Date or upon any prepayment or acceleration of the maturity of this Note. Such
interest payments shall be made in cash or, subject to the Company’s right in its sole discretion
with respect to all interest that accrues and becomes payable during the initial twelve (12) months
after the date of this Note, to pay such interest by means of the issuance of a number of shares of
restricted common stock, par value $0.0001, of the Company to the Holder equal to the amount of
interest due divided by 110% of the “market value” (as defined below) of the common stock on the
date the interest payment is due The market value of such shares for purposes of payment of
interest hereunder shall be established by the five day average closing price for a share of the
common stock of the Company through and including the five trading days immediately prior to the
date on which the quarterly interest payment is due. Maker may at any time or from time to time,
upon giving Holder at least thirty (30) days advance written notice of Maker’s intention to do so,
make a voluntary prepayment, whether in full or in part, of this Note, without premium or penalty.

 

 

 

1. NOTE

This Note in the principal amount of Twenty Five Thousand ($25,000) Dollars is being issued to
evidence indebtedness of the Company to the Holder and is concurrent with similar notes being
issued on the same terms pursuant to an offering of such notes and related common stock purchase
warrants as described in an offering memorandum previously delivered to the Holder. This Note is
subject to certain additional terms and conditions expressed in a Subscription Agreement executed
by the Holder and the Maker for the purposes described in the aforesaid offering memorandum. This
Note is secured by a security interest being granted to the Holder and other purchasers of notes in
the same offering as Holder in and to the following collateral, such security interest being
granted and to be held by such persons on a pari passu basis with an existing lender of $750,000
to the Company, on the specific terms and conditions described in the Subscription Agreement, which
include terms applicable to a conditional obligation of the Holder therein described to release the
Holder’s security interest in the collateral at the request of the Company:

Eight hundred (800) existing proprietary shipping containers (“Smart
VaultsTM”), used to transport household goods and other goods, and
manufactured by Orbis Corporation (“Collateral”), such collateral
interest to be held pro rata among Holder and other holders of notes
on the same terms, on a pari passu basis with an existing lender of
$750,000.

2. CONVERSION AT OPTION OF HOLDER; AUTOMATIC CONVERSION

A. Conversion at Option of Holder. The Holder shall have the right (the “Conversion Right”) at
any time or from time to time prior to the day this Note is paid in full, to convert all or any
part of the outstanding and unpaid principal amount of this Note as shall remain unpaid at the
effective date of the conversion, into, fully paid and non-assessable shares of Common Stock, par
value $.0001 per share, of the Company, at a conversion price determined on the following basis.
The initially applicable conversion price will be $0.75 per share (the “Base Conversion Price”) to
be effective on the date of issuance (being the date of the investor’s legally binding commitment
to advance the principal amount of this Note), and to remain applicable at all times prior to the
Maturity Date of this Note, unless the below-stated pre-conditions for applicability of an
alternative conversion price (the “Issue Date Conversion Price”) have been satisfied. The Issue
Date Conversion Price is a price per share that is equal to the greater of:

	 	a)	 	$0.40 per share; or

	 
	 	b)	 	an amount per share equal to whichever of the following two prices is the lower
price:

1) the average closing price of a share of the Company’s common stock over the five
trading days immediately preceding the original issue date of this Note; or

2) the closing price of a share of the Company’s common stock on the original issue
date;

 

2

 

Unless the holder of a Note postpones making any election to convert until after at least six
months from the date of issuance of the Notes, and unless the holder’s initial written
notice of
election to convert any principal indebtedness under this Note made on or after six months from the
issue date covers at least 10% of the face amount of the holder’s Notes, the conversion price
applicable to all the holders’ conversion elections will be the $0.75 per share Base Conversion
Price rather than the Issue Date Conversion Price”. The Issue Date Conversion Price will be
applicable (and supersede and replace the Base Conversion Price) only if and when both of following
conditions as specified in clause (i) and in clause (ii) below have occurred or been satisfied:

	 	(i)	 	The holder of a Note shall have deferred making any election to convert
any portion of the outstanding principal indebtedness owing under this Note until
after at least six months from the date of issuance of the Note;

	 
	 	(ii)	 	The holder’s initial written notice of election to convert any principal
indebtedness under this Note made on or after six months from the issue date shall
cover at least 10% of the face amount this Note

Notwithstanding the foregoing, in event that the Company at any time receives notice of a tender
offer for shares of its common stock at a price or stated consideration equal to or greater than
the Issue Date Conversion Price (or in the event the Company enters into a binding agreement for
the sale of all or substantially all of its assets), the Issue Date Conversion Price will
automatically become applicable to all conversions under this Note effective on the date the
relevant offer or asset sale becomes effective.

B. Automatic Conversion. The Note 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
$1.00 per share or greater for twenty (20) of thirty (30) consecutive trading days on the American
Stock Exchange, provided that the underlying shares are eligible to be sold under and subject to
Rule 144 under the Securities Act of 1933.

C. Mechanics of Conversion. The Holder shall effect any elective conversions by delivering to
the Company a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”).
Unless the Holder is converting the entire principal amount outstanding under this Note or an
Automatic Conversion has occurred, the Holder is not required to physically surrender this Note to
the Company in order to effect conversions. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Note plus any accrued and unpaid interest thereon
paid in equity securities in an amount equal to the applicable conversion. The Company shall
maintain records showing the principal amount converted and the date of such conversions and will
promptly notify Holder if an Automatic Conversion occurs. Upon conversion of the entire unpaid
principal amount of this Note and any accrued, unpaid interest, whether in connection with a
conversion at the option of Holder pursuant to exercise of the Conversion Right or pursuant to an
Automatic Conversion, this Note shall be surrendered by the Holder to the Company for cancellation
and a certificate representing the Common Stock issued to Holder therefor shall be delivered to
Holder. No fractional shares or scrip shall be issued upon any conversion of this Note. Instead of
any fractional shares that would otherwise be issuable upon conversion of this Note, the Company
shall pay a cash adjustment in respect of such fractional interest in an amount equal to that
fractional interest of the Conversion Price at which the Note was converted.

 

3

 

3. RESERVATION OF AUTHORIZED SHARES; EFFECT OF RECAPITALIZATION

A. Reservation of Authorized Shares. The Company agrees and represents that until this Note
is paid in full or converted, the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full
conversion of this Note. The Company further agrees and represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable and that the Company will instruct
its transfer agent to issue certificates for the Common Stock issuable upon conversion of this
Note.

B. Effect of Capital Reorganization or Reclassification. If the number of outstanding shares
of Common Stock of the Company shall be increased or decreased as a result of a stock split, a
reverse stock split or similar recapitalization or reclassification of stock not involving any
change in the shareholder’s equity or the aggregate market value of shares outstanding as a result
thereof, the per share Conversion Price shall be proportionately adjusted so that the percentage
of the Common Stock acquirable by the Holder upon conversion immediately prior to the event and
immediately following the event remains the same.

4. EVENTS OF DEFAULT

A default shall be defined as one or more of the following events (“Event of Default”)
occurring and continuing:

	 	(a)	 	The Maker shall fail to pay any interest payment on this Note when due for a
period of thirty (30) days after notice of such default has been sent by the Holder to
the Maker.

	 
	 	(b)	 	The Maker shall dissolve or terminate the existence of the Maker.

	 
	 	(c)	 	The Maker shall file a petition in bankruptcy, make an assignment for the
benefit of its creditors, or consent to or acquiesce in the appointment of a receiver
for all or substantially all of its property, or a petition for the appointment of a
receiver shall be filed against the Maker and remain unstayed for at least ninety (90)
days.

Upon the occurrence of an Event of Default, the Holder of this Note may, by written notice to
the Maker given by certified mail, return receipt requested, declare the unpaid principal amount
and all accrued interest of the Note immediately due and payable.

5. SECURITY FOR PAYMENT OF THE NOTE(S)

This Note is secured by a security interest granted to the Holder concurrently with other
existing and concurrent lenders to the Company on a pari passu basis on the terms and conditions
(including certain obligations of the Holder to release the security interest in collateral at the
request of the Company) as described and provided in the Subscription Agreement.

 

4

 

6. EFFECTIVE DATE OF THE NOTE

The Effective Date of this Note for purposes of its status as a binding legal obligation of
the Maker is the date on which funds have been advanced by the Holder and after which interest
shall accrue on the unpaid principal balance hereof.

7. STATUS OF HOLDER

The Maker may treat the Holder of this Note as the absolute owner of this Note for the purpose
of making payments of principal or interest and for all other purposes, and shall not be affected
by any notice to the contrary, unless the Maker so consents in writing.

8. SECURITIES ACT RESTRICTIONS

This Note has not been registered for sale under the Act. This Note may not be sold, offered
for sale, pledged, assigned or otherwise disposed of, unless certain conditions are satisfied, as
more fully set forth in the Note and Warrant Purchase Agreement. The shares of Common Stock
issuable upon conversion of this Note may not be sold or transferred unless (i) they first
shall have been registered under the Securities Act of 1933, as amended, and applicable state
securities laws,(ii) the Company shall have been furnished with an opinion of legal counsel (in
form, substance and scope reasonably acceptable to Company) to the effect that such sale or
transfer is exempt from the registration requirements of the Act or (iii) they are sold pursuant
to Rule 144 under the Act. Each certificate for shares of Common Stock issuable upon conversion of
this Note that have not been so registered and that have not been sold pursuant to an exemption
that permits removal of the legend, shall bear a legend substantially in the following form, as
appropriate:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO BE MADE
IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.”

9. ATTORNEYS’ FEES

The prevailing party in an action to enforce this Note shall be entitled to reasonable
attorneys’ fees, costs and collection expense.

 

5

 

10. MISCELLANEOUS.

(a) Successors and Assigns. The Holder may not assign, transfer or sell this Note to any
party without the express written consent of the Maker, such consent not to be unreasonably
withheld or delayed. This Note shall be binding upon and shall inure to the benefit of the parties
and their respective heirs, successors and assigns. Subject to the foregoing permitted transfers
and status of lawful successors, this Note shall not be enforceable by any other third party.

(b) Entire Agreement. This Note as supplemented by the terms and conditions disclosed in the
offering memorandum and together with the terms of the Subscription Agreement, contains all oral
and written agreements, representations and arrangements between the parties with respect to its
subject matter, and no representations or warranties are made or implied, except as specifically
set forth herein. No modification, waiver or amendment of any of the provisions of this Note shall
be effective unless in writing and signed by both parties to this Note.

(c) Notices. Any notice or other communication to be given hereunder shall be in writing and
personally delivered or delivered via overnight mail, with written receipt therefor, or by a
nationally recognized overnight delivery service, charges and postage prepaid, properly addressed
to the party to receive such notice, at the following address for such party (or at such other
address as shall be specified by like notice given to the appropriate party):

if to Holder:

	 	 	 	 	 
	 

	 	if to the Company:
	 	Smart Move, Inc.
	 

	 	 	 	5990 Greenwood Plaza Blvd., Suite 390
	 

	 	 	 	Greenwood Village, CO 80111
	 

	 	 	 	Attn: Executive Officers

Such notice shall be effective upon personal or overnight delivery or five (5) days after
mailing by certified mail.

(d) Section Headings. The headings of the various sections of the Note have been inserted as
a matter of convenience for reference only and shall be of no legal effect.

(e) Severability. If any provision of this Note is invalid, illegal or unenforceable, the
balance of this Note 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 shall violate
applicable laws governing usury, the applicable rate of interest due hereunder shall automatically
be lowered to equal the maximum permitted rate of interest.

 

6

 

(f) Applicable Law. This Note shall be deemed to have been made in the State of Colorado, and
any and all performance hereunder, or breach thereof, shall be interpreted and construed pursuant
to the laws of the State of Colorado without regard to conflict of laws rules
applied in the State of Colorado. The parties hereto hereby consent to personal jurisdiction and
venue exclusively in the State of Colorado with respect to any action or proceeding brought with
respect to this Note.

(g) Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

(h) Lost, Stolen or Mutilated Note. If this Note is lost, stolen, mutilated or destroyed,
the Company will, on such reasonable terms with respect to indemnity or otherwise as it may in its
discretion impose, issue a new note of like denomination, tenor, and date as this Note. Any such
new note shall constitute an original contractual obligation of the Company, and the lost, stolen,
mutilated or destroyed, as applicable, Note shall be null and void.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized
officer as of the date set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	Maker:	 	 	 	Accepted by Holder:	 	 
	Smart Move, Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 

	 	 
	 	Date:	 	 	 	 
	Date:

	 	 

	 	 
	 	 	 	 

	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

 

7

 

EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to elect to convert the Note)

TO:

The undersigned hereby irrevocably elects to convert the principal amount of the above Note
into Shares of Common Stock of SMART MOVE, INC., according to the conditions stated therein, as of
the Conversion Date written below.

	 	 	 	 	 
	Conversion Date:
	 	 	 	 
	Applicable Conversion Price:

	 	[Base Conversion Price
or Issue Date
Conversion Price]

	Signature:
	 	 	 	 
	Name:
	 	 	 	 
	Address:
	 	 	 	 
	Note amount converted:

	 	$	 	 
	Number of shares of Common Stock to be issued:
	 	 	 	 
	Please issue the shares of Common Stock in the
following name and to the following address:
	 	 	 	 
	Issue to:
	 	 	 	 
	Authorized Signature:
	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	Phone Number:
	 	 	 	 
	Broker DTC Participant Code:
	 	 	 	 
	Account Number:
	 	 	 	 

If this name is different from the name of the Holder, the Holder will have to show compliance for
such transfer with federal and applicable state securities laws or in accordance with the plan of
distribution in any Registration Statement.

By submitting this Notice of Conversion, the undersigned Holder represents and warrants to the
Company that Holder is an accredited investor as that term is defined in SEC Rule 501(a) or
otherwise able to evaluate the risks and merits of an investment, that the Holder is a
sophisticated investor as required by SEC Rule 506, that it has completed such investigation into
the Company and the securities being acquired pursuant to this Notice of Conversion as the
undersigned (in consultation with its advisors) has determined appropriate, and that it is
submitting this Notice of Conversion of its own volition and free will.

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Date:	 	 	 	 
	Name:

	 	 	 	 
	 	 	 	 
	 	 
	Address:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Social Security Number	 	 	 	 	 	 	 	 

 

 

 

This Warrant and the underlying shares of Common Stock represented by this Warrant have not been
registered under the Securities Act of 1933 (the “Act”), and are “restricted securities” as that
term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration statement under the Act, or
pursuant to an exemption from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.

			
	 	 	 
	May
 _____, 2008
	 	Warrant No.                     

***SMART MOVE, INC.***

WARRANT TO PURCHASE SHARES OF COMMON STOCK

Warrant to Purchase 62,500 Shares

(subject to adjustment as set forth herein)

Exercise Price $0.80 Per Share

(subject to adjustment as set forth herein)

VOID AFTER 3:00 P.M., MOUNTAIN TIME, ON

June ___, 2013

THIS CERTIFIES THAT
 _____ 
is entitled to purchase from Smart Move, Inc., a Delaware
corporation (hereinafter called the “Company”) with its principal office located at 5990 Greenwood
Plaza Blvd., Suite 390, Greenwood Village, Colorado 80111, at any time before 3:00 P.M., Mountain
Time, on June
 _____, 2013 (the “Termination Date”), at the purchase price of $0.80 per share, the
number of shares (the “Shares”) of the Company’s common stock (the “Common Stock”) set forth above.
The number of Shares purchasable upon exercise of this Warrant and the Exercise Price per Share
shall be subject to adjustment from time to time as set forth in Section 4 below if the number of
outstanding shares of Common Stock of the Company shall be increased or decreased as a result of a
stock split, a reverse stock split or similar recapitalization or reclassification of stock not
involving any change in the shareholder’s equity or the aggregate market value of shares
outstanding as a result thereof,

SECTION 1. DEFINITIONS.

In addition to the terms defined elsewhere in this Warrant, the terms set forth on the
Definitions Schedule to this Warrant shall have the meanings set forth on such Schedule.

 

1

 

SECTION 2. COVERED SHARES; EXERCISE OF WARRANT.

Subject to the conditions set forth in this Warrant, the Warrant may be exercised in whole or
in part during the Exercise Period, but in no event subsequent to the end of the Exercise Period,
by the surrender of the Warrant (with the subscription form attached to this Warrant duly completed
and executed) at the principal office of the Company at 5990 Greenwood Plaza Blvd, Suite 390,
Greenwood Village, Colorado 80111, and upon payment of the applicable Exercise Price in cash or
other immediately available funds. At the option of the exercising Holder, payment may be made by
(a) cash or other immediately available funds.

The right granted by the Warrant to acquire Shares shall expire at the end of the Exercise
Period, and such right shall be wholly null and void to the extent the Warrant is not exercised
before that time. The Company shall pay all reasonable expenses, taxes and other charges payable in
connection with the preparation, execution and delivery of any certificates or other documents
evidencing the Shares under this §2. Notwithstanding the surrender of the Warrant upon its
exercise, the rights and obligations of the Company and the Holders as set forth in this Warrant
shall continue in full force and effect.

SECTION 3. RESERVATION.

At all times during the Exercise Period, the Company shall reserve and keep available the
maximum number of authorized but unissued Shares, solely for the purpose of issuing, upon the
exercise of the Warrant, a number of Shares equal to the number of Underlying Shares.

SECTION 4. ADJUSTMENT OF NUMBER OF SHARES.

The number of Warrant Shares and the Warrant Price shall be subject to adjustment if the
number of outstanding Shares of Common Stock of the Company shall be increased or decreased as a
result of a stock split, a reverse stock split or similar recapitalization or reclassification of
stock not involving any change in the shareholder’s equity or the aggregate market value of shares
outstanding as a result thereof. The Warrant Price and number of Shares shall be proportionately
adjusted so that the percentage of the Common Stock acquirable by the Holder upon exercise
immediately prior to the event and immediately following the event remains the same.

SECTION 5. DISSOLUTION OR LIQUIDATION; DIVIDENDS AND DISTRIBUTIONS.

Upon any proposed distribution of the assets of the Company in dissolution or liquidation, the
Company shall mail notice of such distribution to each Holder and shall make no distribution to its
shareholders until the expiration of forty five (45) days from the date of mailing of such notice.
Upon receipt of such notice, each Holder may exercise the Warrant at any time prior to the
expiration of such 45-day
period and thereafter receive any distributions made to shareholders of the Company in
connection with such dissolution or liquidation.

 

2

 

SECTION 6. FULLY PAID SHARES; TAXES; FRACTIONAL SHARES.

The Company covenants and agrees that the Warrant Shares will, at the time of delivery upon
the exercise of the Warrant, be validly issued and outstanding and be fully paid and nonassessable.
The Company further covenants and agrees that it will pay when due and payable any and all federal
and state issuance taxes that may be payable in respect of the Warrant or any Warrant Shares or
certificates issued upon the exercise of the Warrant. The Company shall not, however, be required
to pay any tax which may be payable in respect of any Transfer involving a Transfer of Warrant
Shares in the name other than that of a Holder, and any such tax shall be paid by the Holder
requiring such Transfer. Fractional Warrant Shares shall be issued upon the exercise of the Warrant
in any case in which the Underlying Shares are not a whole number and the Holder does not agree to
accept cash in lieu of such fractional Warrant Shares.

SECTION 7. NOTIFICATION OF SHAREHOLDER MATTERS.

Prior to the exercise in full of the Warrant, the Company shall use reasonable efforts to
cause any notice submitted to the shareholders of the Company also to be provided to the Holder,
but shall have no liability to the Holder for failure to provide any such notice with respect to
any matters which are disclosed by the Company to its shareholders or which are available to
shareholders pursuant to the Company’s electronic filings with the Securities and Exchange
Commission (“SEC”) under the Securities Exchange Act of 1934.

	 	 
	SECTION 8. 	RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES; COMPLIANCE WITH LAWS.

8.1. In General. Neither the Warrant nor any Warrant Shares shall be Transferred
except upon the conditions specified in this Warrant, which conditions are intended to insure
compliance with the provisions of the Securities Act (or any similar federal statute at the time in
effect) and any applicable state securities laws in respect of any such Transfer.

8.2. Restrictive Legend. The Warrant Shares shall be represented by certificates,
and, unless otherwise permitted by the provisions of this §8.2, shall be marked with a legend
reading substantially as follows:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH SALE, ASSIGNMENT OR TRANSFER
MUST ALSO BE MADE IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

3

 

If a registration statement covering the Warrant or any Warrant Shares shall become effective under
the Securities Act and under any applicable state securities laws, or if the Company shall receive
an opinion of counsel reasonably satisfactory to the Company (which shall include counsel to the
Company and counsel to the original Holder of the Warrant) that, in the opinion of such counsel,
such legend is not required (including, without limitation, because of the availability of an
exemption afforded by Rule 144(k) under the Securities Act), the Company shall, or shall instruct
its transfer agents and registrars to, remove such legend or issue new Warrants or certificates
without such legend. Upon the reasonable written request of a Holder, the Company shall forthwith
request counsel to render an opinion with respect to the matters covered in this paragraph, and the
Company shall pay all expenses in connection with such matters.

SECTION 9. LOST, STOLEN WARRANTS, ETC.

If the Warrant or any certificates evidencing Warrant Shares shall be mutilated, lost, stolen
or destroyed, the Company shall issue a new Warrant or certificate of like date, tenor and
denomination and deliver the same in exchange and substitution for and upon surrender and
cancellation of the mutilated Warrant or certificate, or in lieu of the Warrant or certificate
lost, stolen or destroyed, upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of the Holder shall be deemed sufficient) of the loss, theft or destruction of such
Warrant or certificate.

SECTION 10. MISCELLANEOUS.

10.1. Holder Not A Shareholder. Except as otherwise specifically provided in this
Warrant, prior to the exercise of the Warrant no Holder shall be entitled to any of the rights of a
shareholder of the Company, including the right as a shareholder to (a) vote or consent or (b)
receive dividends or any other distributions made in respect of Shares.

10.2. Notices. Any notice, demand or delivery to be made pursuant to the provisions
of this Warrant shall be in writing and (a) shall be deemed to have been given or made one day
after the date sent (i) if by the Company, by prepaid overnight delivery addressed to each Holder
at its last known address appearing on the books of the Company maintained for such purpose or (ii)
if by a Holder, by prepaid overnight delivery, addressed to the Company at the Company’s address as
set forth in §2; and (b) if given by courier or confirmed facsimile transmission shall be deemed to
have been made or given when received. Each Holder and the Company may each designate a different
address by notice to the other in the manner provided in this §11.2.

 

4

 

10.3. Successors and Assigns. Subject to all conditions and limitations contained
herein and to the requirements of applicable law, this Warrant and the rights evidenced by the
Warrant shall inure to the benefit of and be binding upon the lawful successors and assigns of the
Company and each Holder. The provisions of this Warrant are intended to be for the benefit of the
Holders of the Warrant or the Warrant Shares and shall be enforceable by the Holders.

10.4. Actions by Holder; Amendments and Waivers. Any provision of this Warrant may be
amended, waived or modified upon the written consent of the Company and the Holder. Any amendment,
waiver, modification or consent entered into pursuant to this Section 11.4 shall be effective only
in the specific instance and for the specific purpose for which it was given.

10.5. Headings; Severability. The descriptive headings of sections of this Warrant
are provided solely for convenience of reference and shall not, for any purpose, be deemed a part
of this Warrant. Should any part of the Warrant or this Warrant for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which shall remain in force
and effect as if the Warrant and this Warrant had been executed with the invalid portion
eliminated. It is the intention of the Company and the Holder that they would have executed and
accepted the remaining portion of the Warrant and this Warrant without including in such remaining
portion any such part, parts or portion which may, for any reason, be hereafter declared invalid.

10.6. Governing Law. The Warrant and this Warrant and all matters concerning the
Warrant and this Warrant shall be governed by the laws of the State of Colorado for contracts
entered into and to be performed in such state without regard to principles of conflicts of laws;
provided however, that with respect to the Company’s internal corporate matters, the laws
of the State of Delaware shall govern.

10.7. Survival of Certain Provisions. Except as otherwise provided, the provisions of
this Warrant shall survive the exercise of the Warrant and shall continue in full force and effect
following such exercise until all Warrant Shares are no longer restricted securities under the
federal securities laws.

10.8. Specific Performance. The Company acknowledges and agrees that the Holders
would be damaged irreparably in the event any of the provisions of this Warrant are not performed
in accordance with their specific terms or otherwise are breached. Accordingly, the Company agrees
that the Holders shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Warrant and to enforce specifically this Warrant and the terms and provisions of
this Warrant in any action instituted in any federal or state court in the United States having
jurisdiction over the parties and the matter, in addition to any other remedy to which the Holders
may be entitled, at law or in equity.

 

5

 

10.9. Consent to Jurisdiction. THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF DENVER, STATE OF COLORADO AND IRREVOCABLY
AGREES THAT, SUBJECT TO THE HOLDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS WARRANT SHALL BE LITIGATED IN SUCH COURTS. THE COMPANY ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT.
THE COMPANY DESIGNATES AND APPOINTS CHRIS SAPYTA, AND SUCH OTHER PERSON AS MAY HEREAFTER BE
SELECTED BY THE COMPANY WHO IRREVOCABLY AGREES IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON
ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY THE COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF
ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY THE HOLDER BY REGISTERED MAIL TO THE COMPANY AT ITS
ADDRESS PROVIDED IN §12.2 AND SHALL BE DEEMED TO HAVE BEEN RECEIVED BY THE COMPANY FIVE (5) DAYS
AFTER BEING SO MAILED. IF ANY AGENT APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE, THE
COMPANY HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING IN
THIS WARRANT SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF HOLDER TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION.

10.10. Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO: (A) THIS WARRANT, OR (B) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
THE HOLDER AND THE COMPANY; OR (C) ANY CONDUCT, ACTS OR OMISSIONS OF THE COMPANY OR THE HOLDER OR
ANY OF THEIR DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES, AGENTS, PARTNERS, REPRESENTATIVES, ATTORNEYS
OR ANY OTHER PERSONS AFFILIATED WITH THE COMPANY OR THE HOLDER; IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN TORT OR OTHERWISE. EACH OF THE COMPANY AND THE HOLDER ALSO WAIVES ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS WARRANT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.

 

6

 

EACH OF THE COMPANY AND THE
HOLDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS WARRANT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE WARRANT.
EACH OF THE COMPANY AND THE HOLDER FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

IN WITNESS WHEREOF, this Warrant has been duly executed as of the day and year first above
written.

	 	 	 	 	 
	 

	 	SMART MOVE, INC.	 	 
	 
	 	 	 	 
	 

	 	 

Chris Sapyta
	 	 
	 

	 	President	 	 

 

7

 

ELECTION TO EXERCISE WARRANT

TO: Smart Move, Inc.:

The undersigned registered holder of the Warrant, a true and correct copy of which is attached
to this election notice, irrevocably exercises the Warrant and purchases pursuant to such exercise
 _____ 
Shares of the Company, makes payment of 

$_____ 
for such Shares, and requests that the
certificates for such Shares be issued in the name of the undersigned holder or its nominee and
delivered to such holder at holder’s address on the books of the Company.

	 	 	 
	Entity Name (if applicable):
	 	 
	 
	 	 
	 

	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	Date:

	 	 

	 	 
	 

	 	 

	 	 

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned registered holder of the Warrant attached to this
assignment notice, sells, assigns and transfers unto
 _____ 
the Warrant and all rights
evidenced by such Warrant and does irrevocably constitute and irrevocably appoints Corporate Stock
Transfer, Inc. or other duly appointed transfer agent for the securities as the undersigned’s
attorney to transfer such Warrant on the books of the Company.

	 	 	 
	Entity Name (if applicable):
	 	 
	 
	 	 
	 

	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	Date:

	 	 

	 	 
	 

	 	 

	 	 

 

8

 

Warrant Definitions Schedule

As used in this Warrant, the following terms have the following respective meanings:

“Company” means Smart Move, Inc., a Delaware corporation, and any successor to all or
substantially all of the assets and business of Smart Move, Inc. Unless the context otherwise
indicates, “Company” shall also include all Subsidiaries of the Company.

“Exercise Period” means the period commencing on the First Exercise Date and terminating at
3:00 p.m., Denver time, on the Expiration Date.

“Expiration Date,” with reference to this Warrant, means June
 _____, 2013.

“First Exercise Date” means the date of original issuance of the Warrant.

“Holder” means a registered holder of the Warrant and, if the context so indicates, the holder
of Shares.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute,
and the rules and regulations under such act, all as the same shall be effect at the time.

“Shares” means, shares of the Company’s common stock, par value $.0001 per share, and stock of
any other class into which such shares may hereafter be changed or reclassified.

“Transfer” means any sale, transfer, issuance, assignment, pledge or other disposition or
conveyance of Shares or the Warrant.

“Underlying Shares” means the Shares issuable upon exercise of the Warrant.

“Warrant” means the Warrant issued on the date of this Warrant to the Holder and any warrant
issued in exchange or substitution for the Warrant.

“Warrant Shares” means the Shares obtained upon exercise of the Warrant.

 

9

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