**EXHIBIT 10.8.34**

 

Execution Version

 

TRADEMARK SECURITY AGREEMENT

 

THIS TRADEMARK SECURITY AGREEMENT (this “Agreement”),dated as of February 14, 2008, is entered into by and between WESTAFF(USA), INC., a California corporation (“Debtor”), having an office at298 North Wiget Lane, Walnut Creek, California 94598, and U.S. BANK NATIONALASSOCIATION, with an office at 633 West Fifth Street, 29th Floor, Los Angeles,California 90071, as Agent (in such capacity and as used herein, “Agent”) forthe benefit of the Secured Parties (as such term is defined in the FinancingAgreement, defined below, and as such term is used herein (the “SecuredParties”), with reference to the following facts:

 

RECITALS

 

A.            Debtor has adopted, used and is using, andis the owner of the entire right, title, and interest in and to the trademarks,trade names, terms, designs and applications therefor described in Schedule Aannexed hereto and made a part hereof; and

 

B.            Debtor, Westaff, Inc., a Delawarecorporation and the sole shareholder of Debtor (“Parent Guarantor”), theLenders party thereto (collectively, the “Lenders”) and Agent areentering into a Financing Agreement of even date herewith (the “FinancingAgreement”), pursuant to which Agent and the Lenders propose to providecertain credit facilities to Debtor (the Financing Agreement, together withthis Agreement, and all other related documents, agreements, instruments, asthe same may now exist or may hereafter be amended or supplemented, arereferred to herein collectively as the “Loan Documents”).

 

C.            Concurrently therewith and herewith, (i) ParentGuarantor is entering into a Continuing Guaranty dated as of even date herewithin favor of Agent for the benefit of the Secured Parties (the “ParentGuaranty”), pursuant to which Parent Guarantor agrees to guaranty thepayment and performance of Debtor’s obligations under the Financing Agreementand the other Loan Documents; and (ii) Westaff Support, Inc., aCalifornia corporation and a wholly owned subsidiary of Debtor (“WestaffSupport”), and MediaWorld International a California corporation and awholly owned subsidiary of Debtor (“MediaWorld International”), aresimilarly entering into a Continuing Guaranty dated as of even date herewith infavor of Agent for the benefit of the Secured Parties (the “SubsidiaryGuaranty”), pursuant to which Westaff Support and MediaWorld agree toguaranty the payment and performance of Debtor’s obligations under theFinancing Agreement and the other Loan Documents.

 

D.            Concurrently therewith and herewith,Debtor, Parent Guarantor, Westaff Support and MediaWorld are entering into aSecurity Agreement dated as of even date herewith in favor of Agent for thebenefit of the Secured Parties (the “Master Security Agreement”),pursuant to which Debtor, Parent Guarantor, Westaff Support and MediaWorld,collectively as grantors, agree to grant to Agent a perfected first prioritysecurity interest in substantially all of each such grantor’s personal propertyassets (subject only to Permitted Liens (as defined in the FinancingAgreement), including all of Debtor’s rights, title and interest in theCollateral (as defined below).

 

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NOW, THEREFORE, and in consideration and infurtherance of, and in order to give effect to, the foregoing recitals, theparties hereto agree as follows:

 

1.             SECURITY INTEREST

 

In order to induce Agent and the SecuredParties to enter into the Loan Documents and in consideration thereof, Debtorhereby grants to Agent, for the benefit of the Secured Parties, a securityinterest in:

 

(a)           all of Debtor’s nowexisting or hereafter acquired rights and interest in and to: all of Debtor’strademarks, trade names, trade styles and service marks; all prints and labelson which such trademarks, trade names, trade styles and service marks appear,have appeared or will appear, and all designs and general intangibles of a likenature; all applications, registrations and recordings relating to theforegoing in the United States Patent and Trademark Office or in any similaroffice or agency of the United States, any State thereof, any politicalsubdivision thereof or in any other countries, and all reissues, extensions andrenewals thereof including those trademarks, terms, design and applicationsdescribed in Schedule A hereto (the “Trademarks”);

 

(b)           the goodwill of thebusiness symbolized by each of the Trademarks, including, without limitation,all customer lists and other records relating to the distribution of productsor services bearing the Trademarks; and

 

(c)           any and all proceeds ofany of the foregoing, including, without limitation, any claims by Debtoragainst third parties for infringement of the Trademarks or of any licenseswith respect thereto.

 

All of the foregoing described in clauses(a), (b) and (c) above are collectively referred to herein as the “Collateral”.

 

2.             OBLIGATIONSSECURED

 

The security interests granted to Agent inthis Agreement shall secure the prompt and indefeasible payment and performanceof the “Obligations” (as defined in the Financing Agreement and as such term usused herein, the “Obligations”).

 

3.             WARRANTIES ANDCOVENANTS

 

Debtor hereby covenants, represents andwarrants that (all of such covenants, representations and warranties beingcontinuing in nature until the Obligations are Paid in Full (as defined in theFinancing Agreement)):

 

A.            All of the existingCollateral is valid and subsisting in full force and effect to Debtor’sknowledge, and Debtor owns sole, full, and clear title thereto, and has theright and power to grant the security interests granted hereunder.  Debtor will, at Debtor’s expense, perform allacts and execute all documents reasonably necessary to maintain the existenceof the Collateral as valid, subsisting and registered trademarks includingwithout 

 

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limitation the filing of anyrenewal affidavits and applications.  TheCollateral is not subject to any lien, security interest, claim or encumbrance(“Lien”), except the security interests granted hereunder, the licenses,if any, which are specifically described in Schedule B hereto andPermitted Liens (as defined in the Financing Agreement).

 

B.            Debtor will notassign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a securityinterest in or Lien upon, encumber, grant an exclusive or non-exclusive licenserelating thereto, except to Agent, or otherwise dispose of, any of theCollateral without the prior written consent of Agent, which will not beunreasonably withheld, except for non-exclusive licenses in the ordinary courseof Debtor’s business and as permitted under Section 10.24 of the FinancingAgreement, except for (i) non-exclusive licenses in the ordinary course ofDebtor’s business and (ii) exclusive registered user agreements orlicenses limited in geographic scope granted to franchisees in the ordinarycourse of Debtor’s business and in accordance with Section 10.24(c) ofthe Financing Agreement.

 

C.            Debtor will, at Debtor’sexpense, perform all acts and execute all documents reasonably requested at anytime by Agent to evidence, perfect, maintain, record, or enforce the securityinterest in the Collateral granted hereunder or to otherwise further theprovisions of this Agreement.  Debtorhereby authorizes Agent to execute and file one or more financing statements(or similar documents) with respect to the Collateral.  Debtor further authorizes Agent to have thisor any other similar security agreement filed with the Commissioner of Patentsand Trademarks or other appropriate federal, state or government office.

 

D.            Debtor will,concurrently with the execution and delivery of this Agreement, execute anddeliver to Agent an original of a Power of Attorney in the form of Exhibit 1annexed hereto for the implementation of the assignment, sale or otherdisposition of the Collateral pursuant to Agent’s exercise of the rights andremedies granted to Agent hereunder. Agent agrees it will only exercise the Power of Attorney upon theoccurrence and during the continuation of an Event of Default under (and asdefined in) the Financing Agreement.

 

E.             Agent may, in itssole discretion, pay any amount or do any act which Debtor fails to pay or doas required hereunder or as requested by Agent to maintain and preserve theCollateral, defend, protect, record, amend or enforce the Obligations, theCollateral, or the security interest granted hereunder, including, but notlimited to, all filing or recording fees, court costs, collection charges andreasonable attorneys’ fees.  Debtor willbe liable to Agent for any such payment, which payment shall be deemed aborrowing by Debtor from Agent, and shall be payable on demand together withinterest at the applicable rate set forth in the Loan Documents and shall bepart of the Obligations secured hereby.

 

F.             As of the datehereof, Debtor does not have any Trademarks registered, or subject to pendingapplications, in the United States Patent and Trademark Office or any similaroffice or agency in the United States other than those described in Schedule Aannexed hereto.

 

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G.            Debtor shall notifyAgent in writing of the filing of any application for the registration of aTrademark with the United States Patent and Trademark Office or any similaroffice or agency in the United States or any state therein within thirty (30)days of such filing.  Upon request ofAgent, Debtor shall execute and deliver to Agent any and all assignments,agreements, instruments, documents, and such other papers as may be requestedby Agent to evidence the security interests of Agent in or Trademark.

 

H.            Debtor has notabandoned any of the Trademarks material to the conduct of the business andDebtor will not do any act, nor omit to do any act, whereby such Trademarks maybecome abandoned, canceled, invalidated, unenforceable, avoided, or avoidableexcept where Debtor, in the good faith exercise of its business judgment, hasotherwise determined that such Trademark is not material to the business oroperations of Debtor.  Debtor shallnotify Agent immediately if Debtor knows or has reason to know of any reasonwhy any application, registration, or recording may become abandoned, canceled,invalidated, unenforceable, avoided, or avoidable.

 

I.              Debtor shall renderany assistance, as Agent may determine is reasonably necessary, to Agent in anyproceeding before the United States Patent and Trademark Office, any federal orstate court, or any similar office or agency in the United States or any statetherein or any other country to maintain such application and registration ofthe Trademarks as Debtor’s exclusive property and to protect Agent’s interesttherein, including, without limitation, filing of renewals, affidavits of use,affidavits of incontestability and opposition, interference, and cancellationproceedings.

 

J.             Debtor shall promptlynotify Agent if Debtor (or any affiliate or subsidiary thereof) learns of anyuse by any person of any other process or product which infringes upon anyTrademark.  If reasonably requested byAgent, Debtor, at Debtor’s expense, shall join with Agent in an infringementaction as Agent, in Agent’s reasonable discretion, may deem advisable for theprotection of Agent’s rights and interests in and to the Trademarks.

 

K.            Debtor assumes allresponsibility and liability arising from the use of the Trademarks by Debtor,and Debtor hereby indemnifies and holds Agent harmless from and against anyclaim, suit, loss, damage, or expense (including reasonable attorneys’ fees)arising out of any alleged defect in any product manufactured, promoted, orsold by Debtor (or any affiliate or subsidiary thereof) in connection with anyTrademark or out of the manufacture, promotion, labeling, sale or advertisementof any such product by Debtor (or any affiliate or subsidiary thereof) exceptfor claims, suits, losses, damages or expenses to the extent resulting from theAgent’s gross negligence or willful misconduct.

 

4.             RIGHTS ANDREMEDIES

 

Upon the occurrence and during thecontinuance of an Event of Default and at any time thereafter, in addition toall other rights and remedies of Agent and the Secured Parties, whetherprovided under applicable law, this Agreement or any of the other LoanDocuments or otherwise, and after expiration of any grace period, Agent shallhave the 

 

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following rights and remedieswhich may be exercised without notice to, or consent by, Debtor, except as suchnotice or consent is expressly provided for hereunder:

 

A.            Agent may make use ofany Trademarks for the sale of goods or rendering of services in connectionwith enforcing any other security interest granted by Debtor to Agent.

 

B.            Agent may grant suchlicense or licenses relating to the Collateral for such term or terms, on suchconditions, and in such manner as Agent shall in its sole discretion deemappropriate.  Such license or licensesmay be general, special, or otherwise and may be granted on an exclusive ornon-exclusive basis throughout all or any part of the United States of America,its territories and possessions, and all foreign countries.

 

C.            Agent may assign,sell, or otherwise dispose of the Collateral or any part thereof, either withor without special conditions or stipulations, except that Agent agrees toprovide Debtor with ten (10) days prior written notice of any proposeddisposition of the Collateral.  Agentshall have the power to buy the Collateral or any part thereof, and Agent shallalso have the power to execute assurances and perform all other acts whichAgent may, in Agent’s sole discretion, deem appropriate or proper to completesuch assignment, sale or disposition.  Inany such event, Debtor shall be liable for any deficiency.

 

D.            In addition to theforegoing, in order to implement the assignment, sale, or other disposition ofany of the Collateral pursuant to subparagraph 4C above, Agent mayat any time execute and deliver on behalf of Debtor, pursuant to the authoritygranted in the Powers of Attorney described in subparagraph 3Eabove, one or more instruments of assignment of the Trademarks (or anyapplication, registration, or recording relating thereto), in form suitable forfiling, recording or registration. Debtor agrees to pay Agent on demand all costs incurred in any suchtransfer of the Collateral, including, but not limited to, any taxes, fees, andreasonable attorneys’ fees.

 

E.             Agent and the SecuredParties may apply the proceeds actually received from any such license,assignment, sale or other disposition of Collateral first to the reasonablecosts and expenses thereof, including, without limitation, reasonable attorneys’fees and all legal, travel, and other expenses which may be incurred byAgent.  Thereafter, Agent and the SecuredParties may apply any remaining proceeds to such of the Obligations as Agentand the Secured Parties may in its and their sole discretion determine.  Debtor shall remain liable to Agent for anyexpenses or obligations remaining unpaid after the application of suchproceeds, and Debtor shall pay Agent on demand any such unpaid amount, togetherwith interest at the default rate set forth in the Loan Agreement.

 

F.             In the event that anysuch license, assignment, sale or disposition of the Collateral (or any partthereof) is made after the occurrence of an Event of Default, Debtor shallsupply to Agent or Agent’s designee Debtor’s knowledge and expertise relatingto the manufacture and sale of the products and services bearing the Trademarksand Debtor’s customer lists and other records relating to the Trademarks andthe distribution thereof.

 

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Nothingcontained herein shall be construed as requiring Agent to take any such actionat any time.  All of Agent’s rights andremedies, whether provided under law, the Agreements, this Agreement, orotherwise, shall be cumulative and none is exclusive.  Such rights and remedies may be enforcedalternatively, successively, or concurrently.

 

5.             MISCELLANEOUS

 

A.            Any failure or delayby Agent to require strict performance by Debtor of any of the provisions,warranties, terms and conditions contained herein or in any other agreement,document, or instrument, shall not affect Agent’s right to demand strictcompliance and performance therewith, and any waiver of any Event of Defaultshall not waive or affect any other Event of Default, whether prior or subsequentthereto, and whether of the same or of a different type.  None of the warranties, conditions,provisions, and terms contained herein or in any other agreement, document, orinstrument shall be deemed to have been waived by any act or knowledge of Agentor any other Secured Party, or any of its or their agents, officers, oremployees, but only by an instrument in writing, signed by an officer of Agentand directed to Debtor, specifying such waiver.

 

B.            All notices, requestsand demands to or upon the respective parties hereto shall be deemed to havebeen duly given or made: if by hand, immediately upon delivery; if by facsimile(fax), telex or telegram, immediately upon sending; if by any overnightdelivery service, one day after dispatch; and if mailed by first class orcertified mail, three (3) days after mailing.  All notices, requests and demands are to begiven or made to the respective parties at the following addresses (or to suchother addresses as either party may designate by notice in accordance with theprovisions of this paragraph):

 
| If to Debtor: | WESTAFF  (USA), INC.                            |
|---------------|-------------------------------------------------|
|          | 298 North  Wiget Lane                           |
|          | Walnut  Creek, California 94598                 |
|          | Attn: Chief  Financial Officer                  |
|          |                                            |
| If to Agent:  | U.S. BANK  NATIONAL ASSOCIATION,                |
|          | as Agent                                        |
|          | 633 West  Fifth Street, 29th Floor              |
|          | Los Angeles,  California 90071                  |
|          | Attn:  Westaff (USA), Inc. Account Officer |

 

C.            In the event that anyprovision hereof shall be deemed to be invalid by any court, such invalidityshall not affect the remainder of this Agreement.

 

D.            This Agreement shallbe binding upon and for the benefit of the parties hereto and their respectivelegal representatives, successors and assigns. No provision hereof shall be modified, altered or limited except by awritten instrument expressly referring to this Agreement signed by the party tobe charged thereby.

 

E.             The security interestgranted to Agent shall terminate and the Collateral will be reassigned toDebtor, at Debtor’s sole expense, upon termination of the Financing 

 

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Agreement and Payment in Full(as defined in the Financing Agreement) to Agent and the Secured Parties of allObligations thereunder.

 

F.             THE VALIDITY,INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OFTHE UNITED STATES OF AMERICA AND THE LAWS OF THE STATE OF CALIFORNIA.

 

{Signature Pages Follow}

 

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IN WITNESS WHEREOF, Debtor and Agent haveexecuted this Agreement as of the day and year first above written.

 
|   | DEBTOR:                                         |
|--------|-------------------------------------------------|
|   |                                            |
|   | WESTAFF (USA), INC., a California corporation   |
|   |                                            |
|   |                                            |
|   | By:                                             | /s/  Dawn M. Jaffray |
|   |                                            | Dawn  M. Jaffray |
|   |                                            | Senior  Vice President and Chief Financial Officer |
|   |                                            |   |
|   |                                            |   |
|   | AGENT:                                          |
|   |                                            |
|   | U.S.BANK NATIONAL ASSOCIATION,                  |
|   | as Agent for the benefit of the Secured Parties |
|   |                                            |
|   | ** **                                      |
|   | By:                                             | /s/  Susan V. Freed |
|   |                                            | Susan  V. Freed |
|   |                                            | Vice  President |

 

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