Exhibit 10.5
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED AND RESTATED
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF JUNE 13,
2002, AS AMENDED, AMONG IMAGEMAX, INC., IMAGEMAX OF DELAWARE, INC., TDH III,
L.P., LVIR INVESTOR GROUP, LP, XXXXXX X. XXXXX AND COMMERCE BANK, NA,
INDIVIDUALLY AND AS AGENT.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is between IMAGEMAX, INC., a Pennsylvania
corporation ("ImageMax"), IMAGEMAX OF DELAWARE, INC., a Delaware corporation
("ImageMax Delaware"; and ImageMax and ImageMax Delaware individually a
"Company" and collectively the "Companies") and TDH III, L.P., a Delaware
limited partnership, individually and as agent ("Secured Party").
WHEREAS, concurrently herewith, the Companies, TDH III, L.P. ("TDH"),
LVIR Investor Group, LP ("LVIR") and Xxxxxx X. Xxxxx ("Xxxxx"; and TDH, LVIR and
Xxxxx individually a "Purchaser" and collectively the "Purchasers"), are
entering into a Subordinated Loan and Amendment Agreement (as amended, restated
or otherwise modified from time to time the "Loan Agreement"); and
WHEREAS, it is a condition precedent to Purchasers' performance of
their obligations under the Loan Agreement that the Companies execute this
Security Agreement; and
WHEREAS, the Companies have obtained senior financing (the "Senior
Loan") from Commerce Bank, NA and FirsTrust Bank ("Senior Lenders") and the
security interest granted herein is subordinate to the security interest granted
to such Senior Lenders as provided in the Subordination Agreement;
NOW THEREFORE, intending to be legally bound, the Companies and the
Secured Party agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement. Whenever used herein the
following terms shall, unless the context otherwise requires, have the following
respective meanings:
(a) "Account Debtor" means the Person who is obligated on an
account or contract right.
(b) "Collateral" means all of the following property of each
Company, whether now owned or hereafter acquired and whether now existing or
hereafter arising: (i) accounts (including health-care insurance receivables and
credit card receivables); (ii) securities entitlements, securities accounts,
commodity accounts, commodity contracts and investment property; (iii) deposit
accounts; (iv) instruments (including promissory notes); (v) documents
(including warehouse receipts); (vi) chattel paper (including electronic chattel
paper and tangible chattel paper); (vii) inventory, including raw materials,
work in process, or materials used or consumed in either Company's business,
items held for sale or lease or furnished or to be furnished under contracts of
service, sale or lease, goods that are returned, reclaimed or repossessed;
(viii) goods of every nature, including stock-in-trade and goods on consignment,
and computer programs embedded in such goods; (ix) equipment, including
machinery, vehicles and furniture; (x) fixtures; (xi) commercial tort claims, if
any, described on Schedule A hereto; (xii) letter of credit rights; (xiii)
general intangibles, of every kind and description, including payment
intangibles, software, computer information, source codes, object codes, records
and data, all existing and future customer lists, choses in action, claims
(including claims for indemnification or breach of warranty), books, records,
patents and patent applications, copyrights, trademarks, tradenames,
tradestyles, trademark applications, goodwill, blueprints, drawings, designs and
plans, trade secrets, contracts, licenses, license agreements, formulae, tax and
any other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies; (xiv) all supporting obligations of all of the
foregoing property; (xv) all property of either Company now or hereafter in
Secured Party's possession or in transit to or from, or under the custody or
control of, Secured Party or any affiliate thereof; (xvi) all cash and cash
equivalents thereof; and (xvii) all cash and noncash proceeds (including
insurance proceeds) of all of the foregoing property, all products thereof and
all additions and accessions thereto, substitutions therefor and replacements
thereof. All terms used in this definition shall have the meanings set forth in
the Uniform Commercial Code.
(c) "Fair Market Value" means the value of property
determined in an arm's length transaction between a willing and informed buyer
under no compulsion to buy and a willing and informed seller under no compulsion
to sell.
(d) "Liabilities" means all existing and future liabilities,
whether absolute or contingent, of either Company to the Secured Party or any
Purchaser arising hereunder, under the Loan Agreement or under any Note.
(e) "Person" means an individual, a corporation, a limited
liability company, a government or governmental subdivision or agency or
instrumentality, a business trust, an estate, a trust, a partnership, a
cooperative, an association, two or more Persons having a joint or common
interest, or any other legal or commercial entity.
(f) "Prevailing Interest Rate" means as of the date of
determination the highest rate of interest payable by the Company under any
Note.
(g) Uniform Commercial Code means the Uniform Commercial Code
as in effect from time to time in the Commonwealth of Pennsylvania.
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2. Grant of Security Interest. (a) To secure the payment, promptly
when due, and the punctual performance of all of the Liabilities, each Company
hereby grants to the Secured Party for its benefit and the ratable benefit of
each Purchaser a continuing lien upon and security interest in all of the
Collateral, subject in priority only to the security interest of the Senior
Lenders as set forth in the Subordination Agreement. The Companies, at their
expense, shall take such actions (including, without limitation, the filing of
Uniform Commercial Code financing statements) as shall be necessary or
appropriate to perfect, and maintain perfection of, the security interest
granted hereby.
(b) If any personal property which becomes part of the Collateral is
subject to a conditional xxxx of sale, security agreement or other lien covering
such property, then, in the event of any Event of Default under this Security
Agreement, all the right, title and interest of either Company in and to any and
all such personal property is hereby assigned to the Secured Party, together
with the benefits of any deposits or payments now or hereafter made by the
Company, or the predecessors or successors in title to the Company in the
Collateral. Should the Secured Party desire to impose the lien of this Security
Agreement more specifically upon said fixtures and articles of said personal
property, the Companies will make, execute and deliver, or cause to be made,
executed or delivered, on demand such security instrument as may be deemed
necessary or appropriate or required to effectuate the same.
(c) It is the intention of the Companies and of this instrument that
the terms of the Security Agreement shall cover the interests of the Companies
of whatever kind in and to all the Collateral of every kind and description
owned by either Company or in which either Company may have an interest, and
used or to be used in the operation of, or in connection with the operation of,
the business of either Company together with replacements of any of the
Collateral presently owned by either Company, and all increases and additions
thereto, and all after acquired personal property used in connection with the
business of either Company, or any interest therein, of any kind or description,
hereafter acquired by either Company for use in the operation of, or connected
with the operation of, said business, which after acquired property shall become
a part of the Collateral. Neither Company will create any chattel paper without
placing a legend on the chattel paper acceptable to the Secured Party indicating
that the Secured Party has a security interest in the chattel paper.
(d) The Companies authorize Secured Party to file at any time
financing statements, continuation statements, and amendments thereto that
describe the Collateral and to describe the Collateral as all assets of the
Companies of the kind pledged hereunder and which contain any other information
required by the Uniform Commercial Code for the sufficiency of filing office
acceptance of any financing statement, continuation statement, or amendment,
including whether either Company is an organization, the type of organization
and any organizational identification number issued to such Company, if
applicable. Any such financing statements may be signed by the Secured Party on
behalf of the Companies, as provided in the Uniform Commercial Code, and may be
filed at any time in any jurisdiction whether or not Revised Article 9 of the
Uniform Commercial Code is then in effect in that jurisdiction. Each Company
shall from time to time execute and deliver to the Secured Party, at the request
of the Secured Party, all Collateral that is negotiable and all other documents
that Bank may reasonably request, in form satisfactory to the Secured Party, to
perfect and continue perfected the Secured Party's security interests in the
Collateral and in order to fully consummate all of the transactions contemplated
under the Purchase Documents. The Companies shall have possession of the
Collateral, except where expressly otherwise provided in this Agreement or where
the Secured Party chooses to perfect its security interest by possession in
addition to the filing of a financing statement. Where Collateral is in
possession of a third party bailee, the Companies shall take such steps as the
Secured Party reasonably requests for the Secured Party to (i) obtain an
acknowledgment, in form and substance satisfactory to the Secured Party, of the
bailee that the bailee holds such Collateral for the benefit of the Secured
Party, (ii) obtain "control" of any Collateral consisting of investment
property, deposit accounts, letter-of-credit rights or electronic chattel paper
(as such items and the term "control" are defined in Revised Article 9 of the
Uniform Commercial Code), with any agreements establishing control to be in form
and substance satisfactory to the Secured Party.
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3. Records and Certifications.
(a) The Companies shall faithfully keep complete and accurate
books, records and equipment lists and make all necessary entries therein to
reflect the quantities, costs, current values and locations of its Collateral
and the transactions and facts giving rise to its accounts and contract rights,
including without limit the identity and address of all Account Debtors and all
payments, credits and adjustments to its accounts and contract rights. Each
Company shall keep the Secured Party fully and accurately informed as to the
location of all such books, lists and records. Each Company shall permit the
Secured Party's and/or any Purchaser's agents to have access to such books,
lists and records and to any other records pertaining to such Company's business
and to remove any such books, lists and records relating to the Collateral from
each Company's place of business or from another place where they may be found
for the purpose of examining, auditing and copying them. Any of such books,
lists or records so removed by the Secured Party's and/or any Purchaser's agents
shall be returned to the Company from which they were removed as soon as the
Secured Party or applicable Purchaser shall have completed its inspection, audit
or copying of them. The Secured Party's and/or any Purchaser's right to take
possession of such books, lists and records shall be enforceable after an
acceleration of the Liabilities by an action of replevin or by any other
appropriate remedy at law or in equity, and the Companies consent to the entry
of judicial orders and injunctions enforcing such rights, without prior notice
to the Companies or opportunity to be heard.
4. Maintenance of Collateral. Each Company shall care for all of the
Collateral and afford it suitable preventative maintenance consistent with past
practice. The Companies will pay the cost of all repairs to or maintenance of
the Collateral and will not permit anything to be done that might in any way
impair the value of any of the Collateral or any of the security intended to be
afforded by this Agreement. Each Company will adopt and adhere to a system with
respect to the Collateral capable of permitting the Companies and the Secured
Party to identify readily at any time the location and condition of each and
every item of the Collateral.
5. Title, etc. The Companies have acquired absolute and exclusive
title to each and every item or unit of the Collateral free and clear of all
liens, claims, security interests and other encumbrances, except those created
hereby in favor of the Secured Parties and those in favor of the Senior Lenders,
and each Company will warrant and defend its title to the Collateral, subject to
the rights of the Secured Party and the Senior Lenders, against the claims and
demands of all persons whomsoever. Without limiting the generality of the
foregoing and except for security interests granted to secure payment of the
Senior Loan and security interests permitted under the Loan Agreement
("Permitted Liens"), neither Company will pledge, assign or otherwise encumber,
or permit any liens or security interests to attach to, any of the Collateral,
nor permit any of the Collateral to be levied upon under any legal process. Upon
any breach of the foregoing covenant against encumbrances, the Secured Party or
any Purchaser may discharge the encumbrance for the account of and without
notice to the Companies, and all expenses incurred by the Secured Party or any
Purchaser in so doing, together with interest thereon at the Prevailing Interest
Rate, shall be added to the Liabilities and shall be payable by the Companies on
demand. Without the prior written consent of the Secured Party in each case,
neither Company will sell, exchange, lease, lend, salvage, replace or otherwise
dispose of any item or unit of the Collateral or any of such Company's rights
therein, except that so long as neither Company is in default hereunder, each
Company shall have the right in the ordinary course of its business to process
and sell its inventory and to replace worn or exhausted items or units of
equipment with new items or units of equipment of the same kind or character and
having a market value equal to or greater than the market value of the replaced
items or units when new.
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6. Taxes and Liens. The Companies will notify the Secured Party as
soon as is reasonably practicable in the event there ever arises against any of
the Collateral any lien, assessment, tax or other liability other than (a) the
lien created hereby in favor of the Secured Party or (b) the liens securing the
Senior Loan and the Permitted Liens. In any such event, whether or not such
notice is given, the Secured Party and any Purchaser shall (unless such lien,
assessment, tax or other liability is the subject of an appeal by either Company
and an appropriate bond has been posted to stay the effect of any resulting
lien) have the right (but shall be under no obligation) to pay any tax or other
liability of either Company deemed by the Secured Party or any Purchaser in good
faith to affect the Secured Party's or any Purchaser's interests hereunder. The
Companies shall repay to the Secured Party or any applicable Purchaser on demand
all sums which the Secured Party or any applicable Purchaser shall have paid
under this section in respect of taxes or other liabilities of either Company,
with interest thereon at the Prevailing Interest Rate, and the liability of the
Companies to the Secured Party or any applicable Purchaser for such repayment
with interest shall be included in the Liabilities. The Secured Party or any
applicable Purchaser shall be subrogated to the extent of any such payment by it
to all the rights and liens of the payee against either Company's assets. Each
Company shall furnish to the Secured Party from time to time upon the Secured
Party's request proof satisfactory to the Secured Party of the making of all
payments or deposits required by applicable law to be made with respect to
amounts withheld by each Company from wages and salaries of employees and
amounts contributed by each Company on account of federal, state or other income
or wage taxes and amounts due under the Federal Insurance Contributions Act or
the Federal Unemployment Tax Act or any similar legislation.
7. Insurance. The Companies shall bear all risk of loss, destruction
and damage to any and all of the inventory and equipment from any cause
whatsoever at any time during the term of this Agreement, and shall at their own
cost and expense obtain and keep in full force and effect, in kind and form
reasonably satisfactory to the Secured Party and with insurers of recognized
standing in the financial community or otherwise approved by the Secured Party,
all risk of physical loss or damage insurance covering the inventory and
equipment wherever the same may be, insuring against the risks of fire,
explosion, theft and such other risks as are customarily insured against by
corporations engaged in the same business and similarly situated with the
Companies (and specifically including vandalism, malicious mischief coverage),
in an amount or amounts usually carried by corporations engaged in the same
business and similarly situated with the Companies. All policies of such
insurance shall be written for the benefit of the Companies and the Secured
Party as the insureds, shall bear an endorsement in form satisfactory to the
Secured Party naming the Secured Party and the Companies as loss payees, as
their respective interests may appear, and shall provide for at least thirty
(30) days' advance written notice to the Secured Party of any cancellation. The
Secured Party and the Companies agree that all insurance proceeds shall be
payable to the Companies if at the time of such payment no Event of Default then
exists and the Companies deliver to the Secured Party a certificate to such
effect. All such policies (or in the Secured Party's discretion certificates
therefor) shall be provided by the Company to the Secured Party upon written
request. If either Company fails to pay any premium on any such insurance, the
Secured Party or any Purchaser shall have the right, but shall be under no
obligation, to pay such premium for either Company's account. The Companies
shall repay to the Secured Party and/or any applicable Purchaser on demand all
sums which the Secured Party and/or any applicable Purchaser shall have paid
under this section in respect of insurance premiums, with interest thereon at
the Prevailing Interest Rate, and the liability of the Companies to the Secured
Party and/or any applicable Purchaser for such repayment with interest shall be
included in the Liabilities. The Companies hereby assign to the Secured Party
any return or unearned premium which may be due upon the cancellation for any
reason whatsoever of any policy of insurance maintained in respect of the
Collateral and hereby direct the insurer to pay the Secured Party any amount so
due, except that the Secured Party shall have no right to any such amount unless
and until there exists an Event of Default. The rights of the Companies to
receive payment of any such return or unearned premium and the proceeds of any
such insurance shall constitute a part of the Collateral for all purposes
hereof.
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8. Control of and Access to Inventory and Equipment, etc. Each Company
shall maintain possession and control of its inventory and equipment consistent
with the ordinary course of the business of the Company, provided that after the
acceleration of the Liabilities the Secured Party shall have the right to take
possession of such inventory and equipment or any portion thereof, and for the
purpose of taking custody of each Company's inventory each Company agrees that
upon request of the Secured Party it will lease warehousing space in such
Company's own premises to the Secured Party and will erect such structures and
post such signs as the Secured Party may, subject to the prior lien rights of
the Senior Lenders, require in order to place such inventory under the exclusive
control of the Secured Party. Notwithstanding any taking of possession by the
Secured Party of any inventory or equipment, the same shall remain at all times
at each Company's sole risk, and to the fullest extent permitted by law the
Secured Party shall not be responsible for any loss, damage or diminution in the
value thereof. If any of either Company's inventory or equipment is or becomes
evidenced by a document of title, the Secured Party may require such Company to
promptly deliver the same to the Secured Party appropriately endorsed to the
Secured Party's order. All costs of transportation, packaging, custody,
processing, storage, insurance and salvage of any unit or item of either
Company's inventory or equipment which may be incurred by the Secured Party
shall be promptly repaid to the Secured Party by the Companies together with
interest thereon at the Prevailing Interest Rate, and the liability of the
Companies to the Secured Party for such repayment with interest shall be
included in the Liabilities. If any item or unit of the equipment is now or
hereafter the subject of a certificate of title or is required by law so to be,
upon request of the Secured Party, subject to the prior lien rights of the
Senior Lender, the Companies will take all steps necessary to cause the Secured
Party's lien or security interest therein to be noted on the face of such
certificate and shall thereafter deposit the original of such certificate of
title with the Secured Party. Each Company will afford the Secured Party's
agents access to such Company's inventory and to each item or unit of such
Company's equipment from time to time upon request for purposes of examination,
inspection and appraisal and to verify such Company's records pertaining
thereto.
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9. Notice of Loss, etc. Each Company, as soon as is reasonably
practicable, will notify the Secured Party of any of the following: (i) any
event causing any deterioration, loss or depreciation in value of any material
item, unit or portion of the Collateral and of the amount thereof; (ii) any
material adverse change in the financial condition of any Account Debtor whose
total outstanding accounts due the Companies exceed $25,000 or any material
adverse change in the collectibility of the accounts taken as a whole; or (iii)
any material adverse change in the financial condition of any obligor whose
total unpaid obligations due the Companies under any chattel paper or
instruments exceeds $25,000.
10. Significant Locations. The Companies jointly and severally
represent and warrant to the Secured Party as follows: (i) none of either
Company's Collateral consists of motor vehicles, railroad rolling stock,
aircraft or vessels except as set forth in item 2 of Schedule A; (ii) none of
either Company's Collateral constitutes goods of a type normally used in more
than one jurisdiction for purposes of Section 9-301 of the Uniform Commercial
Code except as set forth in item 3 of Schedule A; (iii) the chief executive
office of each Company and all locations where either Company maintains a place
of business are set forth in item 4 of Schedule A; (iv) all locations where
either Company maintains records with respect to the Collateral are set forth in
item 5 of Schedule A; (v) all locations where either Company stores or processes
inventory are set forth in item 6 of Schedule A; and (vi) all locations where
either Company keeps equipment are set forth in item 7 of Schedule A. The
Companies will notify the Secured Party in writing upon any change in any
location specified in Schedule A or the establishment of any additional place of
business and will reimburse the Secured Party for the costs of any additional
Uniform Commercial Code filings requested by the Secured Party as a result
thereof. If any of the Collateral or any of the records of either Company
concerning any of the Collateral are at any time to be located on premises
leased by either Company, or any premises owned by either Company subject to a
mortgage or other lien, such Company will obtain and deliver to the Secured
Party, upon the delivery of any such Collateral or records to such premises, an
agreement in form satisfactory to the Secured Party waiving the landlord's,
mortgagee's or other lienholder's right to enforce against such Company any
claims for monies due under the lease, mortgage or other lien by levy or
distraint or other proceedings against the Collateral or such Company's records
concerning the same and assuring the Secured Party's access to such Collateral
and records to facilitate the Secured Party's exercise of its rights to take
possession thereof.
In the event that either Company acquires at any time any
interest in real estate, it shall promptly execute and deliver to Secured Party
on behalf of the Purchasers a deed to secure debt, mortgage or similar
instrument that grants a mortgage (or similar) lien to Secured Party in such
property (subject only to Liens permitted under the Loan Agreement and any deed
to secure debt, mortgage or similar instrument in favor of any other agent that
secures any loan made by such agent to such Company to the extent, but only to
the extent, the proceeds thereof are used by such Company to acquire such
property). The Companies shall provide to Secured Party such evidence of such
lien position in favor of Secured Party as Secured Party shall reasonably
request.
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11. Further Assurances. Without limiting the Companies' obligations
under paragraph 2 hereof, each Company will execute and deliver to the Secured
Party from time to time all such other agreements, instruments and other
documents (including without limitation all requested financing and continuation
statements) and do all such other further acts and things as the Secured Party
may reasonably request in order to further evidence or carry out the intent of
this Agreement or to perfect the liens and security interest created hereby or
intended so to be.
12. Default and Remedies. The Companies shall be in default hereunder
(an "Event of Default") upon
(1) the failure by either Company to observe any material
provision of this Security Agreement, which failure shall continue for
thirty (30) days after the earlier to occur of (i) either Company's
actual knowledge of such event or (ii) receipt by the Companies of
written notice thereof provided by the Secured Party; or
(2) the occurrence of any "Event of Default" under and as
defined in the Loan Agreement.
Upon the occurrence of any Event of Default which shall be
continuing, (i) unless the Secured Party shall elect otherwise the entire unpaid
amount of such of the Liabilities as are not then otherwise due and payable
shall become immediately due and payable without notice to or demand on either
Company or any guarantor of any of the Liabilities (the Companies and all such
guarantors, collectively, the "Obligors") and (ii) the Secured Party may at its
option exercise from time to time any and all rights and remedies available to
it under the Uniform Commercial Code or otherwise, including the right to
collect, assemble, receipt for, adjust, modify, repair, refinish or refurbish
(but without any obligation to do so) or foreclose or otherwise realize upon any
of the Collateral and to dispose of any of the Collateral at one or more public
or private sales or other proceedings, and the Companies agree that the Secured
Party, any of the Purchasers or any nominee thereof may become the purchaser at
any such sale or sales. The Companies agree that ten (10) days shall be
reasonable prior notice of the date of any public sale or other disposition of
all or any part of the Collateral, or of the date on or after which any private
sale or other disposition of the same may be made. All rights and remedies
granted the Secured Party and/or any Purchaser hereunder or under any other
agreement between the Secured Party and/or any Purchaser and either Company
shall be deemed concurrent and cumulative and not alternative, and the Secured
Party and/or any Purchaser may proceed with any number of remedies at the same
time or at different times until all the Liabilities are fully satisfied. The
exercise of any one right or remedy shall not be deemed a waiver or release of
or an election against any other right or remedy, and the Secured Party and/or
any Purchaser may proceed against any one or more of the Obligors and the
Collateral and any other collateral granted by either Company to the Secured
Party under any other agreement, all in any order and through any available
remedies. A waiver on any one occasion shall not be construed as a waiver or bar
on any future occasion. All property of any kind held at any time by the Secured
Party as Collateral shall stand as one general continuing collateral security
for all the Liabilities and may be retained by the Secured Party as security
until all the Liabilities are fully satisfied.
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The Companies will pay to the Secured Party on demand any and
all expenses (including reasonable attorneys' fees and legal expenses) which may
have been incurred by the Secured Party with interest at the Prevailing Interest
Rate from the date of demand (i) in connection with the enforcement of this
Agreement; (ii) in the prosecution or defense of any action growing or connected
with the subject matter of this Agreement, the Liabilities, the Collateral or
any of the Secured Party's rights therein or thereto; or (iii) in connection
with the custody, preservation, use, operation, preparation for sale or sale of
any of the Collateral, the incurring of all of which are hereby authorized to
the extent the Secured Party deems the same advisable. The liability of the
Companies to the Secured Party for any such payment with interest shall be
included in the Liabilities. The enumeration of specific Events of Default shall
not compromise the demand character of any Liability which by its terms is
payable on demand and demand may be made thereon at any time irrespective of the
non-occurrence of any such Event of Default, any provision hereof to the
contrary notwithstanding. The Proceeds of any Collateral received by the Secured
Party at any time before or after default, whether from a sale or other
disposition of Collateral or otherwise, or the Collateral itself, may be applied
to the payment in full or in part of such of the Liabilities and in such order
and manner as the Secured Party and the Purchasers may elect. Each Company to
the extent of its rights in the Collateral waives and releases any right to
require the Secured Party to collect any of the Liabilities from any other of
the Collateral or any other Collateral then held by the Secured Party under any
theory of marshaling of assets or otherwise.
13. Power of Attorney. Each Company hereby irrevocably appoints any
officer, employee or agent of the Secured Party as such Company's true and
lawful attorney-in-fact with power, during the occurrence of an Event of
Default, to (i) endorse such Company's name upon any notes, checks, drafts,
money orders, or other instruments of payment that may come into the Secured
Party's possession and which constitute proceeds of any Collateral; (ii) sign
and endorse such Company's name upon any documents of title, invoices, freight
or express bills, assignments, verifications and notices in connection with any
of the Collateral, and any instruments or documents relating thereto or to such
Company's rights therein; and (iii) execute and file one or more financing
statements covering the Collateral. Any such attorney of either Company shall
have full power to do any and all things necessary to be done with respect to
the above transactions as fully and effectually as such Company might do, and
each Company hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof.
14. Miscellaneous. This Agreement shall commence on the date hereof
and shall continue in full force and effect so long as any of the Liabilities
shall exist from time to time. Upon the discharge of all Liabilities, this
Agreement shall automatically terminate. No modification or waiver of any
provision hereof shall be effective unless the same is in writing and signed by
the Parties against whom its enforcement is sought. This Agreement may be signed
in any number of counterparts and by different parties in separate counterparts,
all with the same effect as if the signatures were on the same counterpart, and
all counterparts hereof, taken together, shall constitute but one and the same
Agreement. Words of any gender shall include any other gender, and singular
words shall include the plural and vice versa, whenever the same is necessary to
produce a fair and meaningful construction. All the rights and remedies of the
Secured Party hereunder shall be cumulative with and not alternative to or in
lieu of the Secured Party's rights and remedies under any other agreement or
agreements. This Agreement shall bind and inure to the benefit of the parties
and their respective successors and assigns, except that neither Company shall
assign any of its obligations or rights hereunder without the prior written
consent of the Secured Party. Captions in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. Any provision hereof which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction. All issues arising
hereunder shall be governed by the laws of the Commonwealth of Pennsylvania.
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15. Governing Law. Jurisdiction. Venue and Service. THIS AGREEMENT
SHALL BE INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE
COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES. EACH COMPANY HEREBY CONSENTS TO THE JURISDICTION OF THE STATE COURTS
OF PENNSYLVANIA AND THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL
MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY
OTHER RELATED DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH COMPANY EXPRESSLY WAIVES ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT
FORUM OR AN IMPROPER FORUM BASED UPON LACK OF VENUE. EACH COMPANY FURTHER WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL
DIRECTED TO SUCH COMPANY AT THE ADDRESS SET FORTH IN SECTION 15 OF THE LOAN
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER
OF ACTUAL RECEIPT OR THREE (3) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED TO SUCH COMPANY'S ADDRESS.
16. Waiver of Trial by Jury. SECURED PARTY AND ANY PURCHASER AND EACH
COMPANY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDINGS, CLAIMS OR
COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATING TO THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS.
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IN WITNESS WHEREOF, this Security Agreement has been duly executed
under due authorization this 11th day of December, 2003.
THE COMPANIES:
IMAGEMAX, INC.
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: CFO
IMAGEMAX OF DELAWARE, INC.
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: CFO
THE SECURED PARTY:
TDH III, L.P.,
individually and as agent
By: TDH III Partners, L.P.,
its general partner
By: /s/ X.X. Xxxxxxx
----------------
Name: X. X. Xxxxxxx
Title: General Partner
11
