INTELLECTUAL PROPERTY SECURITY AGREEMENT

INTELLECTUAL PROPERTY SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT, dated as of
June 5, 2007 (this “Agreement”), made by and among THE BOMBAY COMPANY, INC., a
Delaware corporation, BBA HOLDINGS, LLC, a Delaware limited liability company,
and BOMBAY INTERNATIONAL, INC., a Delaware corporation (individually, a
“Grantor” and collectively, the “Grantors”), in favor of GENERAL ELECTRIC
CAPITAL CORPORATION, as administrative Agent and collateral Agent (in such
capacity, together with its successors and permitted assigns, “Administrative
Agent”).
 
W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, dated as of October 24, 2006 as
amended by Amendment No. 1 to Credit Agreement, dated as of May 25, 2007 by and
among the Borrowers, the Lenders, and the Administrative Agent, (as amended,
supplemented or otherwise modified from time to time the “Credit Agreement”),
the Lenders have made Revolving Loans to the Borrowers upon the terms and
subject to the conditions set forth therein;
 
WHEREAS, each Grantor has granted a security interest to Administrative Agent,
for the benefit of itself and the Lenders, in, among other things, all right,
title and interest of the Grantors in, to and under all of the Grantors’
Intellectual Property (as defined below), whether now existing or hereafter
arising or acquired as security for the Obligations from time to time owing by
the Grantors under the Credit Agreement;
 
WHEREAS, the Administrative Agent and GB Merchant Partners, LLC (the “Term Loan
Agent”) have entered into that certain Intercreditor Agreement, dated as of June
5, 2007 (as the same may be amended, restated, amended and restated,
supplemented, replaced or otherwise modified from time to time, the
“Intercreditor Agreement”);
 
WHEREAS, each Grantor is the owner of the entire right, title and interest in,
to and under such Grantor’s respective Intellectual Property listed on Schedule
I hereto; and
 
NOW, THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
Grantors hereby agree with Administrative Agent as follows:
 
1.  Defined Terms.
 
(a)  Definitions. Unless otherwise defined herein or the context otherwise
requires, terms used in this Agreement, including its preamble and recitals,
have the meanings provided in the Credit Agreement.
 
(b)  Definitions of Certain Terms Used Herein. As used herein, the following
terms shall have the following meanings:
 
“Copyrights” shall mean, with respect to any Grantor, all of such Grantor’s now
existing or hereafter acquired right, title, and interest in and to: (i)
copyrights, rights and interests in copyrights, works protectable by copyright,
all applications, registrations and recordings relating to the foregoing as may
at any time be filed in the United States Copyright Office or in any similar
office or agency of the United States, any State thereof, any political
subdivision thereof or in any other country, and all research and development
 
 
 

--------------------------------------------------------------------------------

 
relating to the foregoing; and (ii) all renewals of any of the foregoing.
 
“Copyright Licenses” shall mean all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Copyright.   
 
“Credit Agreement” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
 
“Intellectual Property” shall mean all: (i) Trademarks and Trademark Licenses;
(ii) Patents and Patent Licenses; (iii) Copyrights and Copyright Licenses; (iv)
all customer lists and customer information; (v) books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, computer software,
source codes, object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any Trademark, Trademark
License, Patent, Patent License, Copyright or Copyright License; (vi) all other
intellectual property; and (vii) all common law and other rights throughout the
world in and to all of the foregoing.
 
“IP Collateral” shall have the meaning assigned to such term in Section 2
hereof.
 
“Licenses” shall mean, collectively, the Trademark Licenses, the Patent
Licenses, and the Copyright Licenses.
 
“Patents” shall mean, with respect to any Grantor, all of such Grantor’s now
existing or hereafter acquired right, title and interest in and to: (i) all
patents, patent applications, inventions, invention disclosures and
improvements, and all applications, registrations and recordings relating to the
foregoing as may at any time be filed in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof, any political subdivision thereof or in any other country, and all
research and development relating to the foregoing; and (ii) the reissues,
divisions, continuations, renewals, extensions and continuations-in-part of any
of the foregoing.
 
“Patent Licenses” shall mean all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered by a Patent.
 
“Trademarks” shall mean, with respect to any Grantor, all of such Grantor’s now
existing or hereafter acquired right, title, and interest in and to: (i) all of
such Grantor’s trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos, other
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all applications, registrations and recordings relating to
the foregoing as may at any time be filed in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country, and
all research and development relating to the foregoing; (ii) all renewals
thereof; (iii) the entire goodwill of the such Grantor’s business connected with
and symbolized by the foregoing or the use thereof; and (iv) all designs and
general intangibles of a like nature.
 
“Trademark Licenses” shall mean all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark.
 
(c)  Other Definitional Provisions.
 
 
2

--------------------------------------------------------------------------------

 
(i)  The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement and section and paragraph references
are to this Agreement unless otherwise specified.
 
(ii)  The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
 
2.  Grant of Security Interest. To secure the payment and performance of the
Obligations, each Grantor hereby confirms and acknowledges that, it has granted,
assigned and conveyed (and, to the extent not previously granted under the
Credit Agreement, does hereby grant, assign and convey) to Administrative Agent
for the benefit of itself and the Lenders a security interest in such Grantor’s
entire right, title and interest in its respective Intellectual Property and all
proprietary rights relating to or arising from such Intellectual Property, in
each case whether now owned or hereafter acquired by such Grantor, and
including, without limitation, each Grantor’s right, title and interest in and
to each Intellectual Property and proprietary rights identified on Schedule I
attached hereto and made a part hereof, and the right to sue for past, present
and future infringements and dilutions, and all rights corresponding thereto
throughout the world, and the entire goodwill of such Grantor’s business
connected with and symbolized by the Intellectual Property and all income, fees,
royalties, proceeds and other payments at any time due or payable with respect
to any of the foregoing (referred to collectively as the “IP Collateral”). 
 
3.  Protection of Intellectual Property by Grantors. The Grantors shall, at
their sole cost, expense and risk, undertake the following with respect to the
Intellectual Property identified on Schedule I:
 
(a)  Pay all renewal fees and other fees and costs associated with maintaining
the Intellectual Property and with the processing of the Intellectual Property
and take all other reasonable and necessary steps to maintain each registration
of the Intellectual Property.
 
(b)  Take all actions reasonably necessary to prevent any of the Intellectual
Property from becoming forfeited, abandoned, dedicated to the public,
invalidated or impaired in any way.
 
(c)  Pursue the prompt, diligent processing of each application for registration
which is the subject of the security interest created herein and not abandon or
delay any such efforts.
 
(d)  Take any and all action which the Grantors reasonably deem appropriate
under the circumstances to protect the Intellectual Property from infringement,
misappropriation or dilution, including, without limitation, the prosecution and
defense of infringement actions.
 
4.  Representations and Warranties. Each Grantor represents and warrants that:
 
(a)  Schedule I is a true, correct and complete list of all registered or
applied for Intellectual Property owned by the Grantors as of the date hereof.
 
(b)  Except as set forth in Schedule I, none of the Intellectual Property
identified on Schedule I is the subject of any licensing or franchise agreement
pursuant to which any Grantor is the licensor or franchisor.
 
(c)  The Intellectual Property identified on Schedule I hereto, is valid and
enforceable, and (i) no claim has been made that the use of any of the
Intellectual Property does or may violate the rights of any third person; and
(ii) no material claim has been asserted and is pending by any Person
challenging or questioning the use by any Grantor of any
 
 
3

--------------------------------------------------------------------------------

 
of the Intellectual Property owned by any Grantor or the validity or
effectiveness of any of the Intellectual Property owned by any Grantor, nor does
any Grantor know of any valid basis for any such claim.
 
(d)  Each Grantor owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted, and such
Grantor is the sole and exclusive owner of the entire right, title and interest
in, under and to, free and clear of any liens, charges and encumbrances, other
than any Intellectual Property listed on Schedule I that is purported to be
owned by each of the Grantors, Permitted Liens and Liens in favor of
Administrative Agent.
 
(e)  No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or any
Grantor’s rights in, any Intellectual Property set forth on Schedule I in any
respect that could reasonably be expected to have a Material Adverse Effect on
the business or the property of any Grantor.
 
(f)  Each Grantor has the legal right and authority to enter into this Agreement
and perform its terms.
 
(g)  The Grantors shall give Administrative Agent written notice (with
reasonable detail) following the occurrence of any of the following:
 
(i)  The Grantors’ obtaining rights to, and filing applications for registration
of, any new Intellectual Property, or otherwise acquiring ownership of any newly
registered Intellectual Property.
 
(ii)  The Grantors’ becoming entitled to the benefit of any registered
Intellectual Property whether as licensee or licensor.
 
(iii)  The Grantors’ entering into any new Licenses.
 
(iv)  The Grantors’ shall give Administrative Agent written notice (with
reasonable detail) following the occurrence of the Grantors’ knowing or having
reason to know, that any application or registration relating to any material
Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, 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) regarding the Grantors’ ownership of, or the validity of, any material
Intellectual Property or the Grantors’ right to register the same or to own and
maintain the same.
 
(h)  If any Grantor amends its name, such Grantor shall provide copies of such
amendment documentation to Administrative Agent and shall re-register such
Grantor’s Intellectual Property with the appropriate Governmental Authority and
shall execute and deliver such agreements or documentation as Administrative
Agent shall request to maintain a perfected first priority security interest
(except to the extent that the Administrative Agent’s claim is junior to that of
the Term Loan Agent under the terms of the Intercreditor Agreement, in which
case such Grantor shall take all actions required under this Section 4(h) to
maintain the Administrative Agent’s perfected second priority security interest)
in such Intellectual Property, to the extent such security interest can be
perfected by such filing.
 
5.  No Violation of Credit Agreement. The representations, warranties or
covenants contained herein are supplemental to those representations, warranties
and
 
 
4

--------------------------------------------------------------------------------

 
covenants contained in the Credit Agreement, and shall not be deemed to modify
any such representation, warranty or covenant contained in the Credit Agreement.
 
6.  Agreement Applies to Future Intellectual Property. 
 
(a)  The provisions of this Agreement shall automatically apply to any such
additional property or rights described in Sections 4(g)(i), above, all of which
shall be deemed to be and treated as “Intellectual Property” within the meaning
of this Agreement.
 
(b)  Upon the reasonable request of Administrative Agent, the Grantors shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents and papers as Administrative Agent may request to evidence
Administrative Agent’s security interest in any Intellectual Property and the
goodwill of the Grantors relating thereto or represented thereby (including,
without limitation, filings with the United States Patent and Trademark Office
or any similar office), and the Grantors hereby constitute Administrative Agent
as their attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; provided, however, Administrative Agent’s taking of such action shall
not be a condition to the creation or perfection of the security interest
created hereby.
 
7.  Grantors’ Rights To Enforce Intellectual Property. Prior to Administrative
Agent’s giving of notice to the Grantors following the occurrence and during the
continuance of an Event of Default below, the Grantors shall have the exclusive
right to sue for past, present and future infringement of the Intellectual
Property including the right to seek injunctions and/or money damages, in an
effort by the Grantors to protect the Intellectual Property against encroachment
by third parties, provided, however:
 
(a)  Any money damages awarded or received by the Grantors on account of such
suit (or the threat of such suit) shall constitute IP Collateral.
 
(b)  Any damages recovered in any action pursuant to this Section, net of costs
and attorneys’ fees reasonably incurred, to be applied as provided in Section
2.11(c) of the Credit Agreement.
 
(c)  Following the occurrence of any Event of Default, Administrative Agent, by
notice to the Grantors may terminate or limit the Grantors’ rights under this
Section 7.
 
8.  Administrative Agent’s Actions To Protect Intellectual Property. In the
event of the occurrence and continuance of any other Event of Default,
Administrative Agent, acting in its own name or in that of the Grantors, may
(but shall not be required to) act in the Grantors’ place and stead and/or in
Administrative Agent’s own right in connection therewith.
 
9.  Rights Upon Default. Upon the occurrence of any Event of Default,
Administrative Agent may exercise all rights and remedies as provided for in the
Credit Agreement.
 
10.  Administrative Agent as Attorney In Fact.
 
(a)  The Grantors hereby irrevocably constitute and designate Administrative
Agent as and for the Grantors’ attorney in fact, effective following the
occurrence and during the continuance of an Event of Default:
 
(i)  To supplement and amend from time to time Schedule I of this Agreement to
include any new or additional Intellectual Property of the Grantors.
 
 
5

--------------------------------------------------------------------------------

 
(ii)  To exercise any of the rights and powers referenced herein.
 
(b)  The within grant of a power of attorney, being coupled with an interest,
shall be irrevocable until this Agreement is terminated by a duly authorized
officer of Administrative Agent.
 
(c)  Administrative Agent shall not be obligated to do any of the acts or to
exercise any of the powers authorized by this Section 10, but if Administrative
Agent elects to do any such act or to exercise any of such powers, it shall not
be accountable for more than it actually receives as a result of such exercise
of power, and shall not be responsible to any Grantor for any act or omission to
act except for any act or omission to act as to which there is a final
determination made in a judicial proceeding (in which proceeding Administrative
Agent has had an opportunity to be heard) which determination includes a
specific finding that the subject act or omission to act had been negligent or
in actual bad faith.
 
11.  Administrative Agent’s Rights. Upon an Event of Default, any use by
Administrative Agent of the Intellectual Property, as authorized hereunder in
connection with the exercise of Administrative Agent’s rights and remedies under
this Agreement and under the Credit Agreement shall be coextensive with the
Grantors’ rights thereunder and with respect thereto and without any liability
for royalties or other related charges.
 
12.  No Limitation; Credit Agreement. This Agreement has been executed and
delivered by the Grantors for the purpose of recording the security interest
granted to Administrative Agent with respect to the IP Collateral with the
United States Patent and Trademark Office. The security interest granted hereby
has been granted as a supplement to, and not in limitation of, the security
interest granted to Administrative Agent under the Credit Agreement. The Credit
Agreement (and all rights and remedies of the Grantors, Administrative Agent,
and the Lenders thereunder) shall remain in full force and effect in accordance
with its terms. In the event of a conflict between this Agreement and the Credit
Agreement, the terms of this Agreement shall control with respect to the IP
Collateral and the Credit Agreement with respect to all other Collateral.
 
13.  Termination; Release of Trademark Collateral. This Agreement and all
obligations of the Grantors and Administrative Agent hereunder shall terminate
on the date upon which the Obligations are performed in full and indefeasibly
paid in full in cash and the Credit Agreement and other Loan Documents are
terminated in accordance with the terms of the Credit Agreement. Upon
termination of this Agreement, Administrative Agent shall, at the expense of the
Grantors, take such actions required by the Credit Agreement to release its
security interest in the IP Collateral.
 
14.  Binding Effect; Benefits. This Agreement shall be binding upon the Grantors
and their respective successors and assigns, and shall inure to the benefit of
Administrative Agent, the Lenders and their respective successors and assigns.
 
15.  GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW
PROVISIONS.
 
[Remainder of Page Intentionally Left Blank]
 
 
6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Intellectual Property Security
Agreement to be executed by its duly authorized representatives as of the date
first above written.

 
                                        THE BOMBAY COMPANY, INC.
 
                                        By:________________________________________
                                        Name:
                                        Title:
 
 
                                        BBA HOLDINGS, LLC
 
                                        By:_______________________________________
                                        Name:
                                        Title:
 
 
                                        BOMBAY INTERNATIONAL, INC.
 
                                        By:________________________________________
                                        Name:
                                        Title:
 

 

 
 
 

--------------------------------------------------------------------------------

 

 
 
                                        GENERAL ELECTRIC CAPITAL CORPORATION,
                                        as Administrative Agent for itself and
the Lenders
 
                                        By:________________________________________
                                        Name:
                                        Title:

 
 

 
 
 

--------------------------------------------------------------------------------

 
 

Schedule I

[SCHEDULE IP BY EACH GRANTOR]

TRADEMARK APPLICATIONS AND REGISTRATIONS
 

Trademark
Country
Status
App. No./
Reg. No.
App. Date/
Reg. Date
         

TRADEMARK LICENSES
 

Name of Agreement
Parties
Date of Agreement
     

 

 
 
 

--------------------------------------------------------------------------------

 

 

 
LIST OF COPYRIGHTS AND APPLICATIONS
 

 

 
 

--------------------------------------------------------------------------------

 
 

 
LIST OF PATENTS
 
PATENT APPLICATIONS AND REGISTRATIONS
 

Country
Status
Application No./ Registration No.
Description of Patent
Date of Filing
         

PATENT LICENSES
 

Name of Agreement
Parties
Date of Agreement