World Moto, Inc. - Exhibit 10.4 - Filed by newsfilecorp.com






SECURITY AGREEMENT 

            THIS
SECURITY AGREEMENT (this “Agreement”) is made as of April 4, 2014
(“Effective Date”) is made by World Moto, Inc., a Nevada
corporation (the “Company”), in favor of Dominion Capital LLC, in its
capacity as collateral agent (in such capacity, the “Collateral Agent”)
for the “Purchasers” (as defined below) party to the Securities Purchase
Agreement, dated as of April 4, 2014 (as amended, restated or otherwise modified
from time to time, the “Purchase Agreement”). 

RECITAL

            A.       
The Company and each party listed as a “Purchaser” on the Schedule A attached
thereto (collectively, the “Purchasers”) are parties to the Purchase
Agreement, pursuant to which the Company shall be required to sell, and the
Purchasers shall purchase or have the right to purchase, the “Debentures” (as
defined therein) issued pursuant thereto (as such Debentures may be amended,
restated, replaced or otherwise modified from time to time in accordance with
the terms thereof, collectively, the “Debentures”) 

           
B.        The parties have agreed that the
Company’s obligations under the Debentures will be secured by the Company’s
grant to the Collateral Agent, for itself and for the ratable benefit of the
Purchasers, of a security interest in and to certain Collateral (as defined
below), pursuant to the terms and conditions of this Agreement. 

            NOW,
THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows: 

AGREEMENT

           
1.        SECURITY.


                          1.1       
Grant of Security Interest. As security for the prompt and
punctual payment and performance of all Indebtedness (as defined below) of the
Company to the Purchasers when and as due under the Debentures, the Company
hereby grants to the Collateral Agent, for itself and for the ratable benefit of
the Purchasers, a security interest in the Collateral (as defined below). For
purposes of this Agreement, “Indebtedness” means all obligations and
liabilities of the Company to the Purchasers under (i) the Debentures, and (ii)
this Agreement.

                          1.2       
Collateral Defined. As used in this Agreement, the term
“Collateral” means, collectively, wherever located, whether now owned or
hereafter acquired or now existing or hereafter acquired or created, all right,
title and interest of the Company in and to all of its assets, including,
without limitation: (i) accounts, chattel paper, deposit accounts, documents,
general intangibles (including, but not limited to intellectual property,
payment intangibles, software, licenses, franchises and customer information),
goods (including, but not limited to equipment, fixtures and inventory),
instruments, investment property, letter-of-credit rights, money, other personal
property, software, any commercial tort claims; (ii) to the extent not referred
to in clause (i) of this sentence, all (A) supporting obligations and incidental
property rights incident to, arising or accruing pursuant to or otherwise
relating to any of the things referred to in clause (i) of this sentence,
whether arising or accruing from any action taken by the Company or the
Collateral Agent or otherwise, (B) proceeds of any of the items referred to in
clauses (i) and (ii)(A) of this sentence and (C) books and records relating to
any of the items referred to in clauses (i) and (ii)(A) and (B) of this
sentence. 

                          1.3       
Collateral Agent Rights. The Collateral Agent is hereby authorized to
file one of more UCC-1 Financing Statements with the Secretary of State of the
State of Nevada evidencing and providing notice of the security interest granted
pursuant to this Agreement in the Collateral.




                          1.4       
Release of Collateral. Upon the full and final discharge of all of the
Indebtedness, the Collateral Agent will execute and deliver such documents as
may be reasonably necessary and requested by the Company to release the
Collateral from the security interest granted to the Collateral Agent in this
Agreement. 

                          1.5       
Termination. When all the Indebtedness has been paid in full and
discharged, this Agreement and the security interest granted to the Collateral
Agent hereunder will terminate and a UCC-3 Termination Statement shall be filed
by Collateral Agent to indicate the termination of the security interest created
hereby. 

            2.       
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Collateral Agent that the statements contained in
the following paragraphs of this Section 2 are all true and correct immediately
prior to the execution of the Debenture. 

                         
2.1       
Title. The Company owns all right, title and interest in and to
the Collateral.

                          2.2       
Right to Grant Interest. The Company has the right to grant the security
interest under this Agreement to Collateral Agent in the Collateral. 

                          2.3       
No Bankruptcy. Company is not subject to any bankruptcy case or
insolvency proceedings before any court in any jurisdiction. In the ninety (90)
days preceding the date of this Agreement, the Company has not received any
threat from any third party to subject the Company to any involuntary bankruptcy
or insolvency proceeding. 

            3.       
COVENANTS OF THE COMPANY. So long as any of the Company Indebtedness to
the Purchasers are not been fully satisfied, the Company covenants and agrees
with the Collateral Agent that: 

                          3.1       
Payment of Indebtedness. The Company will pay all Indebtedness
when due under the Debentures; 

                          3.2       
Condition of Collateral. The Company will maintain the Collateral in good
condition and repair; 

                          3.3       
Further Assurances. The Company will execute and deliver such
documents as the Collateral Agent deems necessary to create, perfect and
continue the security interests granted by this Agreement; 

                          3.4       
Taxes. The Company will pay all taxes due and owing by the
Company at such time as they become due. 

                          3.5       
No Sale or Transfer. The Company will not to sell, offer to
sell, or otherwise transfer the Collateral, except in the ordinary course of
business;

                          3.6       
Books and Records. The Company will keep, in accordance with
accounting principles consistently applied, complete and accurate books and
records regarding all Collateral;

                          3.7       
Inspection. The Company will permit the Collateral Agent and its
designees at all reasonable times to inspect the Collateral and Debtor’s books
and records relating to Collateral, and to audit and make copies or extracts
from such books and records 

2




           
4.        RIGHTS AND
REMEDIES UPON EVENT OF DEFAULT. 

                          4.1       
General Remedies. In the event of an occurrence (and during the
continuance) of an Event of Default (as defined in the Debentures), in addition
to exercising any other rights or remedies the Purchasers may have under the
Debentures, at law or in equity, or pursuant to the provisions of the Uniform
Commercial Code, the Collateral Agent may, at its option, and without demand
first made, exercise any one or all of the following rights and remedies: (i)
collect the Collateral and its proceeds; (ii) take possession of the Collateral
wherever it may be found, using all reasonable means to do so, or require the
Company to assemble the Collateral and make it available to the Collateral Agent
at a place designated by the Collateral Agent that is reasonably convenient to
the Company; (iii) proceed with the foreclosure of the security interest in the
Collateral granted herein and the sale or endorsement and collection of the
proceeds of the Collateral in any manner permitted by law or provided for
herein; (iv) sell, lease or otherwise dispose of the Collateral at public or
private sale, with or without having the Collateral at the place of sale; (v)
institute a suit or other action against the Company for recovery on the
Debenture or to obtain possession or effect a sale of the Collateral; (vi)
exercise any rights and remedies of a Company under the Uniform Commercial Code;
and/or (vii) offset, against any payment due from the Company to the Collateral
Agent, the whole or any part of any Indebtedness of the Collateral Agent to the
Company. 

                          4.2       
No Election of Remedies. The election by the Collateral Agent of any
right or remedy will not prevent any Purchaser from exercising any other right
or remedy against the Company. 

                          4.3       
Proceeds. If an Event of Default occurs (and is continuing), all
proceeds and payments with respect to the Collateral will be retained by the
Collateral Agent (or if received by the Company will be held in trust and will
be forthwith delivered by the Company to the Collateral Agent in the original
form received, endorsed in blank) and held by the Collateral Agent as part of
the Collateral or applied by the Collateral Agent to the payment of the
Indebtedness. 

                          4.4       
Sales of Collateral. Any item of Collateral may be sold for cash
or other value at public or private sale or other disposition and the proceeds
thereof collected by or for the Collateral Agent as provided in the Uniform
Commercial Code or under other applicable law. The Company agrees to promptly
execute and deliver, or promptly cause to be executed and delivered, such
instruments, documents, assignments, waivers, certificates and affidavits and
supply or cause to be supplied such further information and take such further
action as the Collateral Agent may reasonably require in connection with any
such sale or disposition. The Collateral Agent will have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Company, which right or equity is
hereby waived or released. The Company hereby waives any prior notice periods,
to the extent allowable by applicable law. 

                          4.5       
Application of Proceeds. The proceeds of all sales and
collections in respect of the Collateral, the application of which is not
otherwise specifically herein provided for, will be applied as follows: (i)
first, to the payment of the costs and expenses of such sale or sales and
collections and the actual attorneys’ fees and out-of-pocket expenses incurred
by the Collateral Agent relating to costs of collection; (ii) second, any
surplus then remaining will be applied to the payment of all unpaid principal
under the Debenture; and (iii) third, any surplus then remaining will be paid to
the Company. 

3




           
5.       
GENERAL PROVISIONS. 

                          5.1       
Appointment of Collateral Agent. Each Purchaser hereby (a) appoints the
Collateral Agent, as the collateral agent hereunder, and (b) authorizes the
Collateral Agent (and its officers, directors, employees and agents) to take such action
on such Purchaser’s behalf in accordance with the terms hereof. The Collateral
Agent shall not have, by reason hereof, a fiduciary relationship in respect of
any Purchaser. Neither the Collateral Agent nor any of its officers, directors,
employees or agents shall have any liability to any Purchaser for any action
taken or omitted to be taken in connection hereof except to the extent caused by
its own gross negligence or willful misconduct, and each Purchaser agrees to
defend, protect, indemnify and hold harmless the Collateral Agent and all of its
officers, directors, employees and agents (collectively, the “Collateral
Agent Indemnitees”) from and against any losses, damages, liabilities,
obligations, penalties, actions, judgments, suits, fees, costs and expenses
(including, without limitation, reasonable attorneys’ fees, costs and expenses)
incurred by such Collateral Agent Indemnitee, whether direct, indirect or
consequential, arising from or in connection with the performance by such
Collateral Agent Indemnitee of the duties and obligations of Collateral Agent
pursuant hereto. The Collateral Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the holders of a majority in aggregate principal amount
of the Debentures (the “Required Holders”), and such instructions shall
be binding upon all holders of Debentures; provided, however, that the
Collateral Agent shall not be required to take any action which, in the
reasonable opinion of the Collateral Agent, exposes the Collateral Agent to
liability or which is contrary to this Agreement or applicable law. The
Collateral Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message believed by it
in good faith to be genuine and correct and to have been signed, sent or made by
the proper Person (as defined in the Purchase Agreement), and with respect to
all matters pertaining to this Agreement and its duties hereunder or thereunder,
upon advice of counsel selected by it. 

                          5.2       
Resignation of Collateral Agent. The Collateral Agent may resign
from the performance of all its functions and duties hereunder at any time by
giving at least ten (10) business days’ prior written notice to the Company and
each holder of Debentures. Such resignation shall take effect upon the
acceptance by a successor Collateral Agent of appointment pursuant to clauses
(b) and (c) below or as otherwise provided below. The Required Holders may, by
written consent, remove the Collateral Agent from all its functions and duties
hereunder. 

                          (a)       
Upon any such notice of resignation or removal, the Required Holders shall
appoint a successor collateral agent. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor agent, such successor collateral agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the collateral agent, and the Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After the
Collateral Agent’s resignation or removal hereunder as the collateral agent, the
provisions of this Section 5(a) shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Collateral Agent under this
Agreement. 

                          (b)       
If a successor collateral agent shall not have been so appointed within ten (10)
business days of receipt of a written notice of resignation or removal, the
Collateral Agent shall then appoint a successor collateral agent who shall serve
as the Collateral Agent until such time, if any, as the Required Holders appoint
a successor collateral agent as provided above. 

                          (c)       
In the event that a successor Collateral Agent is appointed pursuant to the
provisions of this Section 5.2 that is not a Purchaser or an affiliate of any
Purchaser (or the Required Holders or the Collateral Agent (or its successor),
as applicable, notify the Company that they or it wants to appoint such a
successor Collateral Agent pursuant to the terms of this Section 5.2), the
Company covenants and agrees to promptly take all actions reasonably requested
by the Required Holders or the Collateral Agent (or its successor), as
applicable, from time to time, to secure a successor Collateral Agent
satisfactory to the requesting part(y)(ies), in their sole discretion, including,
without limitation, by paying all reasonable and customary fees and expenses of
such successor Collateral Agent, by having the Company agree to indemnify any
successor Collateral Agent pursuant to reasonable and customary terms and by the
Company executing a collateral agency agreement or similar agreement and/or any
amendment hereto reasonably requested or required by the successor Collateral
Agent. 

4




                          5.3       
Survival of Warranties. The representations, warranties and covenants of
the Company and the Collateral Agent contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Collateral Agent or the Company, as the case may be.


                          5.4       
Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.

                          5.5       
Governing Law. This Agreement shall be governed by and construed under
the internal laws of the State of Nevada as applied to agreements among Nevada
residents entered into and to be performed entirely within Nevada, without
reference to principles of conflict of laws or choice of laws and, to the extent
applicable, by federal law.

                          5.6       
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. 

                          5.7       
Headings. The headings and captions used in this Agreement are used only
for convenience and are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits and schedules attached hereto, all of which exhibits and
schedules are incorporated herein by this reference. 

                          5.8       
Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) at the time of personal delivery, if delivery is in
person; (ii) one (1) business day after deposit with an express overnight
courier for United States deliveries, or two (2) business days after such
deposit for deliveries outside of the United States, with proof of delivery from
the courier requested; or (iii) three (3) business days after deposit in the
United States mail by certified mail (return receipt requested) for United
States deliveries when addressed to the party to be notified at the address
indicated for such party on the signature page hereto, or, or at such other
address as any party or the Company may designate by giving ten (10) days’
advance written notice to all other parties. 

                          5.9       
Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms. 

                          5.10    
 Further Assurances. From and after the date of this
Agreement, upon the request of the Collateral Agent or the Company, the Company
and the Collateral Agent shall execute and deliver such instruments, documents
or other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.

5




                          5.9       
Waiver and Amendment. Any of the terms and provisions of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but only by a written instrument executed by such party. This Agreement may be
amended only by an agreement in writing executed by the parties. 

                          5.10     
Delay or Omission. No delay or omission to exercise any right, power or
remedy accruing to any party hereto shall impair any such right, power or remedy
of such party nor be construed to be a waiver of any such right, power or remedy
nor constitute any course of dealing or performance hereunder. 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS] 

6




            IN
WITNESS WHEREOF, the parties have caused this SECURITY AGREEMENT to be executed
and delivered as of the date first above written. 

COMPANY: 

 

WORLD MOTO,
INC. 
a Nevada corporation

 

By:
___________________________________
      
Name:
       Title: 


Agreed and accepted by: 

COLLATERAL AGENT: 

DOMINION CAPITAL LLC 

By:
___________________________________
      
Name:
       Title: 


[SECURITY AGREEMENT] 




Agreed and accepted by: 

PURCHASER: 


_____________________


 

By: ___________________________________
      
Name:
       Title: 


[SECURITY AGREEMENT]