SECURITY AGREEMENT
Exhibit 10.3
This
SECURITY AGREEMENT
(this
“Agreement”)
is
made this 15th
day of
July, 2005, among the Grantors listed on the signature pages hereof and those
additional entities that hereafter become parties hereto by executing the form
of Supplement attached hereto as Annex
1
(collectively, jointly and severally, “Grantors”
and
each individually “Grantor”),
and
XXXXX
FARGO FOOTHILL, INC.,
in its
capacity as administrative agent for the Lender Group and the Bank Product
Providers (together with its successors and assigns in such capacity,
“Agent”).
W
I T
N E S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement dated as of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the “Credit
Agreement”)
among
PORTRAIT
CORPORATION OF AMERICA INC.,
a
Delaware corporation (“Parent
Guarantor”),
PCA
LLC,
a
Delaware limited liability company (“PCA”),
each
of PCA’s subsidiaries signatory thereto (such Subsidiaries, together with PCA,
are referred to hereinafter each individually as a “Borrower”,
and
individually and collectively, jointly and severally, as the “Borrowers”),
the
lenders party thereto as “Lenders” (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a “Lender”
and
collectively as the“Lenders”),
and
Agent, the Lender Group is willing to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof, and
WHEREAS,
Agent has agreed to act as agent for the benefit of the Lender Group and the
Bank Product Providers in connection with the transactions contemplated by
the
Credit Agreement and the other Loan Documents, and
WHEREAS,
in order to induce the Lender Group to enter into the Credit Agreement and
the
other Loan Documents and to induce the Lender Group to make and extend the
financial accommodations to Borrowers as provided for in the Credit Agreement,
Grantors have agreed to grant a continuing security interest in and to the
Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, (a) the obligations of Grantors arising
from
this Agreement, the Credit Agreement, and the other Loan Documents, including,
without limitation, under the Guaranty other than any Obligations arising
pursuant to a Loan Document which expressly provides that such Obligations
are
unsecured, (b) all Bank Product Obligations, and (c) all Obligations (including,
without limitation, any interest, fees or expenses that accrue after the filing
of an Insolvency Proceeding, regardless of whether allowed or allowable in
whole
or in part as a claim in any Insolvency Proceeding), plus, to the extent
provided in the Loan Documents, reasonable attorneys fees and expenses if the
obligations represented thereunder are collected by law, through an
attorney-at-law, or under advice therefrom (clauses (a), (b), and (c) being
hereinafter referred to as the “Secured
Obligations”),
by
the granting of the security interests contemplated by this Agreement,
and
NOW,
THEREFORE, for and in consideration of the recitals made above and other good
and valuable consideration, the receipt, sufficiency and adequacy of which
are
hereby acknowledged, the parties hereto agree as follows:
1. Defined
Terms.
All
capitalized terms used herein (including, without limitation, in the preamble
and recitals hereof) without definition shall have the meanings ascribed thereto
in the Credit Agreement. In addition to those terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
following meanings:
(a) “Agent”
has the
meaning set forth in the preamble hereto.
(b) “Agreement”
has the
meaning set forth in the preamble hereto.
(c) “Books”
has the
meaning set forth in Section
2.
(d) “Borrower”
and
“Borrowers”
have
the meaning set forth in the recitals hereto.
(e) “Chattel
Paper”
has the
meaning set forth in Section
2.
(f) “Code”
means
the New York Uniform Commercial Code, as in effect from time to time; provided,
however, that in the event that, by reason of mandatory provisions of law,
any
or all of the attachment, perfection, priority, or remedies with respect to
Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of New York, the
term “Code” shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority, or remedies.
(g) “Collateral”
has the
meaning set forth in Section
2.
(h) “Commercial
Tort Claims”
has the
meaning set forth in Section
2.
(i) “Copyrights”
means
all of the following (whether now owned or hereafter adopted or acquired by
a
Grantor): copyrights and copyright registrations, including, without limitation,
the copyright registrations and recordings thereof and all applications in
connection therewith listed on Schedule
1
attached
hereto and made a part hereof, and (i) all restorations, reversions, renewals
or
extensions thereof, (ii) all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including, without
limitation, payments under all Intellectual Property Licenses entered into
in
connection therewith and damages and payments for past or future infringements
thereof, (iii) the right to xxx for past, present and future infringements
thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout
the world.
(j) “Copyright
Security Agreement”
means
each Copyright Security Agreement among Grantors, or any of them, and Agent,
for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
A
attached
hereto.
(k) “Credit
Agreement”
has the
meaning set forth in the recitals hereto.
(l) “General
Intangibles”
has the
meaning set forth in Section
2.
(m) “Grantor”
and
“Grantors”
have
the meanings set forth in the preamble hereto.
(n) “Intellectual
Property”
means
any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks,
the
goodwill associated with such Trademarks, trade secrets and customer
lists.
(o) “Intellectual
Property Licenses”
means
rights under or interest in any patent, trademark, copyright or other
intellectual property, including software license agreements with any other
party, whether the applicable Grantor is a licensee or licensor under any such
license agreement, including, without limitation, the license agreements listed
on Schedule
2
attached
hereto and made a part hereof, and the right to use the foregoing in connection
with the enforcement of the Lender Group’s rights under the Loan Documents,
including, without limitation, the right to prepare for sale and sell any and
all Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses.
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(p) “Investment
Related Property”
means
(i) investment property (as that term is defined in the Code), and (ii) all
of
the following regardless of whether classified as investment property under
the
Code: all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.
(q) “Lenders”
has the
meaning set forth in the recitals hereto.
(r) “Negotiable
Collateral”
has the
meaning set forth in Section
2.
(s) “Parent
Guarantor”
has the
meaning set forth in the recitals hereto.
(t) “Patents”
means
all of the following (whether now owned or hereafter adopted or acquired by
a
Grantor): patents and patent applications, including, without limitation, the
patents and patent applications listed on Schedule
3
attached
hereto and made a part hereof, and (i) all reissues, continuations,
continuations-in-part, substitutes, extensions or renewals thereof and
improvements thereon, (ii) all income, royalties, damages and payments now
and
hereafter due and/or payable under and with respect thereto, including, without
limitation, payments under all Intellectual Property Licenses entered into
in
connection therewith and damages and payments for past or future infringements
thereof, (iii) the right to xxx for past, present and future infringements
thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout
the world.
(u) “Patent
Security Agreement”
means
each Patent Security Agreement among Grantors, or any of them, and Agent, for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
B
attached
hereto.
(v) “PCA”
has the
meaning set forth in the recitals hereto.
(w) “Pledged
Companies”
means,
each Person listed on Schedule
4
hereto
as a “Pledged Company”, together with each other Person, all or a portion of
whose Stock, is acquired or otherwise owned by a Grantor after the Closing
Date
and, pursuant to the Loan Documents, is required to be pledged to Agent
hereunder.
(x) “Pledged
Interests”
means
all of each Grantor’s right, title and interest in and to all of the Stock now
or hereafter owned by such Grantor, regardless of class or designation, in
each
of the Pledged Companies, and all substitutions therefor and replacements
thereof, all proceeds thereof and all rights relating thereto, including,
without limitation, any certificates representing the Stock, the right to
request after the occurrence and during the continuation of an Event of Default
that such Stock be registered in the name of Agent or any of its nominees,
the
right to receive any certificates representing any of the Stock and the right
to
require that such certificates be delivered to Agent together with undated
powers or assignments of investment securities with respect thereto, duly
endorsed in blank by such Grantor, all warrants, options, share appreciation
rights and other rights, contractual or otherwise, in respect thereof and of
all
dividends, distributions of income, profits, surplus, or other compensation
by
way of income or liquidating distributions, in cash or in kind, and cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of,
on
account of, or in exchange for any or all of the foregoing.
(y) “Pledged
Interests Addendum”
means a
Pledged Interests Addendum substantially in the form of Exhibit
C
to this
Agreement.
(z) “Pledged
Notes”
has the
meaning set forth in Section
5(g).
(aa) “Pledged
Operating Agreements”
means
all of each Grantor’s rights, powers, and remedies under the limited liability
company operating agreements of the Pledged Companies that are limited liability
companies.
3
(bb) “Pledged
Partnership Agreements”
means
all of each Grantor’s rights, powers, and remedies under the partnership
agreements of each of the Pledged Companies that are partnerships, if
any.
(cc) “Proceeds”
has the
meaning set forth in Section
2.
(dd) “Records”
means
information that is inscribed on a tangible medium or which is stored in an
electronic or other medium and is retrievable in perceivable form.
(ee) “Secured
Obligations”
has the
meaning set forth in the recitals hereto.
(ff) “Security
Interest”
has the
meaning set forth in Section
2.
(gg) “Supporting
Obligations”
has the
meaning set forth in Section
2.
(hh) “Trademarks”
means
all of the following (whether now owned or hereafter adopted or acquired by
a
Grantor): trademarks, trade names, registered trademarks, trademark
applications, service marks, registered service marks and service xxxx
applications, including, without limitation, the trade names, registered
trademarks, trademark applications, registered service marks and service xxxx
applications listed on Schedule
5
attached
hereto and made a part hereof, and (i) all extensions, amendments and renewals
thereof, (ii) all income, royalties, damages and payments now and hereafter
due
and/or payable under and with respect thereto, including, without limitation,
payments under all Intellectual Property Licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions
thereof, (iii) the right to xxx for past, present and future infringements
and
dilutions thereof, (iv) the goodwill of each Grantor’s business symbolized by
the foregoing and connected therewith, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.
(ii) “Trademark
Security Agreement”
means
each Trademark Security Agreement among Grantors, or any of them, and Agent,
for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
D
attached
hereto.
(jj) “URL”
means
“uniform resource locator,” an internet web address.
2. Grant
of Security.
Each
Grantor hereby unconditionally grants, assigns and pledges to Agent (and its
agents and designees), for the benefit of the Lender Group and the Bank Product
Providers, a continuing security interest in all personal property, of such
Grantor whether now owned or hereafter acquired or arising and wherever located
(hereinafter referred to as the “Security
Interest”),
including, without limitation, such Grantor’s right, title, and interest in and
to the following, whether now owned or hereafter acquired or arising and
wherever located (the “Collateral”):
(a) all
of
such Grantor’s Accounts;
(b) all
of
such Grantor’s books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information)
(“Books”);
(c) all
of
such Grantor’s chattel paper (as that term is defined in the Code) and, in any
event, including, without limitation, tangible chattel paper and electronic
chattel paper (“Chattel
Paper”);
(d) all
of
such Grantor’s interest with respect to any Deposit Account;
(e) all
of
such Grantor’s Equipment and fixtures;
4
(f) all
of
such Grantor’s general intangibles (as that term is defined in the Code) and, in
any event, including, without limitation, payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with
any
Trademark), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, rights in programs,
programming materials, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment
and
other rights under any royalty or licensing agreements, including Intellectual
Property Licenses, infringement claims, rights in computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
pension plan refunds, pension plan refund claims, insurance premium rebates,
tax
refunds, and tax refund claims, uncertificated securities, and any other
personal property other than Commercial Tort Claims, money, Accounts, Chattel
Paper, Deposit Accounts, goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction (“General
Intangibles”);
(g) all
of
such Grantor’s Inventory;
(h) all
of
such Grantor’s Investment Related Property; provided,
however,
in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in, any of such Grantor’s right, title or interest
in any of the outstanding capital Stock of or other ownership interests in
a
Controlled Foreign Corporation in excess of 65% of the voting power of all
classes of capital stock or other ownership interests in such Controlled Foreign
Corporation entitled to vote; provided
that
immediately upon the amendment of the IRC to allow the pledge of a greater
percentage of the voting power of capital Stock of or other ownership interests
in a Controlled Foreign Corporation without adverse tax consequences to the
Grantors, the Collateral shall include, and each Grantor shall be deemed to
have
granted a security interest in, such greater percentage of the capital Stock
of
or other ownership interests in each Controlled Foreign
Corporation;
(i) all
of
such Grantor’s letters of credit, letter of credit rights, instruments,
promissory notes, drafts, and documents (as such terms may be defined in the
Code) (“Negotiable
Collateral”);
(j) all
of
such Grantor’s rights in respect of supporting obligations (as such term is
defined in the Code), including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, documents, General Intangibles, instruments,
or Investment Related Property (“Supporting
Obligations”);
(k) all
of
such Grantor’s interest with respect to any commercial tort claims (as that term
is defined in the Code) listed on Schedule
6
attached
hereto, any update or supplement thereto or any other schedule or notice at
any
time delivered to Agent with regard to any commercial tort claim of any Grantor
(“Commercial
Tort Claims”);
(l) all
of
such Grantor’s money, Cash Equivalents, or other assets of such Grantor that now
or hereafter come into the possession, custody, or control of Agent (or its
agent or designee) or any other member of the Lender Group;
(m) all
life
insurance policies owned by such Grantor with respect to any of its officers
or
employees;
(n) all
of
the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or commercial tort claims covering
or
relating to any or all of the foregoing, and any and all Accounts, Books,
Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory,
Investment Related Property, Negotiable Collateral, Supporting Obligations,
Commercial Tort Claims, money, or other tangible or intangible property
resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the property of Grantors, any rebates or refunds, whether
for taxes or otherwise, and all proceeds of any such proceeds, or any portion
thereof or interest therein, and the proceeds thereof, and all proceeds of
any
loss of, damage to, or destruction of the above, whether insured or not insured,
and, to the extent not otherwise included, any indemnity, warranty, or guaranty
payable by reason of loss or damage to, or otherwise with respect to any of
the
foregoing Collateral (the “Proceeds”).
Without limiting the generality of the foregoing, the term "Proceeds" includes
whatever is receivable or received when Investment Related Property or proceeds
are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes, without limitation,
proceeds of any indemnity or guaranty payable to any Grantor or Agent from
time
to time with respect to any of the Investment Related Property.
5
Notwithstanding
the foregoing, “Collateral” shall not include (x) any rights or interests in any
lease, license (including Intellectual Property Licenses), contract, or
agreement, as such, or the assets subject thereto if under the terms of such
lease, license, contract, or agreement, or applicable law with respect thereto,
the valid grant of a security interest or lien therein or in such assets to
Agent is prohibited and such prohibition has not been or is not waived or the
consent of the other party to such lease, license, contract, or agreement has
not been or is not otherwise obtained or under applicable law such prohibition
cannot be waived and (y) any application for a Trademark that may be deemed
invalidated, cancelled or abandoned to due to the grant and/or enforcement
of a
security interest therein unless and until such time as the grant and/or
enforcement of such security interest will not affect the status or validity
of
such Trademark; provided,
that
the
foregoing exclusion shall in no way be (i) construed to apply if any such
prohibition would be rendered ineffective under the Code or other applicable
law
(including the Bankruptcy Code) or principles of equity, (ii) construed so
as to
limit, impair or otherwise affect Agent’s unconditional continuing security
interests in and liens upon any rights or interests of Grantors in or to the
proceeds thereof, including monies due or to become due under any such lease,
license, contract, or agreement (including any Accounts), in each case, that
are
not subject to such prohibitions, or (iii) construed to apply at such time
as
the condition causing such prohibition shall be remedied and, to the extent
severable, “Collateral” shall include any portion of such lease, license,
contract, agreement or assets subject thereto that does not result in such
prohibition.
3. Security
for Obligations.
This
Agreement and the Security Interest created hereby secures the payment and
performance of all the Secured Obligations, whether now existing or arising
hereafter. Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts which constitute part of the Obligations
and
would be owed by Grantors, or any of them, to Agent, the Lender Group, the
Bank
Product Providers or any of them, but for the fact that they are unenforceable
or not allowable due to the existence of an Insolvency Proceeding involving
any
Grantor.
4. Grantors
Remain Liable.
Anything herein to the contrary notwithstanding, (a) each of the Grantors shall
remain liable under the contracts and agreements included in the Collateral,
including, without limitation, the Pledged Operating Agreements and the Pledged
Partnership Agreements, to perform all of the duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by Agent or any other member of the Lender Group of any of the rights hereunder
shall not release any Grantor from any of its duties or obligations under such
contracts and agreements included in the Collateral, and (c) none of the members
of the Lender Group shall have any obligation or liability under such contracts
and agreements included in the Collateral by reason of this Agreement, nor
shall
any of the members of the Lender Group be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder. Until an Event of Default
shall occur and be continuing, except as otherwise provided in this Agreement,
the Credit Agreement, or any other Loan Document, Grantors shall have the right
to possession and enjoyment of the Collateral for the purpose of conducting
the
ordinary course of their respective businesses, subject to and upon the terms
hereof and of the Credit Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, it is the intention of the parties
hereto that record and beneficial ownership of the Pledged Interests, including,
without limitation, all voting, consensual, and dividend rights, shall remain
with the applicable Grantor unless an Event of Default shall exist and until
Agent shall notify the applicable Grantor of Agent's exercise of voting,
consensual, and/or dividend rights with respect to the Pledged Interests
pursuant to Section
15
hereof.
6
5. Representations
and Warranties.
Each
Grantor hereby represents and warrants as follows:
(a) The
exact
legal name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Agent pursuant to Section
6.5
of the
Credit Agreement.
(b) Schedule
7
attached
hereto sets forth all Real Property owned by Grantors as of the Closing Date.
(c) The
Grantors own, license or otherwise possess the right to use all Intellectual
Property Rights material to the conduct of their businesses as currently
contemplated. As of the Closing Date, no Grantor has any interest in, or title
to, any registered United States Copyrights, written Intellectual Property
Licenses, issued United States Patents, United States Patent applications,
registered United States Trademarks or United States Trademark applications
except as set forth on Schedules
1, 2, 3 and 5,
respectively, attached hereto. The Copyrights, Intellectual Property Licenses,
Patents and Trademarks set forth on Schedules
1, 2, 3, and 5
constitute a true, correct and complete listing of all registered United States
Copyrights, written Intellectual Property Licenses, issued United States
Patents, United States Patent applications, registered United States Trademarks
and United States Trademark applications, respectively, that are material to
the
conduct of the business of any Grantor. This Agreement is effective to create
a
first priority perfected Lien on such Copyrights, Intellectual Property
Licenses, Patents and Trademarks and, upon filing of the Copyright Security
Agreement with the United States Copyright Office and filing of the Patent
Security Agreement and the Trademark Security Agreement with the United States
Patent and Trademark Office, and the filing of appropriate financing statements
in the jurisdictions listed on Schedule
8
hereto,
all action necessary or desirable to protect and perfect the Security Interest
in and to on each Grantor’s Patents, Trademarks, and Copyrights has been taken
to the extent a security interest therein can be perfected by such filings.
(d) This
Agreement creates a valid security interest in the Collateral of such Grantor,
to the extent a security interest therein can be created under the Code ,
securing the payment and performance of the Secured Obligations. Except to
the
extent a security interest in the Collateral cannot be perfected by the filing
of a financing statement under the Code, all filings necessary or desirable
to
perfect and protect the security interest created hereby will have been taken
upon the filing of financing statements listing such Grantor, as a debtor,
and
Agent, as secured party, in the jurisdictions listed next to such Grantor’s name
on Schedule
8
attached
hereto. Upon the making of such filings, Agent shall have a first priority
perfected security interest in the Collateral of such Grantor to the extent
such
security interest can be perfected by the filing of a financing statement under
the Code.
(e) Except
for the Security Interest created hereby, (i) such Grantor is and will at all
times be the sole holder of record and the legal and beneficial owner, free
and
clear of all Liens other than Permitted Liens, of the Pledged Interests
indicated on Schedule
4
as being
owned by such Grantor and, when acquired by such Grantor, any Pledged Interests
acquired after the Closing Date; (ii) all of the Pledged Interests are duly
authorized, validly issued, fully paid and nonassessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Equity Interests of the Pledged Companies of such Grantor identified
on Schedule
4
hereto
as supplemented or modified by any Pledged Interests Addendum or any Supplement
to this Agreement; (iii) such Grantor has the right and requisite authority
to
pledge, the Investment Related Property pledged by such Grantor to Agent as
provided herein; (iv) all actions necessary or desirable to perfect, establish
the first priority of, or otherwise protect, Agent’s Liens in the Investment
Related Property that, pursuant to the Credit Agreement, are required to be
taken, and the proceeds thereof, will have been duly taken, (A) upon the
execution and delivery of this Agreement, (B) upon the taking of possession
by
Agent (or its agent or designee) of any certificates constituting the Pledged
Interests, to the extent such Pledged Interests are represented by certificates,
together with undated powers endorsed in blank by such Grantor, (C) upon the
filing of financing statements in the applicable jurisdiction set forth on
Schedule
8
attached
hereto (as supplemented from time to time) for such Grantor with respect to
the
Pledged Interests of such Grantor that are not represented by certificates,
and
(D) with respect to any Securities Accounts for which, pursuant to the Credit
Agreement, a Control Agreement is required to be delivered to Agent, upon the
delivery of Control Agreements with respect thereto; and (v) such Grantor has
delivered to and deposited with Agent (or, with respect to any Pledged Interests
created after the Closing Date, will deliver and deposit in accordance with
Sections
6(a)
and
8
hereof)
all certificates representing the Pledged Interests owned by such Grantor to
the
extent such Pledged Interests are represented by certificates, and undated
powers endorsed in blank with respect to such certificates.
7
(f) Except
as
otherwise provided under Sections
5(c),
5(d)
or
5(e),
no
consent, approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to
the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, or (ii) for the exercise by
Agent
of the voting or other rights provided for in this Agreement with respect to
the
Investment Related Property or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required by in connection with
such
disposition of Investment Related Property by any Pledged Operating Agreement,
Pledged Partnership Agreement, the Code or laws affecting the offering and
sale
of securities generally. No material Intellectual Property License to which
such
Grantor is a party requires any consent for such Grantor to grant the Security
Interest granted hereunder in such Grantor’s right, title or interest in or to
any Copyrights, Patents, Trademarks or Intellectual Property
Licenses.
(g) Except
as
disclosed to Agent in writing, there is no material default, breach, violation
or event of acceleration existing under any promissory note (as defined in
the
Code) constituting Collateral and pledged hereunder (the “Pledged
Notes”)
and no
event has occurred or circumstance exists which, with the passage of time or
the
giving of notice, or both, would constitute a default, breach, violation or
event of acceleration under the Pledged Notes. Such Grantor, if it is an obligee
under a Pledged Note, has not, to the best knowledge of such Grantor, waived
any
default, breach, violation or event of acceleration under such Pledged Notes.
The proceeds of the loans evidenced by the Pledged Notes have been fully
disbursed and such Grantor has no obligation to make any future advances or
other disbursements under or in respect of the Pledged Notes.
(h) Such
Grantor has made in good faith and in accordance with the procedures and
regulations of the United States Copyright Office and the United States Patent
and Trademark Office, as applicable, all payments, filings and recordations
necessary to protect and maintain its interest in the Intellectual Property
identified on Schedules
1, 2, 3 and 5
in the
United States in a manner sufficient to claim in the public record such
Grantor’s ownership thereof, including (i) making all reasonably necessary
registration, maintenance, and renewal fee payments; and (ii) filing all
reasonably necessary documents, including all material applications for
registration of such Intellectual Property.
(i) Such
Grantor has and reasonably enforces a policy requiring all employees,
consultants and contractors likely to participate in the development or creation
of material Intellectual Property to execute appropriate assignment agreements,
pursuant to which each such employee, consultant or contractor has assigned
to
such Grantor all of its rights, including all rights in Intellectual Property,
in and to all ideas, inventions, processes, works of authorship and other work
products that are material to such Grantor’s business and that were conceived,
created, authored or developed in the course of such employee’s, consultant’s or
contractor’s employment or engagement by such Grantor. To the best knowledge of
such Grantor, no past or present employee or contractor of such Grantor has
any
ownership interest, license, permission or other right in or to any Intellectual
Property that is material to the conduct of any such Grantor’s
business.
(j) Such
Grantor has taken all actions reasonably necessary to protect the
confidentiality of the Intellectual Property that is material to the conduct
of
its business, including (A) protecting the secrecy and confidentiality
of
its confidential information and trade secrets by having and enforcing a policy
requiring all current employees, consultants, licensees, vendors and contractors
to execute appropriate confidentiality agreements; (B) taking all actions
reasonably necessary to ensure that no trade secret falls or has fallen into
the
public domain; and (C) protecting the secrecy and confidentiality of
the
source code of all computer software programs and applications of which it
is
the owner or licensee by having
and enforcing a policy requiring any licensees (or sublicensees) of such source
code to enter into license agreements with appropriate use and non-disclosure
restrictions.
8
(k) No
claim
against such Grantor has been made in writing and is continuing or, to the
best
of such Grantor’s knowledge, threatened that the use by such Grantor of any
Intellectual Property that is material to the conduct of its business does
or
may violate the intellectual property rights of any Person. To the best of
such
Grantor’s knowledge, there is currently no infringement or unauthorized use of
any item of Intellectual Property contained on Schedules
1, 2, 3 or 5.
(l) Other
than those set forth on Schedule
6
hereto,
no Grantor has any Commercial Tort Claim with respect to which the amounts
claimed thereunder exceed $100,000 for any one such Commercial Tort Claim or
$100,000 in the aggregate for all such Commercial Tort Claims of all
Grantors.
6. Covenants.
Each
Grantor, jointly and severally, covenants and agrees with Agent and the Lender
Group that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section
22
hereof:
(a) Possession
of Collateral.
In the
event that any Collateral, including Proceeds, is evidenced by or consists
of
Negotiable Collateral, Investment Related Property, Chattel Paper or Deposit
Accounts, and if and to the extent that perfection or priority of Agent's
Security Interest is dependent on or enhanced by possession or control, such
Grantor, immediately upon the request of Agent and in accordance with
Section
8
but
subject to the limitations set forth herein or in the Credit Agreement, shall
execute such other documents and instruments as shall be requested by Agent
or,
if applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to Agent (or its
agent
or designee), together with such undated powers endorsed in blank as shall
be
requested by Agent or grant control of such Deposit Account, as applicable,
to
Agent (or its agent or designee). Such Grantor hereby acknowledges and agrees
that any such agent or designee of Agent shall be deemed to be a “secured party”
with respect to such Collateral for all purposes.
(b) Chattel
Paper.
(i) To
the
extent that the aggregate amount receivable by such Grantor thereunder exceeds
$100,000 in any one case or in the aggregate for all Chattel Paper of all
Grantors, the applicable Grantor(s) shall take all steps reasonably necessary
to
grant Agent control of all electronic Chattel Paper in accordance with the
Code
and all “transferable records” as that term is defined in Section 16 of the
Uniform Electronic Transaction Act and Section 201 of the federal Electronic
Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction;
(ii) If
such
Grantor retains possession of any Chattel Paper or instruments (which retention
of possession shall be subject to the extent permitted hereby and by the Credit
Agreement), promptly upon the request of Agent, such Chattel Paper and
instruments shall be marked with the following legend: “This writing and the
obligations evidenced or secured hereby are subject to the Security Interest
of
Xxxxx Fargo Foothill, Inc., as Agent for the benefit of the Lender Group and
the
Bank Product Providers pursuant to a Security Agreement dated as of July 15,
2005.”
(c) Control
Agreements.
(i) Except
to
the extent otherwise permitted by Section
6.12
of the
Credit Agreement, such
Grantor shall obtain an authenticated Control Agreement, from each bank holding
a Deposit Account for such Grantor.
9
(ii) Except
to
the extent otherwise permitted by Section
6.12
of the
Credit Agreement, such Grantor shall obtain authenticated Control Agreements,
from each issuer of uncertificated securities, securities intermediary, or
commodities intermediary issuing or holding any financial assets or commodities
to or for any Grantor.
(d) Letter
of Credit Rights.
If such
Grantor is or becomes the beneficiary of a letter of credit in the amount of
$100,000 or more for any one such letter of credit or $100,000 or more in the
aggregate for all letters of credit with respect to which any Grantor is a
beneficiary, the applicable Grantor(s) shall promptly (and in any event within
5
Business Days after becoming a beneficiary), notify Agent thereof and, upon
the
request by Agent, use commercially reasonable efforts to enter into a tri-party
agreement with Agent and the issuer and/or confirmation bank with respect to
letter-of-credit rights (as that term is defined in the Code) assigning such
letter-of-credit rights to Agent and directing all payments thereunder to
Agent’s Account, all in form and substance satisfactory to Agent in its
Permitted Discretion.
(e) Commercial
Tort Claims.
Such
Grantor shall promptly (and in any event within 2 Business Days of receipt
thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof against any third party with respect
to which the amounts claimed thereunder exceed $100,000 for any one such
Commercial Tort Claim or $100,000 in the aggregate for all such Commercial
Tort
Claims of all Grantors, and, upon request of Agent, promptly amend Schedule
6
to this
Agreement, authorize the filing of additional financing statements or amendments
to existing financing statements and do such other acts or things deemed
necessary or desirable by Agent in its Permitted Discretion to give Agent a
first priority, perfected security interest in any such Commercial Tort
Claim.
(f) Government
Contracts.
If any
Account or Chattel Paper of such Grantor arises out of a contract or contracts
with the United States of America or any department, agency, or instrumentality
thereof, such Grantor shall promptly (and in any event within 5 Business Days
of
the creation thereof) notify Agent thereof in writing and, upon Agent’s request,
execute any instruments or take any steps reasonably required by Agent, in
its
Permitted Discretion, in order that all moneys due or to become due under such
contract or contracts shall be assigned to Agent, for the benefit of the Lender
Group and the Bank Product Providers, and notice thereof given under the
Assignment of Claims Act, as amended (31 U.S.C. § 3727; 41 U.S.C. § 15), or
other applicable law.
(g) Intellectual
Property.
(i) Upon
request of Agent, in order to facilitate filings with the United States Patent
and Trademark Office and the United States Copyright Office, such Grantor shall
execute and deliver to Agent one or more Copyright Security Agreements,
Trademark Security Agreements, and/or Patent Security Agreements to evidence
Agent's Lien on such Grantor's Patents, Trademarks, and/or
Copyrights.
(ii) Unless
such Grantor reasonably determines that it is not commercially reasonable to
do
so, such Grantor shall have the duty, (A) to promptly xxx for infringement,
misappropriation, or dilution of any Intellectual Property and to recover any
and all damages for such infringement, misappropriation, or dilution, (B) to
prosecute diligently any trademark application or service xxxx application
that
is part of the Trademarks pending as of the date hereof or hereafter until
the
termination of this Agreement, (C) to prosecute diligently any patent
application that is part of the Patents pending as of the date hereof or
hereafter until the termination of this Agreement, and (D) to take all
reasonable and necessary action to preserve and maintain all of such Grantor’s
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights
therein, including the filing of applications for renewal, affidavits of use
and
affidavits of incontestability. Any expenses incurred in connection with the
foregoing shall be borne by such Grantor. Notwithstanding the foregoing, such
Grantor further agrees not to abandon any Trademark, Patent, Copyright, or
Intellectual Property License that is necessary in the operation of any material
portion of such Grantor’s business without the prior written consent of Agent.
10
(iii) Such
Grantor acknowledges and agrees that the Lender Group shall have no duties
with
respect to the Trademarks, Patents, Copyrights, or Intellectual Property
Licenses. Without limiting the generality of this Section
6(g),
such
Grantor acknowledges and agrees that no member of the Lender Group shall be
under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against
any
other Person, but Agent may do so at its option from and after the occurrence
of
an Event of Default, and all expenses incurred in connection therewith
(including, without limitation, reasonable fees and expenses of attorneys and
other professionals) shall be for the sole account of Borrowers and shall be
chargeable to the Loan Account;
(iv) Such
Grantor agrees to take all commercially reasonable steps, including making
all
necessary payments and filings in connection with registration, maintenance,
and
renewal of Copyrights, Trademarks, and Patents in the United States Copyright
Office, the United States Patent and Trademark Office, any other appropriate
government agencies in foreign jurisdictions or in any court, to maintain its
Intellectual Property Rights so long as such rights are material to the conduct
of such Grantor’s business. Such Grantor hereby agrees to take, or cause to be
taken, corresponding steps with respect to each new or acquired Intellectual
Property Right to which it or any of its Subsidiaries is now or later becomes
entitled that are material to the conduct of their businesses. Any expenses
incurred in connection with such activities shall be borne solely by such
Grantor. In the event any Grantor, either itself or through any agent, employee,
licensee, or designee, files an application for the registration of any Patent
or Trademark with the United States Patent and Trademark Office or any similar
office or agency, such Grantor shall, promptly upon any such filing, comply
with
Section
6(g)(i)
hereof.
No Grantor shall, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Copyright with the
United States Copyright Office or any similar office or agency, except in
compliance with the provisions of Sections
6(g)(v)
through
(vi).
(v) Within
30
days of the end of each quarter, such Grantor shall provide Agent with a written
report of all new Copyrights, Patents and Trademarks that are registered or
the
subject of pending applications for registrations, which were acquired,
generated or filed by such Grantor during such quarter. In each of the foregoing
cases, such Grantor shall cause to be prepared, executed, and delivered to
Agent
supplemental schedules to the applicable Loan Documents to identify such
Copyright, Patent and Trademark registrations and applications therefor as
being
subject to the security interests created thereunder.
(vi) Upon
receipt from the United States Copyright Office of notice of registration of
any
Copyright(s), such Grantor shall promptly (but in no event later than 10
Business Days following such receipt) notify Agent of such registration by
delivering, or causing to be delivered to Agent, via overnight courier,
electronic mail or telefacsimile at the addresses designated in the Credit
Agreement, documentation sufficient for Agent to perfect Agent’s Liens on such
Copyright(s).
(vii) Such
Grantor shall ensure that each of the representations and warranties contained
in Sections
5(h)
through
5(j)
hereof
shall remain true and correct, in all material respects, at all
times.
(h) Investment
Related Property.
(i) If
such
Grantor shall receive or become entitled to receive any Pledged Interests after
the Closing Date, it shall promptly (and in any event within 5 Business Days
of
receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum
identifying such Pledged Interests.
(ii) At
any
time that an Event of Default exists, all sums of money and property paid or
distributed in respect of the Investment Related Property which are received
by
such Grantor shall be held by such Grantor in trust for the benefit of Agent
segregated from such Grantor’s other property, and such Grantor shall deliver
such property forthwith to Agent’s in the exact form received.
11
(iii) Such
Grantor shall promptly deliver to Agent a copy of each material notice or other
communication received by it in respect of any Pledged Interests.
(iv) Such
Grantor shall not make or consent to any amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement,
or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests unless such Grantor is
permitted to do so pursuant to the Loan Documents.
(v) Such
Grantor agrees that it will cooperate with Agent in obtaining all necessary
approvals and making all necessary filings under federal, state, local, or
foreign law in connection with the Security Interest on the Investment Related
Property or, at any time an Event of Default exists, any sale or transfer
thereof.
(vi) As
to all
limited liability company or partnership interests, issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, such Grantor hereby
represents, warrants and covenants that the Pledged Interests issued pursuant
to
any such agreement (A) are not and shall not be dealt in or traded on securities
exchanges or in securities markets, (B) do not and will not constitute
investment company securities, and (C) are not and will not be held
by such
Pledgor in a securities account. In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provide or shall provide that such
Pledged Interests are securities governed by Article 8 of the Uniform Commercial
Code as in effect in any relevant jurisdiction.
(i) Real
Property; Fixtures.
Each
Grantor covenants and agrees that upon the acquisition of any fee interest
in
Real Property with a fair market value in excess of $500,000, it will promptly
(and in any event within 5 Business Days of acquisition) notify Agent of the
acquisition of such Real Property and will grant to Agent, for the benefit
of
the Lender Group and the Bank Product Providers, a first priority Mortgage
on
each fee interest in Real Property now or hereafter owned by such Grantor and
shall deliver such other documentation and opinions, in form and substance
satisfactory to Agent in its Permitted Discretion, in connection with the grant
of such Mortgage as Agent shall request in its Permitted Discretion, including,
without limitation, title insurance policies, financing statements, fixture
filings and environmental audits and such Grantor shall pay all recording costs,
intangible taxes and other fees and costs (including reasonable attorneys fees
and expenses) incurred in connection therewith. Such Grantor acknowledges and
agrees that, to the extent permitted by applicable law, all of its Collateral
shall remain personal property regardless of the manner of its attachment or
affixation to Real Property.
(j) Transfers
and Other Liens.
Such
Grantor shall not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Credit Agreement, or (ii)
create or permit to exist any Lien upon or with respect to any of its
Collateral, except for Permitted Liens. The inclusion of Proceeds in the
Collateral shall not be deemed to constitute Agent’s consent to any sale or
other disposition of any of the Collateral except as expressly permitted in
this
Agreement or the other Loan Documents.
(k) Other
Actions as to Any and All Collateral.
Such
Grantor shall promptly (and in any event within 5 Business Days of acquiring
or
obtaining such Collateral) notify Agent in writing upon (i) acquiring or
otherwise obtaining any Collateral (other than Intellectual Property Rights,
which are governed by Section
6(g)
hereof)
after the date hereof consisting of Investment Related Property, Chattel Paper
(electronic, tangible or otherwise) which pursuant to Section
6(b)
hereof
is required to be under the control of Agent, documents (as defined in the
Code), promisorry notes (as defined in the Code) or instruments (as defined
in
the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper which pursuant to Section
6(b)
hereof
is required to be under the control of Agent, documents, promisorry notes or
instruments, and, upon the request of Agent and in accordance with Section
8
hereof
but subject to any limitations set forth in this Agreement, promptly execute
such other documents and instruments, or if applicable, deliver such Chattel
Paper, documents, promisorry notes, instruments or certificates evidencing
any
Investment Related Property in accordance with Section
6
hereof
and do such other acts or things deemed necessary or desirable by Agent, in
its
Permitted Discretion, to protect Agent’s Security Interest therein.
12
(l) Pledged
Notes.
Except
in the ordinary course of such Grantor’s business, consistent with past
practices:
(i) such
Grantor will not waive or release any obligation of any party to the Pledged
Notes without the prior written consent of Agent;
(ii) such
Grantor will not take or omit to take any action or suffer or permit any action
to be omitted or taken, the taking or omission of which would result in any
right of offset against sums payable under the Pledged Notes;
(iii) such
Grantor shall give Agent copies of all material notices (including notices
of
default) given or received with respect to the Pledged Notes promptly after
giving or receiving any such notice; and
(iv) without
Agent’s prior written consent, such Grantor shall not, and shall not agree to,
assign or surrender its rights and interests under the Pledged Notes nor
terminate, cancel, modify, change, supplement or amend the Pledged Notes.
7. Relation
to Other Security Documents.
The
provisions of this Agreement shall be read and construed with the other Loan
Documents referred to below in the manner so indicated.
(a) Credit
Agreement.
In the
event of any conflict between any provision in this Agreement and a provision
in
the Credit Agreement, such provision of the Credit Agreement shall
control.
(b) Patent,
Trademark, Copyright Security Agreements.
The
provisions of the Copyright Security Agreements, Trademark Security Agreements,
and Patent Security Agreements are supplemental to the provisions of this
Agreement, and nothing contained in the Copyright Security Agreements, Trademark
Security Agreements, or the Patent Security Agreements shall limit any of the
rights or remedies of Agent hereunder.
8. Further
Assurances.
(a) Each
Grantor agrees that from time to time, at its own expense, such Grantor will
promptly execute and deliver all further instruments and documents, and take
all
further action, that may be necessary or that Agent may reasonably request,
in
order to perfect and protect any Security Interest granted or purported to
be
granted hereby or to enable Agent to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral.
(b) Each
Grantor hereby authorizes the filing of such financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver
to
Agent such other instruments or notices, as may be necessary or as Agent may
reasonably request, in order to perfect and preserve the Security Interest
granted or purported to be granted hereby.
(c) Each
Grantor hereby authorizes Agent to file, transmit, or communicate, as
applicable, financing statements and amendments describing the Collateral as
“all personal property of debtor” or “all assets of debtor” or words of similar
effect, in order to perfect Agent’s security interest in the Collateral without
such Grantor’s signature. Each Grantor also hereby ratifies its authorization
for Agent to have filed in any jurisdiction any financing statements filed
prior
to the date hereof.
13
(d) Each
Grantor acknowledges that (prior to the termination of this Agreement in
accordance with the terms of the Loan Documents) it is not authorized to file
any financing statement or amendment or termination statement with respect
to
any financing statement filed in connection with this Agreement without the
prior written consent of Agent, subject to such Grantor's rights under Section
9-509(d)(2) of the Code.
9. Agent's
Right to Perform Contracts.
Upon
the occurrence of an Event of Default and during the continuation thereof,
Agent
(or its designee) may proceed to perform any and all of the obligations of
any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could.
10. Agent
Appointed Attorney-in-Fact.
Each
Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, at such time as an Event of Default has occurred and is continuing
under the Credit Agreement, to take any action and to execute any instrument
which Agent may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) to
ask,
demand, collect, xxx for, recover, compromise, receive and give acquittance
and
receipts for moneys due and to become due under or in connection with the
Accounts or any other Collateral of such Grantor;
(b) to
receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor
to
that of Agent;
(c) to
receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;
(d) to
file
any claims or take any action or institute any proceedings which Agent may
deem
necessary or desirable for the collection of any of the Collateral of such
Grantor or otherwise to enforce the rights of Agent with respect to any of
the
Collateral;
(e) to
repair, alter, or supply goods, if any, necessary to fulfill in whole or in
part
the purchase order of any Person obligated to such Grantor in respect of any
Account of such Grantor;
(f) to
use
any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual
property rights, in advertising for sale and selling Inventory and other
Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and
(g) Agent,
on
behalf of the Lender Group and the Bank Product Providers, shall have the right,
but shall not be obligated, to bring suit in its own name to enforce the
Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if
Agent
shall commence any such suit, the appropriate Grantor shall, at the request
of
Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by Agent in aid of such enforcement.
To
the
extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.
11. Agent
May Perform.
If any
Grantor fails to perform any agreement contained herein, Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses
of
Agent incurred in connection therewith shall be payable, jointly and severally,
by Grantors.
14
12. Agent’s
Duties.
The
powers conferred on Agent hereunder are solely to protect Agent's interest
in
the Collateral, for the benefit of the Lender Group and the Bank Product
Providers, and shall not impose any duty upon Agent to exercise any such powers.
Except for the safe custody of any Collateral in its actual possession and
the
accounting for moneys actually received by it hereunder, Agent shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral
is
accorded treatment substantially equal to that which Agent accords its own
property.
13. Collection
of Accounts, General Intangibles and Negotiable Collateral.
At any
time upon the occurrence and during the continuation of an Event of Default,
Agent or Agent’s designee may (a) notify Account Debtors of any Grantor that
such Grantor’s Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to Agent, for the benefit of the Lender Group
and
the Bank Product Providers, or that Agent has a security interest therein,
and
(b) collect such Grantor’s Accounts, General Intangibles and Negotiable
Collateral directly, and any collection costs and expenses shall constitute
part
of such Grantor's Secured Obligations under the Loan Documents.
14. Disposition
of Pledged Interests by Agent.
None of
the Pledged Interests existing as of the date of this Agreement are, and none
of
the Pledged Interests hereafter acquired on the date of acquisition thereof
will
be, registered or qualified under the various federal or state securities laws
of the United States and disposition thereof after an Event of Default may
be
restricted to one or more private (instead of public) sales in view of the
lack
of such registration. Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities laws and sold on the
open
market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant
to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment
firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest for sale and as
to
the best price reasonably obtainable at the private sale thereof; and (b) such
reliance shall be conclusive evidence that Agent has handled the disposition
in
a commercially reasonable manner.
15. Voting
Rights.
(a) Upon
the
occurrence and during the continuation of an Event of Default, (i) Agent may,
at
its option, and with prior notice (unless such Event of Default is an Event
of
Default specified in Sections
7.4
or
7.5
of the
Credit Agreement, in which case no such notice need be given) to the Grantors,
and in addition to all rights and remedies available to Agent under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and
all
other ownership or consensual rights in respect of the Pledged Interests owned
by such Grantor, but under no circumstances is Agent obligated by the terms
of
this Agreement to exercise such rights, and (ii) if Agent duly exercises its
right to vote any of such Pledged Interests, each Grantor hereby appoints Agent,
such Grantor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote
such Pledged Interests in any manner Agent deems advisable for or against all
matters submitted or which may be submitted to a vote of shareholders, partners
or members, as the case may be. The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.
(b) For
so
long as any Grantor shall have the right to vote the Pledged Interests owned
by
it, such Grantor covenants and agrees that it will not, without the prior
written consent of Agent, vote or take any consensual action with respect to
such Pledged Interests which would materially adversely affect the rights of
Agent and the other members of the Lender Group or the value of the Pledged
Interests or that would be inconsistent with or result in any violation of
any
provision of the Credit Agreement or any other Loan Document.
15
16. Remedies.
Upon
the occurrence and during the continuance of an Event of Default:
(a) Agent
may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to
it,
all the rights and remedies of a secured party on default under the Code or
any
other applicable law. Without limiting the generality of the foregoing, each
Grantor expressly agrees that, in any such event, Agent without demand of
performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon
any of Grantors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors
to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Agent forthwith, assemble all or part of the Collateral as directed by Agent
and make it available to Agent at one or more locations where such Grantor
regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Agent’s offices or elsewhere, for cash, on credit,
and upon such other terms as Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required by law,
at
least 10 days notice to any of Grantors of the time and place of any public
sale
or the time after which any private sale is to be made shall constitute
reasonable notification and specifically such notice shall constitute a
reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn
any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Solely
for the purpose of enabling Agent to exercise its rights and remedies with
respect to the Collateral under this Agreement or any other Loan Document,
Agent
is hereby granted an irrevocable license or other right to use, without
liability to any Grantor for royalties or any other charge, each Grantor’s
labels, Patents, Copyrights, rights of use of any name, trade secrets, trade
names, Trademarks, service marks and advertising matter, URLs, domain names,
industrial designs, other industrial or intellectual property or any property
of
a similar nature, whether owned or licensable by any Grantor or with respect
to
which any Grantor has sublicensable rights under license, sublicense, or other
agreements, as it pertains to the Collateral, in preparing for sale, advertising
for sale and selling any Collateral, and each Grantor’s rights under all
licenses and all franchise agreements shall inure to the benefit of
Agent.
(c) Any
cash
held by Agent as Collateral and all cash proceeds received by Agent in respect
of any sale of, collection from, or other realization upon all or any part
of
the Collateral shall be applied against the Secured Obligations in the order
set
forth in the Credit Agreement. In the event the proceeds of Collateral are
insufficient to satisfy all of the Secured Obligations in full, each Grantor
shall remain jointly and severally liable for any such deficiency.
(d) Each
Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur
Agent
shall have the right, to the extent permitted under applicable law, to an
immediate writ of possession without notice of a hearing. Agent shall have
the
right to the appointment of a receiver for the properties and assets of each
Grantor, and each Grantor hereby consents to such rights and such appointment
and hereby waives any objection such Grantor may have thereto or the right
to
have a bond or other security posted by Agent.
17. Remedies
Cumulative.
Each
right, power, and remedy of Agent as provided for in this Agreement or in the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in
the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by Agent,
of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by Agent of any or all such other rights, powers,
or remedies.
16
18. Marshaling.
Agent
shall not be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order,
and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition
to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Agent's rights and remedies under this Agreement or under
any
other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and,
to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.
19. Indemnity
and Expenses.
(a) Each
Grantor agrees to indemnify, defend and hold harmless Agent and the other
members of the Lender Group to the same extent and in the same manner as the
indemnity made by the Borrowers pursuant to Section
10.3
of the
Credit Agreement. This provision shall survive the termination of this Agreement
and the Credit Agreement and the repayment of the Secured
Obligations.
(b) Grantors,
jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge
to
the Loan Account) all the Lender Group Expenses which Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon an Event of Default, the sale of,
collection from, or other realization upon, any of the Collateral in accordance
with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by
any
of Grantors to perform or observe any of the provisions hereof.
20. Merger,
Amendments; Etc.
THIS
WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this
Agreement, and no consent to any departure by any of Grantors herefrom, shall
in
any event be effective unless the same shall be in writing and signed by Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment of any provision
of
this Agreement shall be effective unless the same shall be in writing and signed
by Agent and each Grantor to which such amendment applies.
21. Addresses
for Notices.
All
notices and other communications provided for hereunder shall be given in the
form and manner and delivered to Agent at its address specified in the Credit
Agreement, and to any of the Grantors at their respective addresses specified
in
the Credit Agreement or Guaranty, as applicable, or, as to any party, at such
other address as shall be designated by such party in a written notice to the
other party.
22. Continuing
Security Interest: Assignments under Credit Agreement.
This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Credit Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
Grantor, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may, in accordance with the provisions of the Credit Agreement, assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise. Upon payment in full in cash of the Obligations in
accordance with the provisions of the Credit Agreement and the expiration or
termination of the Commitments, this Agreement and the Security Interest granted
hereby shall terminate and this Agreement and all rights to the Collateral
shall
revert to Grantors or any other Person entitled thereto. At such time, Agent
will file or authorize the filing of appropriate termination statements or
other
release documents to terminate such Security Interests. No transfer or renewal,
extension, assignment, or termination of this Agreement or of the Credit
Agreement, any other Loan Document, or any other instrument or document executed
and delivered by any Grantor to Agent nor any additional Advances or other
loans
made by any Lender to Borrowers, nor the taking of further security, nor the
retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent,
nor any other act of the Lender Group or the Bank Product Providers, or any
of
them, shall release any Grantor from any obligation, except a release or
discharge executed in writing by Agent in accordance with the provisions of
the
Credit Agreement. Agent shall not by any act, delay, omission or otherwise,
be
deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by Agent and then only to the extent therein
set
forth. A waiver by Agent of any right or remedy on any occasion shall not be
construed as a bar to the exercise of any such right or remedy which Agent
would
otherwise have had on any other occasion.
17
23. Governing
Law.
(a) THE
VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER
LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW YORK.
(b) THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE
STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN
THE BOROUGH XX XXXXXXXXX, XXXXXX XX XXX XXXX, XXXXX XX XXX XXXX; PROVIDED,
HOWEVER,
THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF
FORUM NON CONVENIENS
OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS
SECTION
23(b).
(c) EACH
GRANTOR AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR
STATUTORY CLAIMS. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
24. New
Subsidiaries.
To the
extent required by Section
5.16
of the
Credit Agreement or any other applicable provision of any Loan Document, any
new
direct or indirect Subsidiary (whether by acquisition or creation) of any
Grantor is required to enter into this Agreement by executing and delivering
in
favor of Agent a supplement to this Agreement instrument in the form of
Annex
1
attached
hereto. Upon the execution and delivery of such supplement to this Agreement
by
such new Subsidiary, such Subsidiary shall become a Grantor hereunder with
the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any instrument adding an additional Grantor as a party to this
Agreement shall not require the consent of any Grantor hereunder. The rights
and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor hereunder.
18
25. Agent.
Each
reference herein to any right granted to, benefit conferred upon or power
exercisable by the “Agent” shall be a reference to Agent, for the benefit of the
Lender Group and the Bank Product Providers.
26. Miscellaneous.
(a) This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, shall
be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart
of
this Agreement. Any party delivering an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver
an
original executed counterpart shall not affect the validity, enforceability,
and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis
mutandis.
(b) Any
provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.
(c) Headings
used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.
(d) The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.
19
IN
WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement
by
and through their duly authorized officers, as of the day and year first above
written.
|
GRANTORS:
|
PORTRAIT
CORPORATION OF AMERICA, INC.,
a
Delaware corporation,
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
PCA
LLC,
a
Delaware limited liability company
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
AMERICAN
STUDIOS, INC.,
a
North Carolina corporation
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
PCA
PHOTO CORPORATION OF CANADA, INC.,
a
North Carolina corporation
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
PCA
NATIONAL LLC,
a
Delaware limited liability company
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
HOMETOWN
THREADS LLC,
a
Delaware limited liability company
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
PCA
FINANCE CORP.,
a
Delaware corporation
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
PHOTO
CORPORATION OF AMERICA,
a
North Carolina corporation
By: /s/
Xxxxxx Norsworthy_________________
Its: Executive
Vice President and Chief Financial Officer
|
|
|
PCA
NATIONAL OF TEXAS L.P.,
a
Texas limited partnership
By:PCA
NATIONAL LLC,
a
Delaware limited liability company
Its:General
Partner
By:
/s/ Xxxxxx Norsworthy_______________
Its:
Executive Vice President and
Chief
Financial Officer
|
|
|
AGENT:
|
XXXXX
FARGO FOOTHILL, INC.,
a
California corporation,
as
Agent
By: /s/
Xxxxx MacDonald_____________________
Name: Xxxxx
MacDonald_____________________
Title:
Vice
President_________________________
|
SCHEDULE
1
COPYRIGHTS
SCHEDULE
2
INTELLECTUAL
PROPERTY LICENSES
SCHEDULE
3
PATENTS
SCHEDULE
4
PLEDGED
COMPANIES
SCHEDULE
5
TRADEMARKS
SCHEDULE
6
COMMERCIAL
TORT CLAIMS
[include
specific case caption or descriptions per Official Code Comment 5 to Section
9-108 of the Code]
SCHEDULE
7
OWNED
REAL PROPERTY
SCHEDULE
8
LIST
OF
UNIFORM COMMERCIAL CODE FILING JURISDICTIONS
Grantor Jurisdictions
Portrait
Corporation of America, Inc. Delaware
PCA
LLC Delaware
PCA
Photo
Corporation of Canada, Inc. North
Carolina
PCA
Finance Corp. Delaware
Hometown
Threads LLC Delaware
American
Studios, Inc. North
Carolina
PCA
National LLC Delaware
PCA
National of Texas L.P. Texas
Photo
Corporation of America North
Carolina
ANNEX
1
TO SECURITY AGREEMENT
FORM
OF
SUPPLEMENT
SUPPLEMENT
NO.
____
(this “Supplement”)
dated
as of _______________, 20__, to the Security Agreement dated as of July 15,
2005
(as amended, restated, supplemented or otherwise modified from time to time,
including all exhibits and schedules thereto, the “Security
Agreement”)
by
each of the parties listed as “Grantors” on the signature pages thereto and
those additional entities that thereafter become “Grantors” thereunder
(collectively, jointly and severally, “Grantors”
and
each individually “Grantor”)
and
XXXXX
FARGO FOOTHILL, INC.
in its
capacity as Agent for the Lender Group and the Bank Product Providers (together
with its successors and assigns in such capacity, “Agent”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement dated as of July 15, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, including all
schedules thereto, the “Credit
Agreement”)
among
PORTRAIT
CORPORATION OF AMERICA INC.,
a
Delaware corporation (“Parent
Guarantor”),
PCA
LLC,
a
Delaware limited liability company (“PCA”),
each
of PCA’s subsidiaries signatory thereto (such Subsidiaries, together with PCA,
are referred to hereinafter each individually as a “Borrower”,
and
individually and collectively, jointly and severally, as the “Borrowers”),
the
lenders party thereto as “Lenders” (“Lenders”),
and
Agent, the Lender Group agreed to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof;
WHEREAS,
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement and/or the Credit
Agreement;
WHEREAS,
Grantors have entered into the Security Agreement in order to induce the Lender
Group to make certain financial accommodations to Borrowers; and
WHEREAS,
pursuant to the Loan Documents and subject to Section
5.16
of the
Credit Agreement, certain new direct or indirect Subsidiaries of any Grantor,
must execute and deliver to Agent certain Loan Documents, including the Security
Agreement, and the execution of the Security Agreement by the undersigned new
Grantor or Grantors (collectively, the “New
Grantors”)
may be
accomplished by the execution of this Supplement in favor of Agent, for the
benefit of the Lender Group and the Bank Product Providers;
NOW,
THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each New Grantor hereby agrees as follows:
1. In
accordance with Section
24
of the
Security Agreement, each New Grantor, by its signature below, becomes a
“Grantor” under the Security Agreement with the same force and effect as if
originally named therein as a “Grantor” and each New Grantor hereby (a) agrees
to all of the terms and provisions of the Security Agreement applicable to
it as
a “Grantor” thereunder and (b) represents and warrants that the representations
and warranties made by it as a “Grantor” thereunder are true and correct in all
material respects on and as of the date hereof. In furtherance of the foregoing,
each New Grantor, as security for the payment and performance in full of the
Secured Obligations, does hereby grant, assign, and pledge to Agent, for the
benefit of the Lender Group and the Bank Product Providers, a continuing
security interest in and to all personal property of such New Grantor including,
without limitation, all property of the type described in Section
2
of the
Security Agreement to secure the full and prompt payment of the Secured
Obligations, including, without limitation, any interest thereon, plus
reasonable attorneys' fees and expenses if the Secured Obligations represented
by the Security Agreement are collected by law, through an attorney-at-law,
or
under advice therefrom. Schedule
1,
“Copyrights”, Schedule
2,
“Intellectual Property Licenses”, Schedule
3,
“Patents”, Schedule
4,
“Pledged Companies”, Schedule
5,
“Trademarks”, Schedule
6,
“Commercial Tort Claims”, Schedule
7,
“Owned
Real Property,” and Schedule
8,
“List
of Uniform Commercial Code Filing Jurisdictions” attached hereto supplement
Schedule
1, Schedule
2,
Schedule
3, Schedule
4,
Schedule
5, Schedule
6,
Schedule
7,
and
Schedule
8,
respectively, to the Security Agreement and shall be deemed a part thereof
for
all purposes of the Security Agreement. Each reference to a “Grantor” in the
Security Agreement shall be deemed to include each New Grantor. The Security
Agreement is incorporated herein by reference.
2. Each
New
Grantor represents and warrants to Agent, the Lender Group and the Bank Product
Providers that this Supplement has been duly executed and delivered by such
New
Grantor and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as enforceability thereof may
be
limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws affecting creditors’ rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
3. This
Supplement may be executed in multiple counterparts, each of which shall be
deemed to be an original, but all such separate counterparts shall together
constitute but one and the same instrument. Delivery of a counterpart hereof
by
facsimile transmission or by e-mail transmission shall be as effective as
delivery of a manually executed counterpart hereof.
4. Except
as
expressly supplemented hereby, the Security Agreement shall remain in full
force
and effect.
5. This
Supplement shall be construed in accordance with and governed by the laws of
the
State of New York, without regard to the conflict of laws principles
thereof.
[Signature
Page Follows]
IN
WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement
to the Security Agreement as of the day and year first above
written.
NEW
GRANTORS: [Name
of New Grantor]
By:
Name:
Title:
[Name
of New Grantor]
By:
Name:
Title:
AGENT: XXXXX
FARGO FOOTHILL, INC.,
a
California corporation,
as
Agent
By:
Name:
Title:
EXHIBIT
A
COPYRIGHT
SECURITY AGREEMENT
This
COPYRIGHT
SECURITY AGREEMENT
(this
“Copyright
Security Agreement”)
is
made this ___ day of ___________, 20__, among Grantors listed on the signature
pages hereof ( collectively, jointly and severally, “Grantors”
and
each individually “Grantor”), and XXXXX
FARGO FOOTHILL, INC.,
in its
capacity as Agent for the Lender Group and the Bank Product Providers (together
with its successors and assigns in such capacity, the “Agent”).
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement dated as of July
15,
2005
(as
amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the “Credit
Agreement”)
among
PORTRAIT
CORPORATION OF AMERICA INC.,
a
Delaware corporation (“Parent
Guarantor”),
PCA
LLC,
a
Delaware limited liability company (“PCA”),
each
of PCA’s subsidiaries signatory thereto (such Subsidiaries, together with PCA,
are referred to hereinafter each individually as a “Borrower”,
and
individually and collectively, jointly and severally, as the “Borrowers”),
the
lenders party thereto as “Lenders” (“Lenders”),
and
Agent, the Lender Group agreed to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof;
WHEREAS,
the members of the Lender Group are willing to make the financial accommodations
to Borrower as provided for in the Credit Agreement, but only upon the
condition, among others, that Grantors shall have executed and delivered to
Agent, for the benefit of the Lender Group and the Bank Product Providers,
that
certain Security Agreement dated as of July 15, 2005 (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security
Agreement”);
and
WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Agent, for the benefit of the Lender Group and the Bank Product Providers,
this Copyright Security Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:
1. DEFINED
TERMS.
All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Credit Agreement.
2. GRANT
OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.
Each
Grantor hereby grants to Agent, for the benefit of the Lender Group and the
Bank
Product Providers, a continuing first priority security interest in all of
such
Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the
“Copyright
Collateral”):
(a) all
of
such Grantor's Copyrights and rights in or to Copyright Intellectual Property
Licenses to which it is a party referred to on Schedule
I
hereto;
(b) all
restorations, reversions, renewals or extensions of the foregoing;
and
(c) all
products and proceeds of the foregoing, including, without limitation, any
claim
by such Grantor against third parties for past, present or future infringement
of any Copyright or any Copyright licensed under any Intellectual Property
License.
3. SECURITY
AGREEMENT.
The
security interests granted pursuant to this Copyright Security Agreement are
granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Providers, pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the rights
and remedies of Agent with respect to the security interest in the Copyright
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
4. AUTHORIZATION
TO SUPPLEMENT.
Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule
I
to
include any future United States registered Copyrights of Grantors.
Notwithstanding the foregoing, no failure to so modify this Copyright Security
Agreement or amend Schedule
I
shall in
any way affect, invalidate or detract from Agent's continuing security interest
in all Collateral, whether or not listed on Schedule
I.
5. COUNTERPARTS.
This
Copyright Security Agreement may be executed in any number of counterparts,
each
of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this
Copyright Security Agreement or any other Loan Document in any judicial
proceedings, it shall not be necessary to produce or account for more than
one
such counterpart signed by the party against whom such enforcement is sought.
Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
[signature
page follows]
IN
WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement
to be
executed and delivered by its duly authorized officer as of the date first
set
forth above.
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
ACCEPTED
AND ACKNOWLEDGED BY:
|
|
|
XXXXX
FARGO FOOTHILL, INC.,
a
California corporation,
as
Agent
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
SCHEDULE
I
to
COPYRIGHT
SECURITY AGREEMENT
Copyright
Registrations
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Grantor
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Country
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Copyright
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Registration
No.
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Registration
Date
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Copyright
Licenses
EXHIBIT
B
PATENT
SECURITY AGREEMENT
This
PATENT
SECURITY AGREEMENT
(this
"Patent
Security Agreement")
is
made this ___ day of ___________, 20__, among the Grantors listed on the
signature pages hereof (collectively, jointly and severally, "Grantors"
and
each individually “Grantor”), and XXXXX
FARGO FOOTHILL, INC.,
in its
capacity as administrative agent for the Lender Group and the Bank Product
Providers (together with its successors and assigns in such capacity,
“Agent”).
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement dated as of July 15, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, including all
schedules thereto, the “Credit
Agreement”)
among
PORTRAIT
CORPORATION OF AMERICA INC.,
a
Delaware corporation (“Parent
Guarantor”),
PCA
LLC,
a
Delaware limited liability company (“PCA”),
each
of PCA’s subsidiaries signatory thereto (such Subsidiaries, together with PCA,
are referred to hereinafter each individually as a “Borrower”,
and
individually and collectively, jointly and severally, as the “Borrowers”),
the
lenders party thereto as “Lenders” (“Lenders”),
and
Agent, the Lender Group agreed to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof,
WHEREAS,
the members of Lender Group are willing to make the financial accommodations
to
Borrower as provided for in the Credit Agreement, but only upon the condition,
among others, that the Grantors shall have executed and delivered to Agent,
for
the benefit of the Lender Group and the Bank Product Providers, that certain
Security Agreement dated as of July 15, 2005 (including all annexes, exhibits
or
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security
Agreement”);
and
WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Agent, for the benefit of the Lender Group and the Bank Product Providers,
this Patent Security Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED
TERMS.
All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Credit Agreement.
2. GRANT
OF SECURITY INTEREST IN PATENT COLLATERAL.
Each
Grantor hereby grants to Agent, for the benefit of the Lender Group and the
Bank
Product Providers, a continuing first priority security interest in all of
such
Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the
“Patent
Collateral”):
(a) all
of
its Patents and rights in and to Patent Intellectual Property Licenses to which
it is a party referred to on Schedule
I
hereto;
(b) all
reissues, continuations, continuations-in-part, substitutes, extensions or
renewals of, and improvements on, the foregoing; and
(c) all
products and proceeds of the foregoing, including, without limitation, any
claim
by such Grantor against third parties for past, present or future infringement
or dilution of any Patent or any Patent licensed under any Intellectual Property
License.
3. SECURITY
AGREEMENT.
The
security interests granted pursuant to this Patent Security Agreement are
granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Providers, pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the rights
and remedies of Agent with respect to the security interest in the Patent
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
4. AUTHORIZATION
TO SUPPLEMENT.
If any
Grantor shall obtain rights to any new patentable inventions or become entitled
to the benefit of any patent application or patent for any reissue, division,
or
continuation, of any patent, the provisions of this Patent Security Agreement
shall automatically apply thereto. Grantors shall give prompt notice in writing
to Agent with respect to any such new patent rights. Without limiting Grantors'
obligations under this Section
4,
Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule
I
to
include any such new patent rights of Grantors. Notwithstanding the foregoing,
no failure to so modify this Patent Security Agreement or amend Schedule
I
shall in
any way affect, invalidate or detract from Agent's continuing security interest
in all Collateral, whether or not listed on Schedule
I.
5. COUNTERPARTS.
This
Patent Security Agreement may be executed in any number of counterparts, each
of
which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this
Patent Security Agreement or any other Loan Document in any judicial
proceedings, it shall not be necessary to produce or account for more than
one
such counterpart signed by the party against whom such enforcement is sought.
Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
[signature
page follows]
IN
WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to
be
executed and delivered by its duly authorized officer as of the date first
set
forth above.
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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ACCEPTED
AND ACKNOWLEDGED BY:
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XXXXX
FARGO FOOTHILL, INC.,
a
California corporation
as
Agent
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By:
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Name:
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Title:
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EXHIBIT
C
Annex
1 to Pledge and Security Agreement
PLEDGED
INTERESTS ADDENDUM
This
Pledged Interests Addendum, dated as of _________ ___, 20___, is delivered
pursuant to Section 6
of the
Security Agreement referred to below. The undersigned hereby agrees that this
Pledged Interests Addendum may be attached to that certain Security Agreement,
dated as of July 15, 2005 (as amended, restated, supplemented or otherwise
modified from time to time, including all exhibits and schedules thereto, the
“Security
Agreement”),
made
by the undersigned, together with the other Grantors named therein, to Xxxxx
Fargo Foothill, Inc., as Agent. Initially capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Security Agreement
and/or the Credit Agreement. The undersigned hereby agrees that the additional
interests listed on this Pledged Interests Addendum as set forth below shall
be
and become part of the Pledged Interests pledged by the undersigned to the
Agent
in the Security Agreement and any pledged company set forth on this Pledged
Interests Addendum as set forth below shall be and become a "Pledged Company"
under the Security Agreement, each with the same force and effect as if
originally named therein.
The
undersigned hereby certifies that the representations and warranties set forth
in Section
5
of the
Security Agreement of the undersigned are true and correct in all material
respects as to the Pledged Interests listed herein on and as of the date
hereof.
[___________________]
By:
Name:
Title:
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Name
of Pledgor
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Name
of Pledged Company
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Number
of Shares/Units
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Class
of Interests
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Percentage
of Class Owned
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Percentage
of Class Pledged
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Certificate
Nos.
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EXHIBIT
D
TRADEMARK
SECURITY AGREEMENT
This
TRADEMARK
SECURITY AGREEMENT
(this
“Trademark
Security Agreement”)
is
made this ___ day of ___________, 20__, among Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors”
and
each individually “Grantor”), and XXXXX
FARGO FOOTHILL, INC.,
in its
capacity as Agent for the Lender Group and the Bank Product Providers (together
with its successors and assigns in such capacity, “Agent”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement dated as of July 15, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, including all
schedules thereto, the “Credit
Agreement”)
among
PORTRAIT
CORPORATION OF AMERICA INC.,
a
Delaware corporation (“Parent
Guarantor”),
PCA
LLC,
a
Delaware limited liability company (“PCA”),
each
of PCA’s subsidiaries signatory thereto (such Subsidiaries, together with PCA,
are referred to hereinafter each individually as a “Borrower”,
and
individually and collectively, jointly and severally, as the “Borrowers”),
the
lenders party thereto as “Lenders” (“Lenders”),
and
Agent, the Lender Group agreed to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof;
WHEREAS,
the members of the Lender Group are willing to make the financial accommodations
to Borrower as provided for in the Credit Agreement, but only upon the
condition, among others, that Grantors shall have executed and delivered to
Agent, for the benefit of Lender Group and the Bank Product Providers, that
certain Security Agreement dated as of July 15, 2005 (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security
Agreement”);
WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Agent, for the benefit of Lender Group and the Bank Product Providers, this
Trademark Security Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED
TERMS.
All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Credit Agreement.
2. GRANT
OF SECURITY INTEREST IN TRADEMARK COLLATERAL.
Each
Grantor hereby grants to Agent, for the benefit of the Lender Group and the
Bank
Product Providers, a continuing first priority security interest in all of
such
Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the
“Trademark
Collateral”):
(a) all
of
its Trademarks and rights in and to Trademark Intellectual Property Licenses
to
which it is a party referred to on Schedule I hereto;
(b) all
extensions, modifications and renewals of the foregoing;
(c) all
goodwill of the business connected with the use of, and symbolized by, each
Trademark and each Trademark Intellectual Property License; and
(d) all
products and proceeds of the foregoing, including, without limitation, any
claim
by such Grantor against third parties for past, present or future (i)
infringement or dilution of any Trademark or any Trademark licensed under any
Intellectual Property License or (ii) injury to the goodwill associated with
any
Trademark or any Trademark licensed under any Intellectual Property
License.
3. SECURITY
AGREEMENT.
The
security interests granted pursuant to this Trademark Security Agreement are
granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Providers, pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the rights
and remedies of Agent with respect to the security interest in the Trademark
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
4. AUTHORIZATION
TO SUPPLEMENT.
If any
Grantor shall obtain rights to any new trademarks, the provisions of this
Trademark Security Agreement shall automatically apply thereto. Grantors shall
give prompt notice in writing to Agent with respect to any such new trademarks
or renewal or extension of any trademark registration. Without limiting
Grantors' obligations under this Section
4,
Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule
I
to
include any such new trademark rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Trademark Security Agreement or amend
Schedule
I
shall in
any way affect, invalidate or detract from Agent's continuing security interest
in all Collateral, whether or not listed on Schedule
I.
5. COUNTERPARTS.
This
Trademark Security Agreement may be executed in any number of counterparts,
each
of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this
Trademark Security Agreement or any other Loan Document in any judicial
proceedings, it shall not be necessary to produce or account for more than
one
such counterpart signed by the party against whom such enforcement is sought.
Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
[signature
page follows]
IN
WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement
to be
executed and delivered by its duly authorized officer as of the date first
set
forth above.
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By:
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Name:
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Title:
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By:
|
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Name:
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Title:
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ACCEPTED
AND ACKNOWLEDGED BY:
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XXXXX
FARGO FOOTHILL, INC.,
a
California corporation,
as
Agent
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By:
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Name:
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Title:
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SCHEDULE
I
to
TRADEMARK
SECURITY AGREEMENT
Trademark
Registrations/Applications
|
Grantor
|
Country
|
Xxxx
|
Application/
Registration No.
|
App/Reg
Date
|
Trade
Names
Common
Law Trademarks
Trademarks
Not Currently In Use
Trademark
Licenses
