Document:

Converted by EDGARwiz

Exhibit 10.7

EXECUTION COPY

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Security Agreement”), dated as of March 22, 2011, is by the party identified as “Grantor” on the signature pages hereto and such other parties as may become Grantors hereunder after the date hereof (individually a “Grantor”, and collectively the “Grantors”) and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the “Agent”) for the Lenders (defined below).

W I T N E S S E T H

WHEREAS, pursuant to that certain Credit Agreement dated as of March 22, 2011 (as amended, modified, restated or supplemented from time to time, the “Credit Agreement”) among GREENWAY MEDICAL TECHNOLOGIES, INC. (the “Borrower”), the financial institutions party thereto (the “Lenders”), and Bank of America, N.A., as the Administrative Agent (the “Agent”), pursuant to which the Agent and Lenders have agreed to make Loans to and incur L/C Obligations for the benefit of, Borrower; and

WHEREAS, this Security Agreement is required under the terms of the Credit Agreement;

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.

Definitions and Interpretive Provisions. 

(a)

Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Credit Agreement.  In addition, the following terms, which are defined in the UCC as in effect in the State of Georgia on the date hereof, are used as defined therein:  Accession, Account, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Commingled Goods, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Right, Manufactured Home, Proceeds, Software, Standing Timber, Supporting Obligation and Tangible Chattel Paper.  As used herein:

“Agent” means Bank of America in its capacity as Agent for the holders of the Secured Obligations, or any successor Agent.

“Collateral” has the meaning provided in Section 2 hereof.

“Copyright License” means any written agreement, naming any Grantor as licensor, granting any right under any Copyright including any thereof referred to in Schedule 1(b) attached hereto.

“Copyrights” means (a) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Copyright Office including any thereof referred to in Schedule 1(b) attached hereto, and (b) all renewals thereof including any thereof referred to in Schedule 1(b) attached hereto.

“Grantors” has the meaning provided in the recitals hereto, together with their respective successors and assigns.

“Patent License” means any agreement, whether written or oral, providing for the grant by or to a Grantor of any right to manufacture, use or sell any invention covered by a Patent, including any thereof referred to in Schedule 1(b) attached hereto.

“Patents” means (a) all letters patent of the United States or any other country and all reissues and extensions thereof, including any letters patent referred to in Schedule 1(b) attached hereto, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including any thereof referred to in Schedule 1(b) attached hereto.

“Secured Obligations” means, without duplication, (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, (b) all obligations under any Secured Hedge Agreement, (c) all obligations under any Cash Management Agreement between any Loan Party and any Cash Management Bank and (d) all costs and expenses incurred in connection with enforcement and collection of the Secured Obligations, including attorney costs.

“Security Agreement” has the meaning provided in the recitals hereto, as the same may be amended and modified from time to time.

“Tax Impediment” means the treatment of a foreign Subsidiary as holding an obligation of a United States Person (as such term is defined under Section 957(c) of the Code) pursuant to Section 956 of the Code, assuming for this purpose that such foreign Subsidiary has at all times earnings and profits.

“Trademark License” means any agreement, written or oral, providing for the grant by or to a Grantor of any right to use any Trademark, including any thereof referred to in Schedule 1(b) attached hereto.

“Trademarks” means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, including any thereof referred to in Schedule 1(b) attached hereto, and (b) all renewals thereof.

“UCC” means the Uniform Commercial Code.

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“Work” means any work that is subject to copyright protection pursuant to Title 17 of the United States Code.

(b)

Interpretive Provisions, etc.  Each of the terms and provisions of Sections 1.02, 1.05 and 1.06 of the Credit Agreement (in each case as the same may be amended or modified as provided therein) are incorporated herein by reference to the same extent and with the same effect as if fully set forth herein.  

2.

Grant of Security Interest in the Collateral.  To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Grantor hereby grants to the Agent, for the ratable benefit of the holders of the Secured Obligations, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Grantor in and to all personal property of the Grantors of whatever type or description, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”), including the following:

(a)

all Accounts;

(b)

all cash and currency;

(c)

all Chattel Paper;

(d)

those Commercial Tort Claims identified on Schedule 2(d) attached hereto;

(e)

all Copyrights;

(f)

all Copyright Licenses;

(g)

all Deposit Accounts;

(h)

all Documents;

(i)

all Equipment;

(j)

all Fixtures;

(k)

all General Intangibles;

(l)

all Instruments;

(m)

all Inventory;

(n)

all Investment Property;

(o)

all Letter-of-Credit Rights;

(p)

all Patents;

(q)

all Patent Licenses;

(r)

all Software;

(s)

all Supporting Obligations;

(t)

all Trademarks;

(u)

all Trademark Licenses; 

(v)

all Vehicles, the Leases and any other agreements relating to the Vehicles to which such Grantor is party; and

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(w)

All other personal property of such Grantor of whatever type or description; and

(x)

all Accessions and all Proceeds of any and all of the foregoing.

Notwithstanding anything to the contrary contained herein, the security interests granted under this Security Agreement shall not extend to:

(i)

any lease, license or other contract if the grant of a security interest in such lease, license or contract in the manner contemplated by this Security Agreement, under the terms thereof and under applicable law, is prohibited and would result in the termination thereof; provided in each case that any such limitation on the security interests granted hereunder shall only apply to the extent that

(1)  after reasonable efforts (which shall not include the payment of any additional consideration), consent from the relevant party or parties has not been obtained, and

(2)  any such prohibition could not be rendered ineffective pursuant to the UCC or any other applicable law (including Debtor Relief Laws) or principles of equity; and

(ii)

the Equity Interest of a foreign Subsidiary in excess of sixty-five  percent (65%) of all voting Equity Interests that could result in a Tax Impediment.

The Grantors and the Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest created hereby in the Collateral (A) constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising and (B) is not to be construed as an assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.

3.

Provisions Relating to Accounts.

(a)

Anything herein to the contrary notwithstanding, each of the Grantors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account.  Neither the Agent nor any holder of the Secured Obligations shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Security Agreement or the receipt by the Agent or any holder of the Secured Obligations of any payment relating to such Account pursuant hereto, nor shall the Agent or any holder of the Secured Obligations be obligated in any manner to perform any of the obligations of a Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

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(b)

Consistent with and subject to the provisions of Section 6.10 of the Credit Agreement, the Agent and each Lender shall have the right, but not the obligation, to visit and inspect any of the properties of the Grantors and their Subsidiares and to examine their corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants,  all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that (i) when an Event of Default exists the Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice and (ii) unless an Event of Default exists, the Borrower shall bear the cost of only one such inspection, examination or discussion per year.

4.

Representations and Warranties.  Each Grantor hereby represents and warrants to the Agent, for the ratable benefit of the holders of the Secured Obligations, that so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated:

(a)

Legal Name; Chief Executive Office.  As of the date hereof:

(i)

Each Grantor’s exact legal name is (and for the prior five years has been) and state of incorporation or formation, principal place of business and chief executive office are (and for the prior five months have been) as set forth on Schedule 4(a)(i) attached hereto.  

(ii)

Other than as set forth on Schedule 4(a)(ii) attached hereto, no Grantor has been party to a merger, consolidation or other change in structure or used any tradename in the prior five years.

(b)

Ownership.  Each Grantor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same. 

(c)

Security Interest/Priority.  This Security Agreement creates a valid security interest in favor of the Agent, for the ratable benefit of the holders of the Secured Obligations, in the Collateral of such Grantor and, when properly perfected by filing, shall constitute a valid perfected security interest in such Collateral, to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens.

(d)

Types of Collateral.  None of the Collateral consists of, or is the Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes, or Standing Timber.

(e)

Accounts.  (i) Each Account of the Grantors and the papers and documents relating thereto are genuine and in all material respects what they purport to be, (ii) each Account arises out of (A) a bona fide sale of goods sold and delivered by such Grantor (or is in the process of being delivered) or (B) services theretofore actually rendered by such Grantor to, the account debtor named therein, (iii) no Account of a Grantor is evidenced by

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any Instrument or Chattel Paper unless such Instrument or Chattel Paper has been theretofore endorsed over and delivered to, or submitted to the control of, the Agent and (iv) no surety bond was required or given in connection with any Account of a Grantor or the contracts or purchase orders out of which they arose.

(f)

Inventory.  No Inventory of a Grantor is held by any Person other than a Grantor pursuant to consignment, sale or return, sale on approval or similar arrangement.

(g)

Copyrights, Patents and Trademarks.

(i)

Schedule 1(b) attached hereto includes all registered Copyrights, Copyright Licenses, registered Patents, Patent Licenses, registered Trademarks and Trademark Licenses owned by any Grantor in its own name, or to which any Grantor is a party, as of the date hereof.

(ii)

To the best of each Grantor’s knowledge, each registered Copyright, registered Patent and registered Trademark of such Grantor is valid, subsisting, unexpired, enforceable and has not been abandoned.

(iii)

Except as set forth in Schedule 1(b) attached hereto, none of such registered Copyrights, registered Patents and registered Trademarks is the subject of any licensing or franchise agreement.

(iv)

To the best of each Grantor’s knowledge, no holding, decision or judgment has been rendered by any Governmental Authority that would limit, cancel or question the validity of any such registered Copyright, registered Patent or registered Trademark.

(v)

To the best of each Grantor’s knowledge, no action or proceeding is pending seeking to limit, cancel or question the validity of any registered Copyright, registered Patent or registered Trademark, or that, if adversely determined, could reasonably be expected to have a material adverse effect on the value of any registered Copyright, registered Patent or registered Trademark.

(vi)

To the best of each Grantor’s knowledge, all applications pertaining to the Copyrights, Patents and Trademarks of each Grantor have been duly and properly filed, and all registrations or letters pertaining to such Copyrights, Patents and Trademarks have been duly and properly filed and issued, and all of such registered Copyrights, registered Patents and registered Trademarks are valid and enforceable.

(vii)

No Grantor has made any assignment or agreement in conflict with the security interest in the Copyrights, Patents or Trademarks of each Grantor hereunder.

5.

Covenants.  Each Grantor covenants that, so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated, such Grantor shall:

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(a)

Other Liens.  Defend the Collateral against the claims and demands of all other parties claiming an interest therein, keep the Collateral free from all Liens, except for Permitted Liens, and not sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral or any interest therein, except as permitted under the Credit Agreement.

(b)

Preservation of Collateral.  Keep the Collateral in good order, condition and repair and not use the Collateral in violation of the provisions of this Security Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable statute, law, bylaw, rule, regulation or ordinance.

(c)

Instruments/Tangible Chattel Paper/Documents.  If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any property constituting Collateral shall be stored or shipped subject to a Document, such Grantor shall ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession of such Grantor at all times or, if requested by the Agent, is promptly delivered to the Agent, duly endorsed in a manner satisfactory to the Agent.  Such Grantor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable to the Agent indicating the Agent’s security interest in such Tangible Chattel Paper.

(d)

Change in Structure, Location or Type.  Not, without providing ten days’ prior written notice to the Agent and without filing such financing statements and amendments to any previously filed financing statements as the Agent may require, change its name or state of formation or be party to a merger, consolidation or other change in structure or use any tradename other than as set forth on Schedule 4(a)(ii) attached hereto.

(e)

Inspection.  Upon reasonable notice, and during reasonable hours, at all times allow the Agent or its representatives to visit and inspect the Collateral as set forth in Section 6.10 of the Credit Agreement, in accordance with the terms thereof.

(f)

Authorization.  Authorize the Agent to prepare and file such financing statements (including amendments, supplements and renewal statements), or such other instruments as the Agent may from time to time reasonably deem necessary, appropriate or convenient in order to perfect and maintain the security interests granted hereunder in accordance with the UCC.  

(g)

Perfection of Security Interest.  Execute and deliver to the Agent such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents) and do all such other things as the Agent may reasonably deem necessary, appropriate or convenient (i) to assure to the Agent the effectiveness and priority of its security interests hereunder, including (A) such financing statements (including renewal statements), amendments and supplements or such other instruments as the Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, (B) with regard to registered Copyrights, a Notice of Grant of Security Interest in Copyrights for filing with the United States Copyright Office in the form of Exhibit 5(f)(i) attached hereto, (C) with regard to registered Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Exhibit 5(f)(ii) attached hereto and (D) with regard to registered Trademarks, a Notice of

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Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Exhibit 5(f)(iii) attached hereto, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Agent of its rights and interests hereunder.  To that end, each Grantor agrees that the Agent may file one or more financing statements (with collateral descriptions broader and/or less specific than the description of the Collateral contained herein) disclosing the Agent’s security interest in any or all of the Collateral of such Grantor without such Grantor’s signature thereon, and further each Grantor also hereby irrevocably makes, constitutes and appoints the
Agent, its nominee or any other Person whom the Agent may designate, as such Grantor’s attorney-in-fact with full power and for the limited purpose to sign in the name of such Grantor any such financing statements (including renewal statements), amendments and supplements, notices or any similar documents that in the Agent’s reasonable discretion would be necessary, appropriate or convenient in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable so long as the Secured Obligations remain unpaid and until the commitments relating thereto shall have been terminated.  Each Grantor hereby agrees that a carbon, photographic or other reproduction of this Security Agreement or any such financing statement is sufficient for filing as a financing statement by the Agent without notice thereof to such Grantor wherever the Agent may in its sole discretion desire to file the same.  In the event for any reason the law of any jurisdiction other than the applicable jurisdiction as of the Closing Date becomes or is applicable to the Collateral of any Grantor or any part thereof, or to any of the Secured Obligations, such Grantor agrees to execute and deliver all such instruments and to do all such other things as the Agent in its sole discretion reasonably deems necessary, appropriate or convenient to preserve, protect and enforce the security interests of the Agent under the law of such other jurisdiction (and, if a Grantor shall fail to do so promptly upon the request of the Agent, then the Agent may execute any and all such requested documents on behalf of such Grantor pursuant to the power of attorney granted hereinabove).  If any Collateral is in the possession or control of a Grantor’s agents and the Agent so requests, such Grantor agrees to notify such agents in writing of the Agent’s security interest therein and, upon the Agent’s request, instruct them to hold all such
Collateral for the account of the holders of the Secured Obligations and subject to the Agent’s instructions.  Each Grantor agrees to mark its books and records to reflect the security interest of the Agent in the Collateral.

(h)

Control.  Execute and deliver all agreements, assignments, instruments or other documents as the Agent shall reasonably request for the purpose of obtaining and maintaining control within the meaning of the UCC with respect to any Collateral consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.

(i)

Collateral held by Warehouseman, Bailee, etc.  If any Collateral is at any time in the possession or control of a warehouseman, bailee, agent or processor of such Grantor, (i) notify the Agent of such possession or control, (ii) notify such Person of the Agent’s security interest in such Collateral, (iii) instruct such Person to hold all such Collateral for the Agent’s account and subject to the Agent’s instructions and (iv) use its best efforts to obtain an acknowledgment from such Person that it is holding such Collateral for the benefit of the Agent.

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(j)

Treatment of Accounts.  Not grant or extend the time for payment of any Account, or compromise or settle any Account for less than the full amount thereof, or release any Person or property, in whole or in part, from payment thereof, or allow any credit or discount thereon, other than as normal and customary in the ordinary course of a Grantor’s business or as required by law.

(k)

Covenants Relating to Copyrights.

(i)

Not do any act or knowingly omit to do any act whereby any material Copyright may become invalidated and (A) not do any act, or knowingly omit to do any act, whereby any material Copyright may become injected into the public domain; (B) notify the Agent immediately if it knows that any material Copyright may become injected into the public domain or of any adverse determination or development (including the institution of, or any such determination or development in, any court or tribunal in the United States or any other country) regarding a Grantor’s ownership of any such Copyright or its validity; (C) take all necessary steps as it shall deem appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of each material Copyright owned by a Grantor including filing of applications for renewal where necessary; and (D) promptly notify the Agent of any material infringement of any material Copyright of a Grantor of which it becomes aware and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Copyright, including, where appropriate, the bringing of suit for infringement, seeking injunctive relief and seeking to recover any and all damages for such infringement.

(ii)

Not make any assignment or agreement in conflict with the security interest in the Copyrights of each Grantor hereunder.

(l)

Covenants Relating to Patents and Trademarks.

(i)

(A) Continue to use each registered Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such registered Trademark in full force free from any claim of abandonment for non-use, (B) maintain as in the past the quality of products and services offered under such registered Trademark, (C) employ such registered Trademark with the appropriate notice of registration, (D) not adopt or use any mark that is confusingly similar or a colorable imitation of such registered Trademark unless the Agent, for the ratable benefit of the holders of the Secured Obligations, shall obtain a perfected security interest in such mark pursuant to this Security Agreement, and (E) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any registered Trademark may become invalidated.

(ii)

Not do any act, or omit to do any act, whereby any registered Patent may become abandoned or dedicated.

(iii)

Notify the Agent and the holders of the Secured Obligations immediately if it knows that any application or registration relating to any material

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Patent or Trademark may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court or tribunal in any country) regarding a Grantor’s ownership of any material registered Patent or material registered Trademark or its right to register the same or to keep and maintain the same.

(iv)

Whenever a Grantor, either by itself or through an agent, employee, licensee or designee, shall file an application for the registration of any Patent or Trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, a Grantor shall report such filing to the Agent and the holders of the Secured Obligations concurrently with the next delivery of financial statements of the Loan Parties pursuant to Section 6.01 of the Credit Agreement.  Upon request of the Agent, a Grantor shall execute and deliver any and all agreements, instruments, documents and papers as the Agent may reasonably request to evidence the security interest of the Agent and the holders of the Secured Obligations in any registered Patent or registered Trademark and the goodwill and general intangibles of a Grantor relating thereto or represented thereby.

(v)

Take all commercially reasonable steps, including in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the Patents and Trademarks, including filing of applications for renewal, affidavits of use and affidavits of incontestability.

(vi)

Promptly notify the Agent and the holders of the Secured Obligations after it learns that any registered Patent or registered Trademark included in the Collateral is infringed, misappropriated or diluted by a third party and promptly sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution, or to take such other actions as it shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark.

(vii)

Not make any assignment or agreement in conflict with the security interest in the Patents or Trademarks of each Grantor hereunder.

(m)

Insurance.  Insure, repair and replace the Collateral of such Grantor as set forth in the Credit Agreement.  All insurance proceeds shall be subject to the security interest of the Agent hereunder.

(n)

Commercial Tort Claims.  

(i)

Promptly notify the Agent in writing of the initiation of any Commercial Tort Claim before any Governmental Authority by or in favor of such Grantor or any of its Subsidiaries. 

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(ii)

Execute and deliver such statements, documents and notices and do and cause to be done all such things as the Agent may reasonably deem necessary, appropriate or convenient, or as are required by law, to create, perfect and maintain the Agent’s security interest in any Commercial Tort Claim.

6.

Advances and Performance by Holders of the Secured Obligations.  On failure of any Grantor to perform any of the covenants and agreements contained herein, the Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Agent may reasonably deem advisable in the performance thereof, including the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures that the Agent or the holders of the Secured Obligations may make for the protection of the security hereof or that may be compelled to make by operation of law; provided, however, except in the event of a bona fide emergency, and so long as  an Event of Default has not occurred and is continuing, and notwithstanding the foregoing right of the Agent, the Agent shall not pay any sums or incur any obligations on Grantor’s behalf until after the expiration of ten (10) days after delivery of written notice by the Agent to Grantor of the Agent’s intent to pay such sums or incur such obligation.  All such sums and amounts so expended shall be repayable by the Grantors on a joint and several basis (subject to Section 25 hereof) promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the Default Rate for Base Rate Committed Loans.  No such performance of any covenant or agreement by the Agent or the holders of the Secured Obligations on behalf of any Grantor, and no such advance or expenditure therefor, shall relieve the Grantors of any default under the terms of this Security Agreement, the other Loan Documents or any other documents relating to the Secured Obligations.  The Agent
may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Grantor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

7.

Remedies.

(a)

General Remedies.  Upon the occurrence of an Event of Default and during the continuation thereof, the Agent and the holders of the Secured Obligations shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured Obligations, or by law (including levy of attachment and garnishment), the rights and remedies of a secured party under the UCC of the jurisdiction applicable to the affected Collateral and, further, the Agent may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Grantors, take possession of the Collateral, (ii)  dispose of any Collateral on any such premises, (iii) require the Grantors to assemble and make available to the Agent at the expense of the Grantors any Collateral at any place and time designated by the Agent that is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Grantors hereby waives to the fullest extent permitted by law, at any place and time or times, sell and

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deliver any or all Collateral held by or for it at public or private sale, by one or more contracts, in one or more parcels, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements).  Each of the Grantors acknowledges that any private sale referenced above may be at prices and on terms less favorable to the seller than the prices and terms that might have been obtained at a public sale and agrees that such private sale shall be deemed
to have been made in a commercially reasonable manner.  Neither the Agent’s compliance with applicable law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale.  In addition to all other sums due the Agent and the holders of the Secured Obligations with respect to the Secured Obligations, the Grantors shall pay the Agent and each of the holders of the Secured Obligations all reasonable documented costs and expenses incurred by the Agent or any such holder of the Secured Obligations (including attorney costs and court costs) in obtaining or liquidating the Collateral, in enforcing payment of the Secured Obligations, or in the prosecution or defense of any action or proceeding by or against the Agent or the holders of the Secured Obligations or the Grantors concerning any matter arising out of or connected with this Security Agreement, any Collateral or the Secured Obligations, including any of the foregoing arising in, arising under or related to a case under Debtor Relief Laws.  To the extent the rights of notice cannot be legally waived hereunder, each Grantor agrees that any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Borrowers in accordance with the notice provisions of Section 10.02 of the Credit Agreement at least ten Business Days before the time of sale or other event giving rise to the requirement of such notice.  The Agent and the holders of the Secured Obligations shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given.  To the extent permitted by law, any holder of the Secured Obligations may be a purchaser at any such sale.  To the extent permitted by applicable law, each of the Grantors hereby waives all of its rights of redemption with respect to any such sale.  Subject to the provisions of applicable law, the Agent and the
holders of the Secured Obligations may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by law, be made at the time and place to which the sale was postponed, or the Agent and the holders of the Secured Obligations may further postpone such sale by announcement made at such time and place.

(b)

Remedies Relating to Accounts.  Upon the occurrence of an Event of Default and during the continuation thereof, whether or not the Agent has exercised any or all of its rights and remedies hereunder, each Grantor will promptly upon request of the Agent instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the Agent.  In addition, upon the occurrence of an Event of Default and during the continuation hereof the Agent shall have the right to enforce any Grantor’s rights against its customers and account debtors, and the Agent or its designee may notify any Grantor’s customers and account debtors that the Accounts of such Grantor have been assigned to the Agent or of the Agent’s security interest therein, and may (either in its own name or in the name of a Grantor or both) demand, collect (including by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Agent’s discretion, file any claim or take any other action or proceeding to protect and

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realize upon the security interest of the holders of the Secured Obligations in the Accounts.  Each Grantor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Agent in accordance with the provisions hereof shall be solely for the Agent’s own convenience and that such Grantor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein.  The Agent and the holders of the Secured Obligations shall have no liability or responsibility to any Grantor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other
restrictive legend or endorsement or be responsible for determining the correctness of any remittance.  Each Grantor hereby agrees to indemnify the Agent and the holders of the Secured Obligations from and against all liabilities, damages, losses, actions, claims, judgments, costs, expenses, charges and attorney costs suffered or incurred by the Agent or the holders of the Secured Obligations (each, an “Indemnified Party”) because of the maintenance of the foregoing arrangements except as relating to or arising out of the gross negligence or willful misconduct of an Indemnified Party or its officers, employees or agents.  In the case of any investigation, litigation or other proceeding, the foregoing indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by a Grantor, its directors, shareholders or creditors or an Indemnified Party or any other Person or any other Indemnified Party is otherwise a party thereto.

(c)

Access.  In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Agent shall have the right to enter and remain upon the various premises of the Grantors without cost or charge to the Agent, and use the same, together with materials, supplies, books and records of the Grantors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise.  In addition, the Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

(d)

Nonexclusive Nature of Remedies.  Failure by the Agent or the holders of the Secured Obligations to exercise any right, remedy or option under this Security Agreement, any other Loan Document, any other documents relating to the Secured Obligations, or as provided by law, or any delay by the Agent or the holders of the Secured Obligations in exercising the same, shall not operate as a waiver of any such right, remedy or option.  No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Agent or the holders of the Secured Obligations shall only be granted as provided herein.  To the extent permitted by law, neither the Agent, the holders of the Secured Obligations, nor any party acting as attorney for the Agent or the holders of the Secured Obligations, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder.  The rights and remedies of the Agent and the holders of the Secured Obligations under this Security Agreement shall be cumulative and not exclusive of any other right or remedy that the Agent or the holders of the Secured Obligations may have.

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(e)

Retention of Collateral.  To the extent permitted under applicable law, in addition to the rights and remedies hereunder, upon the occurrence of an Event of Default, the Agent may, after providing the notices required by Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain all or any portion of the Collateral in satisfaction of the Secured Obligations.  Unless and until the Agent shall have provided such notices, however, the Agent shall not be deemed to have accepted or retained any Collateral in satisfaction of any Secured Obligations for any reason.

(f)

Deficiency.  In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Agent or the holders of the Secured Obligations are legally entitled, the Grantors shall be jointly and severally liable for the deficiency (subject to Section 25 hereof), together with interest thereon at the Default Rate for Base Rate Committed Loans, together with the costs of collection and attorney costs.  Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

8.

Rights of the Agent.

(a)

Power of Attorney.  In addition to other powers of attorney contained herein, each Grantor hereby designates and appoints the Agent, on behalf of the holders of the Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Grantor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuation of an Event of Default:

(i)

to demand, collect, settle, compromise and adjust, and give discharges and releases concerning the Collateral, all as the Agent may reasonably deem appropriate;

(ii)

to commence and prosecute any actions at any court for the purposes of collecting any of the Collateral and enforcing any other right in respect thereof;

(iii)

to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Agent may reasonably deem appropriate;

(iv)

to receive, open and dispose of mail addressed to a Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral on behalf of and in the name of such Grantor, or securing, or relating to such Collateral;

(v)

to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

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(vi)

to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Agent or as the Agent shall direct;

(vii)

to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral;

(viii)

to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services that have given rise thereto, as fully and completely as though the Agent were the absolute owner thereof for all purposes;

(ix)

to adjust and settle claims under any insurance policy relating thereto;

(x)

to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security and pledge agreements, affidavits, notices and other agreements, instruments and documents that the Agent may reasonably deem appropriate in order to perfect and maintain the security interests and liens granted in this Security Agreement and in order to fully consummate all of the transactions contemplated therein;

(xi)

to institute any foreclosure proceedings that the Agent may reasonably deem appropriate; and

(xii)

to do and perform all such other acts and things as the Agent may reasonably deem appropriate or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Secured Obligations shall remain outstanding and until all of the commitments relating thereto shall have been terminated.  The Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Agent in this Security Agreement, and shall not be liable for any failure to do so or any delay in doing so.  The Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct as determined by a final and non appealable judgment by a court of competent jurisdiction.  This power of attorney is conferred on the Agent solely to protect, preserve and realize upon its security interest in the Collateral.

(b)

Performance by the Agent of Obligations.  If any Grantor fails to perform any agreement or obligation contained herein, the Agent itself may perform, or cause performance of, such agreement or obligation, and the expenses of the Agent incurred in connection therewith shall be payable by the Grantors on a joint and several basis (subject to Section 25 hereof); provided, however, except in the event of a bona fide emergency, and

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so long as  an Event of Default has not occurred and is continuing, and notwithstanding the foregoing right of the Agent, the Agent shall not pay any sums or incur any obligations on Pledgor’s behalf until after the expiration of ten (10) days after delivery of written notice by the Agent to Pledgor of the Agent’s intent to pay such sums or incur such obligation.  

(c)

Assignment by the Agent.  The Agent may from time to time assign the Secured Obligations and any portion thereof and/or the Collateral and any portion thereof in connection with its resignation as Agent pursuant to Article IX of the Credit Agreement, and the assignee shall be entitled to all of the rights and remedies of the Agent under this Security Agreement in relation thereto.

(d)

The Agent’s Duty of Care.  Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Agent hereunder, the Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Grantors shall be responsible for preservation of all rights in the Collateral, and the Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors.  The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral.  In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Agent shall have no obligation to clean, repair or otherwise prepare the Collateral for sale.

9.

Rights of Required Lenders.  All rights of the Agent hereunder, if not exercised by the Agent, may be exercised by the Required Lenders.

10.

Application of Proceeds.  Upon the occurrence and during the continuation of an Event of Default, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by the Agent or any of the holders of the Secured Obligations in cash or its equivalent, will be applied in reduction of the Secured Obligations in the order set forth in the Credit Agreement or other document relating to the Secured Obligations, and each Grantor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Agent shall have the continuing and exclusive right to apply and reapply any and all such payments and proceeds in the Agent’s sole discretion, notwithstanding any entry to the contrary upon any of its books and records.

11.

Release of Collateral.  Upon request, the Agent shall promptly deliver to the Borrower (at the Borrower’s expense) appropriate release documentation to the extent the release of Collateral is permitted under, and on the terms and conditions set forth in, the Credit Agreement; provided that any such release, or the substitution of any of the Collateral for other Collateral, will not alter, vary or diminish in any way the force, effect, lien, pledge or security interest of this Security Agreement as to any and all Collateral not expressly released or substituted, and this Security Agreement shall continue as a first priority lien (subject to Permitted Liens) on any and all Collateral not expressly released or substituted. 

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12.

Costs and Expenses.  At all times hereafter, whether or not upon the occurrence of an Event of Default, the Grantors agree to promptly pay upon demand any and all reasonable costs and expenses (including attorney costs) of the Agent and the holders of the Secured Obligations (a) as required under Sections 10.04 and 10.05 of the Credit Agreement and (b) as necessary to protect the Collateral or to exercise any rights or remedies under this Security Agreement or with respect to any of the Collateral.  All of the foregoing costs and expenses shall constitute Secured Obligations hereunder.

13.

Continuing Agreement.

(a)

This Security Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated (other than any obligations with respect to the indemnities and the representations and warranties set forth in the Loan Documents).  Upon such payment and termination, this Security Agreement shall be automatically terminated and the Agent and the holders of the Secured Obligations shall, upon the request and at the expense of the Grantors, forthwith release all of its liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Grantors evidencing such termination.  Notwithstanding the foregoing, all releases and indemnities provided hereunder shall survive termination of this Security Agreement.

(b)

This Security Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Agent or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including attorney costs) incurred by the Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.

14.

Amendments and Waivers.  This Security Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated unless in writing signed by the Required Lenders and each Grantor and acknowledged by the Agent, and each such waiver or consent shall be effective only in the specific instance for the specific purpose for which it is given.

15.

Successors in Interest.  This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Grantor, its successors and assigns, and shall inure, together with the rights and remedies of the Agent and the holders of the Secured Obligations hereunder, to the benefit of the Agent and the holders of the Secured Obligations and their successors and permitted assigns; provided, however, that none of the Grantors may assign its rights or delegate its duties hereunder without the prior written consent of the requisite Lenders under the Credit Agreement.  To the fullest extent permitted by law, each Grantor hereby releases the Agent and each holder of the Secured Obligations, and their respective successors, assigns, officers, attorneys, employees and agents, from any liability for any act or omission or any error of

-17-

judgment or mistake of fact or of law relating to this Security Agreement or the Collateral, except for any liability arising from the gross negligence or willful misconduct of such Agent or such holder of the Secured Obligations as determined by a final and non appealable judgment by a court of competent jurisdiction.

16.

Notices.  All notices required or permitted to be given under this Security Agreement shall be given as provided in Section 10.02 of the Credit Agreement.

17.

Counterparts.  This Security Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  It shall not be necessary in making proof of this Security Agreement to produce or account for more than one such counterpart.

18.

Headings.  The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement.

19.

Governing Law; Submission to Jurisdiction; Venue.

(a)

THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE AGENT SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b)

ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA SITTING IN THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH GRANTOR AND THE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH GRANTOR AND THE AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT OR ANY OTHER DOCUMENT RELATED HERETO.  EACH GRANTOR AND THE AGENT WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

20.

Waiver of Right to Trial by Jury.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER DOCUMENT RELATED HERETO, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE

-18-

WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

21.

Severability.  If any provision of this Security Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

22.

Entirety.  This Security Agreement, the other Loan Documents and the other documents relating to the Secured Obligations represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Loan Documents, any other documents relating to the Secured Obligations, or the transactions contemplated herein and therein.

23.

Survival.  All representations and warranties of the Grantors hereunder shall survive the execution and delivery of this Security Agreement, the other Loan Documents and the other documents relating to the Secured Obligations, the delivery of the Notes and the extension of credit thereunder or in connection therewith.

24.

Other Security.  To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including real property and securities owned by a Grantor), or by a guarantee, endorsement or property of any other Person, then the Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default, and the Agent shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of the Agent or the holders of the Secured Obligations under this Security Agreement, under any of the other Loan Documents or under any other document relating to the Secured Obligations.

25.

Joint and Several Obligations of Grantors.

(a)

Subject to subsection (c) of this Section 25, each of the Grantors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the holders of the Secured Obligations, for the mutual benefit, directly and indirectly, of each of the Grantors and in consideration of the undertakings of each of the Grantors to accept joint and several liability for the obligations of each of them.

(b)

Subject to subsection (c) of this Section 25, each of the Grantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Grantors with respect to the payment and performance of all of the Secured Obligations arising under this Security Agreement,

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the other Loan Documents and any other documents relating to the Secured Obligations, it being the intention of the parties hereto that all the Secured Obligations shall be the joint and several obligations of each of the Grantors without preferences or distinction among them.

(c)

Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents or in any other documents relating to the Secured Obligations, the obligations of each Grantor that is a Guarantor under the Credit Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the Bankruptcy Code of the United States or any other applicable Debtor Relief Law (including any comparable provisions of any applicable state law).

[Remainder of page intentionally left blank]

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Each of the parties hereto has caused a counterpart of this Security Agreement to be duly executed and delivered as of the date first above written.

GRANTORS:

GREENWAY MEDICAL TECHNOLOGIES, INC.

By: /s/ James A. Cochran
                                       
          

James A. Cochran, CFO

Accepted and agreed to as of the date first above written.

Bank of America, N.A.,

as Agent

By:  /s/ Thomas M. Paulk                   
            

Name:  Thomas M. Paulk                  
             

Title:  Senior Vice PresidentForm of Indemnification Agreement

 Exhibit 10.4 
 DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT 
 THIS DIRECTOR AND
OFFICER INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of this [        ] day of [            ] 2011, by
and between Francesca’s Holdings Corporation, a Delaware corporation (the “Company”), and [            ] (the “Indemnitee”). 

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals to act as directors and officers;

 WHEREAS, increased corporate litigation and investigations have subjected directors and officers to litigation risks
and expenses, and the limitations on the availability and terms of director and officer liability insurance have made it increasingly difficult for the Company to attract and retain such persons; 

WHEREAS, the Company’s certificate of incorporation permits the Company to provide indemnification and advancement rights to
directors and officers through bylaw provisions or through agreements with directors and officers, or otherwise, to the extent provided therein; 
 WHEREAS, the Company’s bylaws require that the Company indemnify its directors and officers as authorized by the General Corporation Law of the State of Delaware (“DGCL”), as
amended, under which the Company is incorporated, and such bylaws expressly provide that the indemnification provided therein is not exclusive and contemplate that the Company may enter into separate agreements with its directors, officers and other
persons to set forth specific indemnification provisions; 
 WHEREAS, in light of the fact that the certificate of
incorporation and bylaws of the Company are subject to change and may not contain all the provisions and protections set forth in this Agreement, the Company has determined that Indemnitee and other directors and officers of the Company may not be
willing to serve or continue to serve in such capacities without additional protection; and 
 WHEREAS, the Company
desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company, as the case may be, and has proffered this Agreement to Indemnitee as an additional inducement to serve in such capacity. 

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of what is hereby authorized, the Company and Indemnitee do hereby covenant and agree as follows: 
 1. Definitions. 
 (a) “Change in Control”
means the occurrence of any of the following: 
 (i) any person other than the Permitted Investors shall become,
directly or indirectly, the legal or beneficial owner of, or shall have acquired, directly or indirectly pursuant to any contractual obligation or otherwise, control over or control over the voting rights of, more than 50% of the ordinary voting
power represented by the issued and outstanding voting stock of the Company; or 

 (ii) continuing directors shall cease for any reason other than death or
disability to constitute a majority of the members of the board of directors of the Company then in office; or 

(iii) any person other than the Permitted Investors or a Subsidiary of the Company shall acquire all or substantially all
of the assets of the Company. 
 For the purposes of this definition and otherwise, the following terms shall
have the following meanings, notwithstanding any other definition for any such term in any other provisions of this Agreement: (w) “person” means any “person” as such term is used in the United States Securities
Exchange Act of 1934, as amended, including any partnership, limited partnership, syndicate or group of persons that is deemed to be a “person” for purposes of Sections 13(d) and 14(d)(2) of such Securities Exchange Act;
(x) “beneficial owner” means any “beneficial owner” under and as defined in Rules 13d-3 and 13d-5 of the United States Securities and Exchange Commission under such Securities Exchange Act;
(y) “continuing director” means, at any date of determination, each individual member of the board of directors of the Company who (i) has been a member of such board in the period of twelve successive calendar months last
ended prior to such date or (ii) whose nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the directors who were continuing directors at the time of such nomination and
(z) “Permitted Investors” means (i) CCMP Capital Investors II, L.P. and CCMP Capital Investors (Cayman) II, L.P., (ii) their affiliated co-investment partnerships, (iii) any affiliate of the foregoing, and
(iv) any partner or employee of (x) any of the foregoing or (y) any management company managing any of the foregoing. 
 (b) “Corporate Status” describes the status of a person who is serving or has served (i) as a director or officer of the Company, (ii) as a Company employee in a fiduciary
capacity with respect to an employee benefit plan of the Company or (iii) as a director or officer of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section l(b), a director or officer of
the Company who is serving or has served as a director or officer of a Subsidiary shall be deemed to be serving as the request of the Company. 
 (c) “Disinterested Director” means a director of the Company who (i) is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee and
(ii) is determined to be “disinterested” under applicable Delaware state law. 
 (d)
“Entity” shall mean any corporation, partnership (general or limited), limited liability company, joint venture, trust, employee benefit plan, company, foundation, association, organization or other legal entity, other than the
Company. 
 (e) “Expenses” shall be construed broadly to mean all direct and indirect fees of
any type or nature whatsoever, costs and expenses incurred in connection with any Proceeding, including, without limitation, all attorneys’ fees and costs, disbursements and retainers (including, without limitation, any fees, disbursements and
retainers incurred by 

  
 -2-

 
Indemnitee pursuant to Section 10 of this Agreement), fees and disbursements of experts, witnesses, private investigators and professional advisors (including, without limitation,
accountants and investment bankers), court costs, filing fees, transcript costs, fees of experts, travel expenses, duplicating, imaging, printing and binding costs, telephone and fax transmission charges, computer legal research costs, postage,
delivery service fees, secretarial services, fees and expenses of third party vendors; the premium, security for, and other costs associated with any bond (including supersedeas or appeal bonds, injunction bonds, cost bonds, appraisal bonds or their
equivalents), in each case incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (including, without limitation, any
judicial or arbitration Proceeding brought to enforce the Indemnitee’s rights under, or to recover damages for breach of, this Agreement), as well as all other “expenses” within the meaning of that term as used in Section 145 of
the DGCL and all other disbursements or expenses of types customarily and reasonably incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, actions, suits, or proceedings similar to or of the same type as the Proceeding with respect to which such disbursements or expenses were incurred. Expenses also shall include Expenses incurred in connection with any appeal
resulting from any Proceeding. 
 (f) “Indemnifiable Expenses,” “Indemnifiable
Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 3(a) below. 
 (g) “Independent Counsel” means a law firm, or a person admitted to practice law in any State of the United States, that is experienced in matters of corporation law and neither presently
is, nor in the past three (3) years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnities under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not
include any law firm or person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights
under this Agreement. 
 (h) “Liabilities” shall be broadly construed to mean, without
limitation, all judgments, damages, liabilities, losses, penalties, taxes, fines and amounts paid in settlement, in each case, of any type whatsoever, in connection with a Proceeding. References herein to “fines” shall include any excise
tax assessed with respect to any employee benefit plan. 
 (i) “Proceeding” shall be construed
broadly to mean, without limitation, any threatened, pending or completed claim, government, regulatory and self-regulatory action, suit, arbitration, mediation, alternate dispute resolution process, investigation (including any internal
investigation), inquiry, administrative hearing, appeal, or any other actual, threatened or completed proceeding, whether brought in the right of the 

  
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Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, arbitrative or investigative nature, whether formal or informal,
including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee’s rights hereunder. 
 (j) “Subsidiary” shall mean any Entity (1) of which the Company owns (either directly or indirectly) either (i) a general partner, managing member or other similar interest or
(ii) (A) 50% or more of the voting power of the voting capital equity interests of such Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such Entity or (2) as to which the Company
otherwise has the power to generally direct the management thereof. 
 (k) References herein to a director of
any other Entity shall include, in the case of any Entity that is not managed by a board of directors, such other position, such as manager or trustee or member of the governing body of such Entity, that entails responsibility for the management and
direction of such Entity’s affairs, including, without limitation, the general partner of any partnership (general or limited) and the manager or managing member of any limited liability company. 

2. Services by Indemnitee. In consideration of the Company’s covenants and commitments hereunder, Indemnitee agrees to serve
or continue to serve as either a director on the board of directors of the Company or as officer, as applicable, so long as the Indemnitee is duly elected or appointed and until such time as the Indemnitee is removed, terminated, or tenders a
resignation. 
 3. Agreement to Indemnify. The Company agrees to indemnify Indemnitee to the fullest extent permitted,
and in the manner permitted, by applicable law as in effect as of the date hereof or as such laws may, from time to time, be amended (but only if amended in a way that broadens the right to indemnification and advancement of expenses) as follows:

 (a) Indemnification for Third Party Proceedings. Subject to the exceptions contained in
Section 4(a) and Section 6 below, if Indemnitee was or is a party or was or is otherwise involved in or was or is threatened to be made a party or is otherwise involved in any capacity to any Proceeding (other than an action
by or in the right of the Company) by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company to the fullest extent permitted by the DGCL, as the same may be amended from time to time, against all Expenses and
Liabilities actually and reasonably incurred or paid by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding (referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,”
respectively, and collectively as “Indemnifiable Amounts”). In addition, the Indemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnity provisions with another Entity or
protections under the organization documents of such other Entity. In those instances, the Company is still wholly liable for making any indemnification payments for all Indemnifiable Amounts notwithstanding the payment obligation of such amounts by
a third party to the Indemnitee. 

  
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 (b) Indemnification in Derivative Actions and Direct Actions by the
Company. Subject to the exceptions contained in Section 4(b) and Section 6 below, if Indemnitee was or is a party or was or is otherwise involved in or was or is threatened to be made a party to or was or is otherwise
involved in any capacity in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses. In
addition, the Indemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnity provisions with another Entity or protections under the organization documents of such other Entity. In those instances, the
Company is still wholly liable for making any indemnification payments for all Indemnifiable Expenses notwithstanding the payment obligation of such amounts by a third party to the Indemnitee. 

(c) In the event that any Permitted Investor pays, forwards or otherwise satisfies any Indemnifiable Amounts to an
Indemnitee, such amounts shall be promptly reimbursed by the Company to such payor to the extent that such Indemnifiable Amounts were required to be paid by the Company to the Indemnitee pursuant to the terms of the Agreement. Further, for the
avoidance of doubt and notwithstanding anything to the contrary in this Agreement, the Company hereby acknowledges that the Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by a Permitted
Investor separate from the indemnification obligations of the Company under this Agreement or otherwise. The Company hereby agrees (i) that it is the indemnitor of first resort and that its obligations to the Indemnitee under this Agreement (or any
other indemnity provided by the Company) are primary and any obligation of any Permitted Investor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Indemnitee are secondary, (ii) that the Company
shall be required to advance the full amount of expenses incurred by the Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required
by this Agreement (or any other indemnity provided by the Company), without regard to any rights the Indemnitee may have against any Permitted Investor, and (iii) that the Company irrevocably waives, relinquishes and releases the Permitted Investor
from any and all claims against the Permitted Investor for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by any Permitted Investor on behalf of the
Indemnitee with respect to any claim for which the Indemnitee has sought indemnification from the Company pursuant to this Agreement (or any other indemnity provided by the Company) shall affect the foregoing and the Permitted Investor shall have a
right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Indemnitee against the Company. 
 4. Exceptions to Indemnification. Indemnitee shall be entitled to indemnification under Section 3(a) and Section 3(b) above in all circumstances other than the following:

 (a) Exceptions to Indemnification for Third Party Proceedings. If indemnification is requested under
Section 3(a) and there has been a final non-appealable judgment by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act
(i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder. 
 (b) Exceptions to Indemnification in Derivative Actions and Direct Actions by the Company. If indemnification is requested under Section 3(b) and 

  
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 (i) there has been a final non-appealable judgment by a court of competent
jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (A) in good faith and (B) in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or 
 (ii) there has been a final non-appealable judgment by a court of competent jurisdiction that Indemnitee is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out
of which the claim for indemnification has arisen, 
 then no Indemnifiable Expenses shall be paid with respect to such claim,
issue or matter unless the court of competent jurisdiction in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Indemnifiable Expenses which such court shall deem proper. 
 (c) For
purposes of this Agreement, if the Indemnitee has acted in good faith and in a manner such the Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, the Indemnitee shall be deemed to
have acted in a manner not opposed to the best interests of the Company. 
 5. Procedure for Payment of Indemnifiable
Amounts. 
 (a) Subject to Section 9, Indemnitee shall submit to the Company a written request
specifying in reasonable detail the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3, Section 6, or Section 7 of this Agreement and a short description of the basis for the claim. The
Company shall pay such Indemnifiable Amounts to Indemnitee within sixty (60) calendar days of receipt of the request. At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to
Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder. 
 (b) Upon
written request by the Indemnitee for indemnification pursuant to the first sentence of Section 5(a) hereof, if required by applicable law and to the extent not otherwise provided pursuant to the terms of this Agreement, a determination
with respect to the Indemnitee’s entitlement to indemnification shall be made in the specific case as follows: (i) if a Change in Control shall have occurred and if so requested in writing by the Indemnitee, by Independent Counsel in a
written opinion to the Board of Directors; or (ii) if a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent
Counsel as provided in subpart (i) of this Section 5(b)), (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, or (B) by a committee of Disinterested Directors
designated by majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a
written opinion to the Board of Directors, or (D) by the Company’s stockholders in accordance with applicable law. Notice in 

  
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writing of any determination as to the Indemnitee’s entitlement to indemnification shall be delivered to the Indemnitee promptly after such determination is made, and if such determination
of entitlement to indemnification has been made by Independent Counsel in a written opinion to the Board of Directors, then such notice shall be accompanied by a copy of such written opinion. If it is determined that the Indemnitee is entitled to
indemnification, then payment to the Indemnitee of all amounts to which the Indemnitee is determined to be entitled (other than sums that were already advanced) shall be made within sixty (60) calendar days after such determination. If it is
determined that the Indemnitee is not entitled to indemnification, then the written notice to the Indemnitee (or, if such determination has been made by Independent Counsel in a written opinion, the copy of such written opinion delivered to the
Indemnitee) shall disclose the basis upon which such determination is based. The Indemnitee shall cooperate with the person, persons, or entity making the determination with respect to the Indemnitee’s entitlement to indemnification, including
providing to such person, persons, or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to the Indemnitee and reasonably necessary
to determine whether and to what extent the Indemnitee is entitled to indemnification. 
 (c) If the
determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, the Independent Counsel shall be selected as provided in this Section 5(c). If a Change in Control shall
not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in subpart (i) of Section 5(b)), then the Independent
Counsel shall be selected by the Board of Directors, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred and the
Indemnitee shall have requested that indemnification be determined by Independent Counsel, then the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors,
in which event the preceding sentence shall apply), and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, the Indemnitee or the Company, as the case may be,
may, within thirty (30) calendar days after such written notice of selection has been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be
asserted only on the ground that the law firm or person so selected does not meet the requirements of “Independent Counsel” as defined in Section 1 of this Agreement, and the objection shall set forth the basis of such
assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the law firm or person so selected may not serve as Independent Counsel unless and
until such objection is withdrawn or the Court of Chancery of the State of Delaware or another court of competent jurisdiction in the State of Delaware has determined that such objection is without merit. If the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof and, following the expiration of sixty (60) calendar days after submission by the Indemnitee of a written request for indemnification pursuant to
Section 5(a) hereof, Independent Counsel shall not have been selected, or an objection thereto has been made and not withdrawn, then either the Company or the Indemnitee may petition the Court of Chancery of the State of Delaware or
other court of competent jurisdiction in the State of Delaware for resolution of any objection that shall have been made by the Company or the Indemnitee to the other’s selection of 

  
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Independent Counsel and/or for appointment as Independent Counsel of a law firm or person selected by such court (or selected by such person as the court shall designate), and the law firm or
person with respect to whom all objections are so resolved or the law firm or person so appointed shall act as Independent Counsel under Section 5(b) hereof. Upon the due commencement of any Proceeding pursuant to
Section 11(e) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). If the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, then the Company agrees to pay the reasonable fees and expenses of such Independent Counsel and to fully indemnify and hold harmless
such Independent Counsel against any and all expenses, claims, liabilities, and damages arising out of or relating to this Agreement or its engagement pursuant hereto. 
 6. Indemnification for Expenses if Indemnitee is Wholly or Partly Successful. Notwithstanding anything contained in this Agreement to the contrary, to the extent that Indemnitee is or was, or is or
was threatened to be made, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in defending any Proceeding, Indemnitee shall be indemnified against all Indemnifiable Expenses incurred by
Indemnitee or on Indemnitee’s behalf in connection with the defense of such Proceeding. If Indemnitee is not wholly successful in such Proceeding but is successful on the merits or otherwise as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify, hold harmless and exonerate
Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Agreement, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. Notwithstanding any of the foregoing, nothing herein shall be construed to limit an Indemnitee’s
right to indemnification which he or she would otherwise be entitled to pursuant to Section 3 and Section 4 hereof, regardless of the Indemnitee’s success in a Proceeding. 

7. Indemnification for Expenses as a Witness. Anything in this Agreement to the contrary notwithstanding, to the fullest extent
permitted by applicable law, to the extent that the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made, a witness in any Proceeding to which the Indemnitee is not a party, the Indemnitee
shall be indemnified against all Indemnifiable Expenses incurred by the Indemnitee or on the Indemnitee’s behalf in connection therewith. To the extent permitted by applicable law, the Indemnitee shall be entitled to indemnification for
Expenses incurred in connection with being or threatened to be made a witness, as provided in this Section 7, regardless of whether the Indemnitee met the standards of conduct set forth in Sections 4(a) and 4(b) hereof.

 8. Agreement to Advance Expenses; Conditions. The Company shall pay to Indemnitee all Indemnifiable Expenses incurred
by or on behalf of Indemnitee in connection with any Proceeding to which Indemnitee was or is a party or was or is otherwise involved or was or is threatened to be made a party to or was or is otherwise involved in any capacity in any Proceeding by
reason of Indemnitee’s Corporate Status, including a Proceeding by or in the right 

  
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of the Company, in advance of the final disposition of such Proceeding. Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it shall ultimately be
determined by final judicial decision of a court of competent jurisdiction, from which decision there is no further right to appeal, that Indemnitee is not entitled under this Agreement to, or is prohibited by applicable law from, indemnification
with respect to such Indemnifiable Expenses. Any advances and undertakings to repay pursuant to this Section 8 shall be unsecured and interest free. The Indemnitee shall be entitled to advancement of Indemnifiable Expenses as provided in
this Section 8 regardless of any determination by or on behalf of the Company that the Indemnitee has not met the standards of conduct set forth in Sections 4(a) and 4(b) hereof. 

9. Procedure for Advance Payment of Expenses. Indemnitee shall submit to the Company a written request specifying in reasonable
detail the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation reasonably evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of
Indemnifiable Expenses under Section 8 shall be made no later than sixty (60) calendar days after the Company’s receipt of such request. 
 10. Burden of Proof; Defenses; and Presumptions. 
 (a) In
any Proceeding pursuant to Section 11 hereof brought by the Indemnitee to enforce rights to indemnification or to an advancement of Indemnifiable Expenses hereunder, or in any Proceeding brought by the Company to recover an advancement
of Indemnifiable Expenses (whether pursuant to the terms of an undertaking or otherwise), the burden shall be on the Company to prove that the Indemnitee is not entitled to be indemnified, or to such an advancement of Indemnifiable Expenses, as the
case may be. 
 (b) It shall be a defense in any Proceeding pursuant to Section 11 hereof to enforce
rights to indemnification under Section 3(a) or Section 3(b) hereof (but not in any Proceeding pursuant to Section 11 hereof to enforce a right to an advancement of Indemnifiable Expenses under Sections 8
and 9 hereof) that the Indemnitee has not met the standards of conduct set forth in Section 4(a) or Section 4(b), as the case may be, but the burden of proving such defense shall be on the Company. With respect to any
Proceeding pursuant to Section 11 hereof brought by the Indemnitee to enforce a right to indemnification hereunder, or any Proceeding brought by the Company to recover an advancement of Indemnifiable Expenses (whether pursuant to the
terms of an undertaking or otherwise), neither (i) the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of such Proceeding that indemnification is proper in
the circumstances because the Indemnitee has met the applicable standards of conduct, nor (ii) an actual determination by the Company (including by its directors or independent legal counsel) that the Indemnitee has not met such applicable
standards of conduct, shall create a presumption that the Indemnitee has not met the applicable standards of conduct or, in the case of a Proceeding pursuant to Section 11 hereof brought by the Indemnitee seeking to enforce a right to
indemnification, be a defense to such Proceeding. 
 (c) The termination of any Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendre or its equivalent, shall not, in and of itself, 

  
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adversely affect the right of the Indemnitee to indemnification hereunder or create a presumption that the Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, shall not create a presumption that the Indemnitee had reasonable cause to believe that his or her conduct was unlawful. 

(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee’s action is reasonably based on the records or books of account of the Company or other Entity, including financial statements, or on information supplied to Indemnitee by the officers of the Company or other Entity in the course of
their duties, or on the advice of legal counsel for the Company or other Entity or on information or records given or reports made to the Company or other Entity by an independent certified public accountant or by an appraiser or other expert
selected by the Company or other Entity. The provisions of this Section 10(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement. 
 (e) The knowledge and/or actions, or failure to act, of any
other director, officer, agent, or employee of the Company or of an other Entity shall not be imputed to the Indemnitee for purposes of determining the Indemnitee’s right to indemnification or advancement of Indemnifiable Expenses under this
Agreement. 
 11. Remedies of Indemnitees. 

(a) Right to Petition Court. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts
under Section 3 or Section 5 herein or a request for an advancement of Indemnifiable Expenses under Section 8 or Section 9 herein and the Company fails to make such payment or advancement in a timely
manner pursuant to the terms of this Agreement, Indemnitee may petition a court to enforce the Company’s obligations under this Agreement. 
 (b) Expenses. The Company agrees to reimburse Indemnitee in full for any Expenses actually and reasonably incurred by Indemnitee in connection with investigating, preparing for, litigating,
defending or settling any action brought by Indemnitee under Section 11(a) above; provided, however, that to the extent Indemnitee is unsuccessful on the merits in such action then the Company shall have no obligation to
reimburse Indemnitee under this Section 11(b). 
 (c) Validity of Agreement. The Company
shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 11(a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient
consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement. 
 (d) Failure to Act Not a Defense. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination
concerning the permissibility of the payment of Indemnifiable 

  
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Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption
that such payment or advancement is not permissible 
 (e) Entitlement to Indemnification; Independent
Counsel. In the event that (i) a determination is made pursuant to Section 5 of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) if the determination of entitlement to
indemnification is not to be made by Independent Counsel pursuant to Section 5(b) hereof, no determination of entitlement to indemnification shall have been made pursuant to Section 5(b) of this Agreement within sixty
(60) calendar days after receipt by the Company of the Indemnitee’s written request for indemnification, (iii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 5(b) hereof, no determination of entitlement to indemnification shall have been made pursuant to Section 5(b) hereof within eighty (80) calendar days after receipt by the Company of the Indemnitee’s written
request for indemnification, unless an objection to the selection of such Independent Counsel has been made and substantiated and not withdrawn, in which case the applicable time period shall be seventy (70) calendar days after the Court of
Chancery of the State of Delaware or another court of competent jurisdiction in the State of Delaware (or such person appointed by such court to make such determination) has determined or appointed the person to act as Independent Counsel pursuant
to Section 5(b) hereof, (iv) payment of indemnification is not made pursuant to Section 6 or Section 7 of this Agreement within twenty (20) calendar days after receipt by the Company of a written request
therefor, or (v) payment of indemnification pursuant to Section 6 or Section 7 of this Agreement is not made within sixty (60) calendar days after a determination has been made pursuant to Section 5(b)
that the Indemnitee is entitled to indemnification, then the Indemnitee shall be entitled to seek an adjudication by the Court of Chancery of the State of Delaware of the Indemnitee’s entitlement to such indemnification or advancement of
Indemnifiable Expenses. 
 (f) Not Prejudiced by Adverse Determination. In the event that a determination
shall have been made pursuant to Section 5(b) of this Agreement that the Indemnitee is not entitled to indemnification, any Proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination. 
 12. Notice by Indemnitee. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to
any Proceeding which could reasonably be expected to result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not
disqualify Indemnitee from the right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses. 

13. Representations and Warranties of the Company. The Company hereby represents and warrants to Indemnitee as follows:

  
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 (a) Authority. The Company has all necessary power and authority to
enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company. 

(b) Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions
hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by equitable principles and applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally. 
 (c)
No Conflicts. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, does not, and the Company’s performance of its obligations under the Agreement will not violate the Company’s
certificate or articles of incorporation, bylaws, other agreements to which the Company is a party to or applicable law. 
 (d) Insurance. The Company shall use its best efforts to cause Indemnitee, at the Company’s expense, to be covered by such insurance policies or policies providing liability insurance for
directors or officers of the Company or of any Subsidiary, if any, in accordance with its or their terms to the same extent as provided to any then-current director or officer of the Company or any Subsidiary under such policy or policies.

 14. Contract Rights Not Exclusive; Subrogation. The rights to payment of Indemnifiable Amounts and advancement of
Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company’s bylaws or certificate of incorporation, or any other
agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s serving in a Corporate Status.
No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy, given hereunder or now or hereafter existing at law
or in equity or otherwise. In the event of any change after the date of this Agreement in any applicable law, statute, or rule that expands the power of a Delaware corporation to indemnify a member of its board of directors or an officer, employee,
agent, or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greatest benefits afforded by such change. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other right or remedy. Subject to the provisions of Section 3(c), in the event of any payment to or on behalf of the Indemnitee under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to
enforce such rights. 
 15. Successors. This Agreement shall be (a) binding upon all successors and assigns of the
Company (including any transferee of all or a substantial portion of the business, stock 

  
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and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs,
personal representatives, executors and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate
Status. 
 16. Change in Law. To the extent that a change in Delaware law (whether by statute or judicial decision) shall
permit broader indemnification or advancement of expenses than is provided under the terms of the bylaws of the Company and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be
deemed to be amended to such extent, but only to the extent such amendment permits Indemnitee to broader indemnification and advancement rights other than Delaware law permitted prior to the adoption of such amendment. 

17. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be
limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the
parties. 
 18. Modifications and Waiver. Except as provided in Section 16 above with respect to changes in
Delaware law which broaden the right of Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver. 

19. General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to
have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which
it is so mailed 
  

	 	(i)	If to Indemnitee, to: 

[            ] 

 

	 	(ii)	If to the Company, to: 

 c/o
Francesca’s Collections, Inc. 
 3480 W. 12th Street 
 Houston, Texas 77008 
 Facsimile:
[            ] 

  
 -13-

 or to such other address as may have been furnished in the same manner by any party to the others.

 20. Governing Law. This Agreement shall be exclusively governed by and construed and enforced under the laws of the
State of Delaware without giving effect to the provisions thereof relating to conflicts of law of such state. 
 21. Consent
to Jurisdiction. 
 (a) Each of the Company and the Indemnitee hereby irrevocably and unconditionally
(i) agrees and consents to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action, suit, or proceeding that arises out of or relates to this Agreement and agrees that any such action instituted
under this Agreement shall be brought only in the Court of Chancery of the State of Delaware (or in any other state court of the State of Delaware if the Court of Chancery does not have subject matter jurisdiction over such action), and not in any
other state or federal court in the United States of America or any court or tribunal in any other country; (ii) consents to submit to the exclusive jurisdiction of the courts of the State of Delaware for purposes of any action or proceeding
arising out of or in connection with this Agreement; (iii) waives any objection to the laying of venue of any such action or proceeding in the courts of the State of Delaware; and (iv) waives, and agrees not to plead or to make, any claim
that any such action or proceeding brought in the courts of the State of Delaware has been brought in an improper or otherwise inconvenient forum. 
 (b) Each of the Company and the Indemnitee hereby consents to service of any summons and complaint and any other process that may be served in any action, suit, or proceeding arising out of or relating to
this Agreement in any court of the State of Delaware by mailing by certified or registered mail, with postage prepaid, copies of such process to such party at its address for receiving notice pursuant to Section 20 hereof. Nothing herein
shall preclude service of process by any other means permitted by applicable law. 
 22. Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement. 
 23. Headings. The headings of the sections of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 
 24. Entire Agreement.
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and negotiations, written and oral, between the parties with
respect to the subject matter of this Agreement, provided, however, that this Agreement is supplement to and in furtherance of the Company’s certificate of incorporation, bylaws, the DGCL and any other applicable law, and shall not be deemed a
substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder. 

  
 -14-

 [END OF TEXT] 

  
 -15-

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written. 
  

			
	 COMPANY:
  

FRANCESCA’S HOLDINGS CORPORATION

		
	By:	 	 
		 	Name:
		 	Title
	
	INDEMNITEE:
		
	By:	 	 
		 	Name:
[                            ]

 Signature page to the Director and Officer Indemnification Agreement 

  
 -16-

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