Security Agreement Among Grantors and Bank of New York

Exhibit 4.14

    


     

    SECURITY
      AGREEMENT

     

    


     

    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
THE
      BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”),
      solely in its capacity as Collateral Agent for the Trustee and the Noteholders
      (such capitalized terms having the meanings provided below).

     

    


     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      PCA LLC, a Delaware limited liability company, as issuer (“PCA”),
      PCA
      FINANCE CORP., a Delaware corporation, as co-issuer (“PCA
      Finance”
      and
      collectively with PCA, the “Issuers”),
      PORTRAIT CORPORATION OF AMERICA, INC., a Delaware corporation (the “Parent
      Guarantor”)
      and
      each other Guarantor (as referred to below and as defined in the Indenture,
      collectively, together with the Parent Guarantor, the “Guarantors”),
      and
      BNY, as Collateral Agent (in such capacity, together with any successor or
      permitted assign, the “Collateral
      Agent”)
      and as
      trustee (in such capacity, together with any successor or permitted assign,
      the
“Trustee”),
      have
      entered into an Indenture, dated as of July 15, 2005 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Indenture”),
      pursuant to which the Issuers have issued $50,000,0000 in aggregate principal
      amount of their Notes (the “Notes”);
      and

     

    WHEREAS,
      each Domestic Subsidiary of the Issuers is required under the Indenture to
      (a)
      become a party to the Indenture and deliver a Guarantee to guarantee the payment
      of the Notes and the other Obligations of the Issuers thereunder and under
      the
      Indenture Loan Documents to which the Issuers are a party and (b) become a
      party
      hereto as a Grantor and secure its Obligations under the Indenture, such
      Guarantee and the other Indenture Loan Documents to which it is a party pursuant
      to the terms hereof; and

     

    WHEREAS,
      PCA, PCA Finance and each of PCA’s subsidiaries signatory thereto each in its
      capacity as a borrower (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
      Parent Guarantor, each other subsidiary of the Borrowers signatories thereto
      in
      its capacity as a guarantor (collectively, the “Loan
      Guarantors”),
      the
      various 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
      WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
      Lenders (in such capacity, together with any successor or permitted assign,
      hereinafter referred to as the “Original
      Administrative Agent”)
      have
      entered into that certain Credit Agreement, dated as of July 15, 2005 (as
      amended, restated, supplemented, replaced or otherwise modified from time to
      time, the “Original
      Credit Agreement”);
      and


     

    WHEREAS,
      the Borrowers, the Parent Guarantor and each other Loan Guarantor have entered
      into that certain Security Agreement, dated as of the date hereof (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Lender
      Security Agreement”)
      in
      favor of the Administrative Agent; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the Collateral Agent (on behalf of itself, the Trustee and the Noteholders),
      the
      Original Administrative Agent (on behalf of the Lenders), and the Issuers,
      the
      Parent Guarantor and each other Guarantor party thereto in such capacity have
      entered into that certain Intercreditor and Lien Subordination Agreement, dated
      as of July 15, 2005 (as amended, restated, supplemented, replaced or otherwise
      modified from time to time, the “Intercreditor
      Agreement”),
      which
      agreement, among other things, sets forth, as between the Collateral Agent
      and
      the Original Administrative Agent, the relative priority of their respective
      Liens in the Collateral and their rights with respect thereto; and

     

    WHEREAS,
      the Issuers desire to secure their Obligations under the Notes, the Indenture
      and each other Indenture Loan Document to which it is a party by granting to
      the
      Collateral Agent, for the benefit of itself, the Trustee and the Noteholders,
      security interests in the Collateral as set forth herein; and

     

    WHEREAS,
      to induce the Initial Purchaser to purchase the Notes, each Noteholder (each,
      a
“Noteholder”
      and
      collectively the “Noteholders”)
      to
      hold the Notes to be held by it and BNY to act in its capacities as Trustee
      and
      Collateral Agent, each Grantor desires to pledge, grant, transfer, and assign
      to
      the Collateral Agent, for the benefit of itself, the Noteholders and the
      Trustee, a security interest in the Collateral to secure the Obligations, as
      provided herein.

     

    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; Code Definitions.
      All
      capitalized terms used herein (including, without limitation, in the preamble
      and recitals hereof) without definition shall have the meanings ascribed thereto
      in the Indenture Loan Documents. Unless otherwise expressly provided herein
      or
      the context otherwise requires, when used herein the terms “account”, “bank”,
“certificate of title”, “certificated securities”, “chattel paper”, “commercial
      tort claim”, “commodity account”, “commodity contract”, “deposit account”,
“document”, “electronic chattel paper”, “equipment”, “goods”, “instrument”,
“inventory”, “investment property”, “letter of credit rights”, “proceeds”,
“promissory notes”, “securities accounts”, “security entitlement”, “supporting
      obligations” and “uncertificated securities” have the respective meanings
      provided in Article 8 or Article 9, as applicable of the Code, and “letter of
      credit” has the meaning provided in Section 5-102 of the Code. In addition to
      those terms defined elsewhere in this Agreement, as used in this Agreement,
      the
      following terms shall have the following meanings:

     

    (a)  “Administrative
      Agent”
      means
      the Original Administrative Agent or any other Senior Agent which replaces
      the
      Original Administrative Agent in accordance with the Intercreditor
      Agreement.

     

    (b)  “Agreement”
      has the
      meaning set forth in the preamble hereto.

     

    (c)  “BNY”
      has the
      meaning set forth in the preamble hereto.

     

    (d)  “Books”
      has the
      meaning set forth in Section
      2.

     

    (e)  “Borrower”
      and
“Borrowers”
      have
      the meaning set forth in the recitals hereto.

     

    (f)  “Chattel
      Paper”
      has the
      meaning set forth in Section
      2.

     

    (g)  “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
      the
      Collateral 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.

     

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

    

    (h)  “Collateral”
      has the
      meaning set forth in Section
      2.

     

    (i)  “Collateral
      Agent”
      has the
      meaning set forth in the recitals hereto.

     

    (j)  “Commercial
      Tort Claims”
      has the
      meaning set forth in Section
      2.

     

    (k)  “Control
      Agreement”
      means,
      with respect to the applicable Grantor, a control agreement, in form and
      substance reasonably satisfactory to the Administrative Agent (if the
      Intercreditor Agreement has not been terminated at the time of the execution
      of
      such control agreement) or the Collateral Agent (if the Intercreditor Agreement
      is no longer in effect), executed and delivered by (a) such Grantor, (b)(i)
      if
      the Intercreditor Agreement has not been terminated at the time of the execution
      of such control agreement, the Administrative Agent for the benefit of (A)
      the
      Lenders and (B) the Collateral Agent for the benefit of itself, the Trustee
      and
      the Noteholders (in accordance with the provisions of the Intercreditor
      Agreement), or (ii) if the Intercreditor Agreement has been terminated at such
      time, the Collateral Agent, and (c) the applicable (i) securities intermediary
      (with respect to a Securities Account of such Grantor) or (ii) bank (with
      respect to a Deposit Account of such Grantor).

     

    (l)  “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 sue for past, present and future infringements
      thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout
      the world.

     

    (m)  “Copyright
      Security Agreement”
      means
      each Copyright Security Agreement among Grantors, or any of them, and the
      Collateral Agent, for the benefit of itself, the Trustee and each Noteholder,
      in
      substantially the form of Exhibit
      A
      attached
      hereto.

     

    (n)  “Credit
      Agreement”
      means
      the Original Credit Agreement or any other Credit Agreement that replaces the
      Original Credit Agreement in accordance with the Intercreditor
      Agreement.

     

    (o)  “General
      Intangibles”
      has the
      meaning set forth in Section
      2.

     

    (p)  “Grantor”
      and
“Grantors”
      have
      the meanings set forth in the preamble hereto.

     

    (q)  “Guarantors”
      has the
      meaning set forth in the recitals hereto.

     

    (r)  “Indenture”
      has the
      meaning set forth in the recitals hereto.

     

    (s)  “Indenture
      Loan Documents”
      is
      defined in the Intercreditor Agreement.

     

    (t)  “Indenture
      Secured Obligations”
      has the
      meaning provided in the Intercreditor Agreement.

     

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    (u)  “Intellectual
      Property”
      means
      any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks,
      the
      goodwill associated with such Trademarks, trade secrets and customer
      lists.

     

    (v)  “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 Collateral Agent’s rights under the Indenture Loan
      Documents (on behalf of itself, the Trustee or any of the Noteholders),
      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.

     

    (w)  “Intercreditor
      Agreement”
      has the
      meaning set forth in the recitals hereto.

     

    (x)  “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.

     

    (y)  “Issuer”
      and
“Issuers”
      have
      the meanings set forth in the recitals hereto.

     

    (z)  “Lender”
      and
“Lenders”
      have
      the meanings set forth in the recitals hereto.

     

    (aa)  “Lender
      Security Agreement”
      has the
      meaning set forth in the recitals hereto.

     

    (bb)  “Loan
      Guarantors”
      has the
      meaning set forth in the recitals hereto.

     

    (cc)  “Negotiable
      Collateral”
      has the
      meaning set forth in Section
      2.

     

    (dd)  “Noteholder”
      and
“Noteholders”
      have
      the meanings set forth in the recitals hereto.

     

    (ee)  “Notes”
      has the
      meaning set forth in the recitals hereto.

     

    (ff)  “Original
      Credit Agreement”
      has the
      meaning set forth in the recitals hereto.

     

    (gg)  “Original
      Administrative Agent”
      has the
      meaning set forth in the recitals hereto.

     

    (hh)  “Parent
      Guarantor”
      has the
      meaning set forth in the recitals hereto.

     

    (ii)  “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 sue for past, present and future infringements
      thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout
      the world.

     

    
      
        4

      

      
        
        

        
          

        

      

      
        
        

      

    

    (jj)  “Patent
      Security Agreement”
      means
      each Patent Security Agreement among Grantors, or any of them, and the
      Collateral Agent, for the benefit of itself, the Trustee and each Noteholder,
      in
      substantially the form of Exhibit
      B
      attached
      hereto.

     

    (kk)  “PCA”
      has the
      meaning set forth in the recitals hereto.

     

    (ll)  “PCA
      Finance”
      has the
      meaning set forth in the recitals hereto.

     

    (mm)  “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
      Indenture Loan Documents, is required to be pledged to the Collateral Agent
      hereunder.

     

    (nn)  “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 the Collateral Agent or any of
      its
      nominees (or any agent or designee of the Collateral Agent, including, without
      limitation, the Administrative Agent or any Lender in accordance with the
      provisions of the Intercreditor Agreement), the right to receive any
      certificates representing any of the Stock and the right to require that such
      certificates be delivered to the Collateral Agent together with undated powers
      or assignments of investment securities with respect thereto (subject to the
      rights of the Administrative Agent to receive such certificates pursuant to
      the
      Intercreditor Agreement), 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.

     

    (oo)  “Pledged
      Interests Addendum”
      means a
      Pledged Interests Addendum substantially in the form of Exhibit
      C to
      this
      Agreement.

     

    (pp)  “Pledged
      Notes”
      has the
      meaning set forth in Section
      5(g).

     

    (qq)  “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.

     

    (rr)  “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.

     

    (ss)  “Proceeds”
      has the
      meaning set forth in Section
      2.

     

    (tt)  “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.

     

    (uu)  “Security
      Interest”
      has the
      meaning set forth in Section
      2.

     

    (vv)  “Supporting
      Obligations”
      has the
      meaning set forth in Section
      2.

     

    
      
        5

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ww)  “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 mark
      applications, including, without limitation, the trade names, registered
      trademarks, trademark applications, registered service marks and service mark
      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 sue 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.

     

    (xx)  “Trademark
      Security Agreement”
      means
      each Trademark Security Agreement among Grantors, or any of them, and the
      Collateral Agent, for the benefit of itself, the Trustee and each Noteholder,
      in
      substantially the form of Exhibit
      D
      attached
      hereto.

     

    (yy)  “Trustee”
      has the
      meaning set forth in the recitals hereto.

     

    (zz)  “URL”
      means
“uniform resource locator,” an internet web address.

     

    2.  Grant
      of Security.
      Each
      Grantor hereby unconditionally grants, assigns and pledges to the Collateral
      Agent (and its agents and designees (including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement)), for the benefit of itself, the Trustee and each
      Noteholder, 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;

     

    (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”);

     

    
      
        6

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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 Collateral 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 the Collateral
      Agent (or its agent or designee, including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement) or the Trustee or any Noteholder;

     

    (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 the Collateral
      Agent (or its agent or designee, including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement) from time to time with respect to any of the Investment
      Related Property.

     

    
      
        7

      

      
        
        

        
          

        

      

      
        
        

      

    

    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
      the
      Collateral 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 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 the Collateral 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 Indenture Secured Obligations, whether now existing
      or
      arising hereafter. Without limiting the generality of the foregoing, subject
      to
      the Intercreditor Agreement, this Agreement secures the payment of all amounts
      which constitute part of the Indenture Secured Obligations in accordance with
      the terms of the Indenture Loan Documents and would be owed by Grantors, or
      any
      of them, to the Collateral Agent, the Trustee, the Noteholders, 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 the Collateral Agent or the Trustee or any Noteholder 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 Collateral Agent, the Trustee or any Noteholder 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 Collateral Agent, the Trustee
      or
      any Noteholder 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 Indenture,
      the
      Intercreditor Agreement or any other Indenture 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 Indenture and the other Indenture Loan
      Documents. Without limiting the generality of the foregoing, subject to the
      Intercreditor Agreement, 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 the
      Collateral Agent shall notify the applicable Grantor of the Collateral Agent's
      exercise of voting, consensual, and/or dividend rights with respect to the
      Pledged Interests pursuant to Section
      15
      hereof.


     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

    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, to the extent of any name change of any Grantor, as set forth
      in a
      written notice provided to the Collateral Agent in accordance with Section
      6 (m).
      

     

    (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
      valid perfected Lien (subject in priority only to the first priority perfected
      Liens in favor of the Administrative Agent in accordance with the provisions
      of
      the Intercreditor Agreement) 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 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 Indenture Secured Obligations
      (subject in priority only to the first priority perfected security interest
      in
      such Collateral of the Administrative Agent in accordance with the provisions
      of
      the Intercreditor Agreement). 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 the Collateral 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, the Collateral
      Agent shall have a valid 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 (subject in priority only to the first
      priority perfected security interest in such Collateral of the Administrative
      Agent in accordance with the provisions of the Intercreditor
      Agreement).

     

    
      
        9

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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 the
      Collateral Agent as provided herein; (iv) subject only to the actions necessary
      or desirable to perfect, establish the first priority of, or otherwise protect
      the Administrative Agent’s Liens in the Investment Related Property in
      accordance with the provisions of the Intercreditor Agreement, all actions
      necessary or desirable to perfect, establish the valid Lien of, or otherwise
      protect, the Collateral Agent’s Liens in the Investment Related Property that,
      pursuant to the Indenture, 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 the Collateral Agent (or its
      agent or designee, including, without limitation, the Administrative Agent
      or
      any Lender in accordance with the provisions of the Intercreditor Agreement)
      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 any Indenture
      Loan Document, a Control Agreement is required to be delivered to the Collateral
      Agent (or its agent or designee, including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement), upon the delivery of Control Agreements with respect
      thereto; and (v) such Grantor has delivered to and deposited with the Collateral
      Agent (or its agent or designee, including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement) (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.

     

    (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
      the
      Collateral 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 the Collateral 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.

     

    
      
        10

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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.

     

    (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 Schedule
      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 the Collateral Agent
      for its benefit and the benefit of the Trustee and each Noteholder that from
      and
      after the date of this Agreement and until the date of termination of this
      Agreement in accordance with Section
      22
      hereof:

     

    
      
        11

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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 the Collateral
      Agent's Security Interest is dependent on or enhanced by possession or control,
      such Grantor, immediately upon the request of the Collateral Agent or as
      necessary and in accordance with Section
      8
      but
      subject to the limitations set forth herein, in the Indenture Loan Documents
      or
      in the Intercreditor Agreement, shall prepare and execute such other documents
      and instruments as shall be requested by the Collateral Agent or as necessary
      or, if applicable, endorse and deliver physical possession of such Negotiable
      Collateral, Investment Related Property, or Chattel Paper to the Collateral
      Agent (or its agent or designee, including, without limitation, the
      Administrative Agent or any Lender in accordance with the provisions of the
      Intercreditor Agreement), together with such undated powers endorsed in blank
      as
      shall be requested by the Collateral Agent or as necessary or grant control
      of
      such Deposit Account, as applicable, to the Collateral Agent (or any such agent
      or designee). Such Grantor hereby acknowledges and agrees that any such agent
      or
      designee of the Collateral 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 the Collateral Agent (or its agent
      or designee, including, without limitation, the Administrative Agent or any
      Lender in accordance with the provisions of the Intercreditor Agreement) 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
      Indenture Loan Documents), promptly upon the request of the Collateral Agent
      or
      as necessary, 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 Interests of (1) Wells Fargo Foothill, Inc., as
      Administrative Agent for the benefit of the Lender Group and the Bank Product
      Providers pursuant to a Security Agreement dated as of July 15, 2005, and (2)
      subject to the Intercreditor Agreement referred to in the aforementioned
      Security Agreement, The Bank of New York Trust Company, N.A., as Collateral
      Agent for the benefit of itself, the Trustee and the Noteholders under that
      certain Indenture dated as of July 15, 2005, and related Security Agreement
      dated as of July 15, 2005.”

     

    (c)  Control
      Agreements.
      Each
      Grantor agrees that it will take all commercially reasonable steps in order
      for
      the Collateral Agent (or its agent or designee, including, without limitation,
      the Administrative Agent or any Lender in accordance with the provisions of
      the
      Intercreditor Agreement) or the Administrative Agent as contemplated by the
      Intercreditor Agreement (and, if the Intercreditor Agreement has not been
      terminated, as contemplated by the Credit Agreement and the Lender Security
      Agreement) to obtain control in accordance with Sections 8-106, 9-104, 9-105,
      9-106, and 9-107 of the Code with respect to all of its Securities Accounts,
      Deposit Accounts, electronic chattel paper, Investment Property, and
      letter-of-credit rights (other than Deposit Accounts and Securities Accounts
      having an average closing balance not in excess of (i) $50,000, individually,
      or
      (ii) $500,000, in the aggregate, in each case, for any five consecutive Business
      Day period). Upon the occurrence and during the continuance of an Event of
      Default, the Collateral Agent may, subject to the provisions of the
      Intercreditor Agreement and the rights of the Administrative Agent thereunder,
      notify any bank or securities intermediary subject to a Control Agreement to
      liquidate the applicable Deposit Account or Securities Account or any related
      Investment Property maintained or held thereby and remit the proceeds thereof
      to
      the Collateral Agent.

     

    
      
        12

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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 the Collateral Agent thereof and, unless waived by the Collateral Agent,
      but subject to the Intercreditor Agreement, use commercially reasonable efforts
      to enter into a tri-party agreement with the Collateral 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 the Collateral
      Agent and directing all payments thereunder to the Collateral Agent’s Account,
      all in form and substance satisfactory to the Collateral Agent.

     

    (e)  Commercial
      Tort Claims.
      Such
      Grantor shall promptly (and in any event within 2 Business Days of receipt
      thereof), (i) notify the Collateral 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,
      (ii)
      execute and deliver to the Collateral Agent a supplement to Schedule
      6
      to this
      Agreement providing a description and such other information sufficient to
      reasonably identify such Commercial Tort Claim (including a specific case
      caption or descriptions per Official Code Comment 5 to Section 9-108 of the
      Code) pursuant to which such Grantor shall grant a perfected security interest
      in all of its right, title and interest in and to such Commercial Tort Claim
      to
      the Collateral Agent, for the benefit of itself, the Trustee and the
      Noteholders, as security for the Indenture Secured Obligations, and (iii) file
      a
      financing statement or amendment to a previously filed and effective financing
      statement describing such Commercial Tort Claim with sufficient particularity,
      and execute such other instruments or take such other steps as necessary or
      as
      reasonably required by the Collateral Agent, to the extent necessary to give
      the
      Collateral Agent a valid, perfected security interest in such Commercial Tort
      Claim (subject in priority only to the first priority perfected security
      interest in such Collateral of the Administrative Agent in accordance with
      the
      provisions of the Intercreditor Agreement).

     

    (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) (i) notify the Collateral Agent thereof in writing and
      (ii) subject to the Intercreditor Agreement, execute such instruments or take
      such other steps reasonably required by the Collateral Agent in order that
      all
      moneys due or to become due under such contract or contracts shall be assigned
      to the Collateral Agent, for the benefit of itself, the Trustee and the
      Noteholders, 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 the Collateral Agent or as necessary 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 the Collateral
      Agent
      one or more Copyright Security Agreements, Trademark Security Agreements, and/or
      Patent Security Agreements to evidence the Collateral 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 sue 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 mark 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 the
      Collateral Agent. 

     

    
      
        13

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iii)  Such
      Grantor acknowledges and agrees that none of the Collateral Agent, the Trustee
      or any Noteholder shall have any 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 none of the Collateral Agent, the Trustee
      or any Noteholder 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 the Collateral 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 the Issuers and the Guarantors.

     

    (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 the Collateral
      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 the Collateral Agent supplemental schedules to the applicable
      Indenture 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 the Collateral Agent of such
      registration by delivering, or causing to be delivered to the Collateral Agent,
      via overnight courier, electronic mail or telefacsimile at the addresses
      designated in the Indenture, documentation sufficient for the Collateral Agent
      to perfect the Collateral Agent’s Liens on such Copyright(s).

     

    
      
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    (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, subject to the Intercreditor Agreement, to the
      Collateral Agent a duly executed Pledged Interests Addendum identifying such
      Pledged Interests.

     

    (ii)  At
      any
      time that an Event of Default exists, subject to the Intercreditor Agreement,
      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 the Collateral Agent segregated from such
      Grantor’s other property, and such Grantor shall deliver such property forthwith
      to the Collateral Agent’s in the exact form received.

     

    (iii)  Such
      Grantor shall promptly deliver to the Collateral 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 Indenture Loan Documents.

     

    (v)  Such
      Grantor agrees that it will cooperate with the Collateral 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 the Collateral
      Agent of the acquisition of such Real Property and will grant to the Collateral
      Agent, for the benefit of itself, the Trustee and each Noteholder, a valid
      Mortgage on each fee interest in Real Property now or hereafter owned by such
      Grantor (subject in priority only to the first priority mortgages in favor
      of
      the Administrative Agent for the benefit of the Lenders in accordance with
      the
      provisions of the Intercreditor Agreement) and shall deliver such other
      documentation and opinions, in form and substance satisfactory to the Collateral
      Agent, in connection with the grant of such Mortgage as the Administrative
      Agent
      (if the Intercreditor Agreement has not been terminated at the time of such
      grant of such Mortgage) or the Collateral Agent (if the Intercreditor Agreement
      is no longer in effect) shall reasonably request, 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.

     

    
      
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    (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 Indenture, 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 the Collateral Agent’s consent to any sale or other
      disposition of any of the Collateral except as expressly permitted in this
      Agreement or the other Indenture Loan Documents.

     

    (k)  Other
      Actions as to Any and All Collateral.
      Such
      Grantor(s) shall promptly (and in any event within 2 Business Days of acquiring
      or obtaining such Collateral) notify the Collateral 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) with respect to which the aggregate amount
      receivable by any Grantor or all Grantors thereunder exceeds $100,000, documents
      (as defined in the Code), promissory 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, documents, promissory notes or instruments, and,
      upon the request of the Collateral Agent or as necessary and in accordance
      with
Section
      8
      hereof
      but subject to any limitations set forth in this Agreement or in the
      Intercreditor Agreement, promptly execute such other documents and instruments,
      or if applicable, deliver such Chattel Paper, documents, promissory notes,
      instruments or certificates evidencing any Investment Related Property in
      accordance with Section
      6
      hereof
      and do such other acts or things reasonably necessary in order to protect the
      Collateral Agent’s Security Interest therein.

     

    (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 the Collateral 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 the Collateral 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
      the Collateral 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. 

     

    
      
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    (m)  Legal
      Name Change.
      Such
      Grantor shall not change its legal name, organizational identification number,
      state of organization, or organization entity unless such Grantor shall have
      provided at least 30 days prior written notice to the Collateral Agent of such
      change and so long as, at the time of such written notification, such Grantor
      files or causes to be filed such financing statements, amendments to such
      previously filed and effective financing statements or such continuation
      statements, and has taken such other steps as necessary or as may be reasonably
      required by the Collateral Agent, as may be necessary in order to perfect,
      or
      maintain the continued perfection of, the Collateral Agent’s valid, perfected
      security interests in the Collateral.

     

    7.  Relation
      to Other Documents.
      The
      provisions of this Agreement shall be read and construed with the other
      Indenture Loan Documents referred to below in the manner so
      indicated.

     

    (a)  Indenture
      Loan Document.
      In the
      event of any conflict between any provision in this Agreement and a provision
      in
      an Indenture Loan Document, such provision of such Indenture Loan Document
      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 the Collateral Agent hereunder.

     

    (c)  Intercreditor
      Agreement.

     

    (i)  the
      Liens
      granted hereunder in favor of Collateral Agent for the benefit of itself, the
      Trustee and the Noteholders in respect of the Collateral and the exercise of
      any
      right related thereto thereby shall be subject, in each case, to the terms
      of
      the Intercreditor Agreement;

     

    (ii)  in
      the
      event of any direct conflict between the express terms and provisions of this
      Agreement and of the Intercreditor Agreement, the terms and provisions of the
      Intercreditor Agreement shall control; and

     

    (iii)  notwithstanding
      anything to the contrary herein, any provision hereof that requires any Grantor
      to (i) deliver any Collateral to Collateral Agent or (ii) provide that the
      Collateral Agent have control over such Collateral may be satisfied by (A)
      the
      delivery of such Collateral by such Grantor to the Administrative Agent for
      the
      benefit of (x) the Lenders and (y) the Collateral Agent for the benefit of
      itself, the Trustee and the Noteholders pursuant to Section 3.02 of the
      Intercreditor Agreement and (B) providing the Administrative Agent with control
      with respect to such Collateral of such Grantor for the benefit of (x) the
      Lenders and (y) the Collateral Agent for the benefit of itself, the Trustee
      and
      the Holders pursuant to Section 3.02 of the Intercreditor
      Agreement.

     

    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 the Collateral Agent may
      reasonably request, in order to perfect and protect any Security Interest
      granted or purported to be granted hereby or to enable the Collateral 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
      the Collateral Agent such other instruments or notices, as may be necessary
      or
      as the Collateral Agent may reasonably request, in order to perfect and preserve
      the Security Interest granted or purported to be granted hereby. 

     

    
      
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    (c)  Each
      Grantor hereby authorizes the Collateral 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 the Collateral Agent’s security
      interest in the Collateral (subject in priority only to the first priority
      perfected Liens in favor of the Administrative Agent in accordance with the
      provisions of the Intercreditor Agreement) without such Grantor’s signature.
      Each Grantor also hereby ratifies its authorization for the Collateral Agent
      to
      have filed in any jurisdiction any financing statements filed prior to the
      date
      hereof. 

     

    (d)  Each
      Grantor acknowledges that (prior to the termination of this Agreement in
      accordance with the terms of the Indenture 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 the Collateral Agent and (if the
      Intercreditor Agreement has not been terminated) the Administrative Agent,
      subject to such Grantor's rights under Section 9-509(d)(2) of the
      Code.

     

    9.  Collateral
      Agent's Right to Perform Contracts.
      Upon
      the occurrence of an Event of Default and during the continuation thereof,
      subject to the rights of the Administrative Agent under the Intercreditor
      Agreement, the Collateral Agent (or its agent or designee, including, without
      limitation, the Administrative Agent or any Lender in accordance with the
      provisions of the Intercreditor Agreement; it being understood that the
      Collateral Agent shall have no obligation to do so) 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.  Collateral
      Agent Appointed Attorney-in-Fact.
      Each
      Grantor hereby irrevocably appoints the Collateral 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 Indenture or any other Indenture Loan Document, to
      (subject to the rights of the Administrative Agent under the Intercreditor
      Agreement) take any action and to execute any instrument which the Collateral
      Agent may reasonably deem necessary or advisable to accomplish the purposes
      of
      this Agreement (it being understood that the Collateral Agent shall have no
      obligation to do so) including, without limitation:

     

    (a)  to
      ask,
      demand, collect, sue 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 the Collateral 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 the Collateral
      Agent may deem necessary or desirable for the collection of any of the
      Collateral of such Grantor or otherwise to enforce the rights of the Collateral
      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; 

     

    
      
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    (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)  the
      Collateral Agent, on behalf of itself, the Trustee and each Noteholder, 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 the Collateral Agent shall commence any such suit, the appropriate
      Grantor shall, at the request of the Collateral Agent, do any and all lawful
      acts and execute any and all proper documents as necessary or as reasonably
      required by the Collateral 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.  Collateral
      Agent May Perform.
      If any
      Grantor fails to perform any agreement contained herein, the Collateral Agent
      may (but without any obligation) itself perform, or cause performance of, such
      agreement, and the reasonable expenses of the Collateral Agent incurred in
      connection therewith shall be payable, jointly and severally, by
      Grantors.

     

    12.  Collateral
      Agent’s Duties.
      The
      powers conferred on the Collateral Agent hereunder are solely to protect the
      Collateral Agent's interest in the Collateral, for the benefit of itself, the
      Trustee or the Noteholders, and shall not impose any duty upon the Collateral
      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, the Collateral 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. The 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 the Collateral 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,
      the
      Collateral Agent (or the Collateral Agent’s agent or designee, including,
      without limitation, the Administrative Agent or any Lender in accordance with
      the provisions of the Intercreditor Agreement) may, subject to the rights of
      the
      Administrative Agent under the Intercreditor Agreement, (a) notify Account
      Debtors of any Grantor that such Grantor’s Accounts, General Intangibles,
      Chattel Paper or Negotiable Collateral have been assigned to the Collateral
      Agent, for the benefit of itself, the Trustee or the Noteholders, or that the
      Collateral 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 Indenture
      Secured Obligations under the Indenture Loan Documents.

     

    14.  Disposition
      of Pledged Interests by the Collateral 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, the Collateral 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 the Collateral Agent shall, pursuant to the terms of this
      Agreement, and subject to the Intercreditor Agreement, sell or cause the Pledged
      Interests or any portion thereof to be sold at a private sale, the Collateral
      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 the Collateral Agent has handled the disposition in
      a
      commercially reasonable manner.

     

    
      
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    15.  Voting
      Rights.

     

    (a)  Upon
      the
      occurrence and during the continuation of an Event of Default, (i) the
      Collateral Agent may, at its option, subject to the Intercreditor Agreement,
      and
      with prior notice (unless such Event of Default is an Event of Default of a
      type
      specified in clause (7) or clause (8) of Section 6.01 of the Indenture for
      which
      no such notice need be given) to the Grantors, and in addition to all rights
      and
      remedies available to the Collateral 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 the Collateral Agent obligated by the terms of this
      Agreement to exercise such rights, and (ii) if the Collateral Agent duly
      exercises its right to vote any of such Pledged Interests, each Grantor hereby
      appoints the Collateral Agent, such Grantor's true and lawful attorney-in-fact
      and IRREVOCABLE PROXY to vote such Pledged Interests in any manner the
      Collateral 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 the Collateral Agent, vote or take any consensual action
      with
      respect to such Pledged Interests which would materially adversely affect the
      rights of the Collateral Agent, the Trustee or any of the Noteholders or the
      value of the Pledged Interests or that would be inconsistent with or result
      in
      any violation of any provision of the Indenture or any other Indenture Loan
      Document.

     

    16.  Remedies.
      Upon
      the occurrence and during the continuance of an Event of Default, subject to
      the
      Intercreditor Agreement:

     

    (a)  the
      Collateral Agent may exercise in respect of the Collateral, in addition to
      other
      rights and remedies provided for herein, in the other Indenture 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, the Collateral 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 the Collateral Agent forthwith, assemble all or
      part
      of the Collateral as directed by the Collateral Agent and make it available
      to
      the Collateral 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 the Collateral Agent’s offices or elsewhere, for cash, on credit, and
      upon such other terms as the Collateral 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. The Collateral Agent shall not be obligated to make
      any sale of Collateral regardless of notice of sale having been given. The
      Collateral 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.

     

    
      
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    (b)  Solely
      for the purpose of enabling the Collateral Agent to exercise its rights and
      remedies with respect to the Collateral under this Agreement or any other
      Indenture Loan Document, the Collateral 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 the Collateral Agent.

     

    (c)  Any
      cash
      held by the Collateral Agent as Collateral and all cash proceeds received by
      the
      Collateral 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
      Indenture Secured Obligations in the order set forth in the Intercreditor
      Agreement, if in effect or else, in the Indenture. In the event the proceeds
      of
      Collateral are insufficient to satisfy all of the Indenture Secured Obligations
      in full, each Grantor shall remain jointly and severally liable for any such
      deficiency.

     

    (d)  Each
      Grantor hereby acknowledges that the Indenture Secured Obligations arose out
      of
      a commercial transaction, and agrees that if an Event of Default shall occur
      the
      Collateral Agent shall have the right, to the extent permitted under applicable
      law, to an immediate writ of possession without notice of a hearing. The
      Collateral 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 the
      Collateral Agent.

     

    17.  Remedies
      Cumulative.
      Each
      right, power, and remedy of the Collateral Agent as provided for in this
      Agreement or in the other Indenture 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 Indenture 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 the Collateral Agent, of any one or
      more of such rights, powers, or remedies shall not preclude the simultaneous
      or
      later exercise by the Collateral Agent of any or all such other rights, powers,
      or remedies.

     

    18.  Marshaling.
      The
      Collateral 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 Indenture 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 the Collateral Agent's rights and remedies
      under
      this Agreement or under any other instrument creating or evidencing any of
      the
      Indenture Secured Obligations or under which any of the Indenture Secured
      Obligations is outstanding or by which any of the Indenture 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.

     

    
      
        21

      

      
        
        

        
          

        

      

      
        
        

      

    

    19.  Indemnity
      and Expenses.

     

    (a)  Each
      Grantor, jointly and severally, agrees to indemnify, defend and hold harmless
      the Collateral Agent, the Trustee and each Noteholder to the same extent and
      in
      the same manner as the indemnity made by the Issuers pursuant to Section 7.07
      of
      the Indenture. This provision shall survive the termination of this Agreement
      and the Indenture and the repayment of the Indenture Secured
      Obligations.

     

    (b)  Grantors,
      jointly and severally, shall, upon demand, pay to the Collateral Agent all
      reasonable and documented costs and expenses which the Collateral 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 Indenture Loan Documents, (iii)
      the
      exercise or enforcement of any of the rights of the Collateral 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 INDENTURE 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 the Collateral 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 the Collateral 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 the Collateral Agent at its address specified
      in the Indenture, and to any of the Grantors at their respective addresses
      specified in the Indenture 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 Indenture.
      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 Indenture, (b) be
      binding upon each Grantor, and their respective successors and assigns, and
      (c)
      inure to the benefit of, and be enforceable by, the Collateral 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
      Indenture, assign or otherwise transfer all or any portion of its rights and
      obligations under the Indenture 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 Indenture, 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, the Collateral Agent will file or authorize the filing of appropriate
      termination statements or other release documents provided to it to terminate
      such Security Interests. No transfer or renewal, extension, assignment, or
      termination of this Agreement or of the Indenture, any other Indenture Loan
      Document, or any other instrument or document executed and delivered by any
      Grantor to the Collateral Agent, nor the taking of further security, nor the
      retaking or re-delivery of the Collateral to Grantors, or any of them, by the
      Collateral Agent, nor any other act of the Collateral Agent, the Trustee or
      any
      Noteholder, or any of them, shall release any Grantor from any obligation,
      except a release or discharge executed in writing by the Collateral Agent in
      accordance with the provisions of the Agreement. The Collateral 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
      the
      Collateral Agent and then only to the extent therein set forth. A waiver by
      the
      Collateral 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 the Collateral Agent
      would otherwise have had on any other occasion.

     

    
      
        22

      

      
        
        

        
          

        

      

      
        
        

      

    

    23.  Governing
      Law.

     

    (a)  THE
      VALIDITY OF THIS AGREEMENT AND THE OTHER INDENTURE LOAN DOCUMENTS (UNLESS
      EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER INDENTURE LOAN DOCUMENT IN RESPECT
      OF SUCH OTHER INDENTURE 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 INDENTURE 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 OF MANHATTAN, COUNTY OF NEW YORK, STATE OF NEW YORK;
      PROVIDED,
      HOWEVER,
      THAT
      ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
      BROUGHT, AT THE
      COLLATERAL AGENT’S
      OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE
      COLLATERAL AGENT
      ELECTS
      TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
      EACH GRANTOR AND ANY OF THE COLLATERAL AGENT, THE TRUSTEE AND EACH NOTEHOLDER
      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 OF THE COLLATERAL AGENT, THE TRUSTEE AND EACH NOTEHOLDER HEREBY
      WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
      OR
      ARISING OUT OF ANY OF THE INDENTURE 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 THE
      COLLATERAL AGENT, THE TRUSTEE AND EACH NOTEHOLDER 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.

     

    
      
        23

      

      
        
        

        
          

        

      

      
        
        

      

    

    24.  New
      Subsidiaries.
      To the
      extent required by Section 4.16 or Section 10.04 of the Indenture or any other
      applicable provision of any Indenture 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 the Collateral
      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.

     

    25.  Collateral
      Agent.
      Each
      reference herein to any right granted to, benefit conferred upon or power
      exercisable by the “Collateral Agent” shall be a reference to the Collateral
      Agent, for the benefit of itself, the Trustee and each Noteholder.

     

    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
      Indenture 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.

     

    (e)  In
      connection with its appointment and acting hereunder, the Collateral Agent
      is
      entitled to all rights, privileges, protections, immunities and benefits
      provided to the Trustee under the Indenture.

     

    


     

    



    
      
        
          24

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    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/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              PCA
                LLC,

               

              a
                Delaware limited liability company

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              AMERICAN
                STUDIOS, INC.,

               

              a
                North Carolina corporation

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              PCA
                PHOTO CORPORATION OF CANADA, INC.,

               

              a
                North Carolina corporation

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              PCA
                NATIONAL LLC,

               

              a
                Delaware limited liability company

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              HOMETOWN
                THREADS LLC,

               

              a
                Delaware limited liability company

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              PCA
                FINANCE CORP.,

               

              a
                Delaware corporation

               

              By /s/
                Donald Norsworthy

              Its Executive
                Vice President and Chief Financial Officer

               

            
	 	 
	 	
              PHOTO
                CORPORATION OF AMERICA,

               

              a
                North Carolina corporation

               

              By /s/
                Donald 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/
                Donald Norsworthy 

                  Its:
                Executive Vice President and Chief Financial Officer

               

            
	 	 
	
              COLLATERAL
                AGENT:

               

            	
              THE
                BANK OF NEW YORK TRUST COMPANY, N.A.,

               

              as
                Collateral Agent

               

              By: /s/
                Craig A. Kaye

              Name:
                Craig A. Kaye 

              Title:
                Assistant
                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
THE
      BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”),
      solely in its capacity as Collateral Agent for the Trustee and the Noteholders
      (together with its successors and assigns in such capacity, “Collateral
      Agent”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      PCA LLC, a Delaware limited liability company, as issuer (“PCA”),
      PCA
      FINANCE CORP., a Delaware corporation, as co-issuer (“PCA
      Finance”
      and
      collectively with PCA, the “Issuers”),
      PORTRAIT CORPORATION OF AMERICA, INC., a Delaware corporation (the “Parent
      Guarantor”)
      and
      each other Guarantor (as referred to below and as defined in the Indenture,
      collectively, together with the Parent Guarantor, the “Guarantors”),
      and
      BNY, as Collateral Agent (in such capacity, together with any successor or
      permitted assign, the “Collateral
      Agent”)
      and as
      trustee (in such capacity, together with any successor or permitted assign,
      the
“Trustee”),
      have
      entered into an Indenture, dated as of July 15, 2005 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Indenture”),
      pursuant to which the Issuers have issued $50,000,0000 in aggregate principal
      amount of their Notes (the “Notes”);
      and

     

    WHEREAS,
      each Domestic Subsidiary of the Issuers is required under the Indenture to
      (a)
      become a party to the Indenture and deliver a Guarantee to guarantee the payment
      of the Notes and the other Obligations of the Issuers thereunder and under
      the
      Indenture Loan Documents to which the Issuers are a party and (b) become a
      party
      to the Security Agreement as a Grantor and secure its Obligations under the
      Indenture, such Guarantee and the other Indenture Loan Documents to which it
      is
      a party pursuant to the terms hereof; and

     

    WHEREAS,
      PCA, PCA Finance and each of PCA’s subsidiaries signatory thereto each in its
      capacity as a borrower (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
      Parent Guarantor, each other subsidiary of the Borrowers signatories thereto
      in
      its capacity as a guarantor (collectively, the “Loan
      Guarantors”),
      the
      various 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
      WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
      Lenders (in such capacity, together with any successor or permitted assign,
      hereinafter referred to as the “Administrative
      Agent”)
      have
      entered into that certain Credit Agreement, dated as of July 15, 2005 (as
      amended, restated, supplemented, replaced or otherwise modified from time to
      time, the “Credit
      Agreement”);
      and


     

    WHEREAS,
      the Borrowers, the Parent Guarantor and each other Loan Guarantor have entered
      into that certain Security Agreement, dated as of July 15, 2005 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Lender
      Security Agreement”)
      in
      favor of the Administrative Agent; and

     

    WHEREAS,
      the Collateral Agent (on behalf of itself, the Trustee and the Noteholders),
      the
      Administrative Agent (on behalf of the Lenders), and the Issuers, the Parent
      Guarantor and each other Guarantor party thereto in such capacity have entered
      into that certain Intercreditor and Lien Subordination Agreement, dated as
      of
      July 15, 2005 (as amended, restated, supplemented, replaced or otherwise
      modified from time to time, the “Intercreditor
      Agreement”),
      which
      agreement, among other things, sets forth, as between the Collateral Agent
      and
      the Administrative Agent, the relative priority of their respective Liens in
      the
      Collateral and their rights with respect thereto; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      capitalized terms used herein and not otherwise defined herein shall have the
      meanings assigned to such terms in the Security Agreement, the Indenture Loan
      Documents and/or the Intercreditor Agreement, as applicable; 

     

    WHEREAS,
      pursuant to the Indenture Loan Documents and subject to Section 4.16 and Section
      10.04 of the Indenture, certain new direct or indirect Subsidiaries of any
      Grantor, must execute and deliver to Collateral Agent certain Indenture 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 Collateral Agent,
      for the benefit of itself, the Trustee and the Noteholders;

     

    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
      Indenture Secured Obligations, does hereby grant, assign, and pledge to
      Collateral Agent, for the benefit of itself, the Trustee and the Noteholders,
      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 Indenture
      Secured Obligations, including, without limitation, any interest thereon, plus
      reasonable attorneys' fees and expenses if the Indenture 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 Collateral Agent, the Trustee and each
      Noteholder 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:

               

            	
              THE
                BANK OF NEW YORK TRUST COMPANY, N.A.,

               

              as
                Collateral 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 THE
      BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”),
      solely in its capacity as Collateral Agent for the Trustee and the Noteholders
      (together with its successors and assigns in such capacity, “Collateral
      Agent”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      PCA LLC, a Delaware limited liability company, as issuer (“PCA”),
      PCA
      FINANCE CORP., a Delaware corporation, as co-issuer (“PCA
      Finance”
      and
      collectively with PCA, the “Issuers”),
      PORTRAIT CORPORATION OF AMERICA, INC., a Delaware corporation (the “Parent
      Guarantor”)
      and
      each other Guarantor (as referred to below and as defined in the Indenture,
      collectively, together with the Parent Guarantor, the “Guarantors”),
      and
      BNY, as Collateral Agent (in such capacity, together with any successor or
      permitted assign, the “Collateral
      Agent”)
      and as
      trustee (in such capacity, together with any successor or permitted assign,
      the
“Trustee”),
      have
      entered into an Indenture, dated as of July 15, 2005 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Indenture”),
      pursuant to which the Issuers have issued $50,000,0000 in aggregate principal
      amount of their Notes (the “Notes”);
      and

     

    WHEREAS,
      each Domestic Subsidiary of the Issuers is required under the Indenture to
      (a)
      become a party to the Indenture and deliver a Guarantee to guarantee the payment
      of the Notes and the other Obligations of the Issuers thereunder and under
      the
      Indenture Loan Documents to which the Issuers are a party and (b) become a
      party
      to the Security Agreement as a Grantor and secure its Obligations under the
      Indenture, such Guarantee and the other Indenture Loan Documents to which it
      is
      a party pursuant to the terms hereof; and

     

    WHEREAS,
      each of the Issuers, the Parent Guarantor and each other Grantor signatory
      thereto in such capacity has executed and delivered to the Collateral Agent,
      for
      the benefit of itself, the Trustee and the Noteholders, 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,
      PCA, PCA Finance and each of PCA’s subsidiaries signatory thereto each in its
      capacity as a borrower (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
      Parent Guarantor, each other subsidiary of the Borrowers signatories thereto
      in
      its capacity as a guarantor (collectively, the “Loan
      Guarantors”),
      the
      various 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
      WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
      Lenders (in such capacity, together with any successor or permitted assign,
      hereinafter referred to as the “Administrative
      Agent”)
      have
      entered into that certain Credit Agreement, dated as of July 15, 2005 (as
      amended, restated, supplemented, replaced or otherwise modified from time to
      time, the “Credit
      Agreement”);
      and


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the Borrowers, the Parent Guarantor and each other Loan Guarantor have entered
      into that certain Security Agreement, dated as of July 15, 2005 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Lender
      Security Agreement”)
      in
      favor of the Administrative Agent; and

     

    WHEREAS,
      the Collateral Agent (on behalf of itself, the Trustee and the Noteholders),
      the
      Administrative Agent (on behalf of the Lenders), and the Issuers, the Parent
      Guarantor and each other Guarantor party thereto in such capacity have entered
      into that certain Intercreditor and Lien Subordination Agreement, dated as
      of
      July 15, 2005 (as amended, restated, supplemented, replaced or otherwise
      modified from time to time, the “Intercreditor
      Agreement”),
      which
      agreement, among other things, sets forth, as between the Collateral Agent
      and
      the Administrative Agent, the relative priority of their respective Liens in
      the
      Collateral and their rights with respect thereto; and

     

    WHEREAS,
      pursuant to the Security Agreement, Grantors are required to execute and deliver
      to Collateral Agent, for the benefit of itself, the Trustee and the Noteholders,
      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, the Indenture Loan Documents and/or the
      Intercreditor Agreement, as applicable.

     

    2.  GRANT
      OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.
      Each
      Grantor hereby grants to Collateral Agent, for the benefit of itself, the
      Trustee and the Noteholders, a continuing security interest (subject in priority
      only to the first priority perfected security interests in favor of the
      Administrative Agent in accordance with the provisions of the Intercreditor
      Agreement) 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 Collateral Agent,
      for the benefit of itself, the Trustee and the Noteholders, pursuant to the
      Security Agreement. Each Grantor hereby acknowledges and affirms that the rights
      and remedies of the Collateral 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.
      If any
      Grantor shall obtain any new copyrights, the provisions of this Copyright
      Security Agreement shall automatically apply thereto. Without limiting Grantors’
      obligations under this Section
      4,
      Grantors hereby authorize the Collateral 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 the Collateral 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 Indenture 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.

     

    6.  INCORPORATION
      BY REFERENCE.
      In
      connection with its appointment and acting hereunder, the Collateral Agent
      is
      entitled to all rights, privileges, protections, immunities, benefits and
      indemnities of the “Collateral Agent” under the Security Agreement.

     

    [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:

     

    


     

    THE
      BANK
      OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

     

     

    By: 

     

    Name: 

     

    Title: 

     


    
      
        
           

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      I

     

    TO

     

    COPYRIGHT
      SECURITY AGREEMENT

     

    


     

    COPYRIGHT
      REGISTRATIONS

     

    


    
      	
               

              Grantor

               

            	
               

              Country

               

            	
               

              Copyright

               

            	
               

              Registration
                No.

               

            	
               

              Registration
                Date

               

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    


    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 THE
      BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”),
      solely in its capacity as Collateral Agent for the Trustee and the Noteholders
      (together with its successors and assigns in such capacity, “Collateral
      Agent”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      PCA LLC, a Delaware limited liability company, as issuer (“PCA”),
      PCA
      FINANCE CORP., a Delaware corporation, as co-issuer (“PCA
      Finance”
      and
      collectively with PCA, the “Issuers”),
      PORTRAIT CORPORATION OF AMERICA, INC., a Delaware corporation (the “Parent
      Guarantor”)
      and
      each other Guarantor (as referred to below and as defined in the Indenture,
      collectively, together with the Parent Guarantor, the “Guarantors”),
      and
      BNY, as Collateral Agent (in such capacity, together with any successor or
      permitted assign, the “Collateral
      Agent”)
      and as
      trustee (in such capacity, together with any successor or permitted assign,
      the
“Trustee”),
      have
      entered into an Indenture, dated as of July 15, 2005 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Indenture”),
      pursuant to which the Issuers have issued $50,000,0000 in aggregate principal
      amount of their Notes (the “Notes”);
      and

     

    WHEREAS,
      each Domestic Subsidiary of the Issuers is required under the Indenture to
      (a)
      become a party to the Indenture and deliver a Guarantee to guarantee the payment
      of the Notes and the other Obligations of the Issuers thereunder and under
      the
      Indenture Loan Documents to which the Issuers are a party and (b) become a
      party
      to the Security Agreement as a Grantor and secure its Obligations under the
      Indenture, such Guarantee and the other Indenture Loan Documents to which it
      is
      a party pursuant to the terms hereof; and

     

    WHEREAS,
      each of the Issuers, the Parent Guarantor and each other Grantor signatory
      thereto in such capacity has executed and delivered to the Collateral Agent,
      for
      the benefit of itself, the Trustee and the Noteholders, 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,
      PCA, PCA Finance and each of PCA’s subsidiaries signatory thereto each in its
      capacity as a borrower (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
      Parent Guarantor, each other subsidiary of the Borrowers signatories thereto
      in
      its capacity as a guarantor (collectively, the “Loan
      Guarantors”),
      the
      various 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
      WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
      Lenders (in such capacity, together with any successor or permitted assign,
      hereinafter referred to as the “Administrative
      Agent”)
      have
      entered into that certain Credit Agreement, dated as of July 15, 2005 (as
      amended, restated, supplemented, replaced or otherwise modified from time to
      time, the “Credit
      Agreement”);
      and


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the Borrowers, the Parent Guarantor and each other Loan Guarantor have entered
      into that certain Security Agreement, dated as of July 15, 2005 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Lender
      Security Agreement”)
      in
      favor of the Administrative Agent; and

     

    WHEREAS,
      the Collateral Agent (on behalf of itself, the Trustee and the Noteholders),
      the
      Administrative Agent (on behalf of the Lenders), and the Issuers, the Parent
      Guarantor and each other Guarantor party thereto in such capacity have entered
      into that certain Intercreditor and Lien Subordination Agreement, dated as
      of
      July 15, 2005 (as amended, restated, supplemented, replaced or otherwise
      modified from time to time, the “Intercreditor
      Agreement”),
      which
      agreement, among other things, sets forth, as between the Collateral Agent
      and
      the Administrative Agent, the relative priority of their respective Liens in
      the
      Collateral and their rights with respect thereto; and

     

    WHEREAS,
      pursuant to the Security Agreement, Grantors are required to execute and deliver
      to Collateral Agent, for the benefit of itself, the Trustee and the Noteholders,
      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, the Indenture Loan Documents and/or the
      Intercreditor Agreement, as applicable.

     

    2.  GRANT
      OF SECURITY INTEREST IN PATENT COLLATERAL.
      Each
      Grantor hereby grants to the Collateral Agent, for the benefit of itself, the
      Trustee and the Noteholders, a continuing security interest (subject in priority
      only to the first priority perfected security interests in favor of the
      Administrative Agent in accordance with the provisions of the Intercreditor
      Agreement) 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 the Collateral
      Agent, for the benefit of itself, the Trustee and the Noteholders, pursuant
      to
      the Security Agreement. Each Grantor hereby acknowledges and affirms that the
      rights and remedies of the Collateral 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 the Collateral Agent with respect to any such new patent rights. Without
      limiting Grantors' obligations under this Section
      4,
      Grantors hereby authorize the Collateral 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 the Collateral 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 Indenture 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.

     

    6.  INCORPORATION
      BY REFERENCE.
      In
      connection with its appointment and acting hereunder, the Collateral Agent
      is
      entitled to all rights, privileges, protections, immunities, benefits and
      indemnities of the “Collateral Agent” under the Security Agreement.

     

    [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.

    
 

     

    By: 

     

    Name: 

     

    Title: 

     

     

    


     

    By: 

     

    Name: 

     

    Title: 

     

     

    


     

    ACCEPTED
      AND ACKNOWLEDGED BY:

     

    THE
      BANK
      OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

     

    By: 

     

    Name: 

     

    Title: 

     


    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    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 THE
      BANK
      OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent. Initially capitalized
      terms used but not defined herein shall have the meanings ascribed to such
      terms
      in the Security Agreement, the Indenture Loan Documents and/or the Intercreditor
      Agreement, as applicable. 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
      Collateral 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:
       

     

    



    
      
        
           

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    
      	
               

              Name
                of Pledgor

               

            	
               

              Name
                of Pledged Company

               

            	
               

              Number
                of Shares/Units

               

            	
               

              Class
                of Interests

               

            	
               

              Percentage
                of Class Owned

               

            	
               

              Percentage
                of Class Pledged

               

            	
               

              Certificate
                Nos.

               

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


    

    



    
      
        
           

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    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 THE
      BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”),
      solely in its capacity as Collateral Agent for the Trustee and the Noteholders
      (together with its successors and assigns in such capacity, “Collateral
      Agent”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      PCA LLC, a Delaware limited liability company, as issuer (“PCA”),
      PCA
      FINANCE CORP., a Delaware corporation, as co-issuer (“PCA
      Finance”
      and
      collectively with PCA, the “Issuers”),
      PORTRAIT CORPORATION OF AMERICA, INC., a Delaware corporation (the “Parent
      Guarantor”)
      and
      each other Guarantor (as referred to below and as defined in the Indenture,
      collectively, together with the Parent Guarantor, the “Guarantors”),
      and
      BNY, as Collateral Agent (in such capacity, together with any successor or
      permitted assign, the “Collateral
      Agent”)
      and as
      trustee (in such capacity, together with any successor or permitted assign,
      the
“Trustee”),
      have
      entered into an Indenture, dated as of July 15, 2005 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Indenture”),
      pursuant to which the Issuers have issued $50,000,0000 in aggregate principal
      amount of their Notes (the “Notes”);
      and

     

    WHEREAS,
      each Domestic Subsidiary of the Issuers is required under the Indenture to
      (a)
      become a party to the Indenture and deliver a Guarantee to guarantee the payment
      of the Notes and the other Obligations of the Issuers thereunder and under
      the
      Indenture Loan Documents to which the Issuers are a party and (b) become a
      party
      to the Security Agreement as a Grantor and secure its Obligations under the
      Indenture, such Guarantee and the other Indenture Loan Documents to which it
      is
      a party pursuant to the terms hereof; and

     

    WHEREAS,
      each of the Issuers, the Parent Guarantor and each other Grantor signatory
      thereto in such capacity has executed and delivered to the Collateral Agent,
      for
      the benefit of itself, the Trustee and the Noteholders, 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,
      PCA, PCA Finance and each of PCA’s subsidiaries signatory thereto each in its
      capacity as a borrower (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
      Parent Guarantor, each other subsidiary of the Borrowers signatories thereto
      in
      its capacity as a guarantor (collectively, the “Loan
      Guarantors”),
      the
      various 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
      WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
      Lenders (in such capacity, together with any successor or permitted assign,
      hereinafter referred to as the “Administrative
      Agent”)
      have
      entered into that certain Credit Agreement, dated as of July 15, 2005 (as
      amended, restated, supplemented, replaced or otherwise modified from time to
      time, the “Credit
      Agreement”);
      and


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the Borrowers, the Parent Guarantor and each other Loan Guarantor have entered
      into that certain Security Agreement, dated as of July 15, 2005 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Lender
      Security Agreement”)
      in
      favor of the Administrative Agent; and

     

    WHEREAS,
      the Collateral Agent (on behalf of itself, the Trustee and the Noteholders),
      the
      Administrative Agent (on behalf of the Lenders), and the Issuers, the Parent
      Guarantor and each other Guarantor party thereto in such capacity have entered
      into that certain Intercreditor and Lien Subordination Agreement, dated as
      of
      July 15, 2005 (as amended, restated, supplemented, replaced or otherwise
      modified from time to time, the “Intercreditor
      Agreement”),
      which
      agreement, among other things, sets forth, as between the Collateral Agent
      and
      the Administrative Agent, the relative priority of their respective Liens in
      the
      Collateral and their rights with respect thereto; and

     

    WHEREAS,
      pursuant to the Security Agreement, Grantors are required to execute and deliver
      to Collateral Agent, for the benefit of itself, the Trustee and the Noteholders,
      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, the Indenture Loan Documents and/or the
      Intercreditor Agreement, as applicable.

     

    2.  GRANT
      OF SECURITY INTEREST IN TRADEMARK COLLATERAL.
      Each
      Grantor hereby grants to the Collateral Agent, for the benefit of itself, the
      Trustee and the Noteholders, a continuing security interest (subject in priority
      only to the first priority perfected security interests in favor of the
      Administrative Agent in accordance with the provisions of the Intercreditor
      Agreement) 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 the Collateral
      Agent, for the benefit of itself, the Trustee and the Noteholders, pursuant
      to
      the Security Agreement. Each Grantor hereby acknowledges and affirms that the
      rights and remedies of the Collateral 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 the Collateral 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 the Collateral 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 the Collateral 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 Indenture 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.

     

    6.  INCORPORATION
      BY REFERENCE.
      In
      connection with its appointment and acting hereunder, the Collateral Agent
      is
      entitled to all rights, privileges, protections, immunities, benefits and
      indemnities of the “Collateral Agent” under the Security Agreement.

     

    [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. 

     

    


     

    By: 

     

    Name: 

     

    Title: 

     

    
 

     

    By: 

     

    Name: 

     

    Title: 

     

     

     

    ACCEPTED
      AND ACKNOWLEDGED BY:

     

     

    THE
      BANK
      OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

     

     

    By: 

     

    Name: 

     

    Title: 

     


    
      
        
           

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    SCHEDULE
      I

     

    to

     

    TRADEMARK
      SECURITY AGREEMENT

     

    


     

    Trademark
      Registrations/Applications

     

    


    
      	
               

              Grantor

               

            	
               

              Country

               

            	
               

              Mark

               

            	
               

              Application/
                Registration No.

               

            	
               

              App/Reg
                Date

               

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    


     

    Trade
      Names

     

    


     

    Common
      Law Trademarks 

    
 

     

    Trademarks
      Not Currently In Use

     

    


     

    Trademark
      Licenses