SECURITY AGREEMENT
Exhibit 4.5
SECURITY AGREEMENT, dated as of January 15, 2008 (this “Agreement”), between SMART
MOVE, INC., a Delaware corporation (the “Company), and the lenders identified on the
signature page hereto (the “Lenders”).
1. Definitions.
(a) Capitalized terms used herein without definition (by cross-reference or otherwise) shall
have the meanings provided for such terms (by cross-reference or otherwise) in the SPA.
(b) The following capitalized terms, when used herein, shall have the meanings provided for
such terms in Article 9 of the NYUCC (as hereafter defined): Accession, Account, Cash Proceeds,
Certificate of Title, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract,
Commodity Intermediary, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm
Products, General Intangible, Goods, Health-Care-Insurance Receivable, Instrument, Inventory,
Investment Property, Letter-of-Credit Right, Non-Cash Proceeds, Payment Intangible, Proceeds,
Promissory Note, Software, Supporting Obligation, and Tangible Chattel Paper. Such terms (and those
in the following clauses of this Section 1) shall include in the singular number the plural and in
the plural number the singular. Nothing contained in this subsection (b) or otherwise in this
Agreement shall be construed to mean that uncapitalized terms used herein which are defined in the
UCC or the NYUCC shall not have the meanings ascribed to such terms in such statutes.
(c) The following capitalized terms, when used herein and not defined in Article 9 of the
NYUCC, shall have the meanings provided therefor elsewhere in the NYUCC: Certificated Security,
Letter of Credit, Securities Intermediary and Uncertificated Security.
(d) As used herein, the following capitalized terms shall have the following meanings:
“Event of Default” means any of the following: (i) any failure by the Company
to pay, when due, any amount payable by it under any Transaction Document, (ii) any other
material breach by the Company of any provision of any Transaction Document which is
not cured within 30 days, (iii) any representation or warranty made by the Company in
any Transaction Document, or otherwise in writing in connection with any such document, or
in any certificate or statement furnished pursuant to or in connection with any such
document, shall be breached or shall prove to be untrue in any material respect on the date
as of which made; (iv) the occurrence of an Insolvency Event with respect to the Company; or
(v) any other Event of Default (as defined in the terms and conditions of any relevant
Transaction Document).
“Government Authority” shall mean any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
“Insolvency Event” means the occurrence of any of the following with respect to
the Company or another Person: such Person shall make an assignment for the benefit of, or
composition with, creditors or shall become insolvent or be unable, or generally fail, to
pay its debts when due; or any bankruptcy, insolvency or other proceeding for the relief of
financially distressed debtors shall be commenced with respect to such Person, or a
receiver, liquidator, custodian or trustee shall be appointed for such Person or a
substantial part of its assets, and, if any of the same shall occur involuntarily as to such
Person, it shall not be dismissed, stayed or discharged within 60 days; or if any order for
relief shall be entered against such Person under Title 11 of the United States Code
entitled “Bankruptcy”; or such Person shall take any action to effect, or which indicates
its acquiescence in, any of the foregoing; in each of the foregoing situations, whether
under the laws of the United States or the analogous laws of any foreign jurisdiction.
“Loan Agreement” means each agreement (if, as and when executed by the Company
and the Lenders) pursuant to or in connection with which any financial accommodation is
extended by the Lenders to or on behalf of the Company, including, without limitation, the
Debentures.
“NYUCC” means the Uniform Commercial Code of the State of New York (as
currently in effect and as the same may from time to time hereafter be amended).
“Patents” means (i) all United States or other patents which the Company may
from time to time possess or be otherwise entitled to use, and all licenses of United States
or other patents which the Company may from time to time possess or be otherwise entitled to
use (including without limitation the patents described in Section 8(f) hereof), (ii) all
re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof,
(iii) the right to xxx for past, present and future infringements of the foregoing, and (iv)
all rights corresponding to all of the foregoing throughout the world.
“Payment Default” means the failure by the Company to make any payment required
to be made by it pursuant to any Transaction Document to which it is a party at the time
when same is due (after giving effect to any applicable grace period).
“Person” shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability company, a
not-for-profit corporation or other not-for-profit entity, a trust, an unincorporated
association, a joint venture or other entity or a Government Authority.
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“Secured Obligations” means all of the indebtedness, obligations and
liabilities of the Company to the Lenders, individually or collectively, whether direct or
indirect, joint or several, absolute or contingent, due or to become due, now existing or
hereafter arising, pursuant to one or more of the Transaction Documents.
“State” means the State of New York.
“Trademarks” means (i) all United States or other trademarks which the Company
may from time to time possess or be otherwise entitled to use, together with the goodwill of
the business connected with the use of, and symbolized by, such trademarks (together with
the trademarks described in Section 8(f) hereof), (ii) all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iii) the right to
xxx for past, present and future infringements of the foregoing, and (iv) all rights
corresponding to all of the foregoing throughout the world (excluding intent-to-use United
States applications prior to their conversion into use-based applications).
(e) Unless otherwise specified, each reference in this Agreement or in any other Transaction
Document to a Transaction Document shall mean such Transaction Document as the same may from time
to time be amended, restated, replaced, supplemented or otherwise modified from time to time with
the consent of the Lenders.
(f) As used in this Agreement, the terms “including,” “including without limitation” and “such
as” (and like terms) are illustrative and not limitative. No difference shall be imputed to the
use in some places herein of “including” and in others of “including without limitation.” Phrases
such as “hereof” and “herein” refer to the entire Agreement and not just the section or other
portion in which said reference appears.
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(a) The Company is the owner of, or has other rights in, the Collateral, free from any adverse
lien, security interest or other encumbrance, except for the security interest created by this
Agreement and other liens permitted by the Transaction Documents.
(b) None of the Collateral constitutes, or is the proceeds of, Farm Products.
(c) None of the account debtors or other persons obligated on any of the Collateral is a
governmental authority subject to the Federal Assignment of Claims Act or like federal, state or
local statute or rule in respect of such Collateral.
(d) The Company holds no Commercial Tort Claim.
(e) The Company has at all times operated its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions
of federal, state and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances.
(f) On the date hereof, the Company does not hold or have any interest in (directly or through
a nominee or through a Securities Intermediary or Commodity Intermediary) any Investment Property
(whether Certificated Securities, Uncertificated Securities or otherwise).
(g) On the date hereof:
(i) the Company does not hold or otherwise have any interest in any Electronic Chattel
Paper or any such transferable record.
(ii) the Company is not a beneficiary under a letter of credit issued in favor of the
Company.
(iii) the Company possesses no rights in any material or significant copyrights,
regardless of whether same have been registered with the United States Copyright Office or
not.
(a) The Company (either itself or through licensees) will, for each Patent, not do any act, or
omit to do any act, whereby any Patent which is material to the conduct of the Company’s business
may become abandoned or dedicated.
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(b) The Company shall notify the Lenders immediately if it knows or has reason to know that
any application or registration relating to any Patent or Trademark which is material to the
conduct of the Company’s business may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and Trademark Office or
any court) regarding the Company’s ownership of any Patent or Trademark which is material to the
Company’s business, its right to register the same, or to keep and maintain the same.
(c) In no event shall the Company, either itself or through any agent, employee, licensee or
designee, file an application for the registration of any Patent or Trademark with the United
States Patent and Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless it promptly informs the Lenders, and, upon request of the
Lenders, executes and delivers any and all agreements, instruments, documents, and papers as the
Lenders may request to evidence the Lenders’ security interest in such Patent or Trademark and the
goodwill and general intangibles of the Company relating thereto or represented thereby, and the
Company hereby constitutes the Lenders its attorney-in-fact after an Event of Default has occurred
to execute and file all such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until the
Secured Obligations are paid in full.
(d) The Company will take all necessary steps that are consistent with good business practices
in any proceeding before the United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain and pursue each
application relating to the Patents (and to obtain the relevant registration) and to maintain each
registration of each of the Patents which is material to the conduct of the Company’s business,
including, without limitation, filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings.
(e) In the event that any Collateral consisting of a Patent is infringed, misappropriated or
diluted by a third party, the Company shall notify the Lenders within (30) days after it learns
thereof and shall, if consistent with good business practice, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate under the
circumstances to protect such Collateral consisting of a Patent.
(f) If, before the Secured Obligations have been satisfied in full, the Company obtains rights
to any new trademark material to its business or new patent, or becomes entitled to the benefit of
any trademark material to its business or patent application or patent for any reissue, division,
continuation, renewal, extension, or continuation-in-part of any Patent, or any improvement on any
Patent, or any Trademark, the provisions of Section 2 hereof shall automatically apply thereto and
the Company shall give the Lenders prompt notice thereof in writing.
(g) The Company shall have the duty, through counsel reasonably acceptable to the Lenders, to
prosecute diligently any patent or trademark application pending as of the date of this Agreement
or thereafter until the Secured Obligations have been paid in full, to make application on
unpatented but patentable inventions and to preserve and maintain all rights in patent and
trademark applications; provided, however, that the Company shall have no
obligation
to make application on any unpatented but patentable inventions if making such application
would be unnecessary or imprudent in the good faith business judgment of the Company. Any expenses
incurred in connection with such an application shall be borne by the Company.
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(h) The Lenders shall have the right but shall in no way be obligated to bring suit in its own
name to enforce the Patents and Trademarks and any license thereunder, in which event the Company
shall, at the request of the Lenders, do any and all lawful acts and execute any and all proper
documents required by the Lenders in aid of such enforcement action and indemnify the Lenders for
all costs and expenses incurred by the Lenders in the exercise of its rights under this Section
(h).
(i) The Company represents and warrants that (x) it has no Patents or Trademarks which are
material to the business or operations of the Company or otherwise important to the Company except
such as are listed on Schedule 12 to the Perfection Certificate, and (y) it is not the holder,
owner or licensee of any copyright (i) material to its business or (ii) which has been registered
with the United States Copyright Office.
(j) Until the occurrence of an Event of Default, the Lenders hereby grants to the Company the
exclusive, nontransferable right and license to use the Trademarks and to make, have made, use and
sell the inventions disclosed and claimed in the Patents for the Company’s benefit and account and
for none other. The Company agrees not to sell or assign its interest in, or grant any sublicense
under, the license granted to the Company in this clause (j) without the prior written consent of
the Lenders, which consent will not be unreasonably withheld or delayed.
10. Covenants Concerning Collateral, Etc. The Company further covenants with the
Lenders as follows:
(a) The Collateral, to the extent not delivered to the Lenders pursuant to Section 4, will be
kept at those locations listed on Schedule 10 hereto, and the Company will not remove the
Collateral from such locations (except for the sale of Inventory in the ordinary course of the
Company’s business) without providing at least 60 days (or such lesser number of days agreed to at
the relevant time by the Lenders) prior written notice to the Lenders.
(b) Except for the security interest herein granted and liens permitted by the Transaction
Documents: (1) the Company is and shall be the owner of or have other rights in the Collateral free
from any lien, security interest or other encumbrance, and (2) the Company shall defend the same
against all claims and demands of all persons at any time claiming the same or any interests
therein adverse to the Lenders.
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(c) The Company shall not pledge, mortgage or create, or suffer to exist a security interest
in the Collateral in favor of any person other than the Lenders except for liens permitted by the
Transaction Documents.
(d) The Company will keep the Collateral in good order and repair (reasonable wear and tear
excepted) and will not use the same in violation of law or any policy of insurance thereon.
(e) The Company will permit the Lenders, or its designee, to inspect the Collateral (wherever
located) at any reasonable time.
(f) The Company will pay promptly when due all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation of such Collateral
or incurred in connection with this Agreement (except for taxes, assessments and government charges
which are being contested in good faith and by appropriate proceedings diligently conducted and the
Company has set aside on its books adequate reserves therefor in accordance with generally accepted
accounting principles).
(g) The Company will continue to operate its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions
of federal, state and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances.
(h) The Company will not sell or otherwise dispose, or offer to sell or otherwise dispose, of
the Collateral or any interest therein except for (1) sales and leases of Inventory, and licenses
of general intangibles, in the ordinary course of the Company’s business and (2) sales or other
dispositions of obsolescent items of equipment in the ordinary course of business consistent with
the Company’s past practices except to the extent same is prohibited by the Note.
(i) The Company will, whenever the Company acquires or otherwise possesses any significant or
material copyrights or any rights or interests therein, provide to the Lenders a list thereof,
identified (to the extent applicable) by title, author and Copyright Office registration number and
date.
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14. Power of Attorney.
(a) Appointment and Powers of Lenders. The Company hereby irrevocably constitutes and
appoints the Lenders and any officer or agent thereof, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of
the Company or in the Lenders’ own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys
the power and right, on behalf of the Company, without notice to or assent by the Company, to do
the following:
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(i) whenever an Event of Default exists, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral in such manner as is
consistent with the NYUCC and as fully and completely as though the Lenders were the
absolute owner thereof for all purposes, and to do at the Company’s expense, at any time, or
from time to time, all acts and things which the Lenders deems necessary to protect,
preserve or realize upon the Collateral and the Lenders’ security interest therein, in order
to effect the intent of this Agreement, all as fully and effectively as the Company might
do, including, without limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies or authorities with
respect to trademarks, copyrights and patentable inventions and processes, and (ii) the
execution, delivery and recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and
(ii) to the extent that the Company’s authorization given in Section 3 is not
sufficient, to file such Financing Statements with respect hereto, with or without the
Company’s signature, or a photocopy of this Agreement in substitution for a Financing
Statement, as the Lenders may deem appropriate and to execute in the Company’s name such
Financing Statements and amendments thereto and continuation statements which may require
the Company’s signature.
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22. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION, except to the extent that matters of title or procedural issues of
foreclosure are required to be governed by the laws of the state in which the Collateral, or part
thereof, is located.
23. Jurisdiction. The Company hereby agrees that ANY LEGAL ACTION OR PROCEEDING
AGAINST THE COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK AS THE LENDERS MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE COMPANY
ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, unless
waived by the Lenders in writing, with respect to any action or proceeding brought by the Company
against the Lenders, and further consents (to the extent permitted by applicable law) to the
service of process in any such action or proceeding being made upon the Company by mail at the
address stated alongside its name on the signature page hereof or at such other address as the
Lenders are notified of in accordance with Section 24(h) hereof. The Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any such court or that
such suit is brought in an inconvenient court. Nothing herein shall limit the right of the Lenders
to bring proceedings against the Company in the courts of any other jurisdiction. The Company
covenants that it is and will remain subject to service of process in the State of New York so long
as any of the Secured Obligations is outstanding. Nothing herein shall affect the right of the
Lenders to serve process in any other manner permitted by law.
24. Miscellaneous.
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Accepted: | ||||
PROFESSIONAL OFFSHORE OPPORTUNITY FUND, LTD. | ||||
By: |
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Name: | ||||
Title: | ||||
Address: | ||||
PROFESSIONAL TRADERS FUND, LTD. | ||||
By: |
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Name: | ||||
Title: | ||||
Address: | ||||
ENTITIES DESIGNATED BY SMART MOVE, INC. | ||||
By: |
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Name: | ||||
Title: | ||||
Address: |
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