DEFAULT WAIVER AND FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

DEFAULT WAIVER AND FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

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Exhibit 10.31

DEFAULT WAIVER AND FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

THIS DEFAULT WAIVER AND FIFTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 5^th day of October, 2006, by and between Silicon Valley Bank (“Bank”) and A Smart Move L.L.C., a Colorado limited liability company (“Borrower”) whose address is 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, XX 00000.

Recitals

A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of April 26, 2005, as amended by that certain Loan Modification Agreement dated as of June 21, 2005, by that certain Second Amendment to Loan and Security Agreement dated August 29, 2005, by that certain Default Waiver and Third Amendment to Loan and Security Agreement dated December 21, 2005,and by that certain Fourth Amendment to Loan and Security Agreement dated May 12, 2006 (as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

C. Borrower is currently in default of the Loan Agreement for failing to comply with (i) the monthly financial reporting requirements in Section 6.2(a)(i) and Section 6.2(b) of the Loan Agreement as of September 30, 2006 for the August 2006 time period, (ii) the Remaining Months Liquidity covenant set forth in Section 6.7(i) of the Loan Agreement as of June 30, 2006 and August, 31, 2006, (iii) the Profitability/Maximum EBITDA Loss covenant set forth in Section 6.7(ii) of the Loan Agreement, as of June 30, 2006, July 31, 2006 and August 31, 2006, and (iv) the Equity Investment covenant set forth in Section 6.10 of the Loan Agreement as of June 30, 2006 (collectively, the “Existing Defaults”).

D. Borrower has requested that Bank waive its rights and remedies against Borrower, limited specifically to the Existing Defaults. Although Bank is under no obligation to do so, Bank is willing to not exercise its rights and remedies against Borrower related to the specific Existing Defaults on the terms and conditions set forth in this Amendment, so long as Borrower complies with the terms, covenants and conditions set forth in this Amendment.

E. Borrower has further requested that Bank amend the Loan Agreement to (i) change the financial covenants, and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions, and in reliance upon the representations and warranties set forth below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2. Waiver of Covenant Defaults. Bank hereby waives Borrower’s Existing Defaults under the Loan Agreement as specified and defined in Recital C above. Bank’s waiver of Borrower’s compliance of these covenants shall apply only to the foregoing periods. Accordingly, hereinafter, Borrower shall be in compliance with these covenants, unless otherwise provided for in this Amendment.

Bank’s agreement to waive the above-described defaults (1) in no way shall be deemed an agreement by the Bank to waive Borrower’s compliance with the above-described covenants as of all other dates and (2) shall not limit or impair the Bank’s right to demand strict performance of these covenants as of all other dates and (3) shall not limit or impair the Bank’s right to demand strict performance of all other covenants as of any date.

3. Amendments to Loan Agreement.

3.1 Section 6.6 (Primary Accounts). Section 6.6 is amended in its entirety and replaced with the following:

6.6 Primary Accounts.

Borrower will maintain its primary depository and operating accounts and investment accounts with Bank or Bank’s affiliates, which relationship shall include Borrower maintaining account balances in unrestricted demand deposits or liquid investments in any accounts at or through Bank and subject to Bank’s security interest in an aggregate amount of not less than the aggregate principal balances of the Equipment Advances and the Second Equipment Advances outstanding from time to time hereunder until compliance with Section 6.10 and thereafter or otherwise representing at least 85% of all account balances of Borrower held at any financial institution. As to any deposit accounts and investment accounts maintained with other institutions, Borrower shall cause each such institution to enter into a control agreement in form acceptable to Bank in its good faith business judgment in order to perfect Bank’s first priority security interest in said deposit accounts and investment accounts.

3.2 Section 6.7 (Financial Covenants). Section 6.7 is amended in its entirety and replaced with the following:

6.7 Financial Covenants.

Borrower will maintain, as of the last day of each month, commencing with the month in which Borrower completes the Equity Investment described in Section 6.10:

(i) Remaining Months Liquidity. A ratio of Liquidity Coverage to Cash Burn of at least 6.00:1.00. As used herein “Liquidity Coverage” means unrestricted and unencumbered cash and cash equivalents held at Bank plus 30% of the invoice cost of forklifts financed or to be financed by Bank excluding taxes, shipping, warranty charges, freight discounts and installation expense; and “Cash Burn” means net income before any deduction for amortization and depreciation.

(ii) Profitability/Maximum EBITDA Loss. A minimum net profit (and maximum net loss) calculated as EBITDA measured monthly on a rolling 3-month basis, as follows: ($750,000) for the months ending 12/31/06, 01/31/07 and 02/28/07; ($400,000) for the months ending 03/31/07, 04/30/07 and 05/31/06; and $1 for the month ending 06/30/07 and each month ending thereafter.

3.3 Section 6.10 (Equity Investment). Section 6.10 is amended in its entirety and replaced with the following:

6.10 Equity Investment/Cash Balances. Until such time as Borrower has received net proceeds of not less than $5,000,000 on a cumulative basis commencing September 30, 2006 either from an initial public offering of its equity securities or the issuance of other equity or debt securities (as long as any debt is subordinated to the Obligations hereunder on terms agreed to by Bank in advance in writing)(the “Equity Investment”), Borrower will maintain with Bank or Bank’s affiliates account balances in unrestricted demand deposits or in liquid investments in unrestricted investment accounts, which are subject to Bank’s security interest, in an aggregate amount equal to or exceeding the aggregate principal balances of the Equipment Advances and the Second Equipment Advances outstanding from time to time hereunder.

3.4 Collateral. For the avoidance of doubt, the definition of Collateral is amended to include Borrower’s deposit account Number 3300468776.

3.5 Exhibit D. The Compliance Certificate in the form of Exhibit D attached hereto is substituted for that attached to the Loan Agreement.

4. Limitation of Amendments.

4.1 The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

4.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

5. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

5.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

5.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

5.3 The organizational documents of Borrower delivered to Bank on or before April 26, 2005 remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

5.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

5.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

5.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and

5.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

6. Prior Agreement. Except as expressly provided for in this Amendment, the Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect. This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents. In the event of any conflict or inconsistency between this Amendment and the terms of such documents, the terms of this Amendment shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.

7. Release by Borrower.

7.1 FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and discharges Bank and its present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims existing or arising from the beginning of time through and including the date of execution of this Amendment (collectively “Released Claims”). Without limiting the foregoing, the Released Claims shall include any and all liabilities or claims arising out of or in any manner whatsoever connected with or related to the Loan Documents, the Recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing.

7.2 By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever. Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Bank with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.

7.3 This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release. Borrower acknowledges that the release contained herein constitutes a material inducement to Bank to enter into this Amendment, and that Bank would not have done so but for Bank’s expectation that such release is valid and enforceable in all events.

7.4 Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:

(a) Except as expressly stated in this Amendment, neither Bank nor any agent, employee or representative of Bank has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Amendment.

(b) Borrower has made such investigation of the facts pertaining to this Amendment and all of the matters appertaining thereto, as it deems necessary.

(c) The terms of this Amendment are contractual and not a mere recital.

(d) This Amendment has been carefully read by Borrower, the contents hereof are known and understood by Borrower, and this Amendment is signed freely, and without duress, by Borrower.

7.5 Borrower represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released. Borrower shall indemnify Bank, defend and hold it harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters release.

8. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

9. Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, (b) Borrower’s payment to Bank of a fee in an amount equal to $2500.00, and (c) Borrower’s payment to Bank of all Bank Expenses (including reasonable attorneys’ fees and expenses, for documentation and negotiation of this Amendment) incurred to through date of this Amendment.

10. Governing Law. This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of Colorado.

11. Miscellaneous. All of the provisions in Sections 10, 11 and 12 of the Loan Agreement, which are not already included in this Amendment, are incorporated in this Amendment by this reference as if fully set forth herein, except that the references in the Loan Agreement to the term “this Agreement” and words of similar import shall mean this Amendment.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THIS AMENDMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AMENDMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.


BANK		BORROWER

Silicon Valley Bank		A Smart Move L.L.C.

By:	/s/ Xxxx L’Herault	By:	/s/ Xxxxxx Xxxxxxx

Name:	Xxxx L’Herault	Name:	Xxxxxx Xxxxxxx
Title:	Relationship Manager	Title:	Chief Financial Officer

EXHIBIT D
COMPLIANCE CERTIFICATE


TO:		SILICON VALLEY BANK
		0000 Xxxxxx Xxxxx
		Xxxxx Xxxxx, XX 00000

FROM:		A SMART MOVE L.L.C.

The undersigned Responsible Officer of A SMART MOVE L.L.C. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending ___with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned certifies that Borrower, and each Subsidiary, has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Responsible Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.

Please indicate compliance status by circling Yes/No under “Complies” column.


Reporting Covenant	Required	Complies
Monthly financial statements + CC	Monthly within 30 days	Yes/No
Annual	Compiled — FYE 05 — within 45 days	Yes/No
Audited — FYE 06 and after -	within 120 days	Xxx/Xx
00-X, 00-X xxx 0-X	Xxxxxx 0 days after filing with SEC	Yes/No

Continuation


Financial Covenant	Required	Actual	Complies
Maintain on a Monthly Basis (on a rolling 3-month basis):
Commencing with the month in which Borrower completes the Equity Investment described in Section 6.10:

Profitability/Maximum EBITDA Loss:	($750,000)	$___	Yes/No
	12/31/06 thru 02/28/07
	($400,000)
	03/31/07 thru 05/31/07
	$1
	06/30/07 and thereafter

Have there been updates to Borrower’s intellectual property?			Yes/No

Borrower only has deposit accounts located at the following institutions:_________________.


Comments Regarding Exceptions: See Attached.	BANK USE ONLY
	Received by:

		authorized signer
Sincerely,

A SMART MOVE L.L.C.	Date:


	Verified:

Signature		authorized signer

	Date:

Title
	Compliance Status: Yes No


Date

SILICON VALLEY BANK

PRO FORMA INVOICE FOR LOAN CHARGES


BORROWER:	A Smart Move L.L.C.

LOAN OFFICER:	Xxxx L’Herault

DATE:	October 5, 2006

	Loan Fee	$	2,500
	Documentation Fee	$	750

	TOTAL FEES DUE	$	3,250

o A check for the total amount is attached.

x Debit DDA # 3300468776 for the total amount.


BORROWER: A Smart Move L.L.C.



Authorized Signer		(Date)


SILICON VALLEY BANK



Loan Officer Signature		(Date)

Financial Covenant

Required

Actual

Complies

Maintain on a Monthly Basis:

Commencing with the month in which Borrower completes the Equity Investment described in Section 6.10:

Remaining Months Liquidity Ratio