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Exhibit 10.1
SMOKY MARKET FOODS, INC.
NOTE AND SHARE PURCHASE AGREEMENT
THIS NOTE AND SHARE PURCHASE AGREEMENT (the "AGREEMENT") is made
and entered
into as of January 27, 2009 by and between Smoky Market Foods,
Inc., a Nevada
corporation (the "COMPANY"), and 70 LIMITED LLC, a limited
liability company
(the "INVESTOR"). In consideration of the mutual covenants set
forth herein, and
other good and valuable consideration, the Company and Investor
hereby agree as
follows:
1. PURCHASE OF
SECURITIES:
(a) PURCHASE OF SECURITIES. Subject to the terms and
conditions of this Agreement, the Investor shall purchase, and the
Company shall
sell and issue to the Investor, at the Closing (as defined below),
(i) a
promissory note substantially in the form, and with the terms,
attached hereto
as EXHIBIT A in the principal amount of $150,000 (the "NOTE"), and
(ii)
1,500,000 shares of common stock of the Company (the "SHARES";
together with the
Note, the "INITIAL SECURITIES"). The purchase price for the Initial
Securities
shall be the principal amount of the Note (the "PURCHASE PRICE").
The proceeds
from the sale of the Initial Securities are to be used toward for
working
capital and general corporate purposes, including the payment of
accounts
payable, legal and accounting fees, ongoing consulting and
employment expenses
and other purposes. The Company expects to raise additional
capital, on terms
that may be more or less favorable than those offered to Investor,
in the
immediate future. As reasonably requested by the Company, Investor
shall
complete a substitute W-9 or such other forms as the Company
requests in order
for it to comply with its reporting and other obligations.
(b) CLOSING. The closing
(the "CLOSING") of the purchase and
sale of the Initial Securities shall take place on a date within
three (3)
business days after the date first set forth above, and the date of
the Closing
(the "CLOSING DATE") shall be the date (which shall be within such
three
business day period) the Investor pays the Purchase Price by check
or wire
transfer to the Company. On the date the funds for the Purchase
Price clear, the
Company shall cause to be delivered to the Investor a facsimile
copy of the
Note, duly executed and made out in favor of Investor. Within five
(5) business
days of the Closing, the Company shall cause the original Note and
certificates
representing the Shares to be delivered to Investor at the address
set forth on
the signature page hereof. The Closing shall be deemed to have
occurred at the
offices of the Company. Failure of either party to deliver the
items required by
the preceding sentence when and as required thereby shall
constitute a breach of
this Agreement (and the other party shall be entitled to demand
specific
performance in addition to any other remedies available at law or
in equity).
(c) ADDITIONAL SECURITIES. If the outstanding principal amount
owed under the Note is not paid in full on or before the "Payment
Date"
described in the Note (or it the Payment Date is a Saturday, Sunday
or bank
holiday, the first business day thereafter), the Company shall
issue to the
Investor an additional 1,500,000 shares of common stock (the
"ADDITIONAL SHARES"
together with the Initial Securities, the "SECURITIES"). If the
Company is
obligated to issue the Additional Shares, it shall issue
certificates
representing the Additional Shares to the Investor within five (5)
business days
of the Payment Date.
2. REPRESENTATIONS
AND WARRANTIES OF INVESTOR: Investor makes the
following representations and warranties, with the intent that they
be relied
upon by the Company and each officer, director, employee and agent
of the
Company in determining Investor's suitability as a purchaser of the
Securities.
Investor hereby agrees that these representations and warranties
shall survive
the Investor's purchase of the Securities. By signing this
Agreement, Investor
represents that he has read and acknowledged the representations
set forth in
this Section 2.
(a) Investor is the sole and true party in interest, is
acquiring the Securities for Investor's own account for investment,
is not
purchasing the Securities for the benefit of any other person, and
has no
present intention of holding or managing the Securities with others
or of
selling, distributing or otherwise disposing of any portion of the
Securities.
(b) This Agreement constitutes the Investor's valid and
legally binding obligation, enforceable in accordance with its
terms subject to
applicable bankruptcy, insolvency, and other similar laws affecting
creditors'
rights, and rules of law governing specific performance, and the
Investor has
full power and authority to enter into this Agreement.
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(c) Investor is domiciled in the State set forth on the
signature page hereof and has no present intention of becoming
domiciled into,
or to otherwise located in, any other state or jurisdiction, and is
an
"accredited investor" as defined in Rule 501(a) promulgated under
the Securities
Act (as defined below). Investor has filled in and executed an
Investor
Questionnaire in the form attached hereto as EXHIBIT B, and the
information set
forth in such Investor Questionnaire is true and correct as of the
date hereof.
(d) Investor is aware that an investment in the Securities is
highly speculative and subject to substantial risks. Investor has
adequate means
of providing for his current needs and possible contingencies, and
is able to
bear the high degree of economic risk of this investment,
including, but not
limited to, the possibility of the complete loss of Investor's
entire investment
and the limited transferability of the Securities, which may make
the
liquidation of this investment impossible for the indefinite
future.
(e) Investor has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of an
investment in the Securities and making an informed investment
decision.
(f) Investor understands that the Securities will not be
registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"),
or any state securities laws, in partial reliance upon exemptions
from
registration for certain private offerings. Investor understands
and agrees that
the Securities, or any interest therein, may not be resold or
otherwise disposed
of by Investor unless the resale of the Securities is subsequently
registered
under the Securities Act and under all applicable state securities
laws or
unless the Company receives an opinion of counsel, satisfactory to
it that an
exemption from registration is available. Further, Investor
understands that
only the Company can take action so as to register the
Securities.
(g) Investor acknowledges and represents that Investor has
received and reviewed a copy of the Company's Annual Report on Form
10-K for the
year ended December 31, 2007, together with its Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 (the "DISCLOSURE
DOCUMENT"), and any
amendments or supplements thereto, has been given a reasonable
opportunity to
review all documents, books, and records of the Company pertaining
to this
investment, has been supplied with all additional information
concerning the
Company and the Securities that has been requested by Investor, has
had a
reasonable opportunity to ask questions of and receive answers from
the Company
or its representatives concerning this investment, and that all
such questions
have been answered to the full satisfaction of Investor. Without
limiting the
generality of the foregoing, the Investor is aware that the
auditors who
reviewed the financial statements included in the Disclosure
Document have been
disqualified by the Public Company Accounting Oversight Board, that
the Company
has engaged new auditors and that the new auditors are reviewing
the financial
statements included in the Disclosure Document and may recommend or
require
changes or corrections to such financial statements.
(h) Investor has received no representations, written or oral,
from the Company, a placement agent or any officer, director,
employee, attorney
or agent thereof, other than those contained in the Disclosure
Document and this
Agreement. In making the decision to purchase the Securities,
Investor has
relied solely upon Investor's review of the Disclosure Document,
this Agreement,
and independent investigations made by Investor or Investor's
representatives
without assistance of the Company.
(i) Investor understands and agrees that the following
restrictions and limitations are applicable to his purchases and
resales,
pledges, hypothecations, or other transfers of the Securities
(including for
purposes of this subsection (i), any shares of common stock
issuable upon
exercise of the Shares):
i. The Securities shall not be sold, pledged,
hypothecated, or otherwise transferred unless registered under the
Securities
Act and applicable state securities laws or an exemption from
registration is
available;
ii. Each certificate or other document evidencing or
representing the Securities shall be stamped or otherwise imprinted
with a
legend in the form set forth on the form of Note and Share,
respectively,
attached hereto, or a similar legend for any shares of common
stock.
iii. Stop transfer instructions have been or will be
placed on the Securities so as to restrict the resale, pledge,
hypothecation, or
other transfer thereof in accordance with the provisions
hereof.
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(j) Investor represents and affirms that none of the following
information has ever been represented, guaranteed, or warranted to
Investor,
expressly or by implication, by any person:
i. The approximate or exact length of time that
Investor will be required to remain a security holder of the
Company;
ii. The percentage of profit and/or amount of or type
of consideration, profit or loss to be realized, if any, as a
result of an
investment in the Company; or
iii. The possibility that the past performance or
experience on the part of the Company or any affiliate, or any
officer,
director, employee, or agent of the foregoing, might in any way
indicate or
predict the results of ownership of the Securities or the potential
success of
the Company's operations.
(k) Investor represents that he or she has read and considered
fully the sections in the Disclosure Document identifying risk
factors and
investment considerations and understands that (i) any investment
in the
Securities is highly speculative and is subject to a high degree of
risk, and
(ii) there are substantial restrictions on the transferability of
the
Securities, and it may be impossible to liquidate an investment in
the
Securities in case of an emergency.
3.
INDEMNIFICATION: Investor acknowledges that Investor understands
the
meaning and legal consequences of the representations and
warranties set forth
in Section 2 hereof and that the Company and the officers,
directors, employees,
and agents of the Company have relied and will rely upon such
representations
and warranties. Investor hereby agrees to indemnify and hold
harmless the
Company and each of its officers, directors, employees, and agents
from and
against any and all loss, claim, damage, liability, cost, or
expense (including
attorneys' fees), joint or several, to which any such person may
become subject
due to or arising out of:
(a) Any breach by Investor of any representation or warranty
set forth in Section 2 above;
(b) Any inaccuracy in the representations and warranties set
forth in Section 2 above;
(c) The disposition of any of the Securities by Investor
contrary to the representations and warranties set forth in Section
2 above; and
(d) Any action, suit, proceeding, demand, assessment, or
judgment incident to or based upon any of the matters indemnified
against.
Notwithstanding
the foregoing, however, no representation, warranty,
acknowledgement or agreement made herein by Investor shall in
an
