Exhibit 10.2

SECURITY AGREEMENT

SECURITY AGREEMENT (this “Agreement”) dated as of November 12, 2008 by and among
each of:

GAMESTOP CORP., a corporation organized under the laws of the State of Delaware
having a place of business at 625 Westport Parkway, Grapevine, Texas 76051; and

GAMESTOP HOLDINGS CORP., a corporation organized under the laws of the State of
Delaware having a place of business at 625 Westport Parkway, Grapevine, Texas
76051; and

GAMESTOP, INC., a corporation organized under the laws of the State of Minnesota
having a place of business at 625 Westport Parkway, Grapevine, Texas 76051; and

SUNRISE PUBLICATIONS, INC., a corporation organized under the laws of the State
of Minnesota having a place of business at 625 Westport Parkway, Grapevine,
Texas 76051; and

ELECTRONICS BOUTIQUE HOLDINGS CORP., a corporation organized under the laws of
the State of Delaware, having a place of business 625 Westport Parkway,
Grapevine, Texas 76051; and

ELBO INC., a corporation organized under the laws of the State of Delaware,
having a place of business at 625 Westport Parkway, Grapevine, Texas 76051; and

EB INTERNATIONAL HOLDINGS, INC., a corporation organized under the laws of the
State of Delaware, having a place of business at 625 Westport Parkway,
Grapevine, Texas 76051; and

GAMESTOP BRANDS, INC., a corporation organized under the laws of the State of
Delaware having a place of business at 625 Westport Parkway, Grapevine, Texas
76051; and

MARKETING CONTROL SERVICES, INC., a corporation organized under the laws of the
Commonwealth of Virginia having a place of business at 10 S. Jefferson Street,
Ste. 1400, Roanoke, Virginia 24011; and

GAMESTOP (LP), LLC, a limited liability company organized under the laws of the
State of Delaware having a place of business at at 625 Westport Parkway,
Grapevine, Texas 76051; and

GAMESTOP OF TEXAS (GP), LLC, a limited liability company organized under the
laws of the State of Delaware having a place of business at 625 Westport
Parkway, Grapevine, Texas 76051; and

 

-1-

SOCOM LLC, a limited liability company organized under the laws of the State of
Delaware having a place of business at 625 Westport Parkway, Grapevine, Texas
76051; and

GAMESTOP TEXAS LP, a limited partnership organized under the laws of the State
of Texas having a place of business at 625 Westport Parkway, Grapevine, Texas
76051 (each such Person, individually, a “Grantor” and collectively, the
“Grantors”); and

BANK OF AMERICA, N.A., a national banking association, as collateral agent (in
such capacity, the “Collateral Agent” for the Secured Parties (as defined
herein), in consideration of the mutual covenants contained herein and benefits
to be derived herefrom.

WITNESSETH:

WHEREAS, the Grantors have entered into a certain Term Loan Agreement dated as
of even date herewith (as such may be amended, modified, supplemented or
restated hereafter, the “Loan Agreement”) by and between, among others, (i) the
Grantors, (ii) the Lenders named therein, and (iii) Bank of America, N.A., as
Administrative Agent and Collateral Agent for the Lenders, pursuant to which
Loan Agreement the Lenders have agreed to make the Term Loans (consisting of the
Term Loan A and the Term Loan B) to the Grantors, upon the terms and subject to
the conditions specified in, the Loan Agreement; and

WHEREAS, the obligations of the Lenders to make the Term Loan A are conditioned
upon, among other things, the execution and delivery by the Grantors of an
agreement in the form hereof to secure the Secured Obligations (as defined
herein).

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantors and the Collateral Agent on behalf of
itself and each other Secured Party (and each of their respective successors or
assigns) hereby agree as follows.

SECTION 1

 

Definitions

1.1   Generally. Unless the context otherwise requires, all capitalized terms
used but not defined herein shall have the meanings set forth in the Loan
Agreement, and all references to the UCC shall mean the Uniform Commercial Code
as in effect from time to time in the State of New York; provided, however, that
if a term is defined in Article 9 of the UCC differently that in another Article
thereof, the term shall have the meaning set forth in Article 9, and provided
further that if by reason of mandatory provisions of law, perfection, or the
effect of perfection or non-perfection, of the Security Interest in any
Collateral or the availability of any remedy hereunder is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
“UCC” means the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or availability of such remedy, as the case may be.

 

-2-

1.2       Definition of Certain Terms Used Herein. As used herein, the following
terms shall have the following meanings:

“Accessions” shall have the meaning given that term in the UCC.

“Account Debtor” shall have the meaning given that term in the UCC.

“Accounts” shall mean “accounts” as defined in the UCC, and also all accounts,
accounts receivable, and rights to payment (whether or not earned by
performance) for: (i) property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of; (ii) services rendered or to be rendered;
(iii) a policy of insurance issued or to be issued; (iv) a secondary obligation
incurred or to be incurred; or (v) arising out of the use of a credit or charge
card or information contained on or used with that card.

“Blue Sky Laws” shall have the meaning assigned to such term in Section 6.1 of
this Agreement.

“Certificated Security” shall have the meaning given that term in the UCC.

“Confirmer” shall have the meaning given that term in the UCC.

“Chattel Paper” shall have the meaning given that term in the UCC.

“Collateral” shall mean all personal and fixture property (other than fixture
property pledged pursuant to a mortgage on any owned real property) of each
Grantor, including, without limitation: (a) Accounts, (b) Chattel Paper (whether
Tangible Chattel Paper or Electronic Chattel Paper), (c) Commercial Tort Claims,
(d) Deposit Accounts, (e) Documents, (f) Equipment, (g) Fixtures, (h) General
Intangibles (including Payment Intangibles), (i) Goods, (j) Instruments, (k)
Inventory, (l) Investment Property, (m) Letter-of-Credit Rights, (n) Software,
(o) Supporting Obligations, (p) all books, records, and information relating to
any of the foregoing and/or to the operation of any Grantor’s business, and all
rights of access to such books, records, and information, and all property in
which such books, records, and information are stored, recorded and maintained,
(q) all insurance proceeds, refunds, and premium rebates, including, without
limitation, proceeds of fire and credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the foregoing ((a) through (p))
or otherwise, (r) all liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing ((a) through (q)), including the right of
stoppage in transit, and (s) any of the foregoing whether now owned or now due,
or in which any Grantor has an interest, or hereafter acquired, arising, or to
become due, or in which any Grantor obtains an interest, and all products,
Proceeds, substitutions, and Accessions of or to any of the foregoing.
Notwithstanding the foregoing, in no event shall the Collateral include, and no
Grantor shall be deemed to have granted a Security Interest in, any General
Intangibles, other than Payment Intangibles, if and only to the extent that in
the case of any such General Intangible, (x) any contract evidencing such
General Intangible contains a valid and effective contractual restriction or
limitation which prohibits the grant or creation of a security interest therein,
or (y) a valid and effective restriction or limitation imposed by applicable
law, regulation, rule, order or other directive of any governmental body, agency
or authority, or the order of any court of competent jurisdiction, prohibits the
grant or creation of a security interest in such General Intangible, provided
that the Proceeds realized from any of the

 

-3-

foregoing shall not be deemed excluded from the definition of Collateral but
shall constitute Collateral, and provided further that to the extent such
security interest at any time hereafter shall no longer be prohibited by law,
and/or immediately upon such contractual restriction or limitation no longer
being enforceable, as the case may be, the Collateral shall automatically and
without any further action include, and the Grantors shall be deemed to have
granted automatically and without any further action a Security Interest in,
such right as if such law had never existed or such contractual restriction or
limitation had never been enforceable, as the case may be.

“Collateral Agent’s Rights and Remedies” shall have the meaning assigned to such
term in Section 8.8.

“Commercial Tort Claim” shall have the meaning given that term in the UCC.

“Commodity Intermediary” shall have the meaning given that term in the UCC.

“Deposit Account” shall have the meaning given that term in the UCC and shall
also include all demand, time, savings, passbook, or similar accounts maintained
with a bank.

“Documents” shall have the meaning given that term in the UCC.

“Electronic Chattel Paper” shall have the meaning given that term in the UCC.

“Entitlement Holder” shall have the meaning given that term in the UCC.

“Entitlement Order” shall have the meaning given that term in the UCC.

“Equipment” shall mean “equipment” as defined in the UCC, and also all
furniture, store fixtures, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and assets which are
used and/or were purchased for use in the operation or furtherance of a
Grantors’ business, and any and all Accessions or additions thereto, and
substitutions therefor, provided that Equipment shall not include motor
vehicles.

“Financial Asset” shall have the meaning given that term in the UCC.

“Financing Statement” shall have the meaning given that term in the UCC.

“Fixture Filing” shall have the meaning given that term in the UCC.

“General Intangibles” shall have the meaning given that term in the UCC, and
shall also include, without limitation, all: Payment Intangibles; rights to
payment for credit extended; deposits; amounts due to any Grantor; credit
memoranda in favor of any Grantor; warranty claims; tax refunds and abatements;
insurance refunds and premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and futures
contracts; records; customer lists; telephone numbers; goodwill; causes of
action; judgments; payments under any settlement or other agreement; literary
rights; rights to performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements, including all rights of
any Grantor to enforce same; permits, certificates of

 

-4-

convenience and necessity, and similar rights granted by any governmental
authority; internet addresses and domain names; developmental ideas and
concepts; proprietary processes; blueprints, drawings, designs, diagrams, plans,
reports, and charts; catalogs; technical data; computer software programs
(including the source and object codes therefor), computer records, computer
software, rights of access to computer record service bureaus, service bureau
computer contracts, and computer data; tapes, disks, semi conductors chips and
printouts; user, technical reference, and other manuals and materials; patents,
patent applications and patents pending; trade secret rights, copyrights,
copyright applications, mask work rights and interests, and derivative works and
interests; trade names, trademarks, trademark applications, service marks, and
service mark applications, together with all goodwill connected with and
symbolized by any of the foregoing; all other general intangible property of any
Grantor in the nature of intellectual property; proposals; cost estimates, and
reproductions on paper, or otherwise, of any and all concepts or ideas, and any
matter related to, or connected with, the design, development, manufacture,
sale, marketing, leasing, or use of any or all property produced, sold, or
leased, by or credit extended or services performed, by any Grantor, whether
intended for an individual customer or the general business of any Grantor, or
used or useful in connection with research by any Grantor.

“Goods” shall have the meaning given that term in the UCC.

“Indemnitee” shall have the meaning assigned to such term in Section 8.6 of this
Agreement.

“Instruments” shall have the meaning given that term in the UCC.

“Inventory” shall have the meaning given that term in the UCC, and shall also
include, without limitation, all Goods which (a) are leased by a Person as
lessor, (b) are held by a Person for sale or lease or to be furnished under a
contract of service, (c) are furnished by a Person under a contract of service,
or (d) consist of raw materials, work in process, or materials used or consumed
in a business.

“Investment Property” shall have the meaning given that term in the UCC.

“IP Security Agreement” means the Patent and Trademark Security Agreement dated
as of the date hereof and executed and delivered by the Grantors to the
Collateral Agent for the ratable benefit of the Secured Parties, as the same may
be amended, modified, supplemented or restated from time to time.

“Issuer” shall have the meaning given that term in the UCC.

“Letter-of-Credit Right” shall have the meaning given that term in the UCC and
shall also mean any right to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is at the time entitled to demand
payment or performance.

“Loan Agreement” shall have the meaning assigned to such term in the preliminary
statement of this Agreement.

 

-5-

“Payment Intangible” shall have the meaning given that term in the UCC, and
shall also refer to any General Intangible under which the Account Debtor’s
primary obligation is a monetary obligation.

“Perfection Certificate” shall mean a certificate substantially in the form of
Annex 1 hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer of the Lead
Borrower.

“Proceeds” shall have the meaning given that term in the UCC.

“Secured Obligations” shall mean all (a) the due and punctual payment by the
Borrowers of (i) the principal of, and interest (including all interest that
accrues after the commencement of any case or proceeding by or against any
Borrower under any federal or state bankruptcy, insolvency, receivership or
similar law, whether or not allowed in such case or proceeding) on the Term Loan
A, when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, and (ii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise, of the Borrowers to the Secured Parties
under this Agreement and the other Loan Documents relating to the Term Loan A,
and (b) the due and punctual payment and performance of all covenants,
agreements, obligations and liabilities of the Borrowers under or pursuant to
this Agreement and the other Loan Documents in connection with the Term Loan A.

“Secured Parties” shall mean (a) the Term Loan A Lenders, (b) the Agents and
their Affiliates, each in their capacity as agent or affiliate of the Term Loan
A Lenders, (c) the beneficiaries of each indemnification obligation undertaken
by any Grantor under any Loan Document with respect to the Secured Obligations,
(d) any other Person to whom Secured Obligations under the Loan Agreement and
other Loan Documents are owing, and (e) the successors and assigns of each of
the foregoing.

“Securities Act” shall have the meaning assigned to such term in Section 6.1 of
this Agreement.

“Securities Intermediary” shall have the meaning given that term in the UCC.

“Security” shall have the meaning given that term in the UCC.

“Security Interest” shall have the meaning assigned to such term in Section 2.1
of this Agreement.

“Software” shall have the meaning given that term in the UCC.

“Supporting Obligation” shall have the meaning given that term in the UCC and
shall also refer to a Letter-of-Credit Right or secondary obligation that
supports the payment or performance of an Account, Chattel Paper, a Document, a
General Intangible, an Instrument, or Investment Property.

“Tangible Chattel Paper” shall have the meaning given that term in the UCC.

 

-6-

“Uncertificated Security” shall have the meaning given that term in the UCC.

1.3       Rules of Interpretation. The rules of interpretation specified in
Section 1.2 of the Loan Agreement shall be applicable to this Agreement.

SECTION 2

 

Security Interest

2.1       Security Interest. As security for the payment or performance, as the
case may be, in full of the Secured Obligations, each Grantor hereby bargains,
assigns, mortgages, pledges, hypothecates and transfers to the Collateral Agent,
its successors and assigns, for the benefit of the Secured Parties, and hereby
grants to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, a security interest in, all of such Grantor’s right, title
and interest in, to and under the Collateral (the “Security Interest”). Without
limiting the foregoing, each Grantor hereby designates the Collateral Agent as
such Grantor’s true and lawful attorney, exercisable by the Collateral Agent
whether or not an Event of Default exists, with full power of substitution, at
the Collateral Agent’s option, to file one or more Financing Statements
(including Fixture Filings), continuation statements, or to sign other documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by each Grantor, without the signature of any
Grantor (each Grantor hereby appointing the Collateral Agent as such Person’s
attorney to sign such Person’s name to any such instrument or document, whether
or not an Event of Default exists), and naming any Grantor or the Grantors as
debtors and the Collateral Agent as secured party. The Collateral Agent
acknowledges that the attachment of its Security Interest in any Commercial Tort
Claim is subject to the Grantors’ compliance with Section 4.12.

2.2       No Assumption of Liability. The Security Interest is granted as
security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Collateral. Except during the
existence of an Event of Default, the Grantors shall retain the right to vote
any of the Investment Property constituting Collateral in a manner not
inconsistent with the terms of this Agreement and the Loan Agreement.

SECTION 3

 

Representations and Warranties

The Grantors jointly and severally represent and warrant to the Collateral Agent
and the Secured Parties that:

3.1       Representations and Warranties Incorporated by Reference. Each Grantor
hereby restates each of the representations and warranties set forth in Article
3 of the Loan Agreement with respect to such Grantor as a Borrower thereunder.
Each such warranty and representation is incorporated herein by reference.

3.2       Title and Authority. Each Grantor has good and valid rights in, or
title to, the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has

 

-7-

full power and authority to grant to the Collateral Agent the Security Interest
in such Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval which has
been obtained.

3.3       Filings. The Perfection Certificate has been duly prepared, completed
and executed, and the information set forth therein is correct and complete in
all material respects. UCC Financing Statements (including Fixture Filings, as
applicable) or other appropriate filings, recordings or registrations containing
a description of the Collateral have been filed in each governmental, municipal
or other office as is necessary to publish notice of and protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the benefit of the Secured Parties) in respect of all
Collateral in which the Security Interest may be perfected by filing, recording
or registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or re-registration is necessary in any such
jurisdiction, except as provided under Applicable Law with respect to the filing
of continuation statements or as a result of any change in a Grantor’s name or
jurisdiction of incorporation or formation or under any other circumstances
under which, pursuant to the UCC, filings previously made have become misleading
or ineffective in whole or in part.

3.4       Validity and Priority of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all of the Collateral
securing the payment and performance of the Secured Obligations, and (b) subject
to the filings described in Section 3.3 above, a perfected security interest in
all of the Collateral. The Security Interest is and shall be prior to any other
Lien on any of the Collateral, subject only to those Liens expressly permitted
pursuant to Section 6.2 of the Loan Agreement and the terms of the Intercreditor
Agreement.

3.5       Absence of Other Liens. The Collateral is owned by the Grantors free
and clear of any Lien, except for Liens expressly permitted pursuant to Section
6.2 of the Loan Agreement. Except as provided in the Loan Documents, the
Grantors have not filed or consented to the filing of (a) any Financing
Statement or analogous document under the UCC or any other Applicable Law
covering any Collateral, (b) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
Financing Statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 6.2 of the Loan Agreement.

3.6       Bailees, Warehousemen, Etc. Except as otherwise disclosed in the
Perfection Certificate, no Inventory costing in excess of $3,000,000 held on a
temporary basis of any Grantor is in the care or custody of any one third party
or stored or entrusted with any one bailee or other third party and none shall
hereafter be placed under such care, custody, storage or entrustment unless a
waiver or other agreement reasonably satisfactory to the Collateral Agent is
delivered to the Collateral Agent by such third party or bailee.

 

-8-

3.7       Consignments. Except as otherwise disclosed in the Perfection
Certificate, no Grantor has, and none shall have, possession of any property on
consignment.

SECTION 4

 

Covenants

4.1       Covenants Incorporated by Reference. Each Grantor hereby covenants and
agrees that each Grantor shall perform, observe and otherwise comply with the
covenants set forth in Articles 5 and 6 of the Loan Agreement with respect to
such Grantor as a Loan Party.

4.2       Change of Name; Location of Collateral; Records; Place of Business.

(a)       Each Grantor agrees to furnish to the Collateral Agent thirty (30)
days’ prior written notice of (i) any change in its legal name, (ii) any change
in the location of its chief executive office, its principal place of business,
any office in which it maintains books or records relating to Collateral owned
by it, or any office or facility at which Collateral owned by it is located,
including the establishment of any such new office or facility, (iii) any change
in its identity or organizational structure, (iv) any change in its Federal
Taxpayer Identification Number or organizational number, if any, assigned to it
by its state of organization, or (v) the acquisition by any Grantor of any
property for which additional filings or recordings are necessary to perfect and
maintain the Collateral Agent’s Security Interest therein. Each Grantor agrees
not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the UCC or otherwise that are required in order
for the Collateral Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all of the Collateral.

(b)       Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as, or similar to, those
in which such Grantor is engaged, and, at such time or times as the Collateral
Agent may reasonably request, promptly to prepare and deliver to the Collateral
Agent a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.

4.3       Protection of Security. Each Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.2 of the Loan Agreement.

4.4       Further Assurances. Each Grantor agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any Financing Statements (including Fixture Filings) or other
documents in connection herewith or

 

-9-

therewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral
Agent; provided that, until such time as the Revolving Obligations have been
paid in full, delivery of such Collateral shall be to the Revolving Agent, as
agent for the Collateral Agent.

4.5       Inspection and Verification. Subject to the terms and conditions of
Sections 5.9 of the Loan Agreement, the Collateral Agent and such Persons as the
Collateral Agent may reasonably designate shall have the right, at the Grantors’
own cost and expense, on reasonable prior notice except if an Event of Default
then exists, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Grantors’ affairs with the officers of the
Grantors and their independent accountants and to verify the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third Person, by contacting Account Debtors or the third
Person possessing such Collateral for the purpose of making such a verification.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Secured Party.

4.6       Taxes; Encumbrances. At its option, the Collateral Agent may discharge
past due taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral and not permitted
pursuant to Section 6.2 of the Loan Agreement, and may take any other action
which the Collateral Agent may deem necessary or desirable to repair, maintain
or preserve any of the Collateral to the extent any Grantor fails to do so as
required by the Loan Agreement or this Agreement, and each Grantor jointly and
severally agrees to reimburse the Collateral Agent on demand for any payment
made or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that the Collateral Agent shall not have any
obligation to undertake any of the foregoing and shall have no liability on
account of any action so undertaken except where there is a specific finding in
a judicial proceeding (in which the Collateral Agent has had an opportunity to
be heard), from which finding no further appeal is available, that the
Collateral Agent had acted in actual bad faith or in a grossly negligent manner;
and provided further that the making of any such payments by the Collateral
Agent shall not be deemed to constitute a waiver of any Default or Event of
Default arising from the Grantor’s failure to have made such payments. Nothing
in this Section 4.6 shall be interpreted as excusing any Grantor from the
performance of any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan Documents.

 

4.7

Assignment of Security Interest.

(a)       If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent. Such assignment need not be filed of public
record unless necessary to continue the perfected status of the security

 

-10-

interest against creditors of, and transferees from, the Account Debtor or other
Person granting the security interest.

(b)       To the extent that any Grantor is a beneficiary under any written
letter of credit now or hereafter issued in favor of such Grantor, such Grantor
shall deliver such letter of credit to the Collateral Agent, provided that,
until such time as the Revolving Obligations have been paid in full, delivery of
such Collateral shall be to the Revolving Agent, as agent for the Collateral
Agent. The Collateral Agent shall from time to time, at the request and expense
of such Grantor, make such arrangements with such Grantor as are in the
Collateral Agent’s reasonable judgment necessary and appropriate so that such
Grantor may make any drawing to which such Grantor is entitled under such letter
of credit, without impairment of the Collateral Agent’s perfected security
interest in such Grantor’s rights to proceeds of such letter of credit or in the
actual proceeds of such drawing. At the Collateral Agent’s request, such Grantor
shall, for any letter of credit, whether or not written, now or hereafter issued
in favor of such Grantor as beneficiary, execute and deliver to the issuer and
any Confirmer of such letter of credit an assignment of proceeds form, in favor
of the Collateral Agent and satisfactory to the Collateral Agent and such issuer
or (as the case may be) such Confirmer, requiring the proceeds of any drawing
under such letter of credit to be paid directly to the Collateral Agent;
provided that, until such time as the Revolving Obligations have been paid in
full, delivery of such Collateral shall be to the Revolving Agent, as agent for
the Collateral Agent.

4.8       Continuing Obligations of the Grantors. Each Grantor shall remain
liable to observe and perform all the conditions and obligations to be observed
and performed by it under each contract, agreement or instrument relating to the
Collateral, all in accordance with the terms and conditions thereof, and each
Grantor jointly and severally agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all liability
for such performance.

4.9       Use and Disposition of Collateral. None of the Grantors shall make or
permit to be made an assignment, pledge or hypothecation of the Collateral or
shall grant any other Lien in respect of the Collateral, except as expressly
permitted by Section 6.2 of the Loan Agreement. Except as expressly permitted in
the Loan Agreement, none of the Grantors shall make or permit to be made any
transfer of the Collateral, and each Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory may be sold
in the ordinary course of business, (b) a Grantor may transfer Collateral to any
other Grantor, and (c) unless and until the Collateral Agent shall notify the
Grantors that an Event of Default shall have occurred and be continuing and that
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Loan
Agreement or any other Loan Document.

4.10     Limitation on Modification of Accounts. None of the Grantors will,
without the Collateral Agent’s prior written consent, grant any extension of the
time of payment of any of the Accounts, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, releases, credits, discounts, compromises or

 

-11-

settlements granted or made in the ordinary course of business and consistent
with its current practices.

 

4.11

Insurance.

(a)       The Grantors shall maintain insurance on the Collateral as required by
Section 5.7 of the Loan Agreement. All such insurance which covers the
Collateral shall include an endorsement in favor of the Collateral Agent, which
endorsement shall provide that the insurance, to the extent of the Collateral
Agent’s interest therein, shall not be impaired or invalidated, in whole or in
part, by reason of any act or neglect of any Grantor or by the failure of any
Grantor to comply with any warranty or condition of the policy.

(b)       Each Grantor hereby irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact), for the purpose of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the Collateral
Agent may, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Default or Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take any
other actions with respect thereto as the Collateral Agent deems advisable. All
sums disbursed by the Collateral Agent in connection with this Section 4.11,
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Secured Obligations secured hereby.

4.12     Commercial Tort Claims. If any Grantor shall at any time acquire a
Commercial Tort Claim in excess of $1,000,000, such Grantor shall promptly
notify the Collateral Agent in writing of the details thereof and the Grantors
shall take such actions as the Collateral Agent shall reasonably request in
order to grant to the Collateral Agent, for the ratable benefit of the Secured
Parties, a perfected and security interest therein and in the Proceeds thereof.

4.13     Legend. At the request of the Collateral Agent, each Grantor shall
legend, in form and manner reasonably satisfactory to the Collateral Agent, its
Accounts and its books, records and documents evidencing or pertaining thereto
with an appropriate reference to the fact that such Accounts have been assigned
to the Collateral Agent for the benefit of the Secured Parties and that the
Collateral Agent has a security interest therein.

4.14     General Intangibles. Each Grantor shall apply for, and diligently
pursue applications for, registration of its ownership of the General
Intangibles constituting Collateral for which registration is appropriate, and
which are material to its business, and will use such other reasonable measures
as are appropriate to preserve its rights in its other General Intangibles
constituting Collateral, except that such Grantor may abandon such rights as
could not reasonably be expected to have a Material Adverse Effect on the value
of such General Intangibles. Each Grantor will, at the request of the Collateral
Agent, retain current copies of all

 

-12-

materials created by or furnished to such Grantor on which is recorded then
current information relating to any computer programs or data bases that such
Grantor has developed or otherwise has the right to use from time to time. Such
materials shall include, without limitation, magnetic or other computer media on
which object, source or other code is recorded and documentation of those
computer programs or data bases, in the nature of listing printouts, narrative
descriptions, flow diagrams and similar items. Each Grantor will, at the
reasonable request of the Collateral Agent, deliver a set of such copies to the
Collateral Agent for safekeeping and retention or transfer in the event of the
exercise of the Collateral Agent’s Rights and Remedies.

 

4.15

Investment Property.

(a)       If any Grantor shall at any time hold or acquire any Certificated
Securities (other than treasury stock of such Grantor), such Grantor shall
forthwith endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Collateral Agent may from time to time specify, all of which thereafter
shall be held by the Collateral Agent, pursuant to the terms of this Agreement,
as part of the Collateral, provided that, until such time as the Revolving
Obligations have been paid in full, delivery of such Collateral shall be to the
Revolving Agent, as agent for the Collateral Agent. If any Securities now held
or hereafter acquired by any Grantor are Uncertificated Securities (other than
treasury stock of such Grantor) and are issued to such Grantor or its nominee
directly by the Issuer thereof, such Grantor shall promptly notify the
Collateral Agent thereof and, at the Collateral Agent’s request and option,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, subject to the Intercreditor Agreement, either (i) cause the
Issuer to agree to comply with instructions from the Collateral Agent as to such
Securities, without further consent of such Grantor or the nominee, or (ii)
arrange for the Collateral Agent to become the registered owner of the
Securities. If any Grantor, as registered holder of Investment Property,
receives any stock certificate, option or right, or other distribution, whether
as an addition to, in substitution of, or in exchange for, such Investment
Property, or otherwise, such Grantor agrees to accept the same in trust for the
Collateral Agent and the Secured Parties and to forthwith endorse, assign and
deliver the same to the Collateral Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Collateral Agent may from
time to time specify, to be held by the Collateral Agent as Collateral, provided
that, until such time as the Revolving Obligations have been paid in full,
delivery of such Collateral shall be to the Revolving Agent, as agent for the
Collateral Agent. If any Securities, whether Certificated Securities or
Uncertificated Securities, or other Investment Property now held or hereafter
acquired by any Grantor are held by such Grantor or its nominee through a
Securities Intermediary or Commodity Intermediary, such Grantor shall promptly
notify the Collateral Agent thereof and, at the Collateral Agent’s request and
option, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent, subject to the Intercreditor Agreement, either (i)
cause such Securities Intermediary or Commodity Intermediary, as the case may
be, to agree to comply with Entitlement Orders or other instructions from the
Collateral Agent to such Securities Intermediary as to such Securities or other
Investment Property or, as the case may be, to apply any value distributed on
account of any commodity contract as directed by the Collateral Agent to such
Commodity Intermediary, in each case without the further consent of such Grantor
or such nominee, or (ii) in the case of Financial Assets or other Investment
Property held through a Securities Intermediary, arrange for the Collateral
Agent to become the Entitlement Holder with respect to such Investment Property.

 

-13-

(b)       The Collateral Agent agrees with each Grantor that, pursuant to this
Section 4.15, the Collateral Agent shall not give any such Entitlement Orders or
instructions or directions to any such Issuer, Securities Intermediary or
Commodity Intermediary, and shall not withhold its consent to the exercise of
any withdrawal or dealing rights by such Grantor, provided that no Event of
Default has occurred and is continuing or, after giving effect thereto, any such
investment or withdrawal rights not otherwise permitted by the Loan Agreement
would occur. In addition, so long as no Event of Default shall have occurred and
be continuing, (i) each Grantor shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Securities for all
purposes not inconsistent with the terms of this Agreement, the Loan Agreement
or any other instrument or agreement referred to herein or therein; and the
Collateral Agent shall execute and deliver or cause to be executed and delivered
to such Grantor all such proxies, powers of attorney, dividend and other orders,
and all such instruments, without recourse, as such Grantor may reasonably
request for the purpose of enabling such Grantor to exercise the rights and
powers which it is entitled to exercise pursuant hereto, and (ii) each Grantor
shall be entitled to receive and retain any dividends or other distributions on
the Securities.

4.16     Electronic Chattel Paper and Transferable Records. If any Grantor at
any time holds or acquires an interest in excess of $1,000,000 in any Electronic
Chattel Paper or any “transferable record” as such term is defined in the
Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §7001, et.
seq., or in Section 16 of the Uniform Electronic Transactions Act as in effect
in any jurisdiction applicable to such Grantor, such Grantor shall promptly
notify the Collateral Agent thereof and, at the request of the Collateral Agent,
shall take such action as the Collateral Agent may reasonably request to vest in
the Collateral Agent control under the UCC, the Electronic Signatures in Global
and National Commerce Act, or the Uniform Electronic Transactions Act, as the
case may be, of such transferable record. The Collateral Agent agrees with each
Grantor that so long as no Event of Default has occurred and is continuing or
would occur after taking into account the following, the Collateral Agent will
arrange, pursuant to procedures satisfactory to the Collateral Agent and so long
as such procedures will not result in Collateral Agent’s loss of control under
the UCC, the Electronic Signatures in Global and National Commerce Act, or the
Uniform Electronic Transactions Act, as the case may be, for such Grantor to
make such necessary alterations to the Electronic Chattel Paper or transferable
record as are permitted under the UCC, the Electronic Signatures in Global and
National Commerce Act, or the Uniform Electronic Transactions Act, as the case
may be.

4.17     Tangible Chattel Paper, Notes and Other Instruments. If at any time any
amount payable to any Grantor under or in connection with any of the Collateral
is evidenced by any Tangible Chattel Paper, promissory note, trade acceptances
or other Instrument, such Grantor shall promptly deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time reasonably
request; provided that, until such time as the Revolving Obligations have been
paid in full, delivery of such Collateral shall be to the Revolving Agent, as
agent for the Collateral Agent.

4.18     Bailments, Etc. If any Collateral costing in excess of $3,000,000 is at
any time in the possession or control of any one warehouseman for more than a
temporary period of time (not to exceed five (5) Business Days), bailee or any
Grantor’s agents, such Grantor shall

 

-14-

promptly notify the Collateral Agent thereof and, upon the request of the
Collateral Agent, (i) notify such warehouseman, bailee or agent to hold all such
Collateral for the Collateral Agent’s account subject to the Collateral Agent’s
instructions, (ii) obtain from such warehouseman, bailee or agent a written
acknowledgment in form reasonably satisfactory to the Collateral Agent that such
Person holds possession of the Collateral for the Collateral Agent’s benefit and
shall act upon the Collateral Agent’s instructions with respect to such
Collateral without the further consent of such Grantor, (iii) deliver any
negotiable warehouse receipt, bill of lading or other document of title issued
with regard to the Collateral to the Collateral Agent appropriately endorsed to
the Collateral Agent’s order, and/or (iv) arrange for the issuance in the name
of the Collateral Agent, in form reasonably satisfactory to the Collateral
Agent, any nonnegotiable document of title covering such Collateral; provided
that, the endorsements for any such documents described in this Section 4.18
shall be in favor of the Revolving Agent, as agent for the Collateral Agent if
the Revolving Obligations remain outstanding at the time of such endorsement.
The Collateral Agent agrees with each Grantor that the Collateral Agent shall
not give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such Grantor
with respect to such warehouseman, bailee or agent.

4.19     Other Perfection, Etc. The Grantors shall at any time and from time to
time take such steps as the Collateral Agent may reasonably request for the
Collateral Agent (a) to obtain “control” of any Deposit Accounts or
Letter-of-Credit Rights, with any agreements establishing control to be in form
and substance satisfactory to the Collateral Agent, and (b) otherwise to insure
the continued perfection of the Collateral Agent’s security interest in any of
the Collateral with the priority described in Section 3.4 and of the
preservation of its rights therein. The Collateral Agent agrees with each
Grantor that the Collateral Agent shall not give notice to any depositary under
any control, blocked account or similar agreement in respect of a Deposit
Account unless an Event of Default has occurred and is continuing.

4.20     Assignment of Claims Act. If at any time any Accounts of any Grantor
arise from contracts with the United States of America or any department, agency
or instrumentality thereof, such Grantor will promptly notify the Collateral
Agent thereof and shall execute all assignments and take all steps reasonably
requested by the Collateral Agent in order that all monies due and to become due
thereunder will be assigned and paid to the Collateral Agent and notice thereof
given to the federal authorities under the Assignment of Claims Act of 1940, 41
U.S.C. §15.

4.21     Notices and Reports Pertaining to Collateral. In addition to any other
notice or reporting requirement imposed on the Grantors under this Agreement and
the Loan Agreement, the Grantors will, with respect to the Collateral:

(a)       Promptly notify the Collateral Agent when any Grantor obtains
knowledge of actual or imminent bankruptcy or other insolvency proceeding of any
material Account Debtor or Issuer of Investment Property;

(b)       Promptly notify the Collateral Agent of any material return or
adjustment, rejection, repossession, or loss or damage of or to merchandise
represented by Accounts

 

-15-

or constituting Inventory and of any material credit, adjustment or dispute
arising in connection with the goods or services represented by Accounts or
constituting Inventory;

(c)       Promptly after the application by any Grantor for registration of any
General Intangibles, notify the Collateral Agent thereof; and

(d)       Promptly notify the Collateral Agent in the event of a material loss
or damage to the Collateral, if such loss or damage is not covered by insurance,
of any reclamation or repossession of or any action by a creditor to reclaim or
repossess any material asset(s) of any Grantor, of any material adverse change
in the Collateral, and of any other occurrence that may have a Material Adverse
Effect on the Security Interest of the Collateral Agent in the Collateral.

SECTION 5

 

Collections

 

5.1

Collections.

(a)       Each Grantor shall at all times comply with the Cash Management
provisions of Section 2.13 of the Loan Agreement.

(b)       Without the prior written consent of the Collateral Agent, no Grantor
shall modify or amend the instructions pursuant to any of the DDA Notifications,
the Credit Card Notifications, or the Blocked Account Agreements. So long as no
Event of Default has occurred and is continuing, each Grantor shall, and the
Collateral Agent hereby authorizes each Grantor to, enforce and collect all
amounts owing on the Inventory and Accounts, for the benefit and on behalf of
the Collateral Agent and the other Secured Parties; provided, however, that such
privilege may, at the option of the Collateral Agent, be terminated upon the
occurrence and during the continuance of any Event of Default.

5.2       Power of Attorney. Each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or agents designated
by the Collateral Agent) as such Grantor’s true and lawful agent and
attorney-in-fact, and in such capacity the Collateral Agent shall have the
right, with power of substitution for each Grantor and in each Grantor’s name or
otherwise, for the use and benefit of the Collateral Agent and the Secured
Parties, (a) at any time, whether or not a Default or Event of Default has
occurred, to take actions required to be taken by the Grantors under Section 2.1
of this Agreement, (b) upon the occurrence and during the continuance of an
Event of Default or as otherwise permitted under the Loan Agreement, (i) to take
actions required to be taken by the Grantors under Section 5.1 of this
Agreement, (ii) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (iii) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (iv) to sign the name of any Grantor on any invoices, schedules of
Collateral, freight or express receipts, or bills of lading storage receipts,
warehouse receipts or other documents of title relating to any of the
Collateral; (v) to sign the name of any Grantor on any notice to such Grantor’s
Account Debtors; (vi) to sign the name of any Grantor on any proof

 

-16-

of claim in bankruptcy against Account Debtors, and on notices of lien, claims
of mechanic’s liens, or assignments or releases of mechanic’s liens securing the
Accounts; (vii) to sign change of address forms to change the address to which
each Grantor’s mail is to be sent to such address as the Collateral Agent shall
designate; (viii) to receive and open each Grantor’s mail, remove any Proceeds
of Collateral therefrom and turn over the balance of such mail either to the
Lead Borrower or to any trustee in bankruptcy or receiver of a Grantor, or other
legal representative of a Grantor whom the Collateral Agent determines to be the
appropriate person to whom to so turn over such mail; (ix) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (x) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (xi) to take all such action as may be
necessary to obtain the payment of any letter of credit and/or banker’s
acceptance of which any Grantor is a beneficiary; (xii) to repair, manufacture,
assemble, complete, package, deliver, alter or supply goods, if any, necessary
to fulfill in whole or in part the purchase order of any customer of any
Grantor; (xiii) to use, license or transfer any or all General Intangibles of
any Grantor; and (xiv) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent or any other Secured Party to make any commitment or to make
any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent or any other Secured Party, or to present or file any claim or
notice. It is understood and agreed that the appointment of the Collateral Agent
as the agent and attorney-in-fact of the Grantors for the purposes set forth
above is coupled with an interest and is irrevocable.

5.3       No Obligation to Act. The Collateral Agent shall not be obligated to
do any of the acts or to exercise any of the powers authorized by Section 5.2,
but if the Collateral 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 the Collateral Agent has had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission to
act had been grossly negligent, willful misconduct or in actual bad faith. The
provisions of Section 5.2 shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the
Collateral or any part thereof or impose any obligation on the Collateral Agent
or any other Secured Party to proceed in any particular manner with respect to
the Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any other Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise.

 

-17-

SECTION 6

 

Remedies

6.1       Remedies upon Default. Upon the occurrence of an Event of Default, it
is agreed that the Collateral Agent shall have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the UCC or other Applicable Law.
The rights and remedies of the Collateral Agent shall include, without
limitation, the right to take any of or all the following actions at the same or
different times:

(a)       With respect to any Collateral consisting of Accounts, General
Intangibles (including Payment Intangibles), Letter-of-Credit Rights,
Instruments, Chattel Paper, Documents, and Investment Property, the Collateral
Agent may collect the Collateral with or without the taking of possession of any
of the Collateral.

(b)       With respect to any Collateral consisting of Accounts, the Collateral
Agent may (i) demand, collect and receive any amounts relating thereto, as the
Collateral Agent may determine; (ii) commence and prosecute any actions in any
court for the purposes of collecting any such Accounts and enforcing any other
rights in respect thereof; (iii) defend, settle or compromise any action brought
and, in connection therewith, give such discharges or releases as the Collateral
Agent may reasonably deem appropriate; (iv) without limiting the Collateral
Agent’s rights set forth in Section 5.2 hereof, receive, open and dispose of
mail addressed to any 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
such Accounts or securing or relating to such Accounts, on behalf of and in the
name of such Grantor; and (v) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in respect of, any such
Accounts or the goods or services which have given rise thereto, as fully and
completely as though the Collateral Agent were the absolute owner thereof for
all purposes.

(c)       With respect to any Collateral consisting of Investment Property, the
Collateral Agent may (i) exercise all rights of any Grantor with respect
thereto, including without limitation, the right to exercise all voting and
corporate rights at any meeting of the shareholders of the Issuer of any
Investment Property and to exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any
Investment Property as if the Collateral Agent was the absolute owner thereof,
including the right to exchange, at its discretion, any and all of any
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Issuer thereof, all without
liability except to account for property actually received as provided in
Section 5.3 hereof; (ii) transfer such Collateral at any time to itself, or to
its nominee, and receive the income thereon and hold the same as Collateral
hereunder or apply it to the Secured Obligations; and (iii) demand, sue for,
collect or make any compromise or settlement it deems desirable. The Grantors
recognize that (a) the Collateral Agent may be unable to effect a public sale of
all or a part of the Investment Property by reason of certain prohibitions
contained in the

 

-18-

Securities Act of 1933, 15 U.S.C. §77, (as amended and in effect, the
“Securities Act”) or the Securities laws of various states (the “Blue Sky
Laws”), but may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Investment Property for their own account, for investment and not
with a view to the distribution or resale thereof, (b) that private sales so
made may be at prices and upon other terms less favorable to the seller than if
the Investment Property were sold at public sales, (c) that neither the
Collateral Agent nor any Secured Party has any obligation to delay sale of any
of the Investment Property for the period of time necessary to permit the
Investment Property to be registered for public sale under the Securities Act or
the Blue Sky Laws, and (d) that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.

(d)       With respect to any Collateral consisting of Inventory, Goods, and
Equipment, the Collateral Agent may conduct one or more going out of business
sales, in the Collateral Agent’s own right or by one or more agents and
contractors. Such sale(s) may be conducted upon any premises owned, leased, or
occupied by any Grantor. The Collateral Agent and any such agent or contractor,
in conjunction with any such sale, may augment the Inventory with other goods
(all of which other goods shall remain the sole property of the Collateral Agent
or such agent or contractor). Any amounts realized from the sale of such goods
which constitute augmentations to the Inventory (net of an allocable share of
the costs and expenses incurred in their disposition) shall be the sole property
of the Collateral Agent or such agent or contractor and neither any Grantor nor
any Person claiming under or in right of any Grantor shall have any interest
therein. Each purchaser at any such going out of business sale shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor.

(e)       With respect to any Collateral consisting of General Intangibles, the
Collateral Agent may exercise all of the rights granted to the Collateral Agent
under the IP Security Agreement.

(f)        With or without legal process and with or without prior notice or
demand for performance, the Collateral Agent may enter upon, occupy, and use any
premises owned or occupied by each Grantor, and may exclude the Grantors from
such premises or portion thereof as may have been so entered upon, occupied, or
used by the Collateral Agent to the extent the Collateral Agent deems such
exclusion reasonably necessary to preserve and protect the Collateral. The
Collateral Agent shall not be required to remove any of the Collateral from any
such premises upon the Collateral Agent’s taking possession thereof, and may
render any Collateral unusable to the Grantors. In no event shall the Collateral
Agent be liable to any Grantor for use or occupancy by the Collateral Agent of
any premises pursuant to this Section 6.1, nor for any charge (such as wages for
the Grantors’ employees and utilities) incurred in connection with the
Collateral Agent’s exercise of the Collateral Agent’s Rights and Remedies (as
defined herein) hereunder.

(g)       The Collateral Agent may require any Grantor to assemble the
Collateral and make it available to the Collateral Agent at the Grantor’s sole
risk and expense at a

 

-19-

place or places which are reasonably convenient to both the Collateral Agent and
such Grantor.

(h)       Each Grantor agrees that the Collateral Agent shall have the right,
subject to Applicable Law, to sell or otherwise dispose of all or any part of
the Collateral, at public or private sale, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. Each purchaser at any
such sale shall hold the property sold absolutely, free from any claim or right
on the part of any Grantor.

(i)        Unless the Collateral is perishable or threatens to decline speedily
in value, or is of a type customarily sold on a recognized market (in which
event the Collateral Agent shall provide the Grantors such notice as may be
practicable under the circumstances), the Collateral Agent shall give the
Grantors at least ten (10) days’ prior written notice, by authenticated record,
of the date, time and place of any proposed public sale, and of the date after
which any private sale or other disposition of the Collateral may be made. Each
Grantor agrees that such written notice shall satisfy all requirements for
notice to that Grantor which are imposed under the UCC or other Applicable Law
with respect to the exercise of the Collateral Agent’s rights and remedies upon
default. The Collateral Agent shall not be obligated to make any sale or other
disposition of any Collateral if it shall determine not to do so, regardless of
the fact that notice of sale or other disposition of such Collateral shall have
been given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned.

(j)        Any public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice of such sale. At any sale or other disposition, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. If any of the Collateral is sold, leased, or otherwise
disposed of by the Collateral Agent on credit, the Secured Obligations shall not
be deemed to have been reduced as a result thereof unless and until payment is
finally received thereon by the Collateral Agent.

(k)       At any public (or, to the extent permitted by Applicable Law, private)
sale made pursuant to this Section 6.1, the Collateral Agent or any other
Secured Party may bid for or purchase, free (to the extent permitted by
Applicable Law) from any right of redemption, stay, valuation or appraisal on
the part of any Grantor, the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
the Collateral Agent or such other Secured Party from any Grantor on account of
the Secured Obligations as a credit against the purchase price, and the
Collateral Agent or such other Secured Party may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to any Grantor therefor.

 

-20-

(l)        For purposes hereof, a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof. The Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no Grantor
shall be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Secured Obligations paid in full.

(m)      As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose upon the Collateral and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

(n)       To the extent permitted by Applicable Law, each Grantor hereby waives
all rights of redemption, stay, valuation and appraisal which such Grantor now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.

6.2       Application of Proceeds. After the occurrence of an Event of Default
and acceleration of the Obligations pursuant to Section 7.1 of the Loan
Agreement, the Collateral Agent shall apply the proceeds of any collection or
sale of the Collateral, as well as any Collateral consisting of cash, or any
Collateral granted under any other of the Security Documents in the manner set
forth in Section 7.4 of the Loan Agreement.

SECTION 7

 

Perfection of Security Interest

7.1       Perfection by Filing. This Agreement constitutes an authenticated
record, and each Grantor hereby authorizes the Collateral Agent, pursuant to the
provisions of Sections 2.1 and 5.2, to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral, in such filing offices as the Collateral Agent shall reasonably
deem appropriate, and the Grantors shall pay the Collateral Agent’s reasonable
costs and expenses incurred in connection therewith. Each Grantor hereby further
agrees that a carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a Financing Statement and may be filed as a Financing
Statement in any and all jurisdictions.

7.2       Savings Clause. Nothing contained in this Section 7 shall be construed
to narrow the scope of the Collateral Agent’s Security Interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the Collateral Agent’s Rights and Remedies hereunder except (and then
only to the extent) as mandated by the UCC.

 

-21-

SECTION 8

 

Miscellaneous

8.1       Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 9.1 of the Loan Agreement.

8.2       Grant of Non-Exclusive License. Without limiting the rights of the
Collateral Agent under the IP Security Agreement, each Grantor hereby grants to
the Collateral Agent a royalty free, non-exclusive, irrevocable license, which
license shall be exercisable upon the existence and during the continuance of an
Event of Default, to use, apply, and affix any trademark, trade name, logo, or
the like in which any Grantor now or hereafter has rights, such license being
with respect to the Collateral Agent’s exercise of the Collateral Agent’s Rights
and Remedies hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or any sale or other disposition of
Inventory.

8.3       Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest and all obligations of the Grantors hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Loan Agreement, any other Loan Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan Agreement,
any other Loan Document, or any other agreement or instrument, (c) any exchange,
release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from any guarantee,
securing or guaranteeing all or any of the Obligations, or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

8.4       Survival of Agreement. All covenants, agreements, representations and
warranties made by the Grantors herein and in any other Loan Document and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the Collateral Agent and the other Secured Parties and shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Term Loans, regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the Agents or
any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended under the Loan
Agreement, and shall continue in full force and effect as long as the Secured
Obligations are outstanding and unpaid.

8.5       Binding Effect; Several Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the Grantors that are contained in
this Agreement shall bind and inure to the benefit of each Grantor and its
respective successors and assigns. This Agreement shall be binding upon each
Grantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the

 

-22-

benefit of each Grantor, the Collateral Agent and the other Secured Parties and
their respective successors and assigns, except that no Grantor shall have the
right to assign or transfer its rights or obligations hereunder or any interest
herein or in the Collateral (and any such attempted assignment or transfer shall
be void) except as expressly permitted by this Agreement or the Loan Agreement.
This Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released with
respect to any Grantor without the approval of any other Grantor and without
affecting the obligations of any other Grantor hereunder.

 

8.6

Collateral Agent’s Fees and Expenses; Indemnification.

(a)       Without limiting any of their obligations under the Loan Agreement or
the other Loan Documents, and without duplication of any fees, expenses or
indemnification provided for under the Loan Agreement and the other Loan
Documents, the Grantors jointly and severally agree to pay all reasonable
out-of-pocket expenses incurred by the Collateral Agent, including the
reasonable fees, charges and disbursements of any counsel and any outside
consultants for the Collateral Agent, in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral, (iii) the
exercise, enforcement or protection of any of the Collateral Agent’s Rights and
Remedies hereunder or (iv) the failure of any Grantor to perform or observe any
of the provisions hereof.

(b)       Without limiting any of their indemnification obligations under the
Loan Agreement or the other Loan Documents, and without duplication of any fees,
expenses or indemnification provided for under the Loan Agreement and the other
Loan Documents, the Grantors shall jointly and severally indemnify each Secured
Party and each Related Party of any Secured Party (each such Person being called
an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of, (i) the execution or delivery or performance of this
Agreement or any other Loan Document, the performance by any Grantor of its
obligations under this Agreement or any other Loan Document, or the consummation
of the transactions contemplated by the Loan Documents or any other transactions
contemplated hereby, or (ii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing or to the
Collateral, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross negligence, bad
faith or willful misconduct of any Indemnitee or any Affiliate of an Indemnitee
(or of any officer, director, employee, advisor or agent of such Indemnitee or
any such Indemnitee’s Affiliates). In connection with any indemnified claim
hereunder, the Indemnitee shall be entitled to select its own counsel and the
Grantors shall promptly pay the reasonable fees and expenses of such counsel.

(c)       Any such amounts payable as provided hereunder shall be additional
Secured Obligations secured hereby and by the other Security Documents. All
amounts due under this Section 8.6 shall be payable promptly after written
demand therefor.

 

-23-

(d)       The provisions of this Section 8.6 shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby and by the Loan Agreement, the repayment of the Term Loans, or the
termination of this Agreement, the Loan Agreement or any provision hereof or
thereof.                              

8.7       Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

8.8

Waivers; Amendment.

(a)       The rights, remedies, powers, privileges, and discretions of the
Collateral Agent hereunder (herein, the “Collateral Agent’s Rights and
Remedies”) shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Collateral Agent in
exercising or enforcing any of the Collateral Agent’s Rights and Remedies shall
operate as, or constitute, a waiver thereof. No waiver by the Collateral Agent
of any Event of Default or of any Default under any other agreement shall
operate as a waiver of any other Event of Default or other Default hereunder or
under any other agreement. No single or partial exercise of any of the
Collateral Agent’s Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Collateral Agent and any
Person, at any time, shall preclude the other or further exercise of the
Collateral Agent’s Rights and Remedies. No waiver by the Collateral Agent of any
of the Collateral Agent’s Rights and Remedies on any one occasion shall be
deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing
waiver. The Collateral Agent’s Rights and Remedies may be exercised at such time
or times and in such order of preference as the Collateral Agent may determine.
The Collateral Agent’s Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Secured Obligations. No waiver
of any provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.

(b)       Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Collateral Agent and the Grantor or Grantors with respect to whom such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.2 of the Loan Agreement.

8.9       WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE

 

-24-

FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS SET FORTH IN THIS SECTION 8.9.

8.10     Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

8.11     Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

8.12     Headings. Section headings used herein are for convenience of reference
only, are not part of this Agreement and shall not affect the construction of,
or be taken into consideration in interpreting, this Agreement.

 

8.13

Jurisdiction; Consent to Service of Process.

(a)       The Grantors agree that any suit for the enforcement of this Agreement
or any other Loan Document may be brought in any court of the State of New York
sitting in the Borough of Manhattan or any federal court sitting therein as the
Collateral Agent may elect in its sole discretion and consent to the
non-exclusive jurisdiction of such courts. The Grantors hereby waive any
objection which they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient forum. The
Grantors agree that any action commenced by any Grantor asserting any claim or
counterclaim arising under or in connection with this Agreement or any other
Loan Document shall be brought solely in a court of the State of New York
sitting in the Borough of Manhattan or any federal court sitting therein as the
Collateral Agent may elect in its sole discretion and consent to the exclusive
jurisdiction of such courts with respect to any such action.

(b)       Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.1. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

8.14     Termination; Release of Collateral. Except for those provisions which
expressly survive the termination thereof, this Agreement and the Security
Interest shall terminate when all the Secured Obligations have been paid in
full, at which time the Collateral Agent shall execute and deliver to the
Grantors, at the Grantors’ expense, all UCC termination statements and similar
documents that the Grantors shall reasonably request to evidence such
termination.

8.15     Intercreditor Agreement.        Notwithstanding anything herein to the
contrary, the exercise of any right or remedy by the Collateral Agent pursuant
to this Agreement and the other

 

-25-

 

Loan Documents may be subject to, and restricted by, the provisions of the
Intercreditor Agreement. Except as specified herein, nothing contained in the
Intercreditor Agreement shall be deemed to modify any of the provisions of this
Agreement and the other Loan Documents, which, as among the Borrowers, the
Agents, and the Lenders shall remain in full force and effect. In the event of
any conflict between the terms of the Intercreditor Agreement and this
Agreement, the terms of the Intercreditor Agreement shall govern and control.

[SIGNATURE PAGES FOLLOW]

 

-26-

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

 

 

GRANTORS:

GAMESTOP CORP.

GAMESTOP HOLDINGS CORP.

GAMESTOP, INC.

SUNRISE PUBLICATIONS, INC.

ELECTRONICS BOUTIQUE HOLDINGS CORP.

ELBO INC.

EB INTERNATIONAL HOLDINGS, Inc.

GAMESTOP BRANDS, INC.

as Borrowers

 

 

By: /s/ David W. Carlson

Name: David W. Carlson

 

Title:

Executive Vice President and Chief

 

Financial Officer

 

 

MARKETING CONTROL SERVICES, INC.

GAMESTOP (LP), LLC

as Borrowers

 

 

By: /s/ David W. Carlson

 

Name:

David W. Carlson

 

Title:

Authorized Signatory

 

GAMESTOP OF TEXAS (GP), LLC

as Borrower

 

 

By:

GameStop, Inc.

 

 

By: /s/ David W. Carlson

 

Name:

David W. Carlson

 

Title:

Executive Vice President and Chief

 

Financial Officer

 

 

27

GAMESTOP TEXAS LP

as Borrower

 

 

By:

GameStop of Texas (GP), LLC, its

 

general partner

 

 

By:

GameStop, Inc.

 

 

By: /s/ David W. Carlson

Name: David W. Carlson

Title:                Executive Vice President and Chief Financial Officer

 

 

SOCOM LLC

as Borrower

 

 

By: /s/ Marc Summey

Name: Marc Summey

Title: President

 

 

 

28

 

COLLATERAL AGENT:

BANK OF AMERICA, N.A.,

 

 

 

By: /s/ Stephen Garvin

 

Stephen J. Garvin

 

Managing Director

 

 

29